Hello everyone. Welcome to the first earning conference of this year.

Before we officially start today's conference, I would like to say Happy New Year to everyone. Now we will have our IR Ronnie to report the financial numbers for Q4 and 2025.

As usual, we have announced our financial numbers yesterday. We also uploaded our financial report yesterday.

If you need more details, then you can actually find the financial report on our website. Our Q4 revenue reached NT$161.6 billion, marking a record high for a single quarter.

This represents a 42% year-over-year growth and a 8% sequential increase, mainly driven by strong data center demand. This sequential increase was actually above a normal seasonality, but just because in terms of the contributions from the data center business has been increasing for the last couple of quarters, the normal seasonality has become a little bit different from it was, yeah, before.

In terms of the GP margin, gross profit in Q4 was NT$55.9 billion, up 59% year-over-year and 7% quarter-over-quarter, marking a new all-time high. GP margin in Q4 was 34.6% percent versus 30.8% a year ago and 34% 34.9% in Q3.

Year-over-year, R&D and SG&A expenses increased 17% and 24% respectively, leading opex up 21%, with profit surging 147%. Sequentially, opex rose 7%, reflecting 2% and 11% increases in R&D and SG&A expenses respectively, with profit growing 6%.

As a percentage of sales, R&D expenses declined to 8.1% this quarter, compared with 9.8% a year ago and 8.5% last quarter. SG&A expenses were 10.2% versus 11.6% a year ago and 9.9% in the previous quarter.

Benefiting from improved economies of scale, opex ratio in Q4 dropped to 18.3% from 21.4% a year ago and 18.4% last quarter. Operating profit was up 147% year-over-year and 6% sequentially, bringing our Q4 operating margin to 16.3% compared with 9.4% a year ago and 16.5% in Q3.

In terms of the segmentation performance, Infrastructure delivered the strongest growth, with revenues up 94% year-over-year and 12% quarter-over-quarter. Power Electronics also posted solid growth, while Automation recorded modest, but improving, momentum.

In contrast, Mobility remained under pressure, with sales down 31% year on year and 15% quarter-over-quarter. From a profitability standpoint, Infrastructure delivered the strongest performance, with profit up 287% percent year-over-year and 25% quarter-over-quarter.

Power Electronics also posted solid growth, rising 93% year-over-year and 1% quarter-over-quarter. In contrast, Mobility and Automation saw year-over-year profit declines of 27% and 83% respectively.

Quarter-over-quarter, Mobility recorded a profit drop, while Automation swung to a profit. Non-operating income was negative NT$800 million in Q4 compared with negative NT$900 million a year ago and positive NT$2.2 billion in Q3.

The negative income in Q4 was mainly due to the write-offs after a careful review of the assets at the year-end. In Q4, we had NT$25.6 billion profit before tax.

Then our Q4 EBITDA was NT$32.7 billion, up 92% year-over-year and down 7% quarter-over-quarter.

Q4 tax expense was about NT$6 billion. The effective tax rate was 23.4%.

Net profit after tax was about NT$17.3 billion. The Q4 EPS was NT$6.67.

Now let's have a look at the full-year cumulative results. The revenue was NT$554.9 billion in 2025, up 32% year-over-year.

Gross margin was up 19 39% year-over-year, with the GP margin of 34.3% versus 32.4% a year ago. On the year-over-year basis, R&D expenses increased 17%, SG&A rose 21%, and opex grew 19%.

Operating profit increased 76% year-over-year. By segment, Infrastructure delivered the strongest performance, with sales up 82% year-over-year and profit surging 413%.

Power Electronics also posted solid growth, with sales up 25% and profit up 37% year-over-year. Automation showed modest revenue growth, while profit declined 90- 30- 39%.

Mobility remained under pressure, with sales down 16% year-over-year and profit turned to a loss. In 2025, we had about NT$3.9 billion non-operating profit.

In total, we had eight 18- NT$87.9 billion pre-tax income, and EBITDA was NT$117.9 billion. Tax expense was about 18.

NT$19.9 billion, representing an effective tax rate of 20 20- 22.7%. As a result, net profit after tax was NT$60.1 billion.

Translating this number into EPS was NT$23.14. During the board meeting, we actually proposed the cash dividend for this year, which was NT$11.6 per share.

Now we are open to the Q&A session.

I have two questions. For the first question, I would like to know, would you have any guidance on the opex increase of this year?

Then also, do you have any guidance for the capex for this year as well?

For the opex increase this year, I think the opex will continue to increase. Because we continue to have a lot of innovations and R&Ds need to be invested, because we have many new products.

We continue to need to invest a lot into the R&D and innovations of our products. Secondly, for the expenses, because we actually are expanding our service team in other regions because our solution businesses have been increasing within the company, we need to have more salesforce and more FAEs and so on and so forth to serve our clients in different regions.

That is also part of the reasons we actually expect an increase of the opex this year. Speaking of the capex, I think the capex this year is probably going to be slightly higher than 2020 the capex of 2025.

The next question is related to the GP margin in Q4. Could you please give us more colors on your GP margin in Q4?

Because the GP margin in Q4 was actually softer compared to the third quarter. My answer to that question is, I think because our GP margin is very much subject to the product mix of the companies.

Because we have very [unclear] diversified and many different product lines. The GP margin is always going to be a little bit lumpy, but I think our GP margin currently, as I always said, I think is at a quite healthy level, but we just can't really guarantee that we will always continue to achieve the new record high of GP margin.

I think that is actually our healthy expectation for the GP margin.

Yesterday, according to the financial report, I actually noticed that you actually mentioned the write-offs of some of your assets on your financial reports. Is this kind of write-offs is actually one-off, or we will continue to see this kind of write-offs going forward?

I think that is actually kind of a regular practice at the year-end of every year. I can't really say that we will actually expect to see such write-offs every year, but we always take this cautious and conservative approach to review our assets at the year-end.

That is basically like that.

Next question: what percentage of total revenue does liquid cooling represent currently? What level could it reach in 2026?

In 2025, I think liquid cooling-related revenue accounts for approximately 9% of our total revenue, with the majority coming from system-level solutions. We are not in a position to provide guidance for 2026, particularly in terms of mix, given the diversified nature of our business and multiple variables involved.

That said, with the continued expansion of AI data centers, I think our AI-related businesses, including the liquid cooling business and our power-related businesses, or the liquid cooling market is actually experiencing strong growth momentum. We see significant opportunities ahead.

I think in terms of the AI investment, actually the main demand driver for the AI deployment is actually still mainly coming from the major hyperscalers, especially in the US. If you look at the numbers and the capex numbers they have announced, for this year, supposedly, the absolute number of their investments are actually not less than the previous year.

Of course, the capex investment is one thing, but there are always some other bottlenecks or uncertainties, for example, the lack of laborers and the lack of the materials. We can't be totally sure about the pace of the deployment of their investments.

Still, given the commitment into the AI investment from those major CSPs, we remain actually cautious optimistic about the demand for this year. Although there might be some uncertainties or maybe just some ups and downs in this long-term AI cycle, but for the long run, we do believe that it is just a very early stage of the new era of AI.

We remain pretty optimistic for the long-term opportunity.

The next question is related to the potential bottleneck in terms of the power outage in the US. I know that actually Delta has always been very ambitious in terms of your opportunities in the energy infrastructure business.

Can you tell us more about your plans or your opportunities in this space?

I think that is actually a universal issue in many different countries and for many different types of our customers. We do have this ambition to address this issue.

Actually the power architecture change in the data center is also somewhat related to this power efficiency issue. We will continue to work on this, and let's see what we can achieve.

In terms of the outlook for this year, can you please give us some updates or just more colors for four main segments? I think as our chairman just mentioned, this year, I think the main growth driver will continue to be the AI data centers.

We actually expect to see a pretty healthy or solid growth momentum for our Power Electronics and our Infrastructure business.

Speaking of the Mobility business, even though I think the market has been actually experiencing pretty challenging period, but still, in the long run, we still believe the EV is actually one of the key to address the carbon emission issues. We will continue to stay in this market.

Just in terms of the clientele, I think, as everybody knows that in terms of the customers, we actually still have much more customers that are the European OEMs or the American OEMs, but as everybody knows that the Chinese OEMs, they actually have been really, really dominant in the global market, we will continue to try to approach the Chinese OEMs, and then hopefully our exposure to the Chinese OEM customers can continue to increase going forward. Then, speaking of the Automation business, as we just reported, last year we actually had a very modest growth for Automation segment.

Still, we can't really say that we have already seen very clear signs of recovery in the China market. The only thing I can say is the market is probably has already been bottoming out a little bit, but still not a very strong signs of recovery yet.

Hopefully, of course, we do hope to see the growth for this year can accelerate, but that is something actually out of our control, yeah. The first question is actually related to the capacity.

In terms of the capacity issue, I think we still have actually pretty tight capacity in order to fulfill the customers' demand. Last year, actually at the year-end of last year, we had three new factories in Thailand.

Three of our new factories in Thailand have been going online at the year-end of last year. Then we continue to have some new capacity plans for other regions.

Not just Thailand, actually this year we even visited Mexico, but still we are still in the process of evaluating whether the overall environment in Mexico is suitable for us to further expand our capacity in the America regions.

The next question is related to what is the timeline and shipment scale for power racks? Could this become the next growth driver?

Actually assuming no major disruptions, we expect to see initial shipments of power racks this year. However, the actual contribution will depend on customer demand and broader supply chain coordination.

Visibility remains limited. Conceptually, power racks integrate additional components such as relays, breakers, cabling, PDU, ATS, BBU, PCS, and even liquid cooling systems, which meaningfully expand the addressable revenue opportunity for us.

I want to circle back a little bit to your opportunities in the energy infrastructure market. I know that you have this hydrogen energy business, which aims to address this power insufficiency issue.

Do you have any other plans, or do you have any other new product lines which might actually help with this power insufficiency issue in a background of increasing power usage due to the AI deployment?

I think we just actually briefly mentioned that the new power architecture in the data center, which refers to this 800-volt DC, is actually part of the solutions to solve this energy issue. Because in terms of this new power architecture, actually the AI data center they are all using a lot of energy and electricity, something that we can actually do to help with this situation or issue is we help our customers to save as much energy as possible by saving or reducing the energy loss during this energy conversion process.

That is actually one way that we help with this energy or electricity insufficiency issue. The other one is actually the one you just mentioned, which is related to our hydrogen energy business.

As we previously explained in our earnings conference, this hydrogen energy, actually compared to the traditional discrete power generation solutions, actually in terms of the power conversion efficiency, is much higher than the traditional solution. It can up to maybe 65% conversion efficiency for this hydrogen energy.

In terms of the contribution or the shipment, I think we are actually expecting to have some very initial shipment at the end of this year. If we want to see slightly maybe more meaningful contribution from this hydrogen energy business, we may need to wait until maybe next year or even maybe for the longer run.

So, you just mentioned that, you already have some, clients they are testing your products, the they're testing your, fuel cell, products, currently. So,

what kind of, customers they are? Are they the, like the CSPs or other types of customers?

Oh, for the, hydrogen, energy, the fuel cells, the fuel, the fuel cells, actually, the the clients the clients currently, they are the utility companies instead of the CSPs. I think there is still, for the CSP clients, penetrating into the CSP clients, I think, still, it's still going to take, some time to penetrating into the CSP clients.

The next question is, can you please give us some maybe breakdown or split in terms of your power products for maybe GPU servers or maybe ASIC servers?

Actually, we don't really provide the details for this kind of split. Actually, we provide a lot of different products, including our AC products, AC powers, and DC converters for different type of data center clients.

It's actually not that simple to really separate different type of our products for different type of the platforms or for different customers. Speaking of our DC-DC converter business, we actually do not comment on specific customer programs.

However, given the expected meaningful increase in the market demand, we actually remain cautiously optimistic about our overall DC-DC business this year. I think, generally speaking, the whole industry or the whole architecture is still evolving.

Just like many Silicon Valley guys are talking about, maybe we can actually set up the data centers in the space. I think that there might be some advantages if you try to put the data centers or set up the data centers in the space, but there are still some other problems that you have to solve.

For example, in terms of the cooling, how do you plan to cool down the equipment if you put those equipment or data center equipment in the space? There are many different conceptional ideas are being raised in this stage, especially during the innovation of technology.

The only thing I can say is we actually must continue to innovate in line with the market trends and customer needs in order to sustain our competitiveness.

My next question is, actually, can you please give us maybe some rough breakdown or split between your AI servers and your traditional servers? No, we think that actually it's actually not, easy to, to to separate the AI server, revenues and the, AI server power revenues and the traditional, server power revenues.

Can you give us, maybe some, some guidance, for the Q1, seasonality? Because traditionally, we all know about, the first quarter, historically should be the lowest season, for the whole year.

Just because, the the the product mix, the business mix has been changed, over the years over the quarters. Can you please maybe just give us some, ideas or some clues about the the first-quarter seasonality?

The a second question is related to, the high-voltage DC. As I recall that you actually not just have, you don't just have, the 800-volt, DC, you also have the, the plus-minus, 400-volt, DC.

Can you please tell us, the adoption rate of, by the CSP clients for these two different types of, high-voltage DC power racks?

I think as Chairman said, different customers, they actually have different preference for these two types of HVDC power racks. We do provide both solutions.

It's not a problem for us. Then speaking of the seasonality, because as everybody knows that in the first quarter, because there are actually fewer working days in the first quarter because of the Chinese New Year holidays,

theoretically, the second quarter is very likely to going to be better than the first quarter, being given that reason. Then speaking of the 800-volt DC and plus-minus 400-volt DC, because in terms of the pace of deployment, because they are all based on the needs of our customers.

It's actually hard for us to forecast the pace of their pulling our merchandise. Still, I think generally speaking, in terms of the sales contributions from this high-voltage DC, I think next year should actually be the main year in terms of we start to see some more meaningful contribution from the power rack business instead of this year.

My next question is still related to the capacity issue we just discussed at the beginning of the conference. Because you mentioned that you actually are considering to maybe expand your capacity in Thailand or maybe the US or maybe even Mexico, so, if you have any new capacity or new factories in those regions, are they only related to your power products, or maybe you have plans for both power and the cooling products as well for those new factories in different regions?

I think we always plan our capacity based on our long-term plans instead of any short-term needs, because it always takes a few years at least, at the very least maybe 2 to 3 years to complete the whole construction of a new factory. We can only have some rough estimate.

Let's say that we may need more new capacity, and then we want those capacity to serve maybe the clients in different regions. I think, but there are always some dynamics and always some flexibility in terms of the capacity planning, especially for different type of products.

We can actually decide which factory for which product later. We need to just think about which region we might want to increase our capacity at this stage.

Now I think we can still have one last question before we call it a day. The final question I think is actually related to whether Delta has any plan on the AI robots.

I think currently at this stage, I think we have actually still more industrial robots, and then which we really have the mass production for this type of products. Speaking of the AI robot or service robot, we actually just established a robot research center.

I think it was last year, but this is actually for the long-term innovation and a long-term plan for this area. I think, for those so-called service robots to be more reliable and to be more realistic for the actual use, I think it's going to take maybe a few years before that.

I think there are actually some areas or some problems have to be tackled before we see that really happen. Including all the sensing technology, including the communication capability and also including the communication between the edge and cloud.

Then also you need to consider the safety issues if you want to really deploy the service robot in the life environment. It's not like the factories environment.

It's actually much more simple. I do believe it's actually going to take some time to achieve that.

I think, as I said, I think what we have been seeing now, they are still mainly more for demonstration purpose instead of they can be actually used in the real environment. That is my perspective.

Thank you for joining our earnings conference today. I will see you next quarter.

Thank you.