Financial Data and Key Metrics Changes - Revenue for the first quarter was $6.6 billion, an increase of 4% year over year [5][14] - Adjusted operating margin was 6%, with adjusted EPS reaching a record $0.72, reflecting a more than 40% increase [5][14] - Gross profit totaled $596 million, with gross margin improving to 9.1%, up 130 basis points [14] Business Line Data and Key Metrics Changes - Reliability Solutions revenue was $2.9 billion, down 2% year over year, impacted by macro pressures in Automotive and Renewables, but operating income improved to $172 million [15] - Agility Solutions revenue reached $3.7 billion, up 10% year over year, driven by strong cloud and AI demand, with operating income at $240 million [16] Market Data and Key Metrics Changes - Americas revenue rose to 49% in fiscal year 2025, up from 38% in fiscal year 2020, while Asia declined to 30%, down from 41% [11] - The company operates over 49 million square feet globally, with significant manufacturing footprints in North America [10] Company Strategy and Development Direction - The company is focusing on high-growth end markets such as data centers and power, aiming to transform from a contract manufacturer to a strategic end-to-end partner [12][13] - Investments are being made in advanced manufacturing capabilities, including AI and automation, to enhance productivity and meet evolving customer needs [12][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite market uncertainties, highlighting a strong start to fiscal year 2026 [12][19] - The updated fiscal year 2026 revenue guidance is between $25.9 billion and $27.1 billion, reflecting an increase in the midpoint by approximately $600 million [21] Other Important Information - Free cash flow for the quarter was $268 million, representing a conversion rate of 98% [16] - The company acquired a new manufacturing site in Poland to double its power capacity in Europe [18] Q&A Session Summary Question: Margin outlook for the year - Management maintained a margin guidance of 6% to 6.1%, citing tariff impacts and investments as factors affecting margin performance [27][28] Question: Data center revenue trends - Management confirmed a strong outlook for data center growth, with expectations of 35% year-over-year growth, driven by both cloud and power segments [31][32] Question: Market evolution and internal investments by hyperscalers - Management views the trend of hyperscalers investing in their own capabilities positively, emphasizing the importance of integrated solutions [36][38] Question: Full year guidance context - Management clarified that while Q1 results were strong, the full year guidance reflects a cautious approach and ongoing investments in growth [39][41] Question: Capacity constraints and investments - Management acknowledged capacity constraints but expressed confidence in new investments to meet demand, particularly in AI infrastructure [48][50] Question: Tariff impact on guidance - Management indicated that tariffs are largely pass-through costs and will not materially impact revenue growth rates, though they do affect margin performance [59][61] Question: Segment growth expectations - Management expects automotive and consumer markets to remain weak, while healthcare and industrial sectors are projected to grow [64][66]

Financial Data and Key Metrics Changes - The company achieved first quarter sales of $212 million, in line with expectations and normal seasonal trends [6] - Non-GAAP diluted EPS was $0.52, exceeding the high end of guidance, with a GAAP EPS of $0.68 [17] - Total revenue declined 5% sequentially, primarily due to a 6% decline in IC revenue [13] - Operating cash flow was $78 million, representing 37% of total revenue, with total cash at the end of the quarter at $642 million [18][20] Business Line Data and Key Metrics Changes - IC revenue was $154 million, with mainstream IC declining 9% year-over-year due to industry softness [13][15] - High-end IC business increased from 30% of total IC revenue in FY2023 to 39% in Q1 FY2025, with strength in the 14nm to 22nm geometry ranges [15] - FPD revenue remained stable at $58 million, maintaining market leadership despite market headwinds [16] Market Data and Key Metrics Changes - The semiconductor industry is experiencing increased costs from tariffs, but the company’s strategy to invest in regional capacity is expected to mitigate this impact [10] - Demand for photomasks is driven by AI applications, particularly at advanced nodes, while mainstream demand is weak due to low utilization in automotive and industrial applications [10][28] Company Strategy and Development Direction - The company is focusing on high-end business to improve ASPs and is expanding capacity in projected growth regions like the U.S. [11][20] - Investments are driven by specific customer opportunities, with a commitment to $200 million in CapEx for 2025 [19] - The company is cautious about the economic outlook for 2025 but remains confident in its long-term growth drivers [21] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the flat revenue guidance for Q2, attributing it to weakness in mainstream IC and uncertainty in the economic environment [26] - The company anticipates a clearer picture of fiscal 2025 by the end of Q2, with ongoing focus on high-end segments [26][72] - The geopolitical landscape and macroeconomic conditions are seen as top risks for 2025 [72] Other Important Information - The company has a modest $3 million of debt remaining and continues to build a strong cash position for financial flexibility [20] - The company is monitoring its capital allocation strategy, balancing between CapEx, M&A opportunities, and share repurchases [39] Q&A Session Summary Question: Why is the guidance flat quarter-over-quarter? - Management indicated that weakness in the low-end mainstream market, particularly in Asia and Europe, is impacting revenue outlook [25][26] Question: How is the supply-demand equation in mainstream? - The company maintains firm pricing in mainstream but notes a smaller overall market size due to low utilization in automotive and industrial applications [28] Question: Are there increased competition from local Chinese suppliers? - Yes, there is increased competition, but the company is focusing on the middle and high-end segments to maintain stable ASPs [30] Question: What challenges were faced in scaling up to Gen 8.6 AMOLED screens? - Challenges included scaling specifications and integrating advanced technologies, but the company is well-prepared for production [32][34] Question: What is the current mindset on buybacks versus M&A? - The company remains cautious but has the capacity to act on M&A opportunities if they are accretive, while also considering share repurchases [39] Question: How much of the U.S. IC capacity is tied to long-term purchase agreements? - The current investments are primarily driven by organic demand rather than the CHIPS Act [55][60] Question: What are the top risks for 2025? - The top risks identified are macroeconomic conditions and geopolitical tensions [72]