DIODES INC /DEL/ — Call Transcript 2026

Well, let's get started. Good morning. I'm Tristan Gerra, senior semiconductor analyst at Baird. I would like to introduce Diodes, a leading supplier of analog and power platform solutions serving a variety of end markets, including AI data center. We're pleased to have with us today Emily Yang, Senior Vice President, Worldwide Sales and Marketing. With that, let's get started. It's going to be a fire chat with questions only today. We have about 29 minutes. I'm going to start with my first question, which is about the trends in power. Clearly, things are changing fairly quickly these days. You've obviously had a significant share gain over the past several years. You're benefiting from an upcycle. It looks as if there are secular trends that are layering on top of that normal increase. I know you're going to provide more data around data center and the AI part of this, but there are some emerging exciting themes coming, with 800 volt native. Maybe at a high level before you get a chance to, later on this year, provide more metrics. Maybe at a high level, how do you see those trends in data center driving your business and any opportunities that you want to highlight? Oh, perfect. Well, first of all, good morning, everyone. Good to be here with you guys. AI, data center, power, conversion's definitely a very hot topic at this moment. I think I mentioned AI is a whole ecosystem. We did share some of the AI solutions, especially focused on the server applications. We've been growing really fast in this area and benefit a lot for the last few quarters. This is actually specific focusing on the PCI Express support, sending out additional ports on the timing solutions and stuff like that. On top of it, I think Tristan just actually mentioned 800 volt. This is a transition from 48 volt to a 800 volt application. A lot of, I would say, devices focus on, I call, the power supply area. This is actually the power supply supporting the AI applications, whether it's a data center, whether it's a server, whether different application. What we see, the power supply actually consists of different units. There's a power supply unit, we call the PSU. There is battery backup unit, BBU. There's actually power delivery unit, PDU, and there's also isolated, DC-DC conversion portion. I would say all in all, I don't think you guys need to remember all these acronyms. I think with this voltage translation create a lot of opportunity overall for Diodes. If we look at the PSU, which Tristan specifically referred to earlier as a good example. In the PSU area, we actually seeing a lot of silicon carbide requirement. This is actually not only just on the MOSFET area, we actually also have the diodes over this area as well. That's actually a great opportunity for us moving forward. On top of it, we actually seeing a lot of isolation solutions require. This actually covers our gate drivers, isolation gate drivers. We're seeing a lot of current sensing requirement. We also have something called digital isolation, overall, in the ORing. This is more on the redundancy of the power supply, also create a lot of opportunity. I would say all in all, this is quite significant, and like Tristan mentioned earlier, we are putting a lot of materials together that we actually going to share in our investor relationship deck. Just stay tuned, but we are extremely excited. On top of it, we have the BBU opportunities, we have the PDUs. We also have different areas of expansion. Couple areas. One is actually with the current device, current requirement. We also working new products supporting the future requirements. Great. You mentioned silicon carbide. How central is that as part of your product offering? Also, if you could talk to the extent that you can about plan for doing some of the epitaxy internally. Are you fabless right now? What is the product roadmap on silicon carbide and how big do you think it becomes ultimately as part of your portfolio? Is it just a small addition that's nice to have on top of some of the products that you have in PSUs or is it going to become more central? Yeah. silicon carbide is a big, I would say, important portion of our product engagement, product development. This is actually fell under our discrete power management area because a lot of the silicon carbide, whether it's the diodes or MOSFETs, is all belongs in the same category. This is only a part of a product offering, definitely is not everything that we offers. I think currently what we working with, especially on the epi area, we work with all the tier one suppliers like the Episil, EpiWorld stuff. all the actual manufacturing happen in our Taiwan facility, our own fab. We definitely want to continue to engage and continue to expand in this area. Like I mentioned earlier, all this product is actually linked together. What we really want to do is actually total solutions. If you think about Diodes, whether it's discrete, whether it's analog, whether it's mixed signal, whether it's timing, we want to actually loop all this things together provide a total solution to the customers. A lot of time, even with the PSU we mentioned, it's not just about silicon carbide. There's analog, there's discrete on the power protection, whether it's power or data line protection. With some of the other AIs, high speed protocol, PCI Express, whether it's USB Type-C, USB 3, right? All this is actually linked together. If you think about Diodes, other than we don't have CPU, GPU, we don't have the ASICs or FPGA, we actually have a lot of complementary solutions that actually offer to the customers together. I would say silicon carbide is one of the area, but definitely is not the whole thing about Diodes. I know you haven't provided a breakdown of product, but I think historically, it's probably fair to assume that a little bit more than 50% of your product mix has been power, discrete, and the rest being analog. At a high level, how have trends changed in favor potentially of power products? The discrete side, where I think in the past, people, your peers, were really focusing just on analog. I've heard Keh-Shew Lu saying in the past that, clearly there's very good gross margin opportunities in power as well. I just wanted to understand better, with data center, with this whole revamp of power supply, is discrete, is power getting an acceleration of the growth? Is it becoming more important? Is this a portfolio, a mix of product that you're happy with given what we're seeing in terms of trends unfolding in the market? Yeah. What we're seeing, the growth is actually coming both from the discrete as well as analog. Since we cover a wide range of analog power management, whether it's DC-DC, whether it's LDO area together on the discrete side. Right? We talk specific about 800 volt, but 48 volt is not getting away. Right? We still have 12 volt applications as well. I would say for us, we treat everything equally and some specific end application can drive some of the momentum, doesn't mean that others will not. Right? I would say, it's really a balance overall for us. We want to be a well-balanced overall supplier. Even with the end market focus, we talk a lot about AI, but auto, industrial. If you really think about automotive, there's also a power conversion moving towards from 48 volt-800 volt or 400 volt. There's a lot of similarity going on. I would say all in all, it's actually very good potential for Diodes overall in the longer term. Great. A number of companies have talked about supply constraints over the last earning season, given the demand notably coming from AI that seems to be creating some scarcity. in other end market. How do you mitigate that? How big or small is it of an issue? Do you see the potential at some point for the supply constraint to really have an impact on demand where some analog companies could guide on supply as opposed to demand? Again, what steps are you taking to mitigate that? Okay. Demand supply is always there, right? We're definitely seeing very strong demand across the board. I think I talk about it with last earnings call. We're seeing a really good momentum picking up, even in the industrial market segment, automotive market segment, which is great. We focus on the hybrid manufacturing model. Basically what that means is actually we leverage our internal manufacturing capability together with partner outside as well. We believe with our hybrid manufacturing model, give us a lot of flexibility to dynamically adjusting things to better support the customer. What we're seeing is definitely there's constraint both in the backend, I will say more in the backend, and majority of the backend assembly and tests, we actually have in-house capability. We are extending the capacity aggressively, but more focused on the strategic level. We're not just close our eyes, expand everything. We want to make sure the area we expand is actually the future trending area. For example, smaller package, more density of the package, that's the area we expanding. On the front end, we actually own a lot of our, I would say fab in-house together with external partners. With the in-house manufacturing, we are aggressively qualifying, porting our own internal fab. We bought a fab from TI about five, six years ago in Scotland. We bought onsemi fab in South Portland, not too far from here, about two years ago. We are still going through the transition of qualifying the technology process as well as devices. We believe with the front and backend combination actually help Diodes overall better support the customer, working with their real demand, true demand. There are situations are very hand to mouth. It's not like we just have endless capacity, but we try to manage it very closely, stay very close, especially our tier 1, tier 2 customers, and work with them on their real demand. On the same topic as we see demand exceeding supply, and we've seen lead time expand a lot. Are we getting back to an environment that perhaps feels like 2020 where pricing is stabilizing? What do you see in terms of opportunities for peers to raise pricing? I mention peers because you tend to have a fairly price stable philosophy where you emphasize share gains. How do we look at the pricing environment, specifically in discrete, maybe in analog? Also embedded in that question, given those supply constraints, how do you see customers' steps to secure potentially 2027 capacity? On the pricing side, demand, supply always drive different pricing behavior overall in the market. We definitely see that happen already, some of my peers actually announced the second round of price increases. On the Diodes side, I think Tristan mentioned, he's right. I was talk about long-term benefits more important than the short-term gain. There are situations we have to adjust our prices as well, I don't want to say we're not doing it, we want to do it more strategically. We want to continue to gain the market share, design in some of the newer, better product with better margin. If you really think about at the end, we're talking about product margin or gross margin improvement. If I can secure some of the newer designs, with the production cycle, it will actually give me more stability. I call it sustainability for a longer term. I would say that's really more our key focus overall. Talking about long-term supply guarantee, amazingly during the COVID time, there's a lot of LTA, long-term agreements people put in place and then got burned and stuff like that, and customers kind of shy away from it. Currently, there's more customer want to talk about LTAs guarantee for a longer term, one to two years minimum supply, overall. I think that is a good indicator of the market overall change, and people definitely are concerned more on the supply than the specific pricing at this moment. I think overall we also seeing the lead time extended, the cycle time, because there's a queue time. It's definitely happening in the market at this moment. How do you feel your position relative to your peers, in terms of front-end capacity? We've seen, obviously, a big build of capacity in analog, including TI Analog Devices, all at the tail end of the last upcycle in 2023. In retrospect, does it look like all that aggressive capacity build was actually a good thing? Because demand seems to be stronger for the next probably three, five years than it's been. the past 10 years, if you have any comment on that in terms of was that big ramp in capacity industry-wide really ill-fated, or is that instead really going to help for the next few years, and how are you positioned within that? I think from the fab technology point of view, we probably need to separate advanced technology versus I call the more mature technology. All the Diodes products more sitting on the mature technology. We haven't really seen a massive expansion in this area. I mean, it's always difficult for us to time the market, right? If we go back to year 2000, 2020 to COVID, right? At that time, if you ask everybody, say capacity is not enough. We have the post-COVID that everybody say we have too many of the capacity. I think for Diodes, what we try to focus, we didn't really scale back our capacity, whether it's up or down that much. We really focus on the longer term, where we want to be as a company. I think last quarter, we talk about it. We finish our last year, $1.48 billion. We want to grow to $2 billion within the next three years. What we're looking at is actually our current landscape or manufacturing capability, whether it's enough to support our $2 billion goal, right? You can have a little bit up and down. Who knows what's going to happen tomorrow in the market? We want to make sure we look at our long-term goal to match the overall. If you really think about, with the $2 billion, we actually estimated 10.5% CAGR growth for the next three years. If I just look at the first half of this year versus last year first half, I believe it represent about 19% first half versus last year first half growth already. That's really where we want to focus, right? We believe the current manufacturing footprint will enable Diodes to continue to grow towards that direction. I think the South Portland fab in U.S., Maine, would be very focused on the analog, standard linear logic type of product focus. The Scotland fab in Greenock will be more focused on the discrete MOSFET type of area. With both of this structure or the footprint will actually enable us continue to be competitive in the market and continue to support from the supply-demand point of view in a longer term. Given the context of lead time expansion, does that facilitate the push industry-wide for customer re-qualification? In your case, that's for outsourced capacity? Of analog product back in-house, for companies like TI and ST that's trying to migrate people to 300 mm. What's the appetite for customers to re-qualify, I guess, in a way to secure capacity? Maybe that was not the case the past two years when we were in a down cycle. Right. Customers are always more flexible and willing to qualify a new product, whether it's pricing, whether it's capacity. We are leverage every single angle we can and work with customers to better support them in a longer term. Right? I would say all in all, this is all positive for us. Okay. In terms of timing, is this something that started earlier this year or is the bulk of those re-qualification fitting the Greenock fab and the South Portland, Maine fab happening next year? Are you already seeing customer re-qualification this year at those fabs, or is it more about new product ramp? Yeah. I think with the qualification, we have to separate into two areas. One is process qualification. We have to make sure we build a new process with the qualification, and that usually take a little bit longer. Once the process is qualified, then we qualify devices sit on the specific process technology node. What we're seeing is it's progressing. It's not going to be a cliff up or a cliff down. It's going to be every quarter gradually improvement throughout, I would say, next year and the year after. We will start seeing improvement gradually. I think we openly talk about it. There's a lot of changes with the manufacturing service agreement and stuff like that. We believe the worst is pretty much over, so everything is tailwind from now on. Great. Are you able to share maybe some of your target in terms of front-end in-house versus outsourced and how it is looking now in terms of the split? I think right now probably on the fab side, on the front end, I would say probably a 55-45% split. Eventually we want to be maybe more 60-70% in-house, then the outsource portion may be about a percentage somewhere between, I would say, 30-40%. On the back end, we always have a pretty high percentage that's in-house, so we expect to maintain similar percentage. I would say that's somewhere between 85-90% in-house at this moment. We want to continue to engage with our partners outside, especially on the technology on the new product area. We want to, whether it is Pericom type of product, we actually use a lot of third-party partners to enable the technology also enable the new product introduction. That is not going to change. We definitely would continue to remain the hybrid manufacturing model for the years to come. Back a few weeks before last earnings season, there was already feedback from investors that the recovery in analog was counterintuitive because of incremental weakness in PCs and smartphone because of DRAM pricing. Obviously those concerns were dismissed on the last earning season. Could you talk about how do you see those trends unfolding? You've mentioned on the last earnings call that you expect those trends to continue in the second half. You must have very good visibility. Maybe if you could give us a sense of the visibility that you have, how does that compare versus last year? And maybe your quick review by end-market in terms of- Sure demand trends. Yeah. Because we specific talk about computing, consumer, maybe we start with three Cs and then I'll talk about auto industrial. I think the biggest challenge for this year is actually memory shortage. The visibility overall in this area probably still kind of limited because most of the customer maybe have three-month visibility versus a longer term. I think that remains a concern. All in all, if you look at the size of the customers, I think the bigger company probably tend to have more of the capacity guaranteed versus smaller companies. I think there's still a lot of dynamic in this area. Going to the PC area, we've definitely seen very strong momentum continues in the AI-related area, especially AI server. We definitely see a good forecast and good momentum all in all. We're also expanding our content in this area. We believe that's going to continue to help drive for the 2026 as well as 2027. On the PC and motherboard, even with the last quarter, we definitely see some adjustment down, but it kind of help with the AI portion. All in all, that probably still remain a little bit uncertainty. Usually Q3, Q2 are more of the peak, and then usually Q4 is a little bit slowing down. That's based on our usual seasonality trend. Like I said, we do expect that we're going to be a double-digit growth this year. I think even with your estimate, definitely reflecting the expectation of the street, so we want to continue to execute. Consumer, it's even a little bit more uncertainty, very customer-dependent. Some of the customer, they can get very good support. Some definitely challenge a little. I would say, from the historic point of view, this hasn't been our number one focus overall. Right? Communication, we're seeing a lot of momentum also driven by the AI. There's a lot of switches and routers in the networking, very focused on the AI support and application overall. We're seeing good momentum. Auto continue to be our key focus and we want to continue to grow automotive. Based on last quarter, we finished about 20% and we want to grow much bigger. We have a very good momentum so far. If I just compare for the last 13 years, we actually have a compounded annual growth rate more than 20%, and we expect that momentum continues. This is more focused on the content expansion, not specific to the unit output. Industrial, we're actually seeing very good momentum. I think last quarter, I talked about it in the earnings call. Inventory shadow is over, right? Now we're definitely seeing a healthy momentum of picking up of the real demand, we expect that will continue to grow for this year as well. Great. Any signs yet that customers are starting to rebuild inventories? We're looking at ODM inventory days maybe picking up a bit the past quarter, even though at OEMs, inventory levels were still down year-over-year, quarter-over-quarter. In automotive and OEMs, our data is that we're probably back to pre-2021 levels, which is amazing. Are you getting feedback from customers that they wish they had a bit more buffer inventory, or do you expect that to happen into next year? A lot of customer definitely want to build up. If you really think about when we have an inventory correction, sometimes people overreact, correct it to a really low number, which may not be healthy to support their overall production. There's a lot of customer want to rebuild, but I want to be honest with you. On Diodes' situation, we are very hand to mouth at this moment. I don't really think we have a lot of luxury to rebuild the inventory. If you look at end of Q1 resale, I think I talk about it, both the channel in terms of inventory days, in terms of inventory dollar, decreased quarter-over-quarter. I would say, I believe if this rebuild would happen, probably will be sometime next year. I just don't see that as a possibility for this year at this moment. Because of the fact that you're not giving the customers all of what they need, and that's despite the fabs, the Greenock fab or the South Portland, Maine fab. Is it just a different mix where you see very strong demand in areas that are not served by those fabs or how should we look at this? Yeah. I think it's a combination of both. Number one, we also don't want to repeat the same situation that we went through in 2023, right? I think there's a lot of lesson learned. We want to make sure we are building the inventory at the right place for the right customers, for the right parts. That's number one. Number two, there's also some product mix change. I think last quarter, I talk about one of my peers, they have some supply interruption happen, right? That also kind of skewed the mix a little. I would say combination of both, but I think the key message is we want to work with the customer for their real demand, because remember 2023, we have the golden screw situation, so we don't want to repeat that. We want to make sure our shipping and ship-out at a very healthy level. We monitor the POS, point of sales, with distributions very closely. That's really something we try to do better learning from before. Any quick question from the audience? We have 30 seconds left.

Speaker 2: Well, let's get started. Good morning. I'm Tristan Gerra, senior semiconductor analyst at Baird. I would like to introduce Diodes, a leading supplier of analog and power platform solutions serving a variety of end markets, including AI data center. We're pleased to have with us today Emily Yang, Senior Vice President, Worldwide Sales and Marketing. With that, let's get started. It's going to be a fire chat with questions only today. We have about 29 minutes. I'm going to start with my first question, which is about the trends in power. Clearly, things are changing fairly quickly these days. You've obviously had a significant share gain over the past several years. You're benefiting from an upcycle. It looks as if there are secular trends that are layering on top of that normal increase. Well, let's get started. well let's get started Good morning. good morning I'm Tristan Gerra, senior semiconductor analyst at Baird. i'm tristan gerra senior semiconductor analyst at baird I would like to introduce Diodes, a leading supplier of analog and power platform solutions serving a variety of end markets, including AI data center. i would like to introduce diodes a leading supplier of analog and power platform solutions serving a variety of end markets including ai data center We're pleased to have with us today Emily Yang, Senior Vice President, Worldwide Sales and Marketing. we're pleased to have with us today emily yang senior vice president worldwide sales and marketing With that, let's get started. with that let's get started It's going to be a fire chat with questions only today. it's going to be a fire chat with questions only today We have about 29 minutes. we have about 29 minutes I'm going to start with my first question, which is about the trends in power. i'm going to start with my first question which is about the trends in power Clearly, things are changing fairly quickly these days. clearly things are changing fairly quickly these days You've obviously had a significant share gain over the past several years. you've obviously had a significant share gain over the past several years You're benefiting from an upcycle. you're benefiting from an upcycle It looks as if there are secular trends that are layering on top of that normal increase. it looks as if there are secular trends that are layering on top of that normal increase I know you're going to provide more data around data center and the AI part of this, but there are some emerging exciting themes coming, with 800 volt native. Maybe at a high level before you get a chance to, later on this year, provide more metrics. Maybe at a high level, how do you see those trends in data center driving your business and any opportunities that you want to highlight? I know you're going to provide more data around data center and the AI part of this, but there are some emerging exciting themes coming, with 800 volt native. i know you're going to provide more data around data center and the ai part of this but there are some emerging exciting themes coming with 800 volt native Maybe at a high level before you get a chance to, later on this year, provide more metrics. maybe at a high level before you get a chance to later on this year provide more metrics Maybe at a high level, how do you see those trends in data center driving your business and any opportunities that you want to highlight? maybe at a high level how do you see those trends in data center driving your business and any opportunities that you want to highlight

Speaker 1: Oh, perfect. Well, first of all, good morning, everyone. Good to be here with you guys. AI, data center, power, conversion's definitely a very hot topic at this moment. I think I mentioned AI is a whole ecosystem. We did share some of the AI solutions, especially focused on the server applications. We've been growing really fast in this area and benefit a lot for the last few quarters. This is actually specific focusing on the PCI Express support, sending out additional ports on the timing solutions and stuff like that. On top of it, I think Tristan just actually mentioned 800 volt. This is a transition from 48 volt to a 800 volt application. A lot of, I would say, devices focus on, I call, the power supply area. Oh, perfect. oh perfect Well, first of all, good morning, everyone. well first of all good morning everyone Good to be here with you guys. good to be here with you guys AI, data center, power, conversion's definitely a very hot topic at this moment. ai data center power conversion's definitely a very hot topic at this moment I think I mentioned AI is a whole ecosystem. i think i mentioned ai is a whole ecosystem We did share some of the AI solutions, especially focused on the server applications. we did share some of the ai solutions especially focused on the server applications We've been growing really fast in this area and benefit a lot for the last few quarters. we've been growing really fast in this area and benefit a lot for the last few quarters This is actually specific focusing on the PCI Express support, sending out additional ports on the timing solutions and stuff like that. this is actually specific focusing on the pci express support sending out additional ports on the timing solutions and stuff like that On top of it, I think Tristan just actually mentioned 800 volt. on top of it i think tristan just actually mentioned 800 volt This is a transition from 48 volt to a 800 volt application. this is a transition from 48 volt to a 800 volt application A lot of, I would say, devices focus on, I call, the power supply area. a lot of i would say devices focus on i call the power supply area This is actually the power supply supporting the AI applications, whether it's a data center, whether it's a server, whether different application. What we see, the power supply actually consists of different units. There's a power supply unit, we call the PSU. There is battery backup unit, BBU. There's actually power delivery unit, PDU, and there's also isolated, DC-DC conversion portion. I would say all in all, I don't think you guys need to remember all these acronyms. I think with this voltage translation create a lot of opportunity overall for Diodes. If we look at the PSU, which Tristan specifically referred to earlier as a good example. In the PSU area, we actually seeing a lot of silicon carbide requirement. This is actually not only just on the MOSFET area, we actually also have the diodes over this area as well. This is actually the power supply supporting the AI applications, whether it's a data center, whether it's a server, whether different application. this is actually the power supply supporting the ai applications whether it's a data center whether it's a server whether different application What we see, the power supply actually consists of different units. what we see the power supply actually consists of different units There's a power supply unit, we call the PSU. there's a power supply unit we call the psu There is battery backup unit, BBU. there is battery backup unit bbu There's actually power delivery unit, PDU, and there's also isolated, DC-DC conversion portion. there's actually power delivery unit pdu and there's also isolated dc-dc conversion portion I would say all in all, I don't think you guys need to remember all these acronyms. i would say all in all i don't think you guys need to remember all these acronyms I think with this voltage translation create a lot of opportunity overall for Diodes. i think with this voltage translation create a lot of opportunity overall for diodes If we look at the PSU, which Tristan specifically referred to earlier as a good example. if we look at the psu which tristan specifically referred to earlier as a good example In the PSU area, we actually seeing a lot of silicon carbide requirement. in the psu area we actually seeing a lot of silicon carbide requirement This is actually not only just on the MOSFET area, we actually also have the diodes over this area as well. this is actually not only just on the mosfet area we actually also have the diodes over this area as well That's actually a great opportunity for us moving forward. On top of it, we actually seeing a lot of isolation solutions require. This actually covers our gate drivers, isolation gate drivers. We're seeing a lot of current sensing requirement. We also have something called digital isolation, overall, in the ORing. This is more on the redundancy of the power supply, also create a lot of opportunity. I would say all in all, this is quite significant, and like Tristan mentioned earlier, we are putting a lot of materials together that we actually going to share in our investor relationship deck. Just stay tuned, but we are extremely excited. On top of it, we have the BBU opportunities, we have the PDUs. We also have different areas of expansion. Couple areas. That's actually a great opportunity for us moving forward. that's actually a great opportunity for us moving forward On top of it, we actually seeing a lot of isolation solutions require. on top of it we actually seeing a lot of isolation solutions require This actually covers our gate drivers, isolation gate drivers. this actually covers our gate drivers isolation gate drivers We're seeing a lot of current sensing requirement. we're seeing a lot of current sensing requirement We also have something called digital isolation, overall, in the ORing. we also have something called digital isolation overall in the oring This is more on the redundancy of the power supply, also create a lot of opportunity. this is more on the redundancy of the power supply also create a lot of opportunity I would say all in all, this is quite significant, and like Tristan mentioned earlier, we are putting a lot of materials together that we actually going to share in our investor relationship deck. i would say all in all this is quite significant and like tristan mentioned earlier we are putting a lot of materials together that we actually going to share in our investor relationship deck Just stay tuned, but we are extremely excited. just stay tuned but we are extremely excited On top of it, we have the BBU opportunities, we have the PDUs. on top of it we have the bbu opportunities we have the pdus We also have different areas of expansion. we also have different areas of expansion Couple areas. couple areas One is actually with the current device, current requirement. We also working new products supporting the future requirements. One is actually with the current device, current requirement. one is actually with the current device current requirement We also working new products supporting the future requirements. we also working new products supporting the future requirements

Speaker 2: Great. You mentioned silicon carbide. How central is that as part of your product offering? Also, if you could talk to the extent that you can about plan for doing some of the epitaxy internally. Are you fabless right now? What is the product roadmap on silicon carbide and how big do you think it becomes ultimately as part of your portfolio? Is it just a small addition that's nice to have on top of some of the products that you have in PSUs or is it going to become more central? Great. great You mentioned silicon carbide. you mentioned silicon carbide How central is that as part of your product offering? how central is that as part of your product offering Also, if you could talk to the extent that you can about plan for doing some of the epitaxy internally. also if you could talk to the extent that you can about plan for doing some of the epitaxy internally Are you fabless right now? are you fabless right now What is the product roadmap on silicon carbide and how big do you think it becomes ultimately as part of your portfolio? what is the product roadmap on silicon carbide and how big do you think it becomes ultimately as part of your portfolio Is it just a small addition that's nice to have on top of some of the products that you have in PSUs or is it going to become more central? is it just a small addition that's nice to have on top of some of the products that you have in psus or is it going to become more central

Speaker 1: Yeah. silicon carbide is a big, I would say, important portion of our product engagement, product development. This is actually fell under our discrete power management area because a lot of the silicon carbide, whether it's the diodes or MOSFETs, is all belongs in the same category. This is only a part of a product offering, definitely is not everything that we offers. I think currently what we working with, especially on the epi area, we work with all the tier one suppliers like the Episil, EpiWorld stuff. all the actual manufacturing happen in our Taiwan facility, our own fab. We definitely want to continue to engage and continue to expand in this area. Like I mentioned earlier, all this product is actually linked together. What we really want to do is actually total solutions. Yeah. silicon carbide is a big, I would say, important portion of our product engagement, product development. yeah silicon carbide is a big i would say important portion of our product engagement product development This is actually fell under our discrete power management area because a lot of the silicon carbide, whether it's the diodes or MOSFETs, is all belongs in the same category. this is actually fell under our discrete power management area because a lot of the silicon carbide whether it's the diodes or mosfets is all belongs in the same category This is only a part of a product offering, definitely is not everything that we offers. this is only a part of a product offering definitely is not everything that we offers I think currently what we working with, especially on the epi area, we work with all the tier one suppliers like the Episil, EpiWorld stuff. all the actual manufacturing happen in our Taiwan facility, our own fab. i think currently what we working with especially on the epi area we work with all the tier one suppliers like the episil epiworld stuff all the actual manufacturing happen in our taiwan facility our own fab We definitely want to continue to engage and continue to expand in this area. we definitely want to continue to engage and continue to expand in this area Like I mentioned earlier, all this product is actually linked together. like i mentioned earlier all this product is actually linked together What we really want to do is actually total solutions. what we really want to do is actually total solutions If you think about Diodes, whether it's discrete, whether it's analog, whether it's mixed signal, whether it's timing, we want to actually loop all this things together provide a total solution to the customers. A lot of time, even with the PSU we mentioned, it's not just about silicon carbide. There's analog, there's discrete on the power protection, whether it's power or data line protection. With some of the other AIs, high speed protocol, PCI Express, whether it's USB Type-C, USB 3, right? All this is actually linked together. If you think about Diodes, other than we don't have CPU, GPU, we don't have the ASICs or FPGA, we actually have a lot of complementary solutions that actually offer to the customers together. I would say silicon carbide is one of the area, but definitely is not the whole thing about Diodes. If you think about Diodes, whether it's discrete, whether it's analog, whether it's mixed signal, whether it's timing, we want to actually loop all this things together provide a total solution to the customers. if you think about diodes whether it's discrete whether it's analog whether it's mixed signal whether it's timing we want to actually loop all this things together provide a total solution to the customers A lot of time, even with the PSU we mentioned, it's not just about silicon carbide. a lot of time even with the psu we mentioned it's not just about silicon carbide There's analog, there's discrete on the power protection, whether it's power or data line protection. there's analog there's discrete on the power protection whether it's power or data line protection With some of the other AIs, high speed protocol, PCI Express, whether it's USB Type-C, USB 3, right? with some of the other ais high speed protocol pci express whether it's usb type-c usb 3 right All this is actually linked together. all this is actually linked together If you think about Diodes, other than we don't have CPU, GPU, we don't have the ASICs or FPGA, we actually have a lot of complementary solutions that actually offer to the customers together. if you think about diodes other than we don't have cpu gpu we don't have the asics or fpga we actually have a lot of complementary solutions that actually offer to the customers together I would say silicon carbide is one of the area, but definitely is not the whole thing about Diodes. i would say silicon carbide is one of the area but definitely is not the whole thing about diodes

Speaker 2: I know you haven't provided a breakdown of product, but I think historically, it's probably fair to assume that a little bit more than 50% of your product mix has been power, discrete, and the rest being analog. At a high level, how have trends changed in favor potentially of power products? The discrete side, where I think in the past, people, your peers, were really focusing just on analog. I've heard Keh-Shew Lu saying in the past that, clearly there's very good gross margin opportunities in power as well. I just wanted to understand better, with data center, with this whole revamp of power supply, is discrete, is power getting an acceleration of the growth? Is it becoming more important? I know you haven't provided a breakdown of product, but I think historically, it's probably fair to assume that a little bit more than 50% of your product mix has been power, discrete, and the rest being analog. i know you haven't provided a breakdown of product but i think historically it's probably fair to assume that a little bit more than 50% of your product mix has been power discrete and the rest being analog At a high level, how have trends changed in favor potentially of power products? at a high level how have trends changed in favor potentially of power products The discrete side, where I think in the past, people, your peers, were really focusing just on analog. the discrete side where i think in the past people your peers were really focusing just on analog I've heard Keh-Shew Lu saying in the past that, clearly there's very good gross margin opportunities in power as well. i've heard keh-shew lu saying in the past that clearly there's very good gross margin opportunities in power as well I just wanted to understand better, with data center, with this whole revamp of power supply, is discrete, is power getting an acceleration of the growth? i just wanted to understand better with data center with this whole revamp of power supply is discrete is power getting an acceleration of the growth Is it becoming more important? is it becoming more important Is this a portfolio, a mix of product that you're happy with given what we're seeing in terms of trends unfolding in the market? Is this a portfolio, a mix of product that you're happy with given what we're seeing in terms of trends unfolding in the market? is this a portfolio a mix of product that you're happy with given what we're seeing in terms of trends unfolding in the market

Speaker 1: Yeah. What we're seeing, the growth is actually coming both from the discrete as well as analog. Since we cover a wide range of analog power management, whether it's DC-DC, whether it's LDO area together on the discrete side. Right? We talk specific about 800 volt, but 48 volt is not getting away. Right? We still have 12 volt applications as well. I would say for us, we treat everything equally and some specific end application can drive some of the momentum, doesn't mean that others will not. Right? I would say, it's really a balance overall for us. We want to be a well-balanced overall supplier. Even with the end market focus, we talk a lot about AI, but auto, industrial. If you really think about automotive, there's also a power conversion moving towards from 48 volt-800 volt or 400 volt. Yeah. yeah What we're seeing, the growth is actually coming both from the discrete as well as analog. what we're seeing the growth is actually coming both from the discrete as well as analog Since we cover a wide range of analog power management, whether it's DC-DC, whether it's LDO area together on the discrete side. since we cover a wide range of analog power management whether it's dc-dc whether it's ldo area together on the discrete side Right? right We talk specific about 800 volt, but 48 volt is not getting away. we talk specific about 800 volt but 48 volt is not getting away Right? right We still have 12 volt applications as well. we still have 12 volt applications as well I would say for us, we treat everything equally and some specific end application can drive some of the momentum, doesn't mean that others will not. i would say for us we treat everything equally and some specific end application can drive some of the momentum doesn't mean that others will not Right? right I would say, it's really a balance overall for us. i would say it's really a balance overall for us We want to be a well-balanced overall supplier. we want to be a well-balanced overall supplier Even with the end market focus, we talk a lot about AI, but auto, industrial. even with the end market focus we talk a lot about ai but auto industrial If you really think about automotive, there's also a power conversion moving towards from 48 volt- 800 volt or 400 volt. if you really think about automotive there's also a power conversion moving towards from 48 volt- 800 volt or 400 volt There's a lot of similarity going on. I would say all in all, it's actually very good potential for Diodes overall in the longer term. There's a lot of similarity going on. there's a lot of similarity going on I would say all in all, it's actually very good potential for Diodes overall in the longer term. i would say all in all it's actually very good potential for diodes overall in the longer term

Speaker 2: Great. A number of companies have talked about supply constraints over the last earning season, given the demand notably coming from AI that seems to be creating some scarcity. Great. great A number of companies have talked about supply constraints over the last earning season, given the demand notably coming from AI that seems to be creating some scarcity. a number of companies have talked about supply constraints over the last earning season given the demand notably coming from ai that seems to be creating some scarcity in other end market. How do you mitigate that? How big or small is it of an issue? Do you see the potential at some point for the supply constraint to really have an impact on demand where some analog companies could guide on supply as opposed to demand? in other end market. in other end market How do you mitigate that? how do you mitigate that How big or small is it of an issue? how big or small is it of an issue Do you see the potential at some point for the supply constraint to really have an impact on demand where some analog companies could guide on supply as opposed to demand? do you see the potential at some point for the supply constraint to really have an impact on demand where some analog companies could guide on supply as opposed to demand Again, what steps are you taking to mitigate that? Again, what steps are you taking to mitigate that? again what steps are you taking to mitigate that

Speaker 1: Okay. Demand supply is always there, right? We're definitely seeing very strong demand across the board. I think I talk about it with last earnings call. We're seeing a really good momentum picking up, even in the industrial market segment, automotive market segment, which is great. We focus on the hybrid manufacturing model. Basically what that means is actually we leverage our internal manufacturing capability together with partner outside as well. We believe with our hybrid manufacturing model, give us a lot of flexibility to dynamically adjusting things to better support the customer. What we're seeing is definitely there's constraint both in the backend, I will say more in the backend, and majority of the backend assembly and tests, we actually have in-house capability. We are extending the capacity aggressively, but more focused on the strategic level. We're not just close our eyes, expand everything. Okay. okay Demand supply is always there, right? demand supply is always there right We're definitely seeing very strong demand across the board. we're definitely seeing very strong demand across the board I think I talk about it with last earnings call. i think i talk about it with last earnings call We're seeing a really good momentum picking up, even in the industrial market segment, automotive market segment, which is great. we're seeing a really good momentum picking up even in the industrial market segment automotive market segment which is great We focus on the hybrid manufacturing model. we focus on the hybrid manufacturing model Basically what that means is actually we leverage our internal manufacturing capability together with partner outside as well. basically what that means is actually we leverage our internal manufacturing capability together with partner outside as well We believe with our hybrid manufacturing model, give us a lot of flexibility to dynamically adjusting things to better support the customer. we believe with our hybrid manufacturing model give us a lot of flexibility to dynamically adjusting things to better support the customer What we're seeing is definitely there's constraint both in the backend, I will say more in the backend, and majority of the backend assembly and tests, we actually have in-house capability. what we're seeing is definitely there's constraint both in the backend i will say more in the backend and majority of the backend assembly and tests we actually have in-house capability We are extending the capacity aggressively, but more focused on the strategic level. we are extending the capacity aggressively but more focused on the strategic level We're not just close our eyes, expand everything. we're not just close our eyes expand everything We want to make sure the area we expand is actually the future trending area. For example, smaller package, more density of the package, that's the area we expanding. On the front end, we actually own a lot of our, I would say fab in-house together with external partners. With the in-house manufacturing, we are aggressively qualifying, porting our own internal fab. We bought a fab from TI about five, six years ago in Scotland. We bought onsemi fab in South Portland, not too far from here, about two years ago. We are still going through the transition of qualifying the technology process as well as devices. We believe with the front and backend combination actually help Diodes overall better support the customer, working with their real demand, true demand. We want to make sure the area we expand is actually the future trending area. we want to make sure the area we expand is actually the future trending area For example, smaller package, more density of the package, that's the area we expanding. for example smaller package more density of the package that's the area we expanding On the front end, we actually own a lot of our, I would say fab in-house together with external partners. on the front end we actually own a lot of our i would say fab in-house together with external partners With the in-house manufacturing, we are aggressively qualifying, porting our own internal fab. with the in-house manufacturing we are aggressively qualifying porting our own internal fab We bought a fab from TI about five, six years ago in Scotland. we bought a fab from ti about five six years ago in scotland We bought onsemi fab in South Portland, not too far from here, about two years ago. we bought onsemi fab in south portland not too far from here about two years ago We are still going through the transition of qualifying the technology process as well as devices. we are still going through the transition of qualifying the technology process as well as devices We believe with the front and backend combination actually help Diodes overall better support the customer, working with their real demand, true demand. we believe with the front and backend combination actually help diodes overall better support the customer working with their real demand true demand There are situations are very hand to mouth. It's not like we just have endless capacity, but we try to manage it very closely, stay very close, especially our tier 1, tier 2 customers, and work with them on their real demand. There are situations are very hand to mouth. there are situations are very hand to mouth It's not like we just have endless capacity, but we try to manage it very closely, stay very close, especially our tier 1, tier 2 customers, and work with them on their real demand. it's not like we just have endless capacity but we try to manage it very closely stay very close especially our tier 1 tier 2 customers and work with them on their real demand

Speaker 2: On the same topic as we see demand exceeding supply, and we've seen lead time expand a lot. On the same topic as we see demand exceeding supply, and we've seen lead time expand a lot. on the same topic as we see demand exceeding supply and we've seen lead time expand a lot Are we getting back to an environment that perhaps feels like 2020 where pricing is stabilizing? What do you see in terms of opportunities for peers to raise pricing? I mention peers because you tend to have a fairly price stable philosophy where you emphasize share gains. How do we look at the pricing environment, specifically in discrete, maybe in analog? Are we getting back to an environment that perhaps feels like 2020 where pricing is stabilizing? are we getting back to an environment that perhaps feels like 2020 where pricing is stabilizing What do you see in terms of opportunities for peers to raise pricing? what do you see in terms of opportunities for peers to raise pricing I mention peers because you tend to have a fairly price stable philosophy where you emphasize share gains. i mention peers because you tend to have a fairly price stable philosophy where you emphasize share gains How do we look at the pricing environment, specifically in discrete, maybe in analog? how do we look at the pricing environment specifically in discrete maybe in analog Also embedded in that question, given those supply constraints, how do you see customers' steps to secure potentially 2027 capacity? Also embedded in that question, given those supply constraints, how do you see customers' steps to secure potentially 2027 capacity? also embedded in that question given those supply constraints how do you see customers' steps to secure potentially 2027 capacity

Speaker 1: On the pricing side, demand, supply always drive different pricing behavior overall in the market. We definitely see that happen already, some of my peers actually announced the second round of price increases. On the Diodes side, I think Tristan mentioned, he's right. I was talk about long-term benefits more important than the short-term gain. There are situations we have to adjust our prices as well, I don't want to say we're not doing it, we want to do it more strategically. We want to continue to gain the market share, design in some of the newer, better product with better margin. If you really think about at the end, we're talking about product margin or gross margin improvement. If I can secure some of the newer designs, with the production cycle, it will actually give me more stability. On the pricing side, demand, supply always drive different pricing behavior overall in the market. on the pricing side demand supply always drive different pricing behavior overall in the market We definitely see that happen already, some of my peers actually announced the second round of price increases. we definitely see that happen already some of my peers actually announced the second round of price increases On the Diodes side, I think Tristan mentioned, he's right. on the diodes side i think tristan mentioned he's right I was talk about long-term benefits more important than the short-term gain. i was talk about long-term benefits more important than the short-term gain There are situations we have to adjust our prices as well, I don't want to say we're not doing it, we want to do it more strategically. there are situations we have to adjust our prices as well i don't want to say we're not doing it we want to do it more strategically We want to continue to gain the market share, design in some of the newer, better product with better margin. we want to continue to gain the market share design in some of the newer better product with better margin If you really think about at the end, we're talking about product margin or gross margin improvement. if you really think about at the end we're talking about product margin or gross margin improvement If I can secure some of the newer designs, with the production cycle, it will actually give me more stability. if i can secure some of the newer designs with the production cycle it will actually give me more stability I call it sustainability for a longer term. I would say that's really more our key focus overall. Talking about long-term supply guarantee, amazingly during the COVID time, there's a lot of LTA, long-term agreements people put in place and then got burned and stuff like that, and customers kind of shy away from it. Currently, there's more customer want to talk about LTAs guarantee for a longer term, one to two years minimum supply, overall. I think that is a good indicator of the market overall change, and people definitely are concerned more on the supply than the specific pricing at this moment. I think overall we also seeing the lead time extended, the cycle time, because there's a queue time. It's definitely happening in the market at this moment. I call it sustainability for a longer term. i call it sustainability for a longer term I would say that's really more our key focus overall. i would say that's really more our key focus overall Talking about long-term supply guarantee, amazingly during the COVID time, there's a lot of LTA, long-term agreements people put in place and then got burned and stuff like that, and customers kind of shy away from it. talking about long-term supply guarantee amazingly during the covid time there's a lot of lta long-term agreements people put in place and then got burned and stuff like that and customers kind of shy away from it Currently, there's more customer want to talk about LTAs guarantee for a longer term, one to two years minimum supply, overall. currently there's more customer want to talk about ltas guarantee for a longer term one to two years minimum supply overall I think that is a good indicator of the market overall change, and people definitely are concerned more on the supply than the specific pricing at this moment. i think that is a good indicator of the market overall change and people definitely are concerned more on the supply than the specific pricing at this moment I think overall we also seeing the lead time extended, the cycle time, because there's a queue time. i think overall we also seeing the lead time extended the cycle time because there's a queue time It's definitely happening in the market at this moment. it's definitely happening in the market at this moment

Speaker 2: How do you feel your position relative to your peers, in terms of front-end capacity? We've seen, obviously, a big build of capacity in analog, including TI Analog Devices, all at the tail end of the last upcycle in 2023. In retrospect, does it look like all that aggressive capacity build was actually a good thing? Because demand seems to be stronger for the next probably three, five years than it's been. How do you feel your position relative to your peers, in terms of front-end capacity? how do you feel your position relative to your peers in terms of front-end capacity We've seen, obviously, a big build of capacity in analog, including TI Analog Devices, all at the tail end of the last upcycle in 2023. we've seen obviously a big build of capacity in analog including ti analog devices all at the tail end of the last upcycle in 2023 In retrospect, does it look like all that aggressive capacity build was actually a good thing? in retrospect does it look like all that aggressive capacity build was actually a good thing Because demand seems to be stronger for the next probably three, five years than it's been. because demand seems to be stronger for the next probably three five years than it's been the past 10 years, if you have any comment on that in terms of was that big ramp in capacity industry-wide really ill-fated, or is that instead really going to help for the next few years, and how are you positioned within that? the past 10 years, if you have any comment on that in terms of was that big ramp in capacity industry-wide really ill-fated, or is that instead really going to help for the next few years, and how are you positioned within that? the past 10 years if you have any comment on that in terms of was that big ramp in capacity industry-wide really ill-fated or is that instead really going to help for the next few years and how are you positioned within that

Speaker 1: I think from the fab technology point of view, we probably need to separate advanced technology versus I call the more mature technology. All the Diodes products more sitting on the mature technology. We haven't really seen a massive expansion in this area. I mean, it's always difficult for us to time the market, right? If we go back to year 2000, 2020 to COVID, right? At that time, if you ask everybody, say capacity is not enough. We have the post-COVID that everybody say we have too many of the capacity. I think for Diodes, what we try to focus, we didn't really scale back our capacity, whether it's up or down that much. We really focus on the longer term, where we want to be as a company. I think last quarter, we talk about it. I think from the fab technology point of view, we probably need to separate advanced technology versus I call the more mature technology. i think from the fab technology point of view we probably need to separate advanced technology versus i call the more mature technology All the Diodes products more sitting on the mature technology. all the diodes products more sitting on the mature technology We haven't really seen a massive expansion in this area. we haven't really seen a massive expansion in this area I mean, it's always difficult for us to time the market, right? i mean it's always difficult for us to time the market right If we go back to year 2000, 2020 to COVID, right? if we go back to year 2000 2020 to covid right At that time, if you ask everybody, say capacity is not enough. at that time if you ask everybody say capacity is not enough We have the post-COVID that everybody say we have too many of the capacity. we have the post-covid that everybody say we have too many of the capacity I think for Diodes, what we try to focus, we didn't really scale back our capacity, whether it's up or down that much. i think for diodes what we try to focus we didn't really scale back our capacity whether it's up or down that much We really focus on the longer term, where we want to be as a company. we really focus on the longer term where we want to be as a company I think last quarter, we talk about it. i think last quarter we talk about it We finish our last year, $1.48 billion. We want to grow to $2 billion within the next three years. What we're looking at is actually our current landscape or manufacturing capability, whether it's enough to support our $2 billion goal, right? You can have a little bit up and down. Who knows what's going to happen tomorrow in the market? We want to make sure we look at our long-term goal to match the overall. If you really think about, with the $2 billion, we actually estimated 10.5% CAGR growth for the next three years. If I just look at the first half of this year versus last year first half, I believe it represent about 19% first half versus last year first half growth already. That's really where we want to focus, right? We finish our last year, $1.48 billion. we finish our last year $1.48 billion We want to grow to $2 billion within the next three years. we want to grow to $2 billion within the next three years What we're looking at is actually our current landscape or manufacturing capability, whether it's enough to support our $2 billion goal, right? what we're looking at is actually our current landscape or manufacturing capability whether it's enough to support our $2 billion goal right You can have a little bit up and down. you can have a little bit up and down Who knows what's going to happen tomorrow in the market? who knows what's going to happen tomorrow in the market We want to make sure we look at our long-term goal to match the overall. we want to make sure we look at our long-term goal to match the overall If you really think about, with the $2 billion, we actually estimated 10.5% CAGR growth for the next three years. if you really think about with the $2 billion we actually estimated 10.5% cagr growth for the next three years If I just look at the first half of this year versus last year first half, I believe it represent about 19% first half versus last year first half growth already. if i just look at the first half of this year versus last year first half i believe it represent about 19% first half versus last year first half growth already That's really where we want to focus, right? that's really where we want to focus right We believe the current manufacturing footprint will enable Diodes to continue to grow towards that direction. I think the South Portland fab in U.S., Maine, would be very focused on the analog, standard linear logic type of product focus. The Scotland fab in Greenock will be more focused on the discrete MOSFET type of area. With both of this structure or the footprint will actually enable us continue to be competitive in the market and continue to support from the supply-demand point of view in a longer term. We believe the current manufacturing footprint will enable Diodes to continue to grow towards that direction. we believe the current manufacturing footprint will enable diodes to continue to grow towards that direction I think the South Portland fab in U.S., Maine, would be very focused on the analog, standard linear logic type of product focus. i think the south portland fab in u.s maine would be very focused on the analog standard linear logic type of product focus The Scotland fab in Greenock will be more focused on the discrete MOSFET type of area. the scotland fab in greenock will be more focused on the discrete mosfet type of area With both of this structure or the footprint will actually enable us continue to be competitive in the market and continue to support from the supply-demand point of view in a longer term. with both of this structure or the footprint will actually enable us continue to be competitive in the market and continue to support from the supply-demand point of view in a longer term

Speaker 2: Given the context of lead time expansion, does that facilitate the push industry-wide for customer re-qualification? In your case, that's for outsourced capacity? Given the context of lead time expansion, does that facilitate the push industry-wide for customer re-qualification? given the context of lead time expansion does that facilitate the push industry-wide for customer re-qualification In your case, that's for outsourced capacity? in your case that's for outsourced capacity Of analog product back in-house, for companies like TI and ST that's trying to migrate people to 300 mm. What's the appetite for customers to re-qualify, I guess, in a way to secure capacity? Maybe that was not the case the past two years when we were in a down cycle. Of analog product back in-house, for companies like TI and ST that's trying to migrate people to 300 mm. of analog product back in-house for companies like ti and st that's trying to migrate people to 300 mm What's the appetite for customers to re-qualify, I guess, in a way to secure capacity? what's the appetite for customers to re-qualify i guess in a way to secure capacity Maybe that was not the case the past two years when we were in a down cycle. maybe that was not the case the past two years when we were in a down cycle

Speaker 1: Right. Customers are always more flexible and willing to qualify a new product, whether it's pricing, whether it's capacity. We are leverage every single angle we can and work with customers to better support them in a longer term. Right? I would say all in all, this is all positive for us. Right. right Customers are always more flexible and willing to qualify a new product, whether it's pricing, whether it's capacity. customers are always more flexible and willing to qualify a new product whether it's pricing whether it's capacity We are leverage every single angle we can and work with customers to better support them in a longer term. we are leverage every single angle we can and work with customers to better support them in a longer term Right? right I would say all in all, this is all positive for us. i would say all in all this is all positive for us

Speaker 2: Okay. In terms of timing, is this something that started earlier this year or is the bulk of those re-qualification fitting the Greenock fab and the South Portland, Maine fab happening next year? Are you already seeing customer re-qualification this year at those fabs, or is it more about new product ramp? Okay. okay In terms of timing, is this something that started earlier this year or is the bulk of those re-qualification fitting the Greenock fab and the South Portland, Maine fab happening next year? in terms of timing is this something that started earlier this year or is the bulk of those re-qualification fitting the greenock fab and the south portland maine fab happening next year Are you already seeing customer re-qualification this year at those fabs, or is it more about new product ramp? are you already seeing customer re-qualification this year at those fabs or is it more about new product ramp

Speaker 1: Yeah. I think with the qualification, we have to separate into two areas. One is process qualification. We have to make sure we build a new process with the qualification, and that usually take a little bit longer. Once the process is qualified, then we qualify devices sit on the specific process technology node. What we're seeing is it's progressing. It's not going to be a cliff up or a cliff down. It's going to be every quarter gradually improvement throughout, I would say, next year and the year after. We will start seeing improvement gradually. I think we openly talk about it. There's a lot of changes with the manufacturing service agreement and stuff like that. We believe the worst is pretty much over, so everything is tailwind from now on. Yeah. yeah I think with the qualification, we have to separate into two areas. i think with the qualification we have to separate into two areas One is process qualification. one is process qualification We have to make sure we build a new process with the qualification, and that usually take a little bit longer. we have to make sure we build a new process with the qualification and that usually take a little bit longer Once the process is qualified, then we qualify devices sit on the specific process technology node. once the process is qualified then we qualify devices sit on the specific process technology node What we're seeing is it's progressing. what we're seeing is it's progressing It's not going to be a cliff up or a cliff down. it's not going to be a cliff up or a cliff down It's going to be every quarter gradually improvement throughout, I would say, next year and the year after. it's going to be every quarter gradually improvement throughout i would say next year and the year after We will start seeing improvement gradually. we will start seeing improvement gradually I think we openly talk about it. i think we openly talk about it There's a lot of changes with the manufacturing service agreement and stuff like that. there's a lot of changes with the manufacturing service agreement and stuff like that We believe the worst is pretty much over, so everything is tailwind from now on. we believe the worst is pretty much over so everything is tailwind from now on

Speaker 2: Great. Are you able to share maybe some of your target in terms of front-end in-house versus outsourced and how it is looking now in terms of the split? Great. great Are you able to share maybe some of your target in terms of front-end in-house versus outsourced and how it is looking now in terms of the split? are you able to share maybe some of your target in terms of front-end in-house versus outsourced and how it is looking now in terms of the split

Speaker 1: I think right now probably on the fab side, on the front end, I would say probably a 55-45% split. Eventually we want to be maybe more 60-70% in-house, then the outsource portion may be about a percentage somewhere between, I would say, 30-40%. On the back end, we always have a pretty high percentage that's in-house, so we expect to maintain similar percentage. I would say that's somewhere between 85-90% in-house at this moment. We want to continue to engage with our partners outside, especially on the technology on the new product area. We want to, whether it is Pericom type of product, we actually use a lot of third-party partners to enable the technology also enable the new product introduction. That is not going to change. I think right now probably on the fab side, on the front end, I would say probably a 55-45% split. i think right now probably on the fab side on the front end i would say probably a 55-45% split Eventually we want to be maybe more 60-70% in-house, then the outsource portion may be about a percentage somewhere between, I would say, 30-40%. eventually we want to be maybe more 60-70% in-house then the outsource portion may be about a percentage somewhere between i would say 30-40% On the back end, we always have a pretty high percentage that's in-house, so we expect to maintain similar percentage. on the back end we always have a pretty high percentage that's in-house so we expect to maintain similar percentage I would say that's somewhere between 85-90% in-house at this moment. i would say that's somewhere between 85-90% in-house at this moment We want to continue to engage with our partners outside, especially on the technology on the new product area. we want to continue to engage with our partners outside especially on the technology on the new product area We want to, whether it is Pericom type of product, we actually use a lot of third-party partners to enable the technology also enable the new product introduction. we want to whether it is pericom type of product we actually use a lot of third-party partners to enable the technology also enable the new product introduction That is not going to change. that is not going to change We definitely would continue to remain the hybrid manufacturing model for the years to come. We definitely would continue to remain the hybrid manufacturing model for the years to come. we definitely would continue to remain the hybrid manufacturing model for the years to come

Speaker 2: Back a few weeks before last earnings season, there was already feedback from investors that the recovery in analog was counterintuitive because of incremental weakness in PCs and smartphone because of DRAM pricing. Back a few weeks before last earnings season, there was already feedback from investors that the recovery in analog was counterintuitive because of incremental weakness in PCs and smartphone because of DRAM pricing. back a few weeks before last earnings season there was already feedback from investors that the recovery in analog was counterintuitive because of incremental weakness in pcs and smartphone because of dram pricing Obviously those concerns were dismissed on the last earning season. Obviously those concerns were dismissed on the last earning season. obviously those concerns were dismissed on the last earning season Could you talk about how do you see those trends unfolding? You've mentioned on the last earnings call that you expect those trends to continue in the second half. You must have very good visibility. Maybe if you could give us a sense of the visibility that you have, how does that compare versus last year? And maybe your quick review by end-market in terms of- Could you talk about how do you see those trends unfolding? could you talk about how do you see those trends unfolding You've mentioned on the last earnings call that you expect those trends to continue in the second half. you've mentioned on the last earnings call that you expect those trends to continue in the second half You must have very good visibility. you must have very good visibility Maybe if you could give us a sense of the visibility that you have, how does that compare versus last year? And maybe your quick review by end-market in terms of- maybe if you could give us a sense of the visibility that you have how does that compare versus last year? and maybe your quick review by end-market in terms of-

Speaker 1: Sure Sure sure

Speaker 2: demand trends. demand trends. demand trends

Speaker 1: Yeah. Because we specific talk about computing, consumer, maybe we start with three Cs and then I'll talk about auto industrial. I think the biggest challenge for this year is actually memory shortage. The visibility overall in this area probably still kind of limited because most of the customer maybe have three-month visibility versus a longer term. I think that remains a concern. All in all, if you look at the size of the customers, I think the bigger company probably tend to have more of the capacity guaranteed versus smaller companies. I think there's still a lot of dynamic in this area. Going to the PC area, we've definitely seen very strong momentum continues in the AI-related area, especially AI server. We definitely see a good forecast and good momentum all in all. Yeah. yeah Because we specific talk about computing, consumer, maybe we start with three Cs and then I'll talk about auto industrial. because we specific talk about computing consumer maybe we start with three cs and then i'll talk about auto industrial I think the biggest challenge for this year is actually memory shortage. i think the biggest challenge for this year is actually memory shortage The visibility overall in this area probably still kind of limited because most of the customer maybe have three-month visibility versus a longer term. the visibility overall in this area probably still kind of limited because most of the customer maybe have three-month visibility versus a longer term I think that remains a concern. i think that remains a concern All in all, if you look at the size of the customers, I think the bigger company probably tend to have more of the capacity guaranteed versus smaller companies. all in all if you look at the size of the customers i think the bigger company probably tend to have more of the capacity guaranteed versus smaller companies I think there's still a lot of dynamic in this area. i think there's still a lot of dynamic in this area Going to the PC area, we've definitely seen very strong momentum continues in the AI-related area, especially AI server. going to the pc area we've definitely seen very strong momentum continues in the ai-related area especially ai server We definitely see a good forecast and good momentum all in all. we definitely see a good forecast and good momentum all in all We're also expanding our content in this area. We believe that's going to continue to help drive for the 2026 as well as 2027. On the PC and motherboard, even with the last quarter, we definitely see some adjustment down, but it kind of help with the AI portion. All in all, that probably still remain a little bit uncertainty. Usually Q3, Q2 are more of the peak, and then usually Q4 is a little bit slowing down. That's based on our usual seasonality trend. Like I said, we do expect that we're going to be a double-digit growth this year. I think even with your estimate, definitely reflecting the expectation of the street, so we want to continue to execute. Consumer, it's even a little bit more uncertainty, very customer-dependent. Some of the customer, they can get very good support. Some definitely challenge a little. We're also expanding our content in this area. we're also expanding our content in this area We believe that's going to continue to help drive for the 2026 as well as 2027. we believe that's going to continue to help drive for the 2026 as well as 2027 On the PC and motherboard, even with the last quarter, we definitely see some adjustment down, but it kind of help with the AI portion. on the pc and motherboard even with the last quarter we definitely see some adjustment down but it kind of help with the ai portion All in all, that probably still remain a little bit uncertainty. all in all that probably still remain a little bit uncertainty Usually Q3, Q2 are more of the peak, and then usually Q4 is a little bit slowing down. usually q3 q2 are more of the peak and then usually q4 is a little bit slowing down That's based on our usual seasonality trend. that's based on our usual seasonality trend Like I said, we do expect that we're going to be a double-digit growth this year. like i said we do expect that we're going to be a double-digit growth this year I think even with your estimate, definitely reflecting the expectation of the street, so we want to continue to execute. i think even with your estimate definitely reflecting the expectation of the street so we want to continue to execute Consumer, it's even a little bit more uncertainty, very customer-dependent. consumer it's even a little bit more uncertainty very customer-dependent Some of the customer, they can get very good support. some of the customer they can get very good support Some definitely challenge a little. some definitely challenge a little I would say, from the historic point of view, this hasn't been our number one focus overall. Right? Communication, we're seeing a lot of momentum also driven by the AI. There's a lot of switches and routers in the networking, very focused on the AI support and application overall. We're seeing good momentum. Auto continue to be our key focus and we want to continue to grow automotive. Based on last quarter, we finished about 20% and we want to grow much bigger. We have a very good momentum so far. If I just compare for the last 13 years, we actually have a compounded annual growth rate more than 20%, and we expect that momentum continues. This is more focused on the content expansion, not specific to the unit output. Industrial, we're actually seeing very good momentum. I would say, from the historic point of view, this hasn't been our number one focus overall. i would say from the historic point of view this hasn't been our number one focus overall Right? right Communication, we're seeing a lot of momentum also driven by the AI. communication we're seeing a lot of momentum also driven by the ai There's a lot of switches and routers in the networking, very focused on the AI support and application overall. there's a lot of switches and routers in the networking very focused on the ai support and application overall We're seeing good momentum. we're seeing good momentum Auto continue to be our key focus and we want to continue to grow automotive. auto continue to be our key focus and we want to continue to grow automotive Based on last quarter, we finished about 20% and we want to grow much bigger. based on last quarter we finished about 20% and we want to grow much bigger We have a very good momentum so far. we have a very good momentum so far If I just compare for the last 13 years, we actually have a compounded annual growth rate more than 20%, and we expect that momentum continues. if i just compare for the last 13 years we actually have a compounded annual growth rate more than 20% and we expect that momentum continues This is more focused on the content expansion, not specific to the unit output. this is more focused on the content expansion not specific to the unit output Industrial, we're actually seeing very good momentum. industrial we're actually seeing very good momentum I think last quarter, I talked about it in the earnings call. Inventory shadow is over, right? Now we're definitely seeing a healthy momentum of picking up of the real demand, we expect that will continue to grow for this year as well. I think last quarter, I talked about it in the earnings call. i think last quarter i talked about it in the earnings call Inventory shadow is over, right? inventory shadow is over right Now we're definitely seeing a healthy momentum of picking up of the real demand, we expect that will continue to grow for this year as well. now we're definitely seeing a healthy momentum of picking up of the real demand we expect that will continue to grow for this year as well

Speaker 2: Great. Any signs yet that customers are starting to rebuild inventories? We're looking at ODM inventory days maybe picking up a bit the past quarter, even though at OEMs, inventory levels were still down year-over-year, quarter-over-quarter. In automotive and OEMs, our data is that we're probably back to pre-2021 levels, which is amazing. Are you getting feedback from customers that they wish they had a bit more buffer inventory, or do you expect that to happen into next year? Great. great Any signs yet that customers are starting to rebuild inventories? any signs yet that customers are starting to rebuild inventories We're looking at ODM inventory days maybe picking up a bit the past quarter, even though at OEMs, inventory levels were still down year-over-year, quarter-over-quarter. we're looking at odm inventory days maybe picking up a bit the past quarter even though at oems inventory levels were still down year-over-year quarter-over-quarter In automotive and OEMs, our data is that we're probably back to pre-2021 levels, which is amazing. in automotive and oems our data is that we're probably back to pre-2021 levels which is amazing Are you getting feedback from customers that they wish they had a bit more buffer inventory, or do you expect that to happen into next year? are you getting feedback from customers that they wish they had a bit more buffer inventory or do you expect that to happen into next year

Speaker 1: A lot of customer definitely want to build up. If you really think about when we have an inventory correction, sometimes people overreact, correct it to a really low number, which may not be healthy to support their overall production. There's a lot of customer want to rebuild, but I want to be honest with you. On Diodes' situation, we are very hand to mouth at this moment. I don't really think we have a lot of luxury to rebuild the inventory. If you look at end of Q1 resale, I think I talk about it, both the channel in terms of inventory days, in terms of inventory dollar, decreased quarter-over-quarter. I would say, I believe if this rebuild would happen, probably will be sometime next year. I just don't see that as a possibility for this year at this moment. A lot of customer definitely want to build up. a lot of customer definitely want to build up If you really think about when we have an inventory correction, sometimes people overreact, correct it to a really low number, which may not be healthy to support their overall production. if you really think about when we have an inventory correction sometimes people overreact correct it to a really low number which may not be healthy to support their overall production There's a lot of customer want to rebuild, but I want to be honest with you. there's a lot of customer want to rebuild but i want to be honest with you On Diodes' situation, we are very hand to mouth at this moment. on diodes' situation we are very hand to mouth at this moment I don't really think we have a lot of luxury to rebuild the inventory. i don't really think we have a lot of luxury to rebuild the inventory If you look at end of Q1 resale, I think I talk about it, both the channel in terms of inventory days, in terms of inventory dollar, decreased quarter-over-quarter. if you look at end of q1 resale i think i talk about it both the channel in terms of inventory days in terms of inventory dollar decreased quarter-over-quarter I would say, I believe if this rebuild would happen, probably will be sometime next year. i would say i believe if this rebuild would happen probably will be sometime next year I just don't see that as a possibility for this year at this moment. i just don't see that as a possibility for this year at this moment

Speaker 2: Because of the fact that you're not giving the customers all of what they need, and that's despite the fabs, the Greenock fab or the South Portland, Maine fab. Is it just a different mix where you see very strong demand in areas that are not served by those fabs or how should we look at this? Because of the fact that you're not giving the customers all of what they need, and that's despite the fabs, the Greenock fab or the South Portland, Maine fab. because of the fact that you're not giving the customers all of what they need and that's despite the fabs the greenock fab or the south portland maine fab Is it just a different mix where you see very strong demand in areas that are not served by those fabs or how should we look at this? is it just a different mix where you see very strong demand in areas that are not served by those fabs or how should we look at this

Speaker 1: Yeah. I think it's a combination of both. Number one, we also don't want to repeat the same situation that we went through in 2023, right? I think there's a lot of lesson learned. We want to make sure we are building the inventory at the right place for the right customers, for the right parts. That's number one. Number two, there's also some product mix change. I think last quarter, I talk about one of my peers, they have some supply interruption happen, right? That also kind of skewed the mix a little. I would say combination of both, but I think the key message is we want to work with the customer for their real demand, because remember 2023, we have the golden screw situation, so we don't want to repeat that. Yeah. yeah I think it's a combination of both. i think it's a combination of both Number one, we also don't want to repeat the same situation that we went through in 2023, right? number one we also don't want to repeat the same situation that we went through in 2023 right I think there's a lot of lesson learned. i think there's a lot of lesson learned We want to make sure we are building the inventory at the right place for the right customers, for the right parts. we want to make sure we are building the inventory at the right place for the right customers for the right parts That's number one. that's number one Number two, there's also some product mix change. number two there's also some product mix change I think last quarter, I talk about one of my peers, they have some supply interruption happen, right? i think last quarter i talk about one of my peers they have some supply interruption happen right That also kind of skewed the mix a little. that also kind of skewed the mix a little I would say combination of both, but I think the key message is we want to work with the customer for their real demand, because remember 2023, we have the golden screw situation, so we don't want to repeat that. i would say combination of both but i think the key message is we want to work with the customer for their real demand because remember 2023 we have the golden screw situation so we don't want to repeat that We want to make sure our shipping and ship-out at a very healthy level. We monitor the POS, point of sales, with distributions very closely. That's really something we try to do better learning from before. We want to make sure our shipping and ship-out at a very healthy level. we want to make sure our shipping and ship-out at a very healthy level We monitor the POS, point of sales, with distributions very closely. we monitor the pos point of sales with distributions very closely That's really something we try to do better learning from before. that's really something we try to do better learning from before

Speaker 2: Any quick question from the audience? We have 30 seconds left. Any quick question from the audience? any quick question from the audience We have 30 seconds left. we have 30 seconds left