Good afternoon and good morning, everyone. Welcome to Advantech's first quarter 2026 earnings call hosted by UBS.

This is Eileen Chan, covering the industrial sector at UBS. It's our pleasure to have Advantech's management team joining the call today.

On the line, we have Eric Chen, President of GM, CFO; Linda Tsai, President of Intelligent System Sector; and Grace Liao, the IR Manager. For today's meeting, we will start with Grace's presentation and open up for Q&A later.

Now let me pass to Grace.

Thank you, Eileen. Good morning and good afternoon, ladies and gentlemen.

Thank you for your time today. This is Grace Liao, the Senior IR Manager of Advantech.

Regarding our Q1 2026 financial results, Q1's revenue reached NT$20.4 billion, increase 17% year-on-year, 14% quarter-on-quarter. Gross margin rate reached 39.1%, slightly lower on both quarterly and annual basis, mainly due to component cost up.

Operating profit reached NT$3.7 billion, increase 28% year-on-year. Operating profit rate reached 18.3%, which greatly improved from 15.7% in Q4 '25.

Q1 effective tax rate was 18.4%. Net income reached NT$3.3 billion, increase 22% year-on-year.

Earnings per share in Q1 '26 was NT$3.85. Q1 '26 both top line and bottom line reached record high, and also beat the company guidance.

For regional performance, in terms of US dollars, Q1 '26 revenue reached $644 million, increase 22% year-on-year. For regional performance, all region reported double-digit growth.

Major three market continue to contribute 70% of a total sales, with slightly shifts in regional mix. North America increase 13% year-on-year, driven by semiconductor equipments and data center projects.

Europe market increase 19% year-on-year due to strong medical equipments and the channel sales. China market increase 38% year-on-year, benefit from channel sales, semi equipments, and transportation projects.

Korea market showed 44% increase, rebound from low base last year. Taiwan market enjoy 75% year-on-year growth, driven by semiconductor and automation projects.

For sector mix perspective, all sectors enjoy positive growth year-on-year. Both IoT Automation and Intelligent System increase 19% year-on-year, driven by semiconductor, energy, and transportation projects.

Embedded sector increase 15% year-on-year, benefit from strong growth of medical equipments in North America, Europe, Middle East, and Africa. Intelligent Service increase 3% year-on-year, driven by healthcare in Europe and the Middle East and Africa market.

However, retail in North America slowed down due to component shortage. For balance sheets, this is also my last page, inventory accounts for 18% of a total assets, while inventory turnover days slightly improved to 97 days, reflecting improvements in readiness of future shipments.

Cash conversion cycle, CCC, maintain 84 per— 84 days within a healthy range. Now I'm handing over the time to President Eric to share overall business outlook.

Thank you.

Thank you, Grace. Good morning and good afternoon, everyone.

Thank you for joining today's meeting. This is Eric.

Let me start with a few comments on the first quarter result. In the first quarter, our top line and operating profit exceeds our expectations.

Our gross margin was in line with our guidance. Top line commerce was mainly driven by strong demand from the semiconductor and medical sector, also the transportation sector as well.

In addition, higher DDR4 and SSD price promotes customer to place orders early and push the faster delivery. In the first quarter, our OPEX ratio declined by 3.1% year-over-year, and operating profit improved by 1.4 percentage points, with operating profit up 27% year-on-year.

With a stable tax expenses, we achieved record-high first quarter results, with earning per share of NT$3.85. In terms of regional performance, China, Taiwan, and emerging market delivered significant growth of 38%, 75%, and 24%, respectively.

Demand in China was mainly driven by the distribution channels, transportation, and energy sector. Taiwan delivered the strongest result, driven by the semiconductor and factory automation sectors.

From the sector perspectives, the iAutomation and iSystem segments performed well, benefiting from strong demand in semiconductors, energy, and transportation sectors. The Embedded sector benefits from increased shipment of medical equipment in North America, Europe, and Middle East and Africa.

iService worldwide increased by 3% only, driven by growth in healthcare projects in Europe and Middle East, partially offset the weakness in North American retail business. This conclude my comment on the first quarters.

Next page, thank you. Let's look at the BB ratio trend across regions, as shown on this page.

The first quarter BB ratio rose to 1.77. In the US, the BB ratio was 2.37, mainly because key account placed order aggressively to secure product allocation and rising DDR4 and SSD prices.

The BB ratios in Europe and China were 1.76 and 1.30, respectively. It is also worth noting that both BB, bookings and shipment, increased by 48% and 11.6%, respectively, compared with the fourth quarter of 2025.

Next page, yeah. Looking ahead to the second quarter, we expect revenue to range between $650 million and $670 million based on an exchange rate of $1 to NT$31.5.

In terms of margin, we anticipate second quarter gross margin of 38% to 40%, and operating margin of 16% to 18%. Next page.

I'd also highlight a coming event, that is COMPUTEX. We have arranged a series of activities designed to engage different target audience.

On the afternoon of June 1st, we will host an Edge AI Conference at the Hua Nan International Center. The conference will cover three key themes: original leadership in the era of Edge AI, real-world AI impact across industrial, and acceleration of WISE platforms and ecosystems.

Day two will include an on-site visit to Advantech pavilions at the COMPUTEX exhibitions. For investor, we will arrange more than 10 runs of product briefings and booth tours.

Day three will focus on our annual world partner conference. It will be held at our Linkou campus, with business matchmaking and sector forum as a key activities.

We would like to honor to have you join us for the day one or day two events. Many investors has already reserved a spot for the day two on-site booth tours with Grace.

Please feel free to reach out to her to registries. This conclude my guidance for the second quarter, and thank you for your attention.

Thank you, Eric. I'll hand over the time to Eileen.

Thank you.

Thank you, Eric. Thank you, Grace.

Now let's move on to the Q&A session. We will start with questions we collected from investors before the call, and then open up the floor later.

Now on the first one about financial and outlook, what is the expected sales mix target in 2026 and '27, and what's the demand for non-edge-AI project expectation?

Let me try to answer this questions. We expect iSystem and iAutomation to have a stronger gross momentum than Embedded and iService in 2026.

Demand from semiconductors, factory automation, and energies remain promising, and the product such as Sky servers, IPC, box PC, and industrial communication solutions should benefit. Embedded should benefit from demand in medical equipment and robotics, but we expect its growth momentum to be lower than in semiconductors.

In robotics, AMR and AGV demand is stable, while humanoid robotics will take time to move from engineering sample to mass productions, even though we currently have around 130 pipeline on hand, with total revenue of $120 million. iService is facing key chip allocation constraints, which may put some pressures on order fulfillment in the first half.

Regarding the demand for non-edge-AI projects, because edge AI project accounts for about 20% of our first quarter revenues, most revenue is still generated from our edge computing and devices. At this moment, we do not expect demand from non-edge-AI product or project to be negatively impacted by edge AI requirement.

This is my answer to the first questions.

Thank you, Eric. I think the first part, what is the sales mix for edge AI project in first quarter?

You just answered that it's a 20%. I think another question is about which verticals are driving edge AI-related orders?

Okay. Edge AI revenue in the first quarter was $132 million, accounting for 20.5% of total revenues.

We classifies edge AI revenue into two categories: edge AI products and edge AI components. We always have a two category to calculate edge AI performance.

In the first quarter, edge AI product revenue grew 67% to $123 million, while edge AI component revenue grew 58% to $9 million. Here we define the edge AI component as a purely buy-and-sell model with no value added to Advantech products.

They accounts for only 6.8% of our edge AI revenues. For the demand from the sectors, edge-AI-related demand mainly come from the factory automation, robotics, smart city, and transportation sectors.

By geographies, the US, Europe, and China accounts for a large portion of this orders. This is my answer, yeah.

Okay. Then the third question is regarding the BB ratio, what percentage of order backlog is for delivery in second half '26 or 2027?

Based on our order system, we have a central ERP system called SAP system, we have a central data. The percentage of our first quarter order with delivery dates more than six months, six months out, was 37% in January, 57% in February, and 47% in March.

Overall, delivery schedule for more than six months of this year represent 47% of the total quarter-one bookings. Advantech Normally at Advantech, a customer order fulfillment generally fall into two categories.

We have standard product and DMS or tailor-made products. For standard products, the lead time from order to shipments is typically under three months.

For DMS and tailor-made products, lead time depends heavily on customer requirements, but in most cases, that shipping occurs within six months. For the quarter-one bookings, the overall is 47% delivery date more than six months.

This is my answer, yeah.

Thank you, Eric. Next question is about material cost impact and the reactions.

In terms of profitability, what extent can the increased cost be passed on to customers in terms of different kinds of projects? Any signals that higher project pricing is hurting order intake?

Thanks for the questions. Advantech go-to-market sales strategy have three priorities: key accounts, channel partner, and general account.

For general accounts, we have full pricing power. For key account and DMS business, when our design-in products represent a relative small portions of the customer total system cost Here I just give you an example.

We provide high-reliability embedded board or edge AI system when used in the medical device, such as surgical robotics or MRI systems, or in a semiconductor equipment, such as front-end modules or wafer sorters. We are more likely to pass cost increase through our customers because again, our offering is just a small portion of the whole systems.

This type of project represent around 70% of our design-in business. However, in the other side, for projects serving the retail market, for example, the kiosk or POS systems, customer tend to more cost-sensitive.

Fully passing through cost increased is not always practical. In this case, we negotiate with customer to agree on proper pricing adjustments.

At this stage, we don't see higher project pricing materially affect order intakes. In some semiconductor customers, they tend to pressing order cover the next 18 months to secure further allocation and capacity to Advantech.

We don't see any order intake Yeah, this is my answer, yeah.

Thank you, Eric. Next question is about the progress of replacing DDR4 with DDR5, and what has the price increased so far?

Has the price momentum eased?

This is Linda. The migration from DDR4 to DDR5 in Embedded and industrial customer is still ongoing and typically takes 16 to 18 months, and depends on the applications.

In quarter one and quarter two 2026, memory price still remain an upward trend, especially on DDR5. It's roughly 30% to 50% QoQ, driven by strong AI demand.

In DDR4, stay at a more moderate level, but ongoing supply is still very tight because the industry continue to phase out legacy product. Thank you.

Thank you. For the price increase for other components, such as CPU and other passive components, what's the extent of the price increase, and what is the inventory level of these critical components?

Is there any sourcing issue?

From early to mid-2026, in addition to memory and SSD, and we are seeing the pricing pressure from CPU, especially from Intel and AMD. It's around 10% to 20% price increase, depends on the SKU.

Again, it's driven by strong AI demand and limited supply. In addition to CPU, we also see that AI-driven demand contribute the higher PCB cost, also the longer lead time.

Overall, the component availability remain tighter than historical level, and the sourcing condition are becoming more competitive as the lead time extended across more component. We are also playing the long-term PO visibility to our supplier, and we continue to manage this through diversified sourcing with different strategic partner, and the long-term purchase commitment with our upstream supplier, and the closer engagement to support and make sure the supply continuity.

Thank you.

Thank you. Thank you, Linda.

Then next question is about regional and sector performance. What are key order drivers by each sector and by different market in second quarter 2026?

How is first quarter '26 new project design-win progressing versus fourth quarter last

year? The key order drivers by sector and by market are as follows.

For the factory automation, including vision inspections, warehouse management, and safety restricted zone detections, it's mainly for factory automation. For robotics, including AMR and AGVs, we are also receive many RFQ for humanoid robots.

As mentioned earlier, we have a lot of pipeline with one more than $120 million total revenues. Smart city and transportation, including video surveillance, such as railways, heavy-duty vehicles, traffic management, and roadside video surveillances.

Factory automation demand is primarily in Asia. For robotics, demand is primarily from the US, Europe, and China, with a small portion from Korea.

Smart city and transportation demands mainly from the US, China, Asia, and the Europe. For the healthcare, demand is mainly from the US, Europe, and Korea.

For the design-in indicators compared with last quarters, below is some data for your reference. In fourth quarter 2025, NA secure 46 design win, with an estimated annual revenue of $67 million.

In this quarter, in first first quarter this year, NA secure 53 design win, with an estimated annual revenue of $158 million. Compared with last quarter, the design win count increase by seven, but the EAR, EAR means estimated annual revenues, increased by 2.3 times.

This is the data. Please note that design-in activity can be affect by customer demand cycle.

Therefore, a six-month review window provide a more accurate and meaningful compared with just a single quarter. This is my answer.

Thank you, Eric. Next question is about what are the possible impacts from Middle East uncertainties on Advantech, and what's the company strategy to mitigate risks?

The impact of Middle East crisis has been primarily on smart city infrastructure project, especially in transportation sector, where the implementation plan timeline has been experiencing delay. Overall, the affected business portion remain relatively limited.

However, most of our business are actually facing indirect impact, including the one we share previously on the increasing cost and extended lead time for the key component. Thank you.

Thank you, Linda. Then next question is about what would be the highlights of Advantech's COMPUTEX exhibition?

As Eric mentioned earlier, I think we do have a full series of three days of events during COMPUTEX, including our Edge AI Conference in Hua Nan International Conference Center in January in June 1st. During the COMPUTEX exhibition, we do have lots of application and physical AI showcases in the Nangang Center exhibition centers and in June 2nd.

In June 3rd, we do host the WPC World Partner Conference in our Linkou campus, with grand keynote and also sector forums in different partners, global partners and the customers and in the Linkou campus to have a further cooperation and to build the ecosystem in the future. I think for investors, we're quite welcome the investors and also the media to join us in the June 1st and June 2nd event.

Yeah.

We also have a keynote speech by Miller and Richard, right,

in the

June 2nd or June 4th? Oh, yeah.

Afternoon of June 4th.

Yeah.

Okay. Thank you.

I think we've finished the questions we have on hand. Now we will open up the floor to allow participant to raise questions.

If you wish to raise a question, please use the raise hand function, and then unmute yourself. I think while we are waiting for questions from the participants, maybe let me start with a follow-up on BB ratio.

The BB ratio was 1.77 as of end of first quarter. Is there any updates like a BB ratio as of most recent ones?

Thank you.

I think the aggressive BB ratio in Q1 '26 indicating two parts. I think we do see very strong demand in the market side from the enterprise customer, especially in robotic and also automation and the semiconductor equipments.

That is real demands from the end markets. However, with the unbalance of the supply chain and also continuously cost up in the component side, I think most of the customer is prompt to place their orders within 18 months, which means I think they are quite aggressive in their order behavior to secure the sourcing allocation from us.

Yeah.

Okay. I often get asked by investors about how to calculate the BB ratio.

In terms of shipment, is that defined as the quarterly shipment? Or can the management team elaborate a little bit on how to calculate BB ratio?

Let me try to answer this questions. For the BB ratio is called bill to bookings, the ratio compare with shipment versus the order.

Just mentioned earlier, we have a central ERP system, we call it SAP HANA. When the new order place, we will keep the order as a order date.

The booking means, for example, for the April's order, new order came in from April, we keep it as a booking. The order date cannot revised by the manuals.

It created by system automatically. This is we so-called bookings.

For the shipment, as invoice date, as we will generate invoice after the finished goods shipped out from Taiwan or from China Kunshan. BB ratio, the B, booking, means the order entry in the certain period, especially we calculate by monthly base.

For another B, it's called billings. It's about how many invoice we generated and sent out to our customers.

This is we call the BB ratio.

Understand, thank you. Actually, if our revenue is already growing very strong, and BB ratio is increasing, which means our order backlog is actually also increasing a lot?

Exactly. Pay attention because the fulfillment lead time Normally, we get a certain order, we have a huge amount of certain order, but the delivery, that means the billings, might be happens in the coming two to three months for the standard products.

For the design-in products, it's very depends on customer require date. Normally, just mentioned earlier, it will be shipment within six months.

Understand. Thank you.

Then separately on the gross margin front, last analyst meeting, we understand that Advantech should be able to pass over most of the cost increase. Meaning that the input cost difference between the signing of the agreement and the delivery date, the price gap can be largely passed over to our customer.

Is this still the practice now?

Yes, as we mentioned in the previous investor conference, actually we take more aggressive pricing policy to our customer. We do have overall ASP hike in October 2025.

That is the first wave of ASP hike with the hiking range of 4% to 8%. From beginning of this year, we take more aggressive pricing policy with bi-weekly pricing adjustment to our system-level product, and monthly adjustment to the board-level products.

We are able to pass most of the pricing pressure to our customer. As Eric mentioned before, actually the IPC and also the overall purchasement cost in customer points of view is a small portion, is quite limited to their overall CapEx.

Therefore, I think there's a lower sensitive in the cause of pricing sensitivity. Yeah.

Going forward, I think we're still facing the ongoing pressure from the component side. As Linda mentioned that besides memory, we do have several items is still under pressure.

We will more cautious to review our overall cost structure. If necessary, we will continue to pass the pricing pressure to the customer.

This is a continued theme of the whole year. Yeah.

There always is

the time lag between the new order also the existing order. We will compensate a little bit for the time lag, because that if the component is still going higher, then we need a little bit time to adjust our price.

Yeah.

Usually, the time gap is roughly one to two quarter.

Yeah.

Thank you. Let me remind the participant online, if you wish to raise a question, you can press the raise hand button, and then unmute yourself to ask questions.

We have Meryl on hand. Meryl, please go ahead.

Hello, management team. Can you hear me?

Yes, please.

Okay. Hi, management team.

Thanks for having me. I'm Meryl from the Taipei Times.

I believe in the earnings conference last time, we talked about we have this forecast for our edge AI percentage to account for about 30% of our total revenue this year, which it was 20% last year. According to what you just said, I believe we can have a more positive outlook for our edge AI products this year, right?

I would like to ask if we have a new prediction on the specific proportion of edge AI percentage of our total revenue. This is my first question.

My second question is that because I think Advantech has been releasing positive outlooks on our robotics sectors as well. I would like to ask, because I think it's either Eric or Miller, you guys said, we have been cooperating with about 20 robotic clients last year, and I would like to ask if the number has been increasing.

Did we cut into new robot clients, or we are sticking to the 20 clients that we had last year, and we are still sticking to them instead of developing into new customers? Thank you.

Thank you, Meryl. I'll try to answer your questions.

Is the edge AI revenue contribution target this year. I think our target is still maintain 30% by end of this year.

I think right now the progress is on track and slightly beat the expectation. Q1 is 20.5% of total revenue contribution from edge AI.

According to Eric, that edge AI revenue is actually in first quarter is reached 100 $132 million US dollar. I think we are quite positive for the edge AI progress this year, because both edge AI products and edge AI components it grows very aggressively.

I think right now we do see very positive feedback from customer side in the factory automation, robotic, and smart city, transportation sectors, especially in US, Europe, and also China market, which is our major three markets. I think the first question, right now it's on track, and I think we are quite positive with the progress right now.

The second question is about the robotic clients. Globally, last year is around 20 customers, and we are still stick with those key accounts and the major players globally.

However, I think robotics still is an early stage for the global. I think the real contribution is gradually coming out, rather than a rapid growth in the short time.

I think right now, Advantech do have a very good positioning, we do have fully product offering for the building block for the robotic applications, including all the sensing technology, all the calculation core centers and also the modules. However, I think the real contribution right now still very limited in the first half this year.

I think we are continue to co-work with those key accounts globally. Yeah.

Just one appendix from my side. We have enlarged the robotics engagement, not only for Embedded sector, but also for the Intelligent System sector.

I think Linda can update a little bit about the progress for the robotics. Yeah.

Yeah. For robotics, some of customer design-in using embedded board, some of them in the box.

As you may know that last year NVIDIA released Jetson Thor, and they also have one it's called Jetson Thor IGX. That products especially targeting at robotics, either it's human robotics or robotics with arm.

With this new platform, we also have some of good customer we are working on the design-in. The new platform for this year is that Intel also launched Panther Lake.

This is also the one with several application they focus. One of them important is on the robotic as well.

Since quarter end of last year, this year, we are working with some of customer, especially in USA, on the new platform from NVIDIA Jetson Thor IGX and also on Intel Panther Lake.

Got it. Thank you.

Thank you. If anyone wish to raise question, please use the raise hand function.

I also have one follow-up question on the demand front. How would we view the demand, where it come from?

Is it more of a top-down upcycle in terms of automation, in terms of CapEx cycle? Or do you see an uneven demand coming from different subsector?

If this is all about a cycle, where are we in the cycle? Are we just at the beginning, and how long would you expect?

I think because Advantech's business is quite diversified, we covers quite different sectors. Therefore, I think both of the drivers do have a positive effect to our business.

For example, I think we do have policy-driven related sector, for example, like automation or even like semiconductor kind of subsidized by the government, especially for US or even China markets. I think policy-driven is one of the angle here, including semiconductor, high-tech, and also Infrastructure.

high-tech and also, for example, like energy or infrastructure-related. For second, we do see a lot of emergent sectors, for example, like robotic, and also maybe AI-embedded technology, especially in the healthcare, for example.

Emergent technology or emergent sector is one of the driver here. Maybe Linda can add on more information about this question.

Thank you.

Yeah. I think I will feedback on some of the vertical market on the demand cycle, especially on semicon, energy infrastructure, and the data center.

On semicon, of course, everything is driven by AI demand. This is still at the I would say that the beginning of cycle because our target customer are the semicon equipment builder, no matter is the front end or the back end the customer globally.

We still see a very strong demand from our customer where we're at the design-in. Recently, that more design request from our customer.

I think on the semicon equipment builder, that are still at the early design cycle. There are demand from all the fab, one of the very important from Taiwan and others.

Energy side, there are two perspective because the power is very critical for all the data center. That's already is Advantech's focus market, energy sector, smart grid.

We see the demand for smart grid that we provide the smart substation and virtualization, also the connectivity. That's also the demanding.

On the I would say still at the beginning because that's all fulfillment for the data center, how they're going to build up their smart grid infrastructure. Lastly, this is data center.

We are not doing business with data center, but with our automation product and customer. In the data center, in addition to the energy, they need a lot of the gateway and automation control.

That's also through indirect doing data center through our automation customer. On semicon, energy, especially on the infra side on smart grid, and on the data center also is on infrastructure-wise, is benefit to us, I think, is at the beginning of the increasing cycle demand.

Yeah. This is my answer.

Thank you, Linda and the team. Checking if anyone have any question.

While we are waiting for further questions, I would like to recap the the key points that we deliver in during the the last investor conference. Because we this year, beginning of this year, approved by the board, actually Advantech do have majority changes in our new dividend policy.

I would like to take a few minutes to recap the the key points for that. We we do have new dividend policy beginning of this year to realize more the profit sharing to the shareholders, and also try to optimize the ROE and the the value creation of the company.

The key key point for the new policy would be including three parts. Dividends format shifting from stock dividends plus cash dividends, right now shifting to 100% cash dividend-based.

Second, we increase cash payout ratio, raising from 70% to 75% up to 70% to 80%. This is kind of a range.

The third part is we also announced the special cash dividends for the next three years for additional NT$2 per share annually sourcing from our capital reserves. This is for the next three years, a period from 2026 to 2028.

Therefore, with the new dividend policy, take the the year 2025, for example, that our total EPS last year is about NT$12.25, with 75% cash payout ratio, that would be NT$9.2 per share, plus NT$2 special cash dividend additionally, that was total NT$11.2. Therefore, the the overall cash dividend payout is NT$11.2 out of NT$12.25.

I think the total cash payout ratio would be 91.4%. That is higher than the historical range in the historical.

Therefore, I think this is, again, the new dividend policy from the management team and also approved by the board. This is try to realize the profit sharing to every shareholders.

Allow me to recap this key points to the investors. Thank you.

Thank you, Grace. I saw we have two questions.

First from Rohit. Rohit, please unmute yourself.

Yes, please.

Hi. Thanks for the opportunity.

If you could give us some more color on what exactly are the kind of products going into semiconductor equipment customers and into data centers, if you could provide some flavor? Second is, both put together, what will be the sales contributions from this?

Thank you, Rohit. Maybe Linda can share.

Yeah. For semicon equipment builder, that most of our product is on edge computing.

From the front-end tool of the semicon equipment tool, they need that server grade of the that computing over there, that's all their engine. In addition to that, some of our semicon customer, they also require the IO, DIO, AIO, or some connectivity, where Advantech can provide that a bundle selling together.

That's for semicon. Some of semicon customer, they also require the rack integration.

That's also new emerging business that we are incubating. Instead of just provide them a rack server used on the semicon tool, also the full rack integration.

On data center, we are not selling server to data center. From data center-wise, on the infrastructure, they are the energy need to be monitoring.

Those requiring the gateway, again, also with some the IO connectivity. That's why we work with our OEM customer for data center.

That's some of the OEM customer, they are the automation OEM, and we work with them closely, and with them, they sell to data center. I hope that answer your question.

Yes.

Got it. That's very helpful.

Both put together, semicon equipment customers and the business for data centers, what would that be as a percentage of sales for one quarter just to get a sense?

The big portion of the revenue should be on semicon, semicon tool. Most of the semicon business, semicon equipment builder, semicon tool, from Embedded and mostly is come from Intelligent System team.

From Intelligent System team, quarter one, we have like 234, I would say, like 30% to 40%, because this quarter one, one of the growing driver is semicon from US, Taiwan, Japan, and Korea. I would say that 30% to 35% minimum is from semicon, could be higher, could be higher.

Yes, could be higher.

Okay. On

data

center,

on the other hand, data center, because we are selling gateway, the ASP is much lower. It's a gateway is not like high-performance server used on the tool.

Data center is more like we selling the gateway, could be the on-base. That revenue portion is not that big.

It's more on the quantity-wise, yeah.

Got it.

I have one That's mainly from automation product line, IoT Automation product line, yeah.

That's helpful. Just one follow-up on the memory side.

How is Advantech securing memory supplies for the next, say, few quarters? Are we directly speaking to the memory companies and signing long-term contracts, or are we relying on the spot market in case there is a shortage?

On the memory side, no, we do not talk to Micron, Hynix, and Samsung directly. We work with the module house in Taiwan.

Module house, that several of them in Taiwan, they have the long-term agreement with Samsung, Hynix, and Micron. Between Advantech and module house, we have the long-term agreement with them, the whole year that long-term agreement, and we show them our forecast.

That's how we can guarantee the allocation. Really, in case if our demand is out of our forecast, then we will still work with our module house because they have the inventory, and then we have the buffer, even though our demand is higher than our long-term agreement LTA.

Understood. That's very helpful.

Thank you so much.

Thank you. Next question comes from Lorraine.

Lorraine, please unmute yourself.

Hi, thank you for taking my questions. First question is about your order backlog as of the first quarter or as of the April.

Can you share the percentage of your total backlog that will be delivered for the next six months? One more follow-up on this question is, would you foresee any factors that will prevent you from deliver this product within six months schedule, likely maybe CPU or memory shortages?

Thank you.

For the BB ratio, as Eric mentioned during the previous session, that overall this year, the order schedule deliver in second half of this year, which means more than six months delivery, is around 47% of total Q1's bookings. I think this is based on the component situation in the current moment.

For IPC, I think the preparation usually take maybe around six to eight weeks, more than six to eight weeks. I think this is probably is quite fixed in the whole year.

I think under the supply chain situation right now, there is unlikely to push the delivery before the schedule right now. I think for the booking situation this year, during considering the component pricing still went up for the following quarters, I think our BB ratio could be in the high range for the following quarters.

That is from BB ratio points of view. Maybe Eric can share

I can share the backlog situations. We do not disclose these numbers, but just for your reference, from now till December, the backlog is over NT$1.3 billion.

For the second quarter, it's over NT$700 million. Due to the shortage on DDR4 or SSD, we are more conservative.

Our guidance is a little bit below the backlog. Here the backlog is most confirmed from our customers.

The realities, sometimes we will encounter the material supply issue, we just give a certain discounts, then give you the guidance. The backlog actually is over NT$700 million just for this is just the beginning of the month.

We will gradually increase the backlog till the second quarter. Just for your reference, yeah.

Thank you. I have one more follow-up.

Could you also share on the current build of material for memory and CPU on your component and assistant-level product? Thank you.

Sorry, can you repeat your question again, Lorraine?

Oh, sorry. The BOM cost as of the first quarter '26 on memory and CPU on your system and component-level products?

In BOM cost structure points of view, actually we don't disclose the detail as a usual basis, but yeah, roughly

It very depends.

It very depends because we have like embedded board, all the memory chip down, and we could have the edge computing with the memory module, and we have the server with the RDIMM, it's very expensive. In terms of the memory cost on over of bill of material, the percentage is really vary, depends on different product line.

Some of the board, some of the system, and depends on what the chipset, and

yeah. Lorraine, which means we are not able to disclose more detail in the BOM cost points of view.

I'm sorry, yeah.

That's okay. Thank you.

Thank you. Probably due to the limits of the time, maybe we can take one last questions.

Any inquiry from the investors or from Ally's side?

No? Okay.

I think we are all good here. Any final remarks from the management team before we conclude the call?

Not exactly. Just welcome you to join us the COMPUTEX event, especially for day two.

We already arranged more than 10 runs of product briefings, also the booth tours. It's our honor to invite you to join our COMPUTEX event.

Thank you.

Yeah. UBS also host a COMPUTEX tour, if you want to join, please register with us.

Okay. All right.

Thank you, management team. Thank you, everyone, for joining the call.

Let's conclude the call today here. Thank you.

Thank you. Bye-bye.

Bye-bye. Bye-bye.