Thank you, Frank. Good afternoon, everyone.

Welcome to Chroma first quarter 2026 earnings conference. My name is Jennifer and I will be your host for today's sections.

Today's agendas includes: our CFO, Paul Ying, will begin by presenting the financial results for the first quarter. I will then provide an overview of the product mix for the first quarter, too.

Afterwards, we will open the floor to questions and answers. All presentation material are available for download from the company website.

With that, I will now turn the call over to our CFO, Paul Ying.

Thank you, Jennifer. This is Paul Ying.

I'm the CFO of Chroma ATE. Thanks for coming to this earning release of the first quarter of 2026.

Let's go to the first quarter condensed consolidated income statement. We can start it from the 2026 first quarter's net sales, which is reached to NT$11.8 billion, and this is a record high at the first quarter of '26.

Please keep in mind that normally first quarter is a low season in all four seasons every year. This is a quite exciting achievement for Chroma at the first quarters.

From here, you can see that compared to last year fourth quarters, Q-over-Q we have a 38% growth. Compared to first quarter of '25 last year, this is a 73% of growth.

If we look at the gross margin and the gross profit, it reaches approximately NT$7.4 billion, and reached at the 63% as the gross margin. This is I think the second highest on our quarterly gross margin achievement.

Compared to last year fourth quarter, this is a 42% growth, and another 79% growth compared to first quarter of last year. As to the operating expenses, if we look at the percentage, well, on a Q-over-Q base, it's approximately 17% growth.

Compared to last year first quarter, it's approximately 32% growth. That we reached an operating income by 4.7 nearly NT$4.8 billion, and occupied a 40% to the top line.

This is a 61% growth on a Q-over-Q base, and another 122%, doubling the size of the compared to the last year first quarter. Our net income reaches by NT$3.9 billion, and occupies 33% compared to the top line.

This is a 49% growth compared to last year fourth quarter, and on a YoY base compared to the first quarter of last year, it's a 83% growth. In there, you can see that we reaches somewhere in NT$9.12 as the earning per share.

Compared to last year fourth quarter, it's a 51% growth, and another 81% growth on a year-over-year base. This is the achievement on the bottom line.

Let's go to the next page. On a slide number 6, you can see that balance sheet highlights and the financial ratios.

Here, you also can see that the consolidated balance sheet highlights. From here, you can see that our cash and short-term investments grows by 10% compared to last year year-end.

Inventory grows by another 14%. Total assets reach out by NT$54.6 billion.

It's a 16% growth. On the inventory turnover days, it's approximately less than the six months, reaching by 172 days, which is pretty much the expectation of the management.

Accounts receivable turnover days is less than 80 days, which is a 77 days. Net debt to equity, still net cash.

Our return on equity is reaching 51%, and compared to last year year-end 29%, it's a pretty good growth. For the return on assets, it's 30%, it's also another 10% growth compared to last year.

For the cash positions, our EBITDA reached by NT$5.3 billion, and our cash flow from the operation is approximately NT$1 billion. Free cash flow, due to the investment on the fixed income financial instrument, it reached out a negative 8- NT$825 million.

This is the highlight for the balance sheet. Let's go to the operation highlights, and Jennifer, I turn to you.

Thank you, CFO. Please refer to slide 8 for details on our product mix for the first quarter.

The key drivers: during the first quarter, the primary drivers of growth was our test instrument and ATS sections, which saw an remarkable increase of 105% quarter-over-quarter and 145% year-over-year. This surge was mainly contributed by AI server power applications.

In addition to AI server power, we anticipate the battery cell project will start to contributing in sales revenue from second quarter. Move on to semiconductor sectors performance.

The semiconductor sectors achieved revenue of NT$3.4 billion in the first quarter, representing 19% growth over quarter-over-quarter and 31% year-over-year. The main contributors to this growth were system-level testers and photonics sectors, ranked by sales revenue contribution.

Looking ahead, we expect order to increase in the coming quarters. Currently, the world top three AI, HPC company have adopt our system-level testers.

In addition to NVIDIA, both AMD and Google are expected to make meaningful contributions this year. As the demand from the customers continue to increase, plus the cycle times also increase, we are considering revising our forecast upwards for the coming quarters.

For photonics and the CPO developments: another area exceeding expectation is the photonics. The demand from the transceiver market, CPO will also make a meaningful contribution beginning this year.

The CPO sections is now structured into four insertions. Insertion 1, PIC testing.

Insertion 2, EPIC testing. Insertion 3, optical engine testing.

Chroma has already received the purchase order for these insertions. Insertion 4 break down into two process.

First one is insertion 4-O, testing optical light in and out, 100% Chroma, the confirmed purchase order have been received. Another insertion is so-called insertion 4-E.

It's a BER testing, it's kind of a signal testing. The customers is ready and plans to begin a pilot run from June of this year.

The same optical engine will be applied for both scale-out and scale-up scenarios. According to recent the customers release their vendor list and PO.

That's our highlights for this quarters. Now we move on to Q&A.

Hi, Paul and Jennifer. First, congrats on the strong result.

I have a maybe simple question, maybe to both of you guys. This quarter, we have a very good ATS revenue, year-over-year up 145%.

Is it sustainable or not? Based on our experience, this sector actually is our strength, but usually we don't see so strong growth rate.

This is the first question. If I may, can I have a second question on the gross margin?

We also see you a very strong gross margin as well. I personal believe it's a mix, right?

Do you foresee any mix change in the second half or when the other semiconductor products impact your mix? My two question.

Thank you.

Hi, Arthur. I comment on your first questions.

You mean the growth rate or the dollars?

Growth rate.

You mean that means every quarter we need to present 100%? We tend not to give guidance like that, but I'm sure this year we definitely will have some very good result from the test instruments and ATS.

Regarding to the second question, we usually don't comment on gross margin as you've already could assess this kind of number from our financial statements.

Understand. Thank you.

No more question.

Thank you. Yeah.

Hello, Paul and Jennifer. Thank you for taking my question.

I have two question also. The first one was for this quarter in the semi and photonic division, just want to get a sense on how much of that come from photonic-related.

Also, I think so far this year, most of this photonic revenue was still driven by pluggable transceiver. I want to get a sense of how much incremental opportunity can we expect from CPO ramp-up starting let's say second half this year and also into next year.

Thank you. I think

at the time we did our forecast for this year, we didn't include the CPO because at that time the CPO was not very clear. You could see CPO is actually extra on top of the transceiver.

Despite of we actually see very strong the transceiver growth this year, yeah, at the time we make the forecast for 2026. Currently, our customers already final the scale-out and scale-up, they were using the same type and design of optical engine.

I think customers already gave us the forecast, especially for insertion 3 for '27. I think you could have some expectation from the pilot run from second half this year.

Yeah. Got it.

My second question is on the SLT. I think you just mentioned that we're seeing very strong demand increase as well as some cycle time getting longer.

I was wondering what kind of incremental cycle time and or order size are we seeing? Also, if I may, I was wondering how are we seeing the SLT upgrade cycle, because I think in the past we usually see a tool major upgrade driven by power density increase.

Because right now the AI chip system are migrate faster and faster, let's say next year's key customers upgrade, are we going to see another round of faster upgrade next year as well?

I think your thesis is based on NVIDIA's solutions, but I think please don't forget that this year we are also having the other two giants HPC companies. Include AMD and Google.

We haven't really finished all the shipment, order delivers, but AMD is coming up. AMD actually have a very heavyweight especially on system-level testers.

Based on their power density, AMD, the cycle time is started from their design for 4 hours, and now is actually running much more than 4 hours. Actually orders is increased, too.

Okay. Understand.

Thank you, Jennifer.

Thank you.

Hi, this is Kathy on behalf of Hess. Thanks for taking our questions.

The first questions, it's regarding the burn-in. Would you be able to share more detail on your current engagement with customer on the burn-in solution, and how should we think about the long-term opportunity?

Thank you.

We already received one Tier 1 customer place an order for our new burn-in systems. For the others is tryout in or you could say in the middle of process for adopting our burn-in systems.

I think this will be one of the driver for coming years, for sure.

Sure. My next questions is related to power testings.

Given the continuing upgrade in the AI power solutions, would you provide some updates on the backlog from your customers? Are you seeing more tractions across your long-term power solution partners along with more requests from your ESS and battery customers?

Thank you.

I don't quite understand your question. You mean the AI server powers or you want to talk about everything?

Because ESS is nothing to deal with AI server power.

Both from the AI powers and also from the ESS and battery customers. Thank you.

I guess everyone knows about AI server powers, someone like Delta, Lite-On, AcBel, Phihong, and some Chinese makers. Yeah.

Would you like provide some updates on the backlog you are seeing right now or—

We don't comment on individual customers in their backlog.

Thank you. Got it.

My last questions is related to system-level testings. Would you be able to provide how do you think about the addressable market into 2027 and 2028?

Thank you.

We'll let you know when we finalize the forecast for next year.

Okay. Noted.

I'll be back to the queue. Thank you so much.

Thank you.

Hey, this is Alex from Bernstein. Thank you, Jennifer and Paul.

Great results. My first question is, I understand that in the past photonics normally represent 15% to 20% of your semi revenue.

Looking at this year, what will be the ballpark of photonics mix, do you think?

Honestly, I have no idea. Because

that's too strong.

Because as we just guide before, we didn't include the CPO as a part of projection for this year. Then we also do see the increase in demand come from transceiver.

I only could say, please do not underestimate our contribution from CPO. Yeah.

I see. I assume that the mix will be higher than previously at 15% to 20%?

As we just mentioned, our system-level tester the orders also increased. So

I see.

we probably will only have this kind of idea about the breakdowns by end of this year.

Okay. Fair enough.

Second question is that last quarter, you showed a slide about your AIFT handler. I'm wondering if you have any update on that regarding client tractions, order size, et cetera?

It's everything on schedules. You will see the result coming up.

Yeah.

I see. Then maybe my last question is that I understand equipment shipment is very lumpy every quarter, but you have so many types of equipment that might smooth out the seasonality.

What do you see the quarterly sales trend in the remainder of this year?

This is actually very good questions, but I wouldn't say, yeah, it looks lumpy sometimes, but not that lumpy, yeah, because sometimes we deliver all in once just because to meet the customers' plants, their schedule or ramping-up schedule. We do everything to maximize customer satisfactions.

Based on our current order visibility is quite long, it's very hard for me to comment on seasonality pattern. Yeah.

I see. Because I'm looking at your last year seasonality, the first few quarters they're 6 to NT$7 billion and jumped to NT$9 billion,

and

this first quarter is too strong, NT$12 billion. In the remainder of this year, should we expect something similar to first quarter number?

I have no idea. As you could see, we maybe just started because we know nothing booked for the battery cell at the moment, and we will not stop taking order from today.

I see. Okay.

I understand. That's all my questions.

I will back to the queue. Thank you.

Thank you, Alex.

Yeah.

Thank you for taking my question. A first question on the SLT side, I think Jennifer previously you commented that you potentially raise your forecast.

Any idea how much of upside you are seeing right now for this SLT business?

Hi, Jerry. We do serious consider to revise up because first, we have not complete the deliver for our big customers.

AMD currently would like to increase the cycle time, they recently also add more orders. I really have to specially highlight that we are very strong in the liquid cooling, so that's why we had glad to have this customer.

Google is starting up, I think maybe they will be located in the second half this year. Our big customers, well, which is NVIDIA, they're also planning to ramp up LPU.

This is also one of the reasons we do consider to revise up our system-level tester.

Thank you. Also, any ballpark idea on comparing with previous forecast, what kind of magnitude you're expecting right now?

Since we are not releasing individual sectors the forecast, we will not provide any further numbers regarding to that.

I understood. Then on metrology side, can you give us some update on this business?

We do everything to support the Taiwan foundry.

Whatever their schedule or plan, yeah, that's

the statement we're able to comment. Yeah.

Okay. Then outside of the main foundry, I think a lot of OSATs are also helping or you can say developing similar process as the foundry.

Should

we think that this should be your opportunities as well?

That actually happened started from last year. As you could see, we also designed another metrology tool, which is ProMach, and then we do see the order continue to contribute from this year, too.

Yeah.

All right, okay, got it. Thank you.

I'll be back to the queue.

Thank you. Yeah.

Hi, Paul.

Hi. Hi, Jennifer.

Could you hear me?

Yes, please go ahead.

Thanks, and congrats for the great results. First one also want to follow up on photonics business.

Because we also learn from supply chain that no matter transceiver or CPO is have a really strong demand. Could we have more color for CPO part, is there any the contribution for insertion 4 will be similar to the insertion 3, or will be higher or lower?

I think I would suggest analysts to break this CPO things into wafer levels and die level. If you look at the die levels, according to current customers' forecast for coming up 2027, the volume ramp, I would say insertion 3 is a more higher addressable dollar overall.

Oh, great. Congrats.

Thanks.

Like the other chips, is there likely for the CPO switch have a SLT test, or is still uncertain?

Depends on how you defined, because right now as I just briefed, insertion 4 right now break down into two sections, insertion 4-O and insertion 4-E. If you also could consider because under insertion 4-O, which is even is optical light in and out, this is also kind of concept of a system-level testers.

Just depends on how you defined that. If you say this kind of real package is also in line with the thesis of design like a GPU system-level tester, I would say this is some kind of optical type of system-level testers.

Oh, great. It's helpful, yeah, very detailed.

My second question is about could we have more color for the first quarter on the ESS and the power business for ATS? Yeah.

Could we have a breakdown it's more on because you mentioned it's mainly driven by the AI power demand, but could we have a more color on power part and also ESS part, and could it sustain to the further quarters in 2026?

First quarter mostly come from AI server power. You actually can expect the contribution from ESS from second quarter, but it doesn't mean we don't have AI server power in the second quarter, because we do have customers which block up the whole year's capacity.

You need to consider maybe some of the months we have a one-shot regarding to this battery cell project. Yeah.

Got it. Noted.

Thanks. My last

one is for

capacity plan, sorry. Because we saw the really strong demand for '26 and even '27, what's our plan for '27 or '28, and will we need to have more space in second half of '27 or '28?

That's a very good question because actually regarding to our Phase 2, originally we designed for two towers, North and South towers. Then due to the kind of strong visibility in the coming years, we decided not to sell any of the towers, we will keep it for our latest capacity ramp.

We supposed to be have a sufficient capacity in the coming maybe 3 or 5 years. Yeah.

Wow, cool. Thanks.

That's all. Thanks for the answers.

Cool. Thank you.