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Thank you for standing by, and welcome to Magnachip Semiconductor's first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Mike Bishop with Investor Relations. Please go ahead, sir.

Thank you, Jonathan. Hello, everyone, and thank you for joining us to discuss Magnachip's financial results for the first quarter ended March 31, 2026. The first quarter earnings release that was issued today after the close of market can be found on the company's investor relations website. The webcast and webcast replay of today's call will be archived on our website shortly afterwards. Joining me today are Camillo Martino, Magnachip's Chief Executive Officer, and Shinyoung Park, our Chief Financial Officer. Camillo will discuss the company's recent operating performance and business overview. Shinyoung will review the financial results for the quarter and provide guidance for the second quarter of 2026. There will be a Q&A session following the prepared remarks. During the course of this conference call, we may make forward-looking statements about Magnachip's business outlook and expectations.

Our forward-looking statements and all of the statements that are not historical facts reflect our beliefs and predictions as of today, and therefore are subject to inherent risks and uncertainties as described in the safe harbor statement found in our SEC filing. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as otherwise required by law, the company does not undertake any obligation to update these statements. During the call, we will also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of Magnachip's operating performance that may be useful to investors.

A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our first quarter earnings release in the investor relations section of our website. With that, I'll now turn the call over to Camillo Martino. Camillo?

Thanks, Mike. Good afternoon, everyone, and thank you for joining us. I am very happy to be here today for my third earnings call with Magnachip. Let me reiterate a point that I've made consistently over the past several quarters. Specifically, Magnachip has a strong technical foundation with a long history in power semiconductors and deep relationships with important customers. We are building on that foundation to execute a multi-year transformation to return the company to profitable growth. Although we are in the early stages of this transition, I believe that we are making good progress. Let me address the quarter directly. From a revenue standpoint, Q1 came in stronger than typical seasonality would suggest, with both sequential and year-over-year growth. Allow me to provide some clarity on how to interpret that result.

A portion of the strength was driven by actions we took in prior quarters, specifically our previously communicated one-time sales incentive program to reduce channel inventory. This action was necessary to improve the health of the sales channel. It also creates some short-term variability in revenue. While the top-line growth is encouraging, we are still operating in a challenging competitive environment. Consistent with our communications in prior quarters, we continue to face pricing pressure on legacy products, particularly in China. As we have said before, product competitiveness is the key to winning. Where we have competitive products, we can win. Where we do not, it is difficult to win in this market. On gross margin, we saw sequential improvement. We feel good about our progress. We are at the beginning of a multi-year journey to substantially improve gross margin.

Let me just now step back and reconnect this quarter to our broader strategy. As you may recall, last quarter we articulated a new strategy comprising six foundational pillars for the company's longer-term recovery and profitable growth. We are actively executing on all of them. I will not go through each one of them in detail today, but I would like to reinforce a few key points. As we have consistently said, at the center of everything we are doing is improving product competitiveness by developing new generation products. These are all critical to our long-term success. We have focused our efforts on accelerating our R&D and launching new products.

We launched 55 new generation products in 2025. We are now aiming for another 55 new generation products in 2026 after launching only four new generation products in 2024 and zero in 2023. We believe that the launch of many new generation products on a consistent basis will have a meaningful contribution to our financial recovery efforts. Some of these new generation products include those we mentioned in our recent press releases, including our newest 8th generation of products for the BatteryFET as well as for MV MOSFETs. While it takes some time for our customers to qualify a new product and subsequently drive revenue, we believe that over time, these new products will return the company to revenue growth and improve margins.

Consistent with our comments last quarter, we expect new generation products to comprise approximately 10% of our total revenue in the fourth quarter of 2026, up from only 2% for the full year 2025. In parallel, we expect to continue deepening our relationships with important industry leaders in our target market segments. This will be crucial to returning to growth. I would like to address our Power IC business, as that is an area of opportunity and is also critical to our long-term success. It is a smaller portion of our business right now, and we expect it to remain so through 2026. At the same time, we do see significant opportunity for our Power IC business in the coming years.

We continue to align our Power IC products as well as our future gate driver IC products with our power discrete product roadmap, such as MOSFETs and IGBTs. The longer-term alignment of our discrete MOSFETs and our Power IC products will enable Magnachip to launch higher value-added integrated power modules in the future as well. We believe Magnachip's longer-term potential is substantial. The accelerated launch of new generation products are building initial successes. While we are confident in the direction, the financial improvement will be gradual. Let me turn over to Shinyoung. Shinyoung?

Thank you, Camillo, and welcome everyone on the call. Let's start with key financial metrics for Q1. Total Q1 consolidated revenue from continuing operations, which includes power analog solutions and Power IC, was $46.2 million, around the midpoint of our guidance range of $44 million-$48 million. This was up 3.3% year-over-year and up 13.9% sequentially compared to $44.7 million in Q1 2025 and $40.6 million in Q4 2025. Revenue from power analog solutions in Q1 was $41.6 million, up 4.5% year-over-year and up 13.1% sequentially.

The sequential improvement was primarily driven by the $2.7 million of one-time sales incentive that was recognized as a reduction in revenue in Q4 2025 as part of our efforts to reduce elevated channel inventory. Revenue from Power IC in Q1 was $4.6 million, down 6.2% year-over-year, but up 21.3% sequentially. In Q1, consolidated gross profit margin from continuing operations was 15.6%, above the midpoint of our guidance range of 14%-16%. This compares to 20.9% in Q1 2025 and 9.3% in Q4 2025. Year-over-year decline was primarily attributable to an unfavorable product mix, driven mainly by ASP erosion, particularly in China.

As a reminder, the $2.7 million of one-time sales incentive was recorded in Q4 2025. Excluding this item, Q4 gross profit margin would have been 15%. On that basis, gross profit margin improved by 60 basis points quarter-over-quarter, primarily due to higher utilization rates. Moving to operating expenses. SG&A was $7.7 million in Q1 compared to $9.2 million in Q1 2025 and $8.6 million in Q4 2025. As mentioned in our prior earnings call, we expect to see annual OpEx savings of approximately $2.5 million beginning in Q4 2025 from our cost reduction efforts, primarily related to the voluntary resignation program implemented in Q3 last year.

Stock-based compensation charges, including SG&A, were $0.6 million in Q1 compared to $0.8 million in Q1 2025 and $0.4 million in Q4 2025. R&D expenses were $6.7 million in Q1 compared to $5.4 million in Q1 2025 and $7.6 million in Q4 2025. Year-over-year increase reflects the acceleration of investment in new product development. As Camillo noted earlier, we are now aiming for 55 new generation products in 2026. Before turning to our non-GAAP results, please note that our GAAP financial results are available in our Form 8-K filing with our first quarter earnings release.

Our non-GAAP results are as follows: Adjusted operating loss was $6.5 million in Q1 compared to a loss of $4.4 million in Q1 2025 and a loss of $11.9 million in Q4 2025. Adjusted EBITDA was negative $3.6 million in Q1. Compared to negative $1.2 million in Q1 2025 and negative $8.9 million in Q4 2025. The quarter-over-quarter improvement in both adjusted operating loss and adjusted EBITDA was primarily driven by higher gross profit along with lower operating expenses, as discussed earlier. Q1 non-GAAP dilute loss per share was $0.11 compared to a loss per share of $0.08 in both Q1 2025 and Q4 2025. Weighted average non-GAAP diluted shares outstanding for the quarter were 36.4 million, compared to 36.9 million in Q1 2025 and 36 million in Q4 2025.

Moving to the balance sheet. We ended Q1 with cash of $94.6 million, compared to $103.8 million at the end of Q4 2025. The decrease was primarily driven by $3.9 million in capital expenditures, with the remaining change largely attributable to operating cash outflows. At the end of Q1, total borrowings were $42.3 million, including $15.9 million of the equipment loan. Of this amount, nearly $26.4 million associated with the term loan was reclassified to short term during the quarter due to its maturity in March 2027. While this is standard accounting treatment, our lender is aware of the maturity profile. We expect to be able to extend the maturity date beyond March 2027. We'll address it in the ordinary course of business, consistent with typical market practice in Korea. Now moving to our second quarter 2026 guidance.

Consistent with Camillo's earlier comment, Q1 revenue came in stronger than typical seasonality due to the one-time sales incentive program. While actual results may vary, for Q2 2026, Magna currently expects consolidated revenue from continuing operations, which includes power analog solutions and Power IC businesses, to be in the range of $44.5 million-$48.5 million, roughly flat sequentially, a decrease of 2.3% year-over-year at the midpoint. This compares with $46.2 million in Q1 2026 and $47.6 million in Q2 2025. Consolidated gross profit margin from continuing operations to be in the range of 17%-19%, up from 15.6% in Q1 2026, down from 20.4% in Q2 2025.

Finally, I would like to note that a planned upgrade to the electrical substation by a service provider in Gumi is expected in Q3 and will have an impact on our factory operations. To mitigate any potential customer disruptions, we plan to build some additional inventory in Q2 and into Q3. As a result, we would expect our factory utilization rate to be somewhat higher in Q2, followed by lower utilization in Q3. Since utilization is main driver of gross margin, we expect our gross margin in Q2 will likely be higher, as implied by our guidance. Gross margins are expected to decline in Q3 and decline further in Q4 as a result of the planned upgrade. Thank you. Now I'll turn the call over to Camillo for his final remarks. Camillo?

Thank you, Shinyoung. Allow me to reiterate that we are committed to executing on our turnaround strategy, and in particular, the six foundational pillars that we articulated a quarter ago. While we proceed through this multi-year journey, we are pleased to see the initial signs of success. Ultimately, this new strategy should drive long-term shareholder value. I want to thank our employees for their continued hard work and dedication, and our investors and partners for their patience and support as we return the company to growth. We will continue to be transparent, disciplined, and focused on execution. I will now turn the call to the operator and open the call for questions.

Certainly. Our first question for today comes from the line of Suji Desilva from ROTH Capital. Your question please.

Hi, Camillo. Hi, Shinyoung. Could you please start first with maybe the gross margins by segment and how they vary, and is one more manufacturing exposed than the other? Any color would be helpful.

you're asking for this quarter, Suji, right?

You had the gross margins in the press release by segment, and they were very different. I was just curious what the driver of one versus the other was.

We have a discrete business, which we call the power analog solutions and power IC businesses. We've been kind of broken them down into those two buckets. Power IC, that's the IC, the custom chip. That the gross margin has been kind of hovering around like 40%, and it used to be a little over, but depending on the product mix. That, that business, I mean, relatively revenue size is relatively small compared to the total company's revenue, but the margin has been pretty, I mean, a lot higher than the normal corporate gross margin. The other power analog solutions gross margin, that's the product we are producing in our Gumi fab.

There are multiple factors that go into the gross margin calculation, meaning utilization and fixed cost, and all of those kind of put into that, the G-Gumi fab cost profile that we're going to dictate how the gross margin can kind of vary quarter-over-quarter of that product line.

As Shinyoung mentioned, you know, utilization is a key factor that's driving that.

Okay, thank you. Can you talk about the products you're expecting in 2026 and what kind of gross margin trend we can expect above the products you've already introduced in 2025?

Yes, sure. The, the products that we mentioned today, the 55, that's the plan for this year of new generation products. They are across the board. They are medium voltage, low voltage, IGBT, for example, Super Junction. There's a whole bunch of new products right across the board. We're excited about that. That will have an impact on gross margin. As we communicated on the call, it does take time to have an impact this year. I think we said that in Q4, we expect that new generation products to contribute approximately 10% of the total revenue.

At the same time, you need to offset that with Shinyoung's comments on the planned upgrade to the electrical substation, 'cause that will have an impact on Q4 margin as well in the other direction. There's a few factors going into the second half.

Okay, great, Camillo. Thanks. Lastly, can you update us on where the manufacturing is from, filling back in for the manufacturing services capacity you had before? Thanks.

Manufacturing services for

before when you had a contract where you were providing manufacturing services at cost.

Right.

now, when it, how you're filling that in now today? Thanks.

Sure. That's the foundry services that we provided to the buyer of our foundry business and the factory that we used to own them. There are certain margin on that one, although that's actually lower than our corporate margin, like in the past, you see that margin profile. That foundry service actually ended in the beginning of the last year, not in 2026, in 2025. That's what we are dealing with the whole, the idle capacity. Approximately 20% of our Gumi factory is actually was dedicated for the foundry service, and now that's kind of idle. Like you see that our gross margin, like, has been suppressed because of that idle capacity.

That whole kind of CapEx that we announced that we spent, not all of them, but we cut in half and we are spending it, that's to upgrade our equipment to support this new generation power product rather than kind of convert that idle capacity for the power product simply. I mean, that's because of the pace of our product development, also the revenue, it takes some time to do it, also the softness of the, I mean, our legacy product environment. We are kinda being prudent to spend the CapEx to support that. It's really not over time, overnight kinda transition or the conversion from the foundry capacity to the power capacity.

As we said previously, we're gonna be very cautiously assess what's gonna be the best for the company, like from the cash and also the profitability standpoint, how we're gonna convert the capacity for the power.

Okay. Thank you, Shinyoung. Thank you, Camillo.

Thank you.

Thank you.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mike Bishop for any further remarks.

Thank you. Thank you everyone for participating on our call today. We appreciate your support of Magnachip. This concludes the call. Operator?

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you for standing by, and welcome to the Magnachip Semiconductors Corporation's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this program is being recorded. And now I'd like to introduce your host for today's program, Mike Bishop with Investor Relations. Please go ahead, sir.

Thank you. Hello, everyone, and thank you for joining us to discuss Magnachip's financial results for the fourth quarter and year-end December 31, 2025. The fourth quarter earnings release that was issued today after the close of market can be found on the company's Investor Relations website. The webcast replay of today's call will be archived and available on our website shortly afterwards. Joining me today are Camillo Martino, Magnachip's Chief Executive Officer; and Shin Young Park, our Chief Financial Officer. Camillo will discuss the company's recent operating performance and business overview, and Shin Young will review the results for the quarter and provide guidance for the first quarter of 2026. There will be a Q&A session following the prepared remarks. During the course of this conference call, we may make forward-looking statements about Magnachip's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and therefore, are subject to risks and uncertainties as described in the safe harbor statement found in our SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments. Except as otherwise required by law, the company does not undertake any obligation to update these statements. During the call, we'll also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended as supplemental measures of Magnachip's operating performance that may be useful to investors. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth quarter earnings release in the Investor Relations section of our website. With that, I'll now turn the call over to Camillo Martino. Camillo?

Thank you, Mike, and good afternoon, everyone. I would like to open with a comment I made last quarter. Specifically, Magnachip has a strong foundation, a strong history in power, our reputation for reliability and quality and relationships with customers who care about performance and execution. Looking back at 2025, we have implemented many changes to lay the foundation to improve the financial and go-to-market fundamentals, which we believe will result in a positive and consistent recovery over time. We are investing responsibly in areas where we see great potential while staying disciplined and realistic about what it takes to turn a power semiconductor business around. I would like to look back on Q4 and 2025, highlighting what we have completed and we will provide more detail on our go-forward operating strategy. First, a quick review of the quarter. For Q4, revenue was $40.6 million and gross margin was 9.3%. For the full year, revenue was $178.9 million and gross margins were 17.6%. Consistent with our comments from our last earnings call, our results continue to reflect 3 realities. Pricing pressure on legacy products remains intense, especially in China. Factory loading and utilization was a headwind, although we saw utilization slightly above in Q4, what we had said during last quarter's earnings call. We need highly competitive products to win. This is a very important reality. And when we do have competitive products, we can absolutely win. That's the core point behind our product strategy. Shin Young will walk through the financial details and guidance later, moving to the more important changes that we have made during 2025. Over the past year and especially over the past several months, we have taken 3 meaningful actions. Firstly, we significantly reduced our cost structure. We exited the display business, and we resized the organization accordingly. We also executed workforce actions and cost reduction programs to reduce OpEx and to focus the company exclusively on the power business. Secondly, we reorganized and focused our sales and marketing teams on specific market segments and customers. This is important because winning in power setting is not a one size fits all. It is segment by segment and customer by customer. Thirdly, we increased our investments in R&D to significantly improve our mid- to longer-term product competitiveness. In 2025, we launched 55 new generation products versus a total of 4 for the entire 2024 year. This is a massive acceleration by our engineering team and reflects targeted investment for longer-term growth. These new generation products are designed to improve our competitiveness and improve our product margin structure over time. So those 3 definitive changes have already been made. With respect to our go-forward operating strategy, I would now like to highlight 6 foundational pillars that we believe are fundamental to the successful recovery and longer-term profitable growth in our power business. Number one, focus market segments. We are investing in the priority end markets where we believe we can earn better margins and build durable customer positions. The markets are the following: automotive, industrial motor control, solar and energy-related applications and server data infrastructure. And in the future, we expect to be delivering advanced power solutions to the robotics market as well. We are not going to chase every end market. We are going to concentrate on segments where our technology road map and proximity to significant and strategically important customers can translate into sustainable share and better economics. Number two, our product competitiveness. At the heart of our turnaround strategy is product competitiveness. This is a comment that we have made many times previously. We are continuing to accelerate our product development activities. Our plan is to deliver more than 40 new generation products in 2026. This is in addition to the 55 new generation products launched in 2025. This compares to a total of only 4 new generation products launched in 2024 and none at all in 2023. Again, this is the result of a targeted investment with a specific aim to increase revenue, utilization and product margins over time. These products are designed to be meaningfully better, not incremental. Number three is our power IC business. As we expand our focus on certain market segments, we will begin to develop key systems expertise that will align power ICs and gate driver ICs with our future power product road map, and it will augment Magnachip's revenue generation potential. Number four, modules. We are also expanding how we go to market with customers through a module strategy. A module allows us to combine multiple diodes, sometimes our own, sometimes third party into a packaged solution that should increase our product content per application. Our aim is to increase sales efficiency, drive higher revenue at better target in markets where customers want integration and where the economics support it. Number five, technology road map. To continue to support and offer greater value to our key customers, we are actively evaluating offering silicon carbide product solutions to them. Our entry into the silicon carbide market will be thoughtful and deliberately targeting markets where we can have longer-term revenue visibility and in which return on invested capital and payback are demonstrably attractive. We believe our reputation and geographical location should enable us to access such attractive market segments. Finally, number six, strategic partnerships. Our position as a trusted power semiconductor company in Korea places us in a strong position to establish mutually beneficial relationships with key customers and technology partners who value our local access, security of supply, expertise and reputation. Building stronger and deeper customer relationships in our focused market segments is critical, and we believe having multiple anchor customers that adopt a broad range of our products will be highly beneficial and a testament to our value proposition. Likewise, partnerships with technology leaders who recognize our value as a trusted partner in a strategically important market will accelerate our product road maps while expanding our market reach in a capital-efficient manner. We believe developing these close relationships with anchor customers and technology partners will provide a foundation for significant value creation over time. We believe the strategic customer relationships we are developing, the focused market segments we are pursuing and the advanced technology we are developing, including silicon carbide, will significantly expand Magnachip's TAM and SAM. Selling modules and higher value-added power ICs will further expand our TAM to approximately double over the next 5 years. Even more importantly, our SAM is expected to nearly triple over the next 5 years. We are building a more balanced, resilient business, one where customer relationships support investment decisions and value creation over a multiyear horizon. Now let me address some recent Board-level activities. We recently announced that Cristiano Amoruso, Chief Investment Officer of Byreforge, has joined the Board as a Director. His firm became a significant shareholder of Magnachip because it believes in Magnachip's ability to create significant long-term value for its customers, shareholders and employees. The Board also believes the company is significantly undervalued relative to its long-term value creation potential and believes that focused execution and the strategic realignments we are implementing, product competitiveness, market focus, technology road map and customer technology partnerships can turn the company to growth and create significant long-term shareholder value. In line with its fiduciary responsibilities, the Board will responsibly and carefully evaluate any actionable opportunities that can accelerate and derisk shareholder value creation and compare it with all other options available to the company. Looking forward, allow me to set the expectations clearly. This turnaround will take time. We believe that great products and great customer partnerships will turn Magnachip around. At the same time, and as we discussed previously, new generation products take time to qualify, to ramp and to contribute meaningfully towards revenue. In 2026, we still expect legacy products to represent the vast majority of revenue and pricing pressure affecting these products will continue. We expect new generation products to comprise approximately 10% of our total revenue in the fourth quarter of 2026, up from 2% for the full year 2025. So 2026 will remain a challenging period, especially for gross margin as we transition the portfolio and scale new generation products. We believe we are taking the right corrective actions to improve our competitive position and create a path to meaningful value creation. We will continue to be transparent, prioritize cash discipline and execute the product road map with urgency. With that, I'll turn over the call to Shin Young to walk through the quarterly financial results and our outlook. Shin Young?

Thank you, Camillo, and welcome, everyone, on the call. Let's start with key financial metrics for Q4 and full year 2025. Quarter Q4 consolidated revenue from continuing operations, which includes Power Analog Solutions and Power IC was $40.6 million, approximately at the midpoint of our guidance range of $38.5 million to $42.5 million. This was down 17% year-over-year and down 11.7% sequentially on an apples-to-apples basis. This compares with the equivalent revenue of $48.9 million in Q4 2024 and $45.9 million in Q3 2025. For the full year 2025, total consolidated revenue from continuing operations was $178.9 million compared with $185.8 million in 2024, representing a 3.7% year-over-year decline. This reserve was consistent with our prior guidance, which anticipated an approximately 3.8% year-over-year decrease. Revenue from Power Analog Solutions in Q4 was $36.8 million, down 15.3% year-over-year and down 11.4% sequentially, primarily due to competitive pricing pressure on our older generation products, which was especially intense in China. The $2.7 million onetime sales incentive was recognized as a reduction in revenue in Q4 2025 as part of our efforts reduced elevated inventory levels in the channel, primarily in China. For the full year 2025, revenue from Power Analog Solutions was $160.5 million compared with $166.8 million in 2024. This 3.8% year-over-year decline was primarily due to intensified pricing pressure on our older generation products, partially offset by revenue growth in low-voltage MOSFET attributable to market share gains. Revenue from Power IC in Q4 was $3.8 million. This was down 30.4% year-over-year and down 14.5% sequentially. The sequential decline was due mainly to customer order pulls in Q3 from Q4. Revenue from Power IC for the full year 2025 was $18.4 million, down 3.4% year-over-year compared with $19 million in 2024. In Q4, consolidated gross profit margin from continuing operations was 9.3%, within the guidance range of 8% to 10% compared with 23.2% in Q4 2024 and 18.6% in Q3 2025 on an apples-to-apples basis. The previously mentioned onetime sales incentive had a 560 basis point negative impact on gross profit margin. Year-over-year and sequential decline was primarily attributable to an unfavorable product mix driven mainly by ASP version, particularly in China and filling our fab with lower-margin products and a lower utilization rate. For the full year 2025, consolidated gross profit margin from continuing operations was 17.6% within our annual guidance range of 17% to 18% compared with 21.5% in 2024. Year-over-year change was primarily driven by continuing pricing pressure, continued pricing pressure, lower margin products loaded in our fab and a lower fab utilization rate. The company's display business has been classified as a discontinued operation in 2025. Accordingly, all of the following figures reflect results from continuing operations and prior periods have been recast on a comparable basis. Q4 SG&A was $8.6 million compared with equivalent SG&A of $9.8 million in Q4 '24 and $8.3 million in Q3 2025. We expect to see annual OpEx savings of more than $2 million beginning in Q4 2025 from our cost reduction efforts, including the execution of the voluntary resignation program, primarily for shared function employees in Q3. Stock-based compensation charges, including SG&A were $0.4 million in Q4 as compared with $1.6 million in Q4 '24 and negative $28,000 in Q3 2025. Both in Q3 and Q4, we recorded adjustments to stock-based compensation expense related to the separation of certain executives and associated for feature of their equity grants. For the full year 2025, SG&A was $35.1 million compared with $38.1 million in 2024. Stock-based compensation charges, including SG&A were $1.9 million in 2025 and $4.8 million in 2024. Q4 R&D was $7.6 million compared with equivalent R&D of $6.6 million in Q4 2024 and $7.8 million in Q3 2025. R&D in Q4 increased year-over-year due to the acceleration of new product development. We introduced 65 new generation products in 2025, of which 44% were introduced in Q4. This compares to 4 in all of 2024. For the full year 2025, R&D was $27.3 million compared to $25 million in the prior year. Before I go into the details of our non-GAAP results, please note that our GAAP financial results are available in our Form 8-K filing with our fourth quarter earnings release. Our non-GAAP results are as follows: Q4 adjusted operating loss was $11.9 million compared with an equivalent adjusted operating loss of $3.5 million in Q4 2024 and adjusted operating loss of $10.4 million in Q3 2025. Q4 adjusted EBITDA was negative $8.9 million compared with an equivalent adjusted EBITDA of $0.3 million in Q4 2024 and negative $4 million in Q3 2025. For the full year 2025, adjusted operating loss was $28.5 million compared with an equivalent adjusted operating loss of $19.1 million in 2024. Adjusted EBITDA in '25 was negative $15.6 million compared with an equivalent adjusted EBITDA of negative $4.2 million in 2024. Adjusted operating loss and adjusted EBITDA deteriorated year-over-year, primarily due to lower gross profit and higher R&D expenses as explained above. Our Q4 non-GAAP diluted loss per share was $0.08 compared with equivalent non-GAAP diluted earnings per share of $0.15 in Q4 2024 and non-GAAP diluted loss per share of $0.01 in Q3 2025. Our weighted average non-GAAP diluted shares outstanding for the quarter were 36 million, 37.7 million in Q4 2024 and 35.9 million shares in Q3 2025. For the full year 2025, non-GAAP diluted loss per share was $0.22 compared with $0.22 in 2024. Weighted average non-GAAP diluted shares outstanding for 2025 were 36.2 million shares compared with 37.8 million in 2024. Moving to the balance sheet. Previously, we had expected our cash at the end of 2025 to be in the mid-$90 million range. However, we ended Q4 with cash of $103.8 million, and this compared with $138.6 million at the end of Q4 2024. The main cash outflow during 2025 included $13 million in net cash CapEx, $4 million related to package costs and statutory severance associated with the warrant resignation program executed in Q3 and $3.6 million spent on share repurchases, primarily in the first half of 2025. The remaining debt was primarily attributable to net cash loss from operations. At the end of Q4, our long-term borrowings totaled $44.6 million, which included $16.7 million of the equipment loan including maintenance CapEx, our total CapEx for the full year 2025 was $30 million. However, the net cash impact was $13 million due to partial funding through the equipment loan. Now moving to our first quarter 2026 guidance. While actual results may vary, for Q1 2026, Magna currently expects consolidated revenue from continuing operations, which includes Power Analog Solutions and Power IC businesses to be in the range of $44 million to $48 million, up 13.4% sequentially and up 2.9% year-over-year at the midpoint. This compares with $40.6 million in Q4 2025 and $44.7 million in Q1 2025. Consolidated gross profit margin from continuing operations to be in the range of 14% to 16%, up from 9.3% in Q4 2025, but down from 20.9% in Q1 2025. Finally, I'd like to add that on a reported basis and excluding stock-based compensation and onetime charges, total operating expenses, SG&A and R&D together decreased by 35% in 2025 compared with 2024. Also, as a result of our cost reduction efforts, we expect more than $2 million of annualized SG&A savings that started in the fourth quarter of 2025. On the other hand, to support the go-forward operating strategy Camillo discussed earlier, we expect to increase -- we plan to increase our investment in R&D in 2026. Thank you. And now I'll turn the call over to Camillo for his final remarks. Camillo?

Thank you, Shin Young. We are committed to executing on the 6 foundational pillars we emphasized earlier. We have implemented a new go-forward strategy and many of the necessary changes to position Magnachip for future success and value creation. I want to thank our employees for their continued hard work and dedication and our investors and partners for their patience and support as we return the company to growth. I will turn the call to the operator to open the call for questions. Operator?

And our first question for today comes from the line of Suji Desilva from ROTH Capital.

First, a question on the gross margin guidance. I know there was a gross margin inventory reserve hit in 4Q. Are you assuming a similar impact or are you assuming an impact Shin Young in 1Q? Or is that 14% to 16% range a pure range without expected?

That did not include the onetime incentive that we did executed in Q4 '25. So had we excluded Q4's onetime impact, Q4 margin would be like 15%. So like we are expecting the Q1 2026 to be the similar range, and that's mainly driven by the utilization and also the pricing pressure. So that's actually impacting us our gross margin at this time. Our revenue, still the vast majority of that is older generation product. We are still feeling the pricing pressure, especially in China.

Understood. Okay. That helps. And then on the operating expense savings from the restructuring, it will flow through you said -- I think you said SG&A, right, the $2 million run rate, and that would be -- we see that benefit toward the end of '26? Or when would that step down? What's the linearity of that step down?

Well, that's actually -- it's going to be the continuing basis. So we started in Q4 2025. I just quantified the annualized impact is at $2 million plus, and we are going to see the full impact in 2026. And I'm hoping that, that's going to minimize the investment that we are going to do in R&D to support the go-forward strategy operating the strategy.

Okay. And then a question for yourself or maybe Camillo. The geographic exposure, as you bring these new products to market and the new focus segments, does that move your business out of China where it's competitive price-wise? Or does it stay in China in less price competitive markets? What's the shift there as you go to new products and new markets versus the competitive China market right now?

Look, it's very clear that we have some very, very important, strategically important and very large customers right here in Korea. And so I think it's important that we do an excellent job in servicing their needs for the next many, many years. So to me, it's -- they're here, they're in our backyard, let's deliver the value that we can realize together. It's not a strategy of moving away necessarily from any one country. It's more about focusing more of Korea because we're right here. And clearly, at the same time, we are a global company. We have sales offices in every country, every major country around the world. And so we're going to continue to service them as well. But frankly, I would expect to have a higher percentage of our revenue coming from Korea because they're very close to us, right, very, very close, and we want -- and really service them extremely well.

Okay. That's very helpful. And then last question on the silicon carbide effort. Can you tell us where you are in that? Is that in development effort? Do you have the technologies in-house that you need? Do you have to invest or partner to get there? And what products or end markets might you target with silicon carbide?

So I don't want to disclose what products we're developing. I would say that we're in development. We are in development, absolutely. We're building the team as well as we are speaking. And to some of our key customers, we're sharing some of that information with them under NDA. At the same time, I would say that this is a long-term plan. This is not a 12-month plan. Clearly, silicon carbide is going to take many years first to develop and then potentially, we're going to look for ways to potentially manufacture either in-house or maybe in the short term, we may go to an outside fab in the short term. So we're looking at everything there. But very clearly, as I stated in my prepared remarks, silicon carbide is a very, very important part of our future road map. If you look at the market segments that we are pursuing, if you look at the key customers that we are deepening our relationships with, silicon carbide is very, very important for them.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mike Bishop for any further remarks.

Thank you, everyone, for participating on today's call. We appreciate your support of Magnachip. Operator?

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.