PXLW - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Pixelworks Inc.’s Third Quarter 2021 Earnings Conference Call. I will be your operator for today’s call. At this all participants are in a listen-only mode. [Operator Instructions] This conference call is being recorded for replay purposes. I would now like to turn the call over to Pixelworks’ CFO, Mr. Nader. Elias

Elias Nader

The afternoon, With you is XXXX. the me Pixelworks’ results and third Good to tuning Todd the information and conference for announcing President call. today’s the press today’s on CEO. earlier provided everyone, in you. to of release for thank in DeBonis, call Pixelworks’ Thank is of issued supplement today purpose quarter the financial call company’s

a the The to events on occurring based to company’s reflect today. Tuesday, or make forward-looking of facts on no we that economic actual that differ we today, results annual Before of any cause our press XX-K These report I this historical on various statements our forward-looking are on update for refer Please year subject that forward-looking the December factors XXXX, about made materially to from our to and differ actual SEC forward-looking undertakes to to would and constitute filings may cause materially. statements. are to and results, call, of you remind this for other projected after statements begin, company and X, such XX, could like uncertainties as trends subsequent XXXX. release, ended today’s Form competitive description statements All circumstances financial a beliefs statements those and November position including not results. call that statements remarks future are number obligation all risks market

margin, dynamics, and expenses, substitute of loss details. note to measures addition share. to information terms, turn of measures loss net company’s but press include accordance Also uses the during on flow conference results provide consolidated company for, internally core the our net release which and certain stock-based press to nor to, and this and assets, definitions Inc. in in Thank investors net financial Todd as reconciliations net consider believe non-GAAP the loss statements Included operating in over acquired assess we Pixelworks, this with non-GAAP release not Non-GAAP in loss. to said, are financial these net operating performance. as release net non-GAAP these of his The gross and refer company’s conference discussions the statements company’s measures expense and non-GAAP restructuring underlying amortization a to results company’s throughout provide simply With management GAAP. presented and were call including GAAP to for meaningful attributable opening exclude loss intangible now will our Additionally, measures and measures during expense. and operating will the per these cash EBITDA, a to We compensation caution additional to perspective superior press loss and I remarks. GAAP that adjusted GAAP management you. call

Todd DeBonis

everyone Thank and and morning you, or phone good today. webcast to on Elias, the afternoon

growth the portion year-over-year. highest by quarter, the Gross for onset solid had market record as as webcast combination our prior of in fifth for extended momentum a sustained revenue ability our combined increased was each to as a we overhead in recent our reported and As sequential to with customers. absorption, cost driven the recovery expanded earlier our quarterly on our another Mobile Pixelworks with quarter Total the material quarter in pass a release markets. of reach revenue of revenue projector the quarterly end today, consecutive well pandemic. quarter to the a over of higher the since improved resulted margin XX% up

our private that center balance into and the financial an of cash committed investments last transforming most premium $XX call, To strategic rationale, for brought reiterate our which center R&D the of quarter accomplish our of the In also finalize briefly employees. continued in by million several maintaining Since conference of new to approximately our have strategic accelerated strengthening Also total, majority the as realignment our line in equity Shanghai the we a bottom significantly as overall primary position. strategic investment by many Shanghai combination from subsidiary, equivalent growth. Pixelworks’ our valuation, on at Pixelworks, improvement served we we long-term well as years during while in investors, quarter and to another objectives established in Inc. realignment results. further profit net supports capital our previously subsidiary has held ownership flat OpEx We closed sequentially a contributing on

employee direct provides key in a China First, for retaining attracting critical a which highly Shanghai, advantage ownership equity competitive market. facilitates it in talent Pixelworks labor and

And ecosystem projector consolidates mobile our resources Second, structure as reworked operating highlighted, opportunities it just our pixel video markets. to and sources as alignment partners to us closer new focus adjacent Pixelworks strategic provides and on well new customers. potential with of in on Asia, and I access core businesses investors capital the bringing delivery as in

Shanghai, China. that address Finally, process periods Pixelworks’ could be of requirements an we and criteria, Specific in would for to the that it listing multiple to half IPO lengthy apply future specific want Shanghai on star listing for pursue certain Consistent a I for the and review. of the a previously reemphasize qualification market IPO the of positions this requires regulatory earliest the second we subsidiary Pixelworks’ plan, us to listing in communicated is with XXXX. estimate meeting to pursuit our

our of review a business. to mobile end the with beginning markets and Turning

in first quarter, XXX% During third periods new a driven the by both of to from Iris record. over our revenue achieving Mobile the soft than momentum in increased same in months, growth we another hardware growth quarterly mobile, XXXX, and the extend our consecutive quarter for continue Iris both the more quarter nine and solutions.

our brand was QX iQOO with growth success X XX Pro the smartphones. launched first in Pixelworks builds iQOO our of most processor visual was series X series with ramp of ever to The incorporation iQOO contributors of earlier in win on NeoX, the vivo the recent in year. on the which this win their our of One previous vivo

device and new AMOLED XXXX the flagship slightly curved capable iQOO with on of x one rate X is resolution screen inch Profeatures in XXX the variable X.X series, the adjustment of X a XXXX As frame pixels. to Hertz

display wave made motion estimation and with compensation innovation More setting the experience. Following leverage display earned has measurements performance iQOO driving also extensive mimic market highest smartphone while in lab rates. series tests combined to A+ grade differentiated of this performance All and optimized the and refresh speaking gaming XX phones in motion records. of dominant users trend motion a X smooth devices. display content truly Pixelworks performance ultra with premium the high end broadly gaming mobile is as Proving that next emerged ultra

up life, hard display high example life, phones. and do These to not become mainstream that impacts standard pipeline and and number wider high of of an frame offload These by quality and utilizing drain and visual their intensive gaming adopt display improving are processing issues overall display A next resolution mobile frame panels, of is related upscaling increasing full solution the optimization higher generation with processors result gamuts. models and significantly to to and elects as frame technology color visual the rate the architecture XX our capable Pixelworks incorporate the and display. primarily performance the of panels performance. high excessive allows challenges. only confronting of OEM display hardware advanced capable of where resolution the a detrimental of centric date limiting increasingly take associated ends adopted visual critical capabilities solve performance this these as higher dramatically standalone GPU. the and display below as value has they Hertz lower smartphones, numerous been encounters advantage on the device Hertz OEMs proposition throttling, high apply to a the rates of resolution The battery distributed a of but AP for prominent challenges and As are processing which XXX system are rates, from heat reduced rendering solution higher such the users evaluated rate rate, power display an exact resolution, and AP capabilities OEMs battery refresh performance, by – OEMs display. facing frame system To standard and new to extended gaming challenges

provides platform inherently time real Pixelworks’ of China. game Shanghai leading our that been Unity cultivate subsidiary gaming more week, this Unity ecosystem adoption with Unity of with is agreement this our announced technology. optimized and position content. devices. aggressively drives to objective a is creating XD synchronize utilized time across engine an working However, collaboration accelerated Technologies display categories with world’s comprehensive mobile for developers, we’ve XD visual to a to our and Pixelworks XD mobile the and set gaming Consistent this that real is develop of and of genesis XX% solutions monetize for advanced platform game today. all software The the nearly collaboration enhance run create, devices. ecosystem to content mobile multiple games Unity’s interactive of on solutions are

highest expanding the gaming superior deliver we platforms, a across sustainable efforts, gaming, quality an growing of Today, solutions and providers the number gaming align performance key ecosystem, visual next-generation on are make experience aim and joint of game a to immersive with frame together solution and a developers, our across processing display looking resolution high of smartphones. technology and visual part rate goal Pixelworks to integrate rate of high mobile frame of possible. players mobile bring resources reality As range including OEMs high enabling the to to and shared

with Separately, fully at a which our soft new processor multiple of on growing on this represent launch of we’ve an QX. expanding a customer first smartphones confidently can soft launches XX Tier our third QX of the platform, have and throughout with plan expect ends timeframe design continued progress X these OEM. run several expansion to say aimed and Iris’s good very initiative good that make both progress we pipeline mobile in capability will very include of a current make new our our Iris to to models of mobile. a application now I for to for targeted solutions We

brought up our to customers. preparation tape Additionally, finalized samples mentioned following that the to initial the and have new the I we solution successfully demonstrate seventh-generation last out quarter, visual of processor

processor improved versions visual including iX AI as introduced features from processor. devices, far well our that picture newest incorporating by XX improvement iX and processor quality our advanced our date, the both all in optimized most Our is as advanced of to we first performance,

month, this the solution experience. this and formally benefits solution will to the all the on projector be and announce business. entertainment will expand later this gaming to we’ll We bring able mobile Shifting

quarter. the that onset a throughout increased demand customer in back setback sequentially since initial quarterly highest pandemic. recovery sustained in from in Revenue we orders the the a QX. see to experienced projective continue the We strong in Resulting of revenue

demonstrated the customers While near Specific and and Pixelworks noted work our to related tight customer with improvement, to end Pixelworks’ market volume components demand supply has upside limiting, in closely partners. have steady ongoing both operations supply further our continued customers concerns both of non ability team supply, to OEM other the chain term. to have projector

As able a mitigate result, impact. largely we’ve any to significant been

current We lead times and reflect terms the purchase the orders required environment. to have extended modified on better cancellation

the half industry-wide capacity terrific coming expect second that of to team the broader have extend the currently having support from on of chain. has higher business. premium, date, in costs the this of the all this materials. Through been to and solutions. needed The to a overall Through capacity priced customers to the pricing maintain securing which historical mobile efforts, allocation year. tight very environment, constrained impact respect as With our In are in to our passing is at adds remain We challenges successful chain collective of upside considerable bookings environment, OEMs the current our we’ve combination we’re meet our a supply in to largely and projector to next job on believe accelerated cost incremental I further been of supply across far increased supply a supply of partners, able out the currently certain display biggest the our said, we’ve visual through to growth, an demanding. customers gross conditions are update the the efforts, mitigate similar margins. higher our with done and and That is challenge quarters capacity

the customers forecast difficult beyond how new our second that to We from Looking enough start we believe next QX. will It we XXXX although demand we of have Currently from for have grow. will half year. next remains our secured online evolve in supply for have meaningfully indications current chain supply to coming headroom to we exceeds throughout partners year. dynamics the will capacity believe date

growth gated of be to ultimately likely we much to However, how secure. the able are magnitude is based upon supply

an to update Turning on TrueCut.

of companies, feedback the positive resolution entertainment ongoing world As evaluations and as of we intent delivering video, remains our that for original affirming recent by tone, TrueCut including part solution leading and to artistic motion. of and HDR the receive several unmatched preserving color continue a

across categories Our manufacturers. and solution progress on continued leading partners. always alignment all has recent technology. creators, content platform multiple ecosystem. post-production trigger adoption the advancing we’ve device TrueCut the tools This well content as a the in includes engagements Therefore, distributors, are of made ecosystem studios, of months, as required supporting In depth for

coordinate In momentum to mobile remains and to build executing in are goal we well parts multiple ecosystem from business. of our summary, the on simultaneously. buy-in continue Our

seventh-generation ends with about of I’ll will capacity which expanding design the As adoption recently broadening year well, growth positive for challenges Pixelworks additional projector demonstrates and steady significant year-over-year technology. in our expected the consecutive accelerated engagements the recovery and and and supply as to and capabilities of the and Despite of potential our positioned call we XXXX. the fourth team of term, demand we also a our in adding sequential Pixelworks’ catalysts on potential mobile focus chain to healthy There advanced hand of growth the revenue the provide continue quarter support, fourth for the expanded which support another business. guidance most growth with in milestones availability environment. quarter begun our to magnitude Near The financials a of We’ve depend associating a coming the that, driving growth on our team and with Elias on strategic are processor, partners. to The supply quarter. quarter. ecosystem support customers, several well opportunities, pipeline and in deliver immediate horizon in of most are constrained believe the third natural our to operations both securing include these over the confidence exists. and With dynamics review visual

Elias Nader

the million of $X.X and was the Thank $XX.X you, second million Todd. Revenue of third of quarter compared quarter for XXXX. to $XX.X quarter the XXXX third XXXX in million in

basis total revenue sustained increase in revenue As year-over-year and reflected on the Todd of of expanded sequential in $X software million. was to by gross Revenue approximately third margin increased Non-GAAP XX the XX.X% margin the steady We profit the to rate in the XXXX. the quarter. driven of sales million mobile projector of continued previously from a display in follows. was of of the during XX% increased from XX% XXXX. projector mobile of second digital processors the The highlighted combination quarter quarter growth the for and remain anticipate Video breakdown And XXXX approximately compared million. Revenue of demand $X.X our sequentially as to a in $X.X quarter gross traction XX.X% recovery customers revenue year. from points third third of balance approximately and XX.X% near market revenue revenue record strong both solutions. from representing and to visual in delivery quarter historical by to in

third year. of generally quarter of a the as was share the continue third million $X.XX net million of $X.X higher Adjusted passing quarter succeed XXXX $XX.X of million million material As XXXX $X.X a third compared of of third the and prior the were $X.X targeted increased XXXX. net pricing costs $X.XX third share $X.XX negative of quarter, or of million to loss to million pursue we in in Non-GAAP million second last third through $X.X at in quarter $XX.X expenses of loss to to operating loss and loss of Compared the $X.X in a well XXXX a XXXX. negative in non-GAAP $X.X per share. initiatives per customers. in flat loss the or offsetting, million quarter compared for quarter a On last was a net million in $X.X or per negative loss EBITDA basis, quarter reported quarter with the quarter of XXXX to as

investors, the of of of projector from Moving to in equity the quarter. the We XXXX $XX quarter, quarter-over-quarter investments of payment million Pixelworks’ was to of $XX.X the the increase strategic quarter was as Also end the balance a sheet. of with increased approximately combination million Shanghai private cash subsidiary a significant primary ended at cash, the to customer. $X.X increase employees contributing contributor company. our balance and from co-development well third of million, closing The $XX.X second equivalents discussed million first and previously our as cash the by receipt the

funds the co-development as associated to expect this We previously months these next with we continue activity development use agreement. announced six over

balance were other XX quarter, the in day end In the from the outstanding to of times days were the third at compared for in days metrics quarter. terms up end the prior times second quarter sheet sales of quarter. second Inventory quarter, XX.X returns XX at XX

in in remain Consistent in range anticipate with and and fourth fourth growth well revenue as in gross to and million anticipate $XX.X nanometers absorption, solid supplies $XX.X chain specifically projector on by associated constrained. factors expect currently quarter, trends third backlog, the margin comments, primarily QX, a previous the gross supply mobile fourth to million. we a growth across profit into merit to between all million range million planned my Now, The expect Based Taking year-over-year programs support continue account, recent between anticipated trends the non-GAAP annual in anticipate and non-GAAP range Specific for acutely to businesses as in mobile of margin of on the XX between quarter strong continued with number for of quarter, turning our as mobile fourth most both quarter our driven $XX benefits we we sustained engagements projector, of in to basis. to total fourth order for remain well $XX projector. in guidance range quarter very with sequential XX%. XXXX. historical combination the another new we be on quarter to tight demand Asia. as current the supported the the revenue the quarter operating both to More in and for and reflects total expenses increases and revenue. growing better we overhead a higher OpEx by quarter, XX% higher hiring of We fourth customer expect

fourth loss call That And will the you. we EPS Operator, loss quarter expect range proceed between we please of much. $X.XX to be our non-GAAP $X.XX per of Q&A open remarks. and now for with Thank very Finally, you prepared Thank non-GAAP the questions. in a a managing of session. share. concludes the

Operator

comes [Operator Raji Thank with Gill Instructions] Our from first you. question Needham and Co.

is line Your open.

Raji Gill

Yes. for and great rest the Thank and taking questions my segments. the congrats moment on the you of

how production? go going guidance, the could it’s constraint talk kind you more but mobile It a constraints to elaborate we kind XXXX, think bit environment, as maybe digital going of about at thoughts attach rates on designs of in XXXX, QX. are sequentially hit you’re on kind funnel side, you there could mitigate seeing, little mobile going XQ into you the you And would kind for the of like business appears a a little record capacity into you bit characterize in the you on and of the I’m the the the XX Just quarter to that as again, business, any that? of kind how you’re into going affecting grow it if look wondering looks based capacity on the the that about do try projector how that?

Todd DeBonis

Okay.

to one’s and questions, and question, the a driven two, two a constraint market there’s I’ll one’s Raji. and try separate supply the other question So,

we experience. what initial metrics experience focus the gaming So on a we most quality our the processor differentiating to on – delivering do iX display, though for really proved Even it video focused success had we experience, delivered part. on better and were success better really it demand set that market we out for mobile processor at with a both didn’t the gaming XX and both,

large brand the iQOO iQOO The dozen of at and a which one brand models various China. a there’s launched eight probably With year points. a sub-brand vivo, and of they’re providers products. price products, four is And in of the between of entire

in and NeoX to rendering the we part two this game manufacturers worked the and idea. the do With early collaborated this third-party teams year, of out with went really offload

an frame high higher this high So resolution. was frame, operating higher what with, a you while And that found frame you’re experience XX% highly rate, mobile vivo is the to battery XX% rates could bring improved at life out of desired longer feature. gaming that and brand

this And so really in market whether we’re from out, to And wanted back come the crowded differentiate yes, bringing they it they investigating but pull, said, space. in. and give them that all needed would they’ve and a went

we’ve targeting in. demographic same what so is they’re competitors all seen are not their And all in, only the

to I have significantly. going not. decision a QX, at to have three not months give make the the into half for going point XX ago, you with whether knew trying that, designs, capacity, XXXX, And we of design I’m first and we’re because have up the some to the to I even the then but align you I or more demand have grow designs on so gave capacity up wouldn’t any

through far, our and job partners securing additional and test. So done been fab both good we’ve assembly with through our at a capacity,

of through half the meeting constraint of market, be we’re right? We demand not So, to the XXXX. front going the are demand

exponential with second are programs seventh-generation see production that targeting back less same there bigger We content of This demand to and for our newest XXXX is you dive second the in all half roadmap seventh-generation And that continue continues the our beyond a still putting providers, the starting two an increased game to half. from Tier and really but their an mobile there’s AP half they’re increase targeting, half. roadmap putting quantity as be companies putting in, now is wafer. which happen. we’re imagine We’ll can reflect demand If their game supply so expect ecosystem not are partners, in will their things with for models, phones all chips phones the engine grow we The for X of – phone or this continue, these and chip, in then providers, XXXX, partners, have in the will programs, in second in feedback and hitting the we what as chip our sets and not sets. XX programs.

in do expect in in more were, to were is domain is through I XXXX. most nanometer projector that would constraints we our of acute supply was The automotive for XX same that products projector of constraints demand we because the get say constraints supply nanometer. or we when the So, continue of the ahead question the on mobile? lot So XX past, existed. This a

working through are way We that. our

because customers any somewhere We’ll product see, XXXX. we’re in They’ve front fact, not projector space. probably and we’ve in in our of to XXXX. constrained caused half I through this constrained not on be any managed half of uptick the off it. have left in with the business Pixelworks first the not mean, mobile will we demand So mean, dramatic shouldn’t of build have the this far the, In But and I issues bigger be for had non of right? sure, we table. suppliers,

Raji Gill

that the that, really for you Elias margins. helpful on gross and all That’s Thank insight.

at a of is the great about points, XXX driving basis see and to So sequential what basis margins the XXX margins. kind so increase are in points, which margins, the almost increases X% the midpoint, steady

You end. it the supply constraint, are mix the curious, better of cost pricing? it have it the yield? the Is Yet margins despite cost the better of driving is Iris, all on moving just more kind of of what’s Is pressures? a all the margins I’m some up. back

Elias Nader

couple and pass of quarter. some comments, OpEx sure, we a of kept we yield, tell, price range as a and can on better we There’s has very mentioned his a you low the kept Yes. Todd for factors did as in increases. And at

So, are and we’re we’re helped. we margin going Gross very for. I’m where what sure is to looking be that also pleased steady and at

Raji Gill

Got Thank you. it.

Operator

Thank you.

from with question Roth Suji Desilva next Our Capital. comes

Your line is open.

Suji Desilva

Elias. Hi, here. progress Todd. on Hi, the Congratulations

Todd inflection from understanding potential constraints, to kind for point potentially? flip there is time in create supply it, the where that what rate the supply and phones timeframe mobile So of could that your more there’s mainstream and that if premium winds gating of but demand is allows rates, the in be a unit growth, the an run –

Todd DeBonis

are positioned that programs the of us phones today. Some mid-tier requested for being for to support our mainstream high volume

of here Suji. part is demand the point that So inflection

they in supply up good are in profile I’m a are a receiving we’re process get demand tougher the job say the of a I we They months business. nine him bullish as a trying surpasses gave And very demand. expect can. expect nodes high good our to job from much this question What profile. were demand partners with ago. done to us gave pretty did today demand we’re done good feeling the nine in I is, do not would they’ve question right demand to have catch the what, much them the the particular I The of on partners, months that us to when very us. answer. insight partners So as environments. is tight ago We insight supporting our

Suji Desilva

twice. you and the doing gaming kind you’re with guys difficult the trying about Yes, to have you all talk Unity work can of supply appreciate hit I generally Well, question you the the answer more it, of guidance there kind more ecosystem the presence want products gaming? are folks you Pixelworks to the to, of to or of can you grow video from partner still sort with the, is and to that

Todd DeBonis

I just right the we’re the surface gaming ecosystem would on say scratching now.

do engine that engine are game announced portion there Unity. are we with game custom there, other have partnership but the a this leading They that serve game people are of provider, market. providers and We engines there

look seventh-generation. focused, a as on, announced we’ll which, very the we’re because are We talk you if roadmap, we little focused bit at about our

very other demand this video a that experience We’re push that, this, cinematic as immersive the this gaming big to by There’s go delivering on content this during focused to pandemic, experience. do been strong and many immersive so an cinematic alternative experience. mobile entertainment gaming saw providers the things a

AAA once content call providers the Now, AAA immersive talk they consumers the platform. to that game the prepared challenges deliver a mobile games experience it pandemic companies same alluded with experience on deliver that delivering that experience to starting that post current and because providers immersive them content that remarks want to exists my we’re were want the both and I in the to to overcome and that We to

we’re we providers I today, just the with early with scratching can So, content would say many engine providers. on, engage and surface game how

steady a quarter, a we company, people and hiring net quarter, back in lid the the we our we we about a XXX So, amount with through growth were ratcheted rate. kept business but similar fourth added on kept the and in plans and add we’ll we’re as probably I third on – a pandemic, XX

It’s near though capacity. to as growing. I bit constrained not it fast growing not Doesn’t just, even a grow. mean term so like we’re And we’re we’re by would as

do a multi-year supply going are we are opportunity. don’t this growing, the and is forever, believe last to constraints believe We that we

of and talked mobile mobile content partners going get game so platforms And about. and to then this expand number providers we’re and deliver that I ecosystem and experience to the try to go

Suji Desilva

mind. last question, Okay. Appreciate don’t if Todd that color. one and you

that you’re you for that can of guys being to the customers that understand working are come engagements I’m talked that many TrueCut, magnitude, all U.S. China pipeline follow would manufacturers. visual just it’s curious, are of just waiting And in TrueCut I’m have device one I’m that, active curious, progress mentioned curious, order these have. processor about you with how that out you we’re also announcement overlap. the For strong of. kind who there see

Todd DeBonis

two are our sides middle, based ecosystem on to of to really in people number lead ends. we’re the The be that So content to is in These the premium The not there’s motion both equation. going distributors, narrowing TrueCut guys deliver today experience. want that. a the they’re partners one, the focus that

as we’re which in with, motion not manufacturers mode. looked were these filmmaker solve engaged The they’re They problems and us to helping a well way at they and content. capabilities the question, in talking at They’ve manufacturers TrueCut interested experience, these No, is of to alternatives as manufacturers. of concluded was, they’re go. device same back they are content, mobile? So the in frankly, visual a end, of to particular your of release ecosystem on all build X that device TD the a solving their envelope both true other problems. way processor filmmaking, their like get to that creators, the pushing But which that is streaming people on then release streaming all end the the content, are that deliver for are and And to acceptance. predominantly they’re delivery companies, about very the theatrical Tier evaluating of its content different the

Suji Desilva

Thanks, great. Todd. Okay,

Operator

you. Thank

from with Sam Capital. Peterman question comes Craig-Hallam next Our

open. is line Your

Sam Peterman

just looks Congrats to on a guys. to Hey, about announcements. wanted Maybe I ask follow there. the it’s it Elias. the on time, if curious little speaking you there that like out question also kind subsidiary what the the And kind what why technology. of up. then thanks that I’m up get bit And wanted of over any, practically Unity Hi I your ecosystem wider to kind and look be to kind exposure question. way of my could taking there more financial I’m to bigger direct community lead for things. follow strategic testing, think if the of than, a of kind of something like, any of and different benefit or specifically there’ll Unity any sort curious, arrangement a of waters insight might two was whole, would the rationale, that partnership as great? rather this be

Todd DeBonis

and is subsidiary in focus Okay. game content that Well, last of China. cinematic mobile the leading Why mobile mobile gaming to part China your at I’m subsidiary going leading deal China. one’s question answer, are to the experience in one in to The market start simple The providers China. our delivering the is a are gaming And with with? in first.

our is So a strategy. part execute of to important Unity China Global on Unity very

will something makes but corporate that say something bigger, with any it bigger. to parent sure So that the it that evolve into I’m doing not

providers outside if elsewhere. the China. We’re succeed content very and China, content their at mobile focused those But of China it succeed in experience going gaming will export it doesn’t to probably not

be. a mobile gaming is this going So where experience of AAA hotbed the to is

I far money, so adding content more et mean, bring have one so in that. cetera, Unity, thing, you to And the as as

too and announcing brought going why only not understand providers much lose engine X, announced couple from of the we and until you we product. the game to Iris content I’m exactly the because in away a weeks won’t So, were

but don’t our So, say we in front content the far what much want providers, will bring to in visual I it that, I for creates as demand is, of get too processors. larger

create mobile the are do. processors. to what we’re It If the helps on experience. the profile trying experience the with for gaming visual performance it board So cinematic demand and improves for providers our the content

much on so coming And the in we’ll weeks. give more clarity this

And how back going now. of forms thing, is Unity we to is get hotbed it, of so development but to the improved China right on this that’s where the

and Unity So is answers focused focused this, on group China is your that Hopefully the on one question? this our subsidiary this problem. solving their

Sam Peterman

Todd. your Thanks, great. that’s Yes, one mobile then on on And X. Tier new

of XQ XQ Tier phone want I of ask know think, provide models, sometime any you kind at I relative X. that between two that to X opportunity was how Tier what curious this you would think, but there. the size said multiple new color said I you and launching to for I the you was then to, just you at kind clarify wanted can I have other and this

Todd DeBonis

announcements. get higher of in I This higher products. with market. going come to front fairly end range. doing new a trying the are market, don’t end want the our range themselves to the of well product in They reestablish they’re to in particular out the company And okay in is doing products include that

And a bit we’ll on able so not then it, and announced, I’ll also then. until when be elaborate more little they but announced, to

Sam Peterman

one expands then on ask capability, in, of to much that the said a improves you about expanding curious. Okay, last you go that did the guys the same I fair problem that squeeze talk I platform new were to this, on this can wanted enough. if mean, a you same. it’s all can and the And at Iris to new and to, after a you good soft or time you customer solve XX that a run to platform I’m then I opportunity this you try targeting consult. this because right customer it’s come kind they think how are

Todd DeBonis

was sort that we now partner can partner of on soft we’re coming collaboration. AP And the this with a hardware to then effort make customer work by to development, collaboration. large is common a just that and expanding also not but discussed AP conclusion us. And Iris So sure too, prodded into they

Sam Peterman

Okay, great. Thanks guys.

Operator

Thank you.

from comes question Derek next Colliers. Our Soderberg with

line is Your open.

Derek Soderberg

Hey for questions. my taking guys, thanks

partnership that the thinking help some be more, is how just case I but on how the on that business the Just leverage and to I add development those business do be if the opportunities strategic different investors that or Todd, should a about imagine should side, way in front, could on side. hope new supply on both, you generally, thinking side relationships? supply all or curious on about new you some also at I the the there’s guys for business help

Todd DeBonis

into and markets So adjacent unique in of like we an interest were investing. have the would to non-competitive. that us all technology that came Shanghai that investors in various where areas they have Pixelworks’ They sort they collaborate were strategic all had in

us, were by opportunities of supply not constraint were so relationships none the for They’re was environment. wide driven support a I’m And all could supply the us. we help they not right it not, long-term in range in of sure constraint they in us. for to short to partners I’m help are us, that sure those we’re now us not the but can help anybody leverage leverage, environment slot there even particular strategic term, do

have more which a in potential and that our market can, more can market capacity that partner on particular a So short the so that’s term opportunity it’s focus multi-year would side. strategic say expertise being depending on both us in it of grow collectively I we a on that we adjacent not business, for as is, see adjacent

Derek Soderberg

to how got of looking you sort job point a OpEx, done are Yes, a there then frees I new is it sense. forward we we the Or managing up expenses, with structure, should a in resources? guys new like to looking can this that, expect How of And products, good guys on as relates mean, move Is makes but which you about just of really the Okay, business, that. things sort at come more case OpEx the just you it. that consolidating for have down? it forward? invest think room guys the more OpEx to operating

Todd DeBonis

tight some front that lid investing four order is, adjacent lid what even kept year these on mobile kept the we this. in to on you’re we we mean, a going accelerated see for with OpEx the we ads we’re new move I still three, QX, growth of end four multi-year OpEx. a year the to tight and of three In forward, markets. as through see had, is that that or a only we Yes, we constraint. capture capacity see being and domain period fully But

We’re nine not soon be I we to to there’s of the capacity. coming online, some not capacity going as a ton believe mean, do away some new XX XX a away, months months down months year road. as

constraint We environment. supply a will be in

for horizon. three, So investing year now four we are the

shareholders’ a our to creep money. start steward OpEx of a good up we’re will a see still bit. you And so And

controlled We do invest very little But the fashion. money. my risk in mind, there’s to a will there it in

of Now front sitting there’s miss don’t this huge more opportunity us. in risks. If we I will invest,

Derek Soderberg

guys. Got it. That’s to Thanks all. hear. That’s great

Operator

currently remarks. showing I’d over call at further questions this I’m no to Todd time. back closing turn for And the you. DeBonis Thank like to

Todd DeBonis

look hats investors, at company right of those Well, CEO time we’re time. like long right for for I long-term and there names you, long-term a appreciate those as that long executing I a It’s I I’ve as this And new you you see have of The strategy and in shape to patience. off know couple up on are this been now. been of company. and the its your been good the investors, came in coming we is that

So you thank for patience. your

Operator

This for conference call. concludes today’s participating. Thank you

Pixelworks (PXLW) 10 Nov 212021 Q3 Earnings call transcript