Good afternoon investors, welcome to AAC Technologies 2026 interim results announcement and investor conference. I'm Joyce Wang, director of investor relations and your host.

On behalf of the company, I thank you for your interest in AAC. Now allow me to introduce the management team present today.

They are: Mr. Benjamin Pan, executive director and CEO of AAC Technologies.

Good afternoon. Mr.

Kelvin Pan, executive vice president of AAC Technologies. Miss Dan Guo, chief financial officer of AAC Technologies.

Mr. Jack Duan, chairman of AAC Optics.

Mr. Shiqing Jia, senior vice president of strategy of AAC Technologies.

Thank you for joining us. Today's meeting has two parts, starting with my presentation on AAC 2026 interim financials and business developments, and then a Q&A session.

Please note that certain statements may be forward-looking based on your assumptions and our assumptions and expectations given current market conditions and business circumstances. You are welcome to ask your questions by pressing the raise hand...

profit was RMB 901 million. Notably, net profit excluding other gains and losses related to fair value changes grew 37.4% year-over-year, demonstrating our ability to increase share with major customers through innovation and AAC's resilience amid market disruptions in memories.

In the first half of 2026, total revenue hit a new high, with rapid breakthroughs in new lines. Heat dissipation revenue grew 400%, gimbal modules and active cooling secured design wins, optical communication heat dissipation lens arrays progressed well.

Importantly, our lens array technology for optical communication outperforms silicon lenses in coupling and is already in the factory audit stage. In liquid cooling, high-end CDU and the UQD started global volume deliveries.

Robot joint motors and dexterous hands have multiple projects underway, and high-end automotive branded audio system orders grew significantly. During the period, operating cash flow was RMB 1.91 billion, capex RMB 1.23 billion, and cash on book 7.07 billion.

The group continued to improve operational efficiency with the cash turnover circle significantly improved by 30 days to within 20 days. Now let's walk through each business segment.

To capitalize on AI industry growth opportunities, the group will deepen integration within the acoustics and EMD segment. We will deliver integrated solutions in emerging tracks such as AI terminals, humanoid robotics, and smart cabins, unlocking value and long-term growth.

Hence, we have consolidated the former acoustics and electromagnetic drives business. Meanwhile, the precision mechanics segment has rapidly expanded its boundaries, incubating heat dissipation and other new business targeting multibillion revenues.

The consolidated segment generated revenue of RMB 6.01 billion, up 14.2% year-over-year. Gross margin was 28.6%, up 0.7 ppts, of which the former acoustics revenue increased and gross margin improved by 0.9 percentage points.

EMD revenue grew over 20%. Several new business achieved breakthroughs.

An active cooling fans leveraging high-precision electromagnetic design achieved higher efficiency and passed customer certification, expected to become standard in high-end models and expand to servers and robotics. In robotics, motors and modules secured design wins with multiple global top customers, with some entering mass production.

Leveraging self-development of core components and system assembly, the group is positioning for complete robot system business, targeting mass production by end of 2026. Automotive acoustics revenue was RMB 2.23 billion, up 23.1% year-over-year.

Gross profit margin was 20.1%, down 3.2 percentage points, mainly due to intensified competition, higher amplifier revenue share, and geopolitical-driven raw material price increases, for example magnets, which are expected to ease in the second half with new product upgrades. Domestic business progressed well, with Zeekr project performing strongly, leveraging high-spec hardware, customer software, and systematic tuning to build differentiated audio quality.

Deep cooperation with top brands like Naim sets high-value benchmark. Optics revenue was RMB 2.05 billion.

The group adhered to the premiumization strategy, optimizing product mix, with ASP up double digits year-on-year, and gross margin was 10.2%. In lenses, 6P and above accounted for nearly 20% of the shipment volume.

5P lenses achieved a milestone. In modules, over 50% were 32MP and above, OIS modules over 20%, and main camera module deliveries were smooth.

We will cover optical modules later. Now let's turn to precision mechanics and heat dissipation.

Revenue was RMB 3.25 billion, up 12.5% year-over-year, driven by high-performance ultra-thin VCs, with heat dissipation revenue up 400%. The group is among global leaders in consumer electronics thermal management, and ranks top three in China's AI server liquid cooling market.

In liquid cooling, its subsidiary Yuantian's 2.2 MW and 2.6 MW decentralized CDU started global mass deliveries. Quick connectors began mass production.

Liquid cooling plates are progressing toward white-paper certification with leading CPU companies. The Honor Robot structural parts project secured major supply and delivery is smooth.

We are also designing integrated structural parts and liquid cooling solutions with multiple EV makers. Finally, sensors and semiconductors revenue was RMB 858 million, up 41% year-over-year, driven by high-value products and increased share with major overseas customers.

We also extended MEMS technology to thermal management, launching the CoolFan series and active cooling chips. MEMS cooling cooperation has begun with mobile phone and memory companies.

After reviewing segments financials, let's look at core highlights and strategies. Riding the AI wave, we are expanding business boundaries.

Our progress in emerging areas in first half is shown on our slides. The company will continue to push forward in new billion-yuan tracks such as smart vehicles, liquid cooling, XR, and robotics, creating new growth curves.

Small size, perceptibility, and ease of interaction are common traits of future AI hardware. The group's high-value innovative AI hardware co-developed with global top customers will see volume shipments in second half.

Per-unit value for motors can range from tens to hundreds of USD. In mobile phone thermal management, the group has sufficient production resources with stable delivery of key projects and steady share gains.

Optical modules upgrade to higher speed like 1.6T and 3.2T, cooling has become a necessity. Advanced solutions like forged housings, high-performance VCs, and liquid cooling plates are being explored.

The group has promoted and sampled multiple innovative solutions to leading domestic and international optical communication manufacturers. In liquid cooling, the group's centralized CDUs have achieved mass production with monthly capacity over 600 units, ranking among top tier.

Customers expansion followed a dual-track approach, as well as close cooperation with leading North American CPU and ASIC companies. In automotive acoustics, the group is building branded system solutions, optimizing brand portfolio and structure to enhance competitiveness.

On one hand, we support localization; on the other hand, domestic OEMs export models show growing demand for branded audio systems. We will seize this trend.

I also want to highlight breakthroughs in optical communications, a key area of interest. CPO as a critical technology for next-generation high-speed optical interconnects demands stringent optical alignment, which is a key application for our WLG technologies.

WLG, wafer-level glass molding, offer high precision and mass production advantages. We have met CPO requirements for thermal stability, and mold precision and wafer-level processing enable array-level alignment.

Array molding and passive alignment deliver a mass-producible solution, balancing precision and efficiency. These advantages enable microlens arrays with pitch within 1 micron and surface accuracy below 250 nanometers, as well as fiber V-grooves.

We are actively engaging with leading overseas optical communication companies, including top high-speed interconnect chip suppliers for AI and cloud. In AR, by integrating Dispelix, a global waveguide leader, with our light engine team, we provide one-stop waveguide and light engine, optical system design and simulation solution, transitioning from component supplier to end-to-end AR display module provider.

Our light engines feature high brightness, low power, compact size, and high image quality. We are the first to achieve volume delivery of full-color light engine to top customers for single-layer SRG waveguides.

We are the first to mass-produce via etch-in our lenses with large FOV, single-layer full-color, slim profile, and clear image quality passed performance and reliability tests with multiple global customers and secured design wins for mass productions, laying a solid base for future growth. Finally, our robotic business: leveraging years of micromotor experience and robust patent portfolio, our product strengths drives customers acquisition.

Our linkage solution achieves 21 DOF with core motors self-manufactured plus unique joint designs. Our integrated cooling fans and reliable mechatronic solutions offer no-load life over 1.5 million cycles, addressing industry pain points.

This ends my presentation, and we will start the QA session. To ask a question, please raise your hand in Zoom and also introduce your firm and name before speaking.

Let's take the first question. The first one is from Everbright, Miss Fu.

Thank you, Joyce. Dear management, good afternoon, everyone.

I'm Fu Tianzi from Everbright. I have two questions.

We see the ASPs has recorded a double-digit growth, and WLG's development is in non-smartphone areas, and we also secured samples to overseas leading communication and optical communication manufacturers. I would like to ask Mr.

Pan, if we look forward to 2027 and 2028, what's the main positioning of WLG in optical communication, and what are our strengths? This is my first question.

In terms of the, for example, the CPO and optical communication modules and some solutions, and those are not only in the optical communication modules, they all require high-precision lenses. The traditional methods they use the molding, including some companies in Japan and Taiwan.

The efficiency and manufacturing accuracy of WLG and molding are very advanced. We have deepened our cooperation with the leading optical communication companies, and we have this in-depth cooperation.

From the customer's perspective, we may see next year a demand of over 100 million. Of course, by 2028, there will be billions of units of output in this field alone.

We are very pleased to see that our WLG technology has been applied not only in the field of mobile phone cameras, but also in the non-smartphone sectors. We have been working with our customer in the US, and our qualification has been completed, and we will see the mass production and shipments in Q4 of this year.

More importantly, we have observed significant progress in optical communication industries, as well as the CPO and also the connectors in the optical communication applications. They all use this WLG lenses.

Our investment on WLG will unleash its strengths and the potentials in the coming years in this directions, and we will foresee a very good revenue level. Thank you,

Mr. Pan.

It's very clear, and we also look forward the good development in the field of optical communication. The second question is about the precision mechanics and also the heat dissipation business.

We see the revenue was over 3 billion in the first half and increased by 400%.

We think in the next 3 years, and this is a very prospect, and this will reach over 30 to 50 million, and it depends on the mid and high-end applications. The application in high-end mobile phones has already reached 100% penetration, and this will also be applied in the laptops and other areas.

If we see the scale doubled or tripled, and this will be about 4 to 5 billion. Next year, this will be ramped up again.

If you add laptops and in 3 years, and this will make breakthroughs in 7 to 8 billion. We have already acquired Yuantian, and they entered the cooling service in server, and from the passive cooling solutions to the active cooling solutions, and this will also secure our other electromagnetic growth.

Thank you, Mr. Pan's answers.

We hope that group will have brighter results in 2027 and 2028. Thank you

for your questions and management answers. Next question is from Kyna from Citi.

Please go ahead.

Thank you for the opportunity. I'm Kyna from Citi.

I have two questions. The first question is whether you have any upgrade on your annual guide.

In addition, the future development on the gross profit margin on the metal casing business, as well as optics on modules. What's the prospect of the growth?

What's your solution towards the market volatility? We see the ASPs increased in the company, and what's your future strategy?

Thank you.

Thank you, Kyna, for your question. I would like to talk about the guidance first.

You also mentioned the market change, but despite the market environment, and our group has already reached a 9% top line, and gross profit margin increased as well, and we have the confidence to realize double digits in revenue. The gross profit margin in the first half will continue to grow steadily.

Year-on-year, the sales will reach about single-digit growth, and the gross profit margin will be raised from 28.6% to a higher level. You can see the year-on-year, and this was increased 30%, and the first half we have realized 23%, and in the second half, this will continue to increase.

You also talk about optics. Optics will be impacted by the market and customer allocation, and the sales and revenue of the optics, the year-on-year was down a little, but the gross profit margin of the optics, and you see, no matter it is in the first half or the whole year, and it's very stable.

In the plastic and also the hybrid, and we have a little drop in the global sales, but the GP margin have already been increased over 5%, representing the efficiency and yield, and also technology improvement. In terms of modules, the year-on-year revenue declined over 20%, and GP margin is a little down from 4% to 3%.

In our slides, we talk about the modules and its higher percentage of the higher margins, and we will actively deploy our overseas customers. ASP is increased 15% to 20%, and GP margin is also increased.

Automotive is also increased 15% to 20% year-on-year on revenue, and gross margins, and due to the macro environment as well as the product structure, and this will be a little down by 2%, 2%.

You also talk about the heat dissipation opportunities. We also observed a big change in the second half.

For example, your modules will be more on the high-end designs, you will need more components, whether this will impact gross profit margins. I just want to confirm whether this kind of impact is very limited.

I'd like to take this question. Yes, in the high-end products, our structure and materials are more complicated, and the BOM price is increasing.

With our automatic and efficiency improvement, because our volume is very large, we need to guarantee the yield and improve our yield, and to guarantee the GP margin. Based on the current development, and this product can achieve higher gross margin than our average products.

This is a quite promising business and the products, and this segment's development is very rapid. This kind of investment is also very large.

In terms of this high-end products, and this will penetrate to more products, and also the non-smartphone areas, all laptops and the other products and business segments. This is also one of the drives for our continuous investment in this regard.

Thank you. Very clear.

Thank you Tina's question. Next question is from Bingyi.

Mass-produced, and the monthly delivery capacity, and we have already reached a certain scale. I would like to ask the management to help us quantify this, and looking forward to the second half of the year or next year, and what's the growth expectation?

Thank you for your question. Actually, the AAC liquid cooling business is divided into two parts: one is a CDN business led by Yuantian, as you mentioned, and the other is related to connectors.

I will first talk about the Yuantian CDN business. Yuantian CDN will achieve 3 to 4 times growth this year.

Its revenue should exceed 200 million this year. Next year, in addition to the existing 2.2 MW and 2.6 MW products, we will also launch 3 MW CDUs.

Next year's revenue will still be based on 2026, distributing 600 to 800 million yuan revenue growth in 2027. In this way, the CDU led by Yuantian in terms of shipments should already been among the top three in China.

Meanwhile, from other perspectives, for the liquid cooling plate and joint business, and the estimated revenue is 200 to 300 million yuan next year. Also the AAC should reach 1 billion yuan in the liquid cooling sector in 2027.

Got it. Thank you.

My second question is about robotics. The company mentioned that we have global leading customers for motors and modules, I would like to ask the leaders to help us quantify this.

What is the scale of this business, and by 2027, we will see more meaningful revenue contribution?

Yes, thank you. I remember last year's investment conference we mentioned robotics sectors.

From today's perspective, including some major events that have occurred in entire capital market recently, robotics is still a very clear direction, and the progress is very good. I think first of all, we see this humanoid robots development.

This is kind of a carrier of a hardware innovation and AI innovation. We also see this dexterous hands and hollow cup, including like the forearms and the frameless torque motor in the arm and leg.

We are carrying out a series of customers product development and the delivery. These customers include domestic startups and domestic consumer electronics and automotive companies.

Recently we are also promoting related motors and the delivery of the motor modules. At present, this market is relatively fragmented.

It is difficult to say this or one single client can form volume revenue. From the prediction and the delivery of mass production next year, the motors including structural parts and a series of sensors, we think the robot sector can reach about 300 million to 500 million.

If the shipment volume goes smoothly, and we think it can reach 500 million yuan. This is also a very good sector and reserve and breakthroughs for VCs in the humanoid robot sector.

In addition to humanoid robots, we also see some customers they are interested in small robots or even desktop robots. In this regard, maybe 100 to 200 million or even more next year.

Our small robots at home and humanoid robots can reach a scale of 400 to 700 million next year. If you still maintain relatively high growth by 2028, the customer still hope to have higher performance products, better cost, and lighter weight, we think we can maintain double-digit growth in 2028, then it will reach at least 1 billion.

This is the overall scale in 2028. Apart from this AI growth, we also see the potential and the growth in the AI-related devices, for example, the wearable devices in the market, such as some round ones or some Meta ones or some glasses.

I think the growth in this area will also be very rapid. I think next year AI wearable devices may have different types of motors and acoustics.

We are capable of micro-precision components, and this is what our strength, and the value of a single machine in this regard may exceed 10 US dollar, maybe 20 US dollar, which is relatively high margins. We foresee this kind of market can have at least $1 billion in revenue next year.

Wearable devices are also a very important track for us in our AI.

Thank you, management, for your answers, and thank you, Bingyi, for your question. Next we would like to invite Zhou Huanbo.

Thank you for giving me this opportunity. I'd like to ask a question about financials.

We also noticed that in the company's recent released financial reports, the cash flow statement, cash inflow from the operating activities and cash on book have decreased significantly, and net debt ratio we seen a relatively large increase. I'd like to ask the reasons behind them, and any measures in future to improve.

Let me answer your question. In the first half, due to impact of those contribution of our major customers and also seasonal factors, our operating cash flow is impacted, and also some incremental effect.

For example, the operational efficiency of the group and our important indicators such as DSO and DPO have improved significantly, and overall cash turnover cycle has improved by 30 days and has dropped to within 20 days. In the second half of operating cash flow will be largely improved, and this will maintain the same level with last year's.

Also our cash flow will also remain in a very healthy financial situation. Additionally, regarding our cash position, as you mentioned, there has been decline.

In fact, in the first half of the year, for example, the US dollar bond, and our overall debt scale has decreased compared to the same period last year, and the overall debt scale has decreased by approximately 650 million. The decline in our cash on book is basically in line with the decline in the same period last year.

Estimated debt at the end of the year will also be lower. From Moody's perspective, the total debt to EBITDA ratio will decline from less than 1.8 times to 1.1 times by the end of this year, which is very sufficient, and it's very stable.

In addition, in terms of capex was 1.5 billion yuan in the first half, and we made a lot of arrangements on dissipation. The second half of the year will be much lower than this level.

We will be improved in the second half of the year, and including our free cash flow.

Understood. This is my question.

Thank you.

Thank you. Next is from Xia Jun, managing director of Guosen Overseas.

Thank you, Joyce. Thanks to all the management.

Congratulations to the company for achieving 37% increase in profit after deducting non-recurring items. This includes many new developments and new products.

I'd like to have a follow-up question on what Mr. Pan just mentioned on the wearable hardwares.

We see the mass production progress, and next year the revenue expectation is about 1 billion yuan. Any breakdown of this 1 billion yuan?

For example, large-model manufacturers, what are the product form and the quantity, the price, and how to break down, and

our core overseas A client, the product of this home furnishing scene, whether the supply is also included in? How to break down the quality and price of this part?

Because of the confidentiality, we cannot break it down too much, but overall we think the AI wearables at present was driven by the overseas market and overseas large-model manufacturers. At present, it still gives relatively a neutral prediction, and the shipment volume this year is around 5 million to 10 million units.

We believe the value here is about tens of dollars, at least $30, and there are very precise and complex multiple motors and speakers, and some of the whole wireless charging modules products and coordinates and connectors with this structure. This is a very precise and has a very high requirement on the precision.

That's why this value is quite high. We think this is mainly driven by this large-model companies.

We also know other international companies are also searching similar products, but according to our current forecast for next year, it is mainly this model company. It's more certain, with a high degree of certainty, we mainly focus on this.

The figure can reach about 1 billion, that depends on their main volume. I think the AI is currently expanding rapidly, and also the edge products, including some companies also making similar robot phones integrating micron motors, camera modules.

For this type of module, we have also made a lot of progress. On the one hand, we have this gimbal motors in smartphones, and also this can be used independently.

Companies like DJI and also the Insta360 are developing many camera-related gimbal products. We are also working on relevant technologies and have corresponding mass production projects.

We have multiple mass production projects, and this will enter this mass production in the second half. We believe next year it will contribute at least 500 million.

A gimbal module has three motors plus some other structural components and a camera. We believe that in the AI category, besides this part, consumer electronics is also making continuous updates.

Wearable AI camera products will contribute over 1.5 billion yuan.

Understood. Thank you.

Thank you, Mr. Pan.

My second question is you talked about the progress on the AI wearables, and also the new progress on the gimbal products. What's your expectation on the R&D expenses in the future?

You can see that our overall R&D expenses ratio is still quite high, because there are several factors, right? One is that in the second half of this year, and we have mass-produced the high-end DC heat dissipation, and this requires a lot of investment in our overall R&D resources.

For example, this will develop from high-performance VCs to higher-performance VCs to the active heat dissipation modules with cooling fans. We have to investment and this will cause additional R&D costs.

In addition, the robots and AI devices, including wearable AI devices, we have also invested a lot of resources for the R&D of the new technologies. This is very important for us.

In the development of AI, and AI infrastructure will develop rapidly, and you can see this from the development from Yuantian. Next step, and how do we empower the AI terminals from the data center and to the AI terminals, and, for example, AI motors, acoustics, and microphones, and we need to continue to invest.

Thank you, Mr. Pan and Kelvin, and we hope to see more achievements in your new tracks.

Regarding the R&D expenses, I think we need to add something. Compared to the first half of last year, and we have increased by less than 200 million yuan, around 200 million yuan.

I think Kelvin has already mentioned. It's a lead in the first half, but for the full year, the second half R&D expenses will be lower than the first half.

You see whether we need to upgrade this EMD business and acoustics. We make some consolidation.

Based on the original acoustics and haptics in the existing market conditions, and we can improve technology and standardize our technology to save a certain cost and put those resources to the new tracks. From the second-half perspective, in this area, the R&D expenses will be lower.

Of course, the absolute figure will be increased, but the overall R&D expenses ratio will still be controlled at a reasonable level.

Thank you management for the answers. Next one is from Morgan Stanley, Andy Meng.

Please go ahead.

Thank you. Thank you, Joyce.

My question is mainly to understand whether the company will consider through M&A to further accelerate the business development. During the M&A, I would like to know, for example, in terms of valuation, revenue growth, and profit margins, those core indicators, which indicators will you pay more attention to?

If you rank them, what will be your priorities? For new projects, and will we evaluate its overall ROC or ROI and ROIC's level?

Let me introduce it with a case first. Our company's M&A of a new business and a new products has quite a lot of experience.

Since we start doing Toyo and PSS and to our latest M&A Dispelix, the most important thing for us is to build our core competitiveness and the core business segments. Take Dongyang as an example.

We mainly focused on mobile phone structural components, and after our M&A of Dongyang, we entered the structural components of notebooks. We expect next year from the original 500 to 600 yuan in notebook structure company next year around 700 million and to about 700 million yuan, and we will grow to 2 billion yuan next year.

This is mainly based on the business layout and plan, and including our recent PSS M&A. After PSS M&A and based on and our overall section will further grow this year.

Another one is the growth on the automotive components, like the Zeekr this year, collaboration with Zeekr. The growth of the Naim system will empower the entire product and the business end.

Also in the XR field, we acquired Dispelix, and this year from last year to this year, and XR waveguide has continuously make breakthroughs. From the international customers and the pace of cooperation with us and the recognition of our technology, and this kind of M&A are very smooth.

I think in the future, especially in the XR field and the server field, we will continue to acquire and make business plans to expand our business and the products range. For example, in XR field like the light waveguide, and we currently see the value is tens of dollars, right?

If it's high-end silicon, it may be hundreds of dollars, then we definitely need to acquire to supplement our strength in this regard. Secondly, there are also XR displays, and for example, light engine, and the value is also very high, and we are doing a series of layouts in this regard.

Next is about AI, and the most important thing is AI server, right? We have already acquired Yuantian, and we have also seen the domestic AI server market is growing rapidly, and we will use M&A to supplement our core competitiveness in this server field and to secure our key accounts.

Eventually, it comes down to the return on investment. I believe and this investments are not purely technological investments, but rather the balance of business.

This mobile phone have low gross profit margins, but return on investment is much higher. This is definitely our long-term capability and our important part of a product.

This is another organic new product layout and the additional growth channel, and it will definitely be our key considerations.

Thank you. Very helpful.

Next question is from Tony from CLSA.

Thank you, Joyce. Thank you, management.

I'm Tony Zhang from CLSA. I'd like to ask in the smartphone areas, the Android and non-Android layout, do you have any outlook for the entire development of this year?

Is there an estimated that the industry will bottom out or recover, or any plan on the profitability?

The impact of memory on the entire mobile phone market, you see this impact. Our forecast for our entire mobile phone market for the full year will decline from 11.6% last year, right, around 11% last year and to 10%.

You also see this decline in the terminals. From perspective of optics and acoustics, we have already seen the relevant impact.

Our focus will be more on the high end of mobile phones and the modularization. In mobile phones, we may use high-end phones and the integration to expand and get more market share.

We have already reached a relatively high and the healthy level, even there are some certain fluctuations in the market, it won't affect our cost too much. I believe the situation in this is the same for acoustics.

Our utilization rate was quite high last year, and it may decline slightly this year. Through our breakthroughs in the new products and the new markets, our overall capacity utilization rate is still maintained at a relatively healthy level, and this will give us a certain ability to resist market fluctuations.

Thank you.

Due to time constraints, we will move on to the next question from Huatai Securities, Mr. Chen Xudong.

Please go ahead.

Thank you, Joyce. I have one question about the XR business.

Just now Kelvin talked about the XR business line, especially the glasses. We also see the after the M&A of Dispelix, it has obtained the core components of AR and XR, for example, the light waveguide.

The company's future clients in North America, what's the breakthroughs in their development, and what are the value-added products in the future for your revenue growth? Thank you.

Thank you for your question. As Kelvin just mentioned, after the acquisition of Dispelix, we quickly gained a leading position in the field of optical waveguide and light waveguide.

We have just completed what Kelvin said, completed acquisition of an overseas team in the field of optical engine based on the acquisition of these two teams. AAC has already been in the XR field, especially in the field of XR glasses display.

It has already occupied a leading position, and has really delivered the first mass production in the market, and showed our light engine capability. There are two advantages.

The first advantage is we have the leading capability in the industry and a rapid development of the product. The second advantage is that we see some large customers in North America, and these are our customers to conduct some mergers and acquisitions.

We have already win their recognition and have already secured the 3 to 5 years supply. Based on these two advantages, we have already covered XR big customers domestically and internationally.

If we see from the business figures, and by 2028, there are about 1 to 1.5 billion growth in terms of units, and this is only in the display modules. There are other aspects.

We are also excel, for example, our traditional AAC and speakers, haptics, and microphones. With the completion of M&A, and these will all help us enter the XR glasses field.

Understood. Thank you very much.

Thank you. Due to time constraints, we will now end QA session.

Next, let's invite Mr. Benjamin Pan, executive director and CEO, to give closing remarks.

Please, Mr. Pan.

I think for the closing remarks, I'd like to highlight two points. I believe with the effort of the AAC management team and all staff, and firstly, in the mobile phone industry, with the impact of memory, as Kelvin just mentioned, and this market will decrease from 11.6% to around 10%.

Margins, and based on this, we have made progress in traditional business, but we still manage to achieve a steady increase in gross profit margin. This is through our technology and our standards and our management performance, and we bring about this results.

This is about this memory impact and reshuffle in the entire mobile phone industry. In the first half of our results, we have seen that our response was promising and properly, and this is the first point.

The second point: we have several new products lines, from VCs to the active coolings, and we see the next year and the output value will be about 5 billion or 7, even higher in the sales. Also AI devices as well as this gimbal modules, there's about 1.5 billion, and CDUs with the liquid cooling versions, and we see a scale of 1 billion, and robots and some desktop devices can achieve a scale of 400 to 700 million with our core components.

The WLG in the new communication modules, we can see a scale of at least 100 million next year. We have made a good start.

In total, we can probably see a new direction of 8 billion to 9 billion. It brings opportunities.

I think in 2027, based on this, a scale of 8 to 9 billion is just a beginning. In the next 3 to 5 years, before 2030, I believe the growth rate in this direction will be much higher than that of our traditional business.

I want to emphasize this to our investors. Thank you very much.

Thank you, Mr. Pan.

Due to time constraints, the AAC Technologies 2026 interim results conference ends here. Our presentation materials are uploaded to the company website.

For any questions, please contact our investor relations team. Thank you for your attention to AAC.

Thanks, everyone.