Realtek Semiconductor Corp
TWSE:2379
Realtek Semiconductor Corp
Realtek Semiconductor Corp., nestled in the dynamic tech landscape of Hsinchu Science Park in Taiwan, is an enduring emblem of the relentless march of technology. Founded in 1987, Realtek has meticulously carved its niche in the semiconductor industry, capitalizing on the burgeoning demand for integrated circuit (IC) solutions. The company's growth narrative has been anchored around its core competency: designing and supplying a broad spectrum of ICs that cater to industries ranging from communications network systems to multimedia appliances. Realtek's prowess lies in its ability to anticipate and adapt to the rapid technological changes, ensuring its products remain indispensable to manufacturers who thrive on the cutting edge.
The heartbeat of Realtek's business model is a seamless integration of innovation and production efficiency, which enables the company to offer competitive solutions in a highly fragmented market. It generates revenue primarily through the sale of ICs used in ubiquitous devices such as smartphones, PCs, and smart home gadgets. By maintaining a keen focus on high-demand sectors—like Ethernet chips, audio codecs, and wireless communication ICs—Realtek stays ahead of the curve, creating a steady revenue stream. Additionally, its research and development efforts continue to unlock new frontiers, driving both product diversification and technological advancements that keep Realtek at the forefront of semiconductor innovation, consistently fulfilling the global demand for smarter, faster, and more efficient electronic solutions.
Earnings Calls
In the first quarter of 2025, Realtek Semiconductor reported a revenue increase of 36.68% year-over-year to TWD 35.02 billion, with a gross margin up to 51.56%. The strong performance was bolstered by customers restocking amidst tariff uncertainties. Net profit rose to TWD 4.76 billion, with an EPS of TWD 9.28. Despite a favorable inventory strategy, ongoing geopolitical tensions could affect future demand, especially in the PC and automotive sectors. Looking ahead, Realtek anticipates continued growth, particularly in the automotive Ethernet market, potentially reaching USD 700-800 million by 2026, though macroeconomic factors may pose challenges.
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Good afternoon, everyone. Welcome to Realtek's 2025 First Quarter Earnings Call. This call is chaired by Realtek's spokesperson, Yee-Wei Huang. The presentation will be available on the company website before 6:00 p.m. today. At the beginning, our spokesperson will report our first quarter financial results and give the management's remarks. After that, we will have a Q&A session. [Operator Instructions]
Note that portions of what is presented in this call contain forward-looking statements. Investors are cautioned that forward-looking statements involve risks and uncertainties. Actual results may differ materially from the results forecasted or implied in such statements. Investors should not place undue reliance on such statements.
Now, I'll pass this call to our Spokesperson, Yee-Wei.
Yes. Thank you. Good afternoon, ladies and gentlemen on the line. You are currently participating in the first quarter 2025 webcast earnings release hosted by Realtek Semiconductor Corporation.
Now, let us go through the first quarter 2025 financial results. First quarter revenue was TWD 35.02 billion, marking a 32.94% increase from the previous quarter and a 36.68% rise from the same period last year. This notable growth can be attributed to a combination of factors: customers restocking after the first quarter inventory control and proactively placing orders to bolster inventory in anticipation of market uncertainty.
First quarter gross margin was 51.56%, a marked 3.21 percentage point increase quarter-over-quarter. The main reason is product mix changes towards products with favorable gross margin. Q1 operating expense was TWD 13.15 billion, accounting for 37.6% of revenue. The OpEx ratio is 0.2 percentage points higher than that in the fourth quarter 2024. First quarter operating profit was TWD 4.90 billion, or an operating margin of 14.0%. The operating profit improved 70.3% quarter-over-quarter, thanks to higher gross margin.
Q1 non-op income was TWD 702 million, a drop from TWD 762 million in the previous quarter, mainly due to reduced government subsidies this quarter. Q1 tax in response to the implementation of the global minimum tax, the company started recognizing the relevant income tax. The effective tax rate in Q1 increased to 15% accordingly. First quarter net profit as a result was TWD 4.76 billion, or 13.6% of revenue. Q1 EPS as a result was TWD 9.28 compared to TWD 6.62 in Q4 2024, or TWD 6.10 in the first quarter 2024.
Now regarding inventory, Q1 inventory turnover days were 75 days, a notable 19 days drop from the 94 days in Q4. This drop was expected as the high inventory levels in Q4 were planned to accommodate the order pull-ins anticipated in the first quarter due to tariff uncertainties. Overall, the inventory levels at Realtek and in the market channels are healthy. We also have first quarter '25 balance sheet and cash flow statement for your reference at your convenience. This concludes Realtek's first quarter 2025 financial results.
Looking ahead to the second quarter, some customers may continue defensive stocking due to the ongoing high uncertainties in the international landscape. Realtek's operations remain robust, nonetheless. Vigilant monitoring of shifts in end market demand is essential. Starting this quarter, we will shift our management remarks from reviewing the top product lines to examining each key market segment that Realtek serves. This approach aims to offer a better understanding of Realtek's performance in relation to market trends.
So first, PC shipments during the first quarter of 2025 show a 4.9% year-over-year growth in Q1 2025, with global shipments reaching 63.2 million units according to IDC. At Realtek, we saw a higher than corporate average growth in PC-related product lines, including PC codec, PC Ethernet and PC webcam and more, driven by strategic inventory build up. This gives rise to a PC versus non-PC revenue split at approximately 36% to 64% in the first quarter.
Looking ahead for the rest of 2025, the PC industry has many tailwinds and headwinds, which make it very challenging even for IDC to comment on the full-year outlook and forecast. Specifically, most of the underlying demand factors for PCs, including the installed base upgrade ahead of Win 10 end of product and demand for on-device AI remains strong. However, the uncertainty surrounding tariffs and associated inflationary pressure and global macroeconomic risks may negatively impact demand for PCs in the following quarters in 2025. We will have to track the market progress carefully.
During the first quarter of 2025, the consumer electronics market performed well, driven by government stimulus, particularly in China and tariff-driven order pull-ins. Realtek sees growth in its leading consumer segment products, including TVs, IoT devices and CE audio codecs, matching the corporate average. Despite a strong first quarter, companies are cautious about increasing their full-year 2025 forecast due to the economic uncertainty. The networking market segment remains stable in the first quarter, with regional variations in growth and infrastructure investments.
Notably, 10G PON tender projects previously concentrated in China have started to gain traction outside the country. Meanwhile, FTTR deployments in China continued to expand steadily. The switch business held up well in the first quarter as customers strategically build up inventories to cope with tariff uncertainties. Growth was led by 2.5 gig and managed switches as Realtek focus on higher-end enterprise and private cloud switches, while also monitoring server-grade and AI Ethernet switch requirements.
Looking ahead, the PON and switch market is expected to grow, driven by emerging technologies and increasing customer demand. At the beginning of 2025, the global automotive market was forecasted to experience modest growth, primarily driven by China, where government incentives for new energy vehicles and the nation's aggressive innovation strategy fueled development.
In February, a major Chinese automaker announced plans to equip all mainstream car models with smart ADAS systems. This announcement was positively received by the market, leading to increased demand for automotive Ethernet required for these ADAS systems. Consequently, Realtek observed strong demand for automotive Ethernet in the first quarter. However, ongoing tariff pressures are casting uncertainty on the year-over-year growth outlook for the global automotive market in 2025. Despite this, Realtek's automotive Ethernet is anticipated to achieve above-average corporate growth for the year due to continued global expansion of EVs and ADAS.
[Operator Instructions] The first question is from Bruce Lu, Goldman Sachs, related to demand outlook. In light of the evolving geopolitical landscape and concerns over U.S. tariffs, what are the company's projections for the second quarter 2025 and second half 2025? Do you foresee that the demand pull-in will continue or diminish due to early orders in the first quarter 2025? And how do you relate the growing demand in the first quarter to end market recovery versus potential front-loading influenced by tariff implications?
Well, significant increase in orders during the first quarter of 2025 was notably influenced by front-loading due to anticipated tariff hikes, particularly for U.S. bound shipments. Many brand customers expedited procurement in the first quarter to mitigate the impact of expected tariff increases. At the same time, we observed that key customers have taken strategic measures to navigate the uncertainty. Companies are reorganizing their supply chains, shifting U.S.-bound manufacturing to countries with a least tariff impact, while Chinese firms prioritize domestic sourcing. Some are delaying non-critical projects to better manage costs.
Despite these challenges, there remains a genuine demand for faster and more manageable connectivity, as well as improved utilization of AI in various edge devices. It is crucial to acknowledge that geopolitical conflicts are unlikely to continue indefinitely. Consequently, while visibility regarding second half demand remains limited at this moment, we prefer not to rush to conclusion about future demand beyond recognizing the current uncertainties. Nonetheless, overall, we remain committed to our target of achieving steady growth in 2025.
Next question is from Brad Lin, Bank of America, about market diversification. How is Realtek navigating the challenge posed by global trade dynamics, particularly concerning the U.S.-China tension? And what steps are being taken to diversify market exposure?
Yes. To navigate through geopolitical tensions and tariff uncertainties, Realtek implemented several strategic measures. One, we diversified our foundry and OSAT partnerships to enhance the resilience of our supply chain while leveraging Taiwan's semiconductor ecosystem to minimize tariff impact. Two, we strengthened our compliance team to assure adherence to the laws and regulations of the regions in which we operate. Three, we build just-in-case inventory by staying in close contact with our customers and regularly reviewing our supply-demand forecast against our current inventory levels. Four, we expand and diversify our market and client coverage to achieve a balanced customer base and accelerate our entry into new markets such as automotive and servers. We continue to recruit and retain top talent, staying true to our vision of enabling a connected AI world.
The next question is from [ Rick Daiwa ]. How are macroeconomic uncertainties affecting Realtek's supply chain?
Well, the supply chain for Realtek, we are a fabless IC design company, can be affected by macroeconomic uncertainties in several ways. One, geopolitical tensions and trade policies of individual countries can create tariff and non-tariff barriers that disrupt the supply chain. Two, national policies promoting self-sufficiency through government subsidies may lead to oversupply and irrational price competition, ultimately harming the supply chain. Three, fluctuations in end market demand and economy volatility are often magnified by the semiconductor supply chains large [ time ] concern. Facing the uncertainties, Realtek remains cautiously optimistic, while implementing strategic measures mentioned in our reply to the previous question.
The next question is from Sunny Lin, UBS, regarding the gross margin outlook. Guidance on gross margin in second quarter 2025. What is the possible -- how is it possible to sustain gross margin into second half 2025? How will the latest round of U.S. tariffs affecting gross margin outlook?
Well, among the 3 factors influencing gross margin, namely average sales cost, average sales price and product mix, we recognize that product mix currently has the most significant impact. Generally, when the macro economy is strong or orders are robust, the mix tends to favor high-margin products. And conversely, when macro economy weakens, lower-margin products become more prevalent. A prolonged high tariff, if happens, is anticipated to dampen the macro economy, thereby exerting pressure on gross margin. Regardless of macroeconomic conditions, Realtek is committed to evolving our product portfolio to deliver higher value through AI-enabled products or products that facilitate AI. Despite the challenges, Realtek has managed and will continue to manage our gross margin favorably.
The next question is from [ William Young ], JPMorgan, related to R&D expense and OpEx. Amid with macro uncertainties, what is our top priority or products to spend R&D dollars in 2025? What is our latest OpEx ratio and dollar guidance for 2025?
Well, Realtek's current R&D priorities in no particular order include advanced node designs, less than 7-nanometer, cutting-edge high-speed service over 100 gigabit per second per LAN and various aspects of spec upgrades of current products, and AI hardware and software development for diverse applications. It is anticipated that R&D expenses will increase as the company continues to grow, although this will be controlled and modest. In the first quarter, our OpEx amounted to TWD 9.7 billion with an OpEx ratio of 37.6%. The higher-than-expected figures were primarily due to high selling expenses, largely comprised of product mix-based sales commissions. Nevertheless, we anticipate a decline in the OpEx ratio in the medium to long term.
Next question is from Sunny Lin, UBS. What is the current inventory level at Realtek and its channels? What is your latest inventory management strategy, especially with U.S. tariffs soon taking effect?
As previously reported, Realtek's Q1 inventory turnover days were 75 days, reflecting a significant 19-day quarter-over-quarter drop. This decrease was anticipated as we began accumulating just-in-case inventory in Q4 to manage the uncertainties associated with tariffs. We will continue to follow the just-in-case inventory strategy. We maintain close communication with our customers and regularly review our supply-demand forecast against current inventory levels to ensure its health. Currently, we find the inventory levels, both in-house and within the channel to be very healthy. Additionally, we observed that end customer inventory levels may be elevated as part of their strategic -- their strategy to mitigate tariff-related risks.
Okay. Next is a question related to PC from Daniel Yen, Morgan Stanley. What is the full-year PC shipment outlook for 2025 now after the tariff impact?
As previously shared, according to IDC, total shipment of PC grew by 4.9% compared to a year ago, reaching 63.2 million units in the first quarter of 2025. This surge in shipments was driven by OEMs increasing their deliveries to the U.S. in anticipation of forthcoming tariff announcements. As of today, the U.S. has officially exempted semiconductors, smartphones, computers, including PC and laptops and many related electronic devices such as gaming consoles, displays, memory cards and flash devices, flash drives from newly imposed reciprocal tariffs.
While these exemptions offer immediate relief, the situation remains fluid as U.S. trade policy continue to evolve. Despite the Q1 shipment surge, many predict this increase to be temporary. PC demand is expected to taper off or even contract in the later part of 2025, if tariffs take full effect and inventory levels normalize. In its latest update in February, IDC forecasted a 3.7% increase in PC unit shipments to reach 273 million units for the full-year 2025 compared to 2024. Given the uncertainties, the 2025 full-year PC shipment growth is likely to be modest at best, potentially even declining depending on the severity and duration of tariff impacts, a sentiment echoed by most of our customers.
Another question on PC from Aaron Jeng, Nomura. After announcement of tariff, do you receive any order adjustments from PC customers? Do you expect to share the cost if required by customers?
We see different PC customers having various responses to tariff announcements. Not that many have already accelerated shipments, especially those to the U.S. in Q1 to stockpile inventory before the April 2nd announcement, leading to a strong inventory build-up for the quarter. Following the tariff announcement, PC makers adjusted orders again to benefit from the 90-day freeze on tariff, but doing so cautiously to avoid misjudging post freeze demand. Based on what we know, semiconductor suppliers have not yet been asked to share the cost of tariff. The burden of tariff, if they are enacted, seems likely to fall primarily on the PC importers and consumers.
Next question is from Sunny Lin, UBS. Are the tariffs starting to impact the technology upgrades like AI PCs or Wi-Fi 7 or multi-gig Ethernet with higher cost?
Well, the tariffs are indeed affecting technology upgrades as we speak in areas such as AI PCs, Wi-Fi 7 and multi-gigabit Ethernet infrastructure, primarily through increased costs and supply chain disruptions. One of the key intentions behind these tariff is to encourage semiconductor production to move back to the U.S. However, this shift faces significant challenges, including high production costs and labor shortages, which could threaten long-term affordability. In essence, whether due to tariff or intended reshoring, these increased costs are having an impact on technology upgrades.
The next is a question related to Wi-Fi from Wei Lun Yang, JPMorgan. May we update the Wi-Fi 7 penetration rate estimates for PC and networking in 2025?
Well, we previously reported that Wi-Fi 7 penetration reached over 4% in 2024 and was projected to increase to over 10% in 2025. Despite the uncertainties surrounding tariff, the Wi-Fi 7 market appears to keep expanding. In light of the latest product plans from key customers for this year and next, we observe the following; on PC, the Wi-Fi 7 penetration rate is projected to surpass 10% for the entirety of 2025 with the potential to exceed 20% in 2026. Regarding router, the Wi-Fi 7 penetration rate is expected to be lower due to delayed adoption by operators and decreased consumer interest. Major operators like China Telecom seems to be still utilizing Wi-Fi 6.
Another question on Wi-Fi 7 from Sunny Lin, UBS. What is the current feedback from customers? How is this lining up with competition's Wi-Fi 7 product, especially with cost and performance? Also, can you update the competitive landscape for Wi-Fi and Ethernet, et cetera, in China in recent 6 to 9 months? Are Chinese competitors catching up on Wi-Fi 6 and Wi-Fi 7 capabilities?
Well, customers have given positive feedback about Realtek Wi-Fi 7. For example, our Wi-Fi 7 solutions for PC introduced a new power saving architecture that excels particularly in stand-by mode, outperforming our competitors. And our Wi-Fi 7 architecture for routers is exceptionally flexible, making it an ideal choice for the retail market with multiple configuration option. It is especially suitable for mesh routers, where it strikes a perfect balance between cost and coverage. Realtek further introduces the market only multifunction high-speed wireless IC featuring Wi-Fi 7 with Realtek Wi-Fi sensing and positioning, Bluetooth 6.0, IEEE 802.15.4 for ZigBee 3.0 and Open Threat while supporting AECQ100 Grade 2 specification and secure boot mechanism, winning accolades from customers for a wide range of applications, including PC, TV, game console, smart surveillance, environmental monitoring and automotive.
In the Chinese market, we observe that local companies primarily offer Wi-Fi 4 and basic 1x1 Wi-Fi 6 solutions, which Realtek avoids competing solely on price. Instead, Realtek aims to attract users by providing additional features and superior cost performance. While Chinese competitors are striving to expand their coverage to maximally meet domestic market needs in Wi-Fi, Ethernet and more. Realtek is advancing rapidly with enhanced features to maintain a competitive edge in the global market.
Next question is from Lucas Liu, KGI regarding tender projects. What is the status of the China tender projects for 2025 and 2026? Also, can you provide an update on the XG-PON upgrade in the U.S., Europe, China and other regions in 2025?
While, we are closely monitoring the impact of U.S. tariff policies on the telecom market, but the visibility for the rest of 2025 and 2026 remains low. Here are what we have observed by the end of the first quarter. In China, the progression clearly indicates a move toward 10G PON, judging from the shipments related to previously awarded projects. Also, the FTTR deployments in China continue to expand steadily. In America and Europe, we see aggressive deployments of 10G PON products. North America is focusing on Wi-Fi 7 tri-band HGU project, while Latin America appears to concentrate on GPON AX3000. Europe is focused on Wi-Fi 7 dual band HGU projects.
In emerging countries, telco projects predominantly use GPON with varying Wi-Fi standards from Wi-Fi 5 to Wi-Fi 6. We have observed an increase in demand in India and Vietnam with an annual growth rate in the mid to high single-digit percentage range. Overall, we observed a growing trend where China tender projects increasingly favor domestic semiconductor companies. Simultaneously, we are witnessing expanding opportunities globally, particularly in the U.S., EU, India and emerging market.
The next question is related to automotive Ethernet business from Kevin Wang, Mizuho. What is sales contribution from automotive business for Realtek in 2025? How should we expect the market growth for automotive Ethernet market and Realtek's market share changes in 2025 and 2026?
While Realtek automotive Ethernet business experienced significant growth in the first quarter, continuing its trend of outperforming the corporate average for 5 consecutive years. Automotive Ethernet has emerged as one of Realtek's leading product lines. The strategic importance of Ethernet in the automotive industry is underscored by Infineon Technologies recent acquisition of Marvell Technologies automotive Ethernet business for USD 2.5 billion. According to Infineon, Ethernet is a key enabling technology for low latency, high-bandwidth communication, which is crucial for software-defined vehicles. Additionally, it has significant potential in adjacent fields of use such as humanoid robots.
The automotive Ethernet market is expected to continue its growth trajectory in the coming years. However, as previously reported, the automotive market in 2025 and perhaps even 2026 is anticipated to face challenges stemming from tariffs and geopolitical tensions. Realtek remains confident in maintaining its leadership position through these turbulent times, considering our robust customer base and comprehensive automotive Ethernet product portfolio.
Another auto question raised by Bruce Lu of Goldman Sachs. With the automotive Ethernet market expected to expand quickly, driven by the rising demand for connected and autonomous vehicles, could you share updates on any recent projects in the automotive sector? Additionally, in what ways does Realtek's automotive solutions stand out from the competition? Do we have an updated perspective on the total addressable market for automotive Ethernet in 2025 and 2026?
Well, various market reports indicate significant growth in the automotive Ethernet market. The total addressable market is anticipated to reach between USD 700 million and USD 800 million by 2025, 2026 and could exceed USD 1 billion in the following 3 years. This growth is driven by the increasing adoption of software-defined vehicles that demand higher data intensity and connectivity.
Prior to Infineon's acquisition, Marvell's automotive Ethernet business, well, prior to Infineon's acquisition of Marvell's automotive Ethernet business on April 8, NXP announced in December 2024, its acquisition of Aviva Links, a provider of automotive service alliance compliant in-vehicle connectivity solutions. These actions reflect an industry-wide shift towards software-defined vehicles that require high-speed standardized in-vehicle networking solutions. Realtek has consistently emphasized the importance of automotive Ethernet and [ ESA ] technologies for several years, positioning our self at the forefront of this automotive evolution and preparing solutions for the sector's growth. This strategic foresight provides us with a competitive advantage in serving our customers.
Another question on auto from Michelle Wang, [ Wubon ]. Marvell will sell automotive Ethernet business to Infineon. May I know if there is any impact to our automotive Ethernet business?
Well, as previously mentioned, it is important to emphasize the significance of Marvell's position in the automotive Ethernet market and their decision to sell this division may suggest their difficulties in maintaining competitiveness. Conversely, Infineon's strategic acquisition speaks loudly about the critical role of automotive Ethernet in their product line-up, reflecting their desire to complete the missing puzzle to remain the top automotive IC solution provider. This move underscores the ongoing evolution and growth of automotive Ethernet technology. Realtek has consistently performed well against major competitors like Marvell, and we are confident in our ability to continue thriving in this sector.
The next question is from Sunny, UBS, about TV. What's your current forecast on TV shipment in 2025? With last year's high base, are you optimistic for growth this year?
Well, due to panel price stabilization, potential tariff increases and China swap old for new stimulus policy, there has been strong initial demand for flat panel displays, resulting in increased TV production from late Q4 2024 to Q1 2025. The demand for second quarter 2025 appears steady. However, supply-demand imbalance is anticipated in 2025 -- is anticipated in 2025 with a tight supply in the first half of the year, followed by an oversupply in the second half. Amid the rapidly changing tariff policy, TV manufacturers may need to adjust their shipment target, leading to a correction in demand for the entire year. As it stands, the global TV shipment for 2025 is likely to decline slightly year-over-year according to [ Omdia ].
The next question is from Lucas, KGI related to smart glasses. Are there any updates to share on the smart glasses business? When can we expect a more meaningful revenue contribution? What is the sales target for this segment?
Well, the initial success of Ray-Ban Meta smart glasses has sparked a rise in global smart glasses shipments. Many follow-up products and competitors are now emerging, particularly in China, striving to build on Ray-Ban's achievements. Users are mainly interested in smart glasses for hands-free AI-driven digital interaction, augmented reality experiences, communication, content creation and professional productivity. As these competitors work on enhancing battery life, camera quality and reduce weight, Realtek offers a low-power AI smart glasses chipset solution.
This includes 2 chips, one with a high-performance CPU, AI engine, dual band Wi-Fi and image ISP. The other with an MCU Bluetooth 5.4 LE audio and DSP supporting multi-microphone noise reduction and hardware voice activity detection. Realtek's solution provides exceptional computing capabilities and low power consumption with millisecond response times for seamless keyword spotting voice command processing, steady visual and electronic image stabilization, a clear 2K video quality, AI power, HD image recognition and real-time translation for a seamless digital experience anywhere.
Our leading customers are at various stages of product development with releases expected in the second half of the year. At this point, we prefer not to comment on the expected revenue contribution. Suffice it to say, nonetheless, we do not expect a new product to ramp up quickly in its first year of introduction.
Next is a question raised by Bruce Lu, Goldman Sachs related to humanoid robotics. The company has previously mentioned a focus on emerging sectors like humanoid robotics. Are there any updates regarding the firm's expectations for revenue diversification stemming from these new applications in 2025 and beyond? If so, when does the company anticipate this growth will begin? And what percentage of revenue contribution is expected once fully developed?
Well, let's say, NVIDIA has projected that humanoid robots could be introduced within the next 5 years, with an initial focus on industrial environments such as factories. This was highlighted during NVIDIA's keynote address at its Annual Technology Conference, GTC, held in March 2025. Industry experts generally agree that the first significant adoption of humanoid robots will occur in controlled settings like manufacturing, where tasks are clearly defined and automation is more straightforward to implement. It is worth noting that along with NVIDIA, 2 companies that are I see capable and vocal about humanoid robots are Tesla and Infineon, all with extensive experience in the automotive industry.
As in the case of automotive applications, although Realtek may not be the one offering the most powerful SoC for humanoid robots, there are significant opportunities for our wired and wireless connectivity solutions, as well as its AI-driven audiovisual technologies. The integration of Realtek's advanced connectivity and multimedia capability can greatly enhance the functionality and user experience of humanoid robots.
Next question is from Rick Hsu, Daiwa. Can you share some more details about your collaboration with E INC. on the second-generation system on panel ESL?
While E INC and Realtek have collaborated to develop the second-generation system on panel electronic shelf label technology, featuring significant advancements in design, efficiency and sustainability. The scope of collaboration includes the following; on technology integration, Realtek contributes its Bluetooth 5.0 SoC and expertise in RFIC bonding, while E INC focus on panel design and chip-on-glass integration. On product readiness, the design is commercially viable and set for mass production. On future development, the partnership is advancing color displays, lower power consumption and cost reduction for next-generation ESL alongside applications in healthcare using real-time Wi-Fi and energy harvesting Bluetooth and display scaler controllers.
The last question is from Daniel Yen, Morgan Stanley. Could you give us some updates on the ASIC business?
Well, we are currently still in the preparatory phase and are progressing according to our plan. Specifically, we are advancing our design flows for advanced process nodes, including 4-nanometer and 5-nanometers and developing relevant IPs such as PAM4 10 gigabit per second -- 100 gigabit per second, 200 gigabit per second service for targeted application, including edge servers.
Due to the time constraint, we will conclude the meeting now. Thanks for your participation today. Please feel free to contact our IR team if you have further questions after the meeting. The replay will be available on the IR page of the company website before 6:00 p.m. Thank you, and have a good afternoon.