"In our previous earnings calls, we talked about wafer foundry capacity shortage for CMOS image sensor which limited our revenue growth in this segment over the past few quarters. Starting from the second quarter, the shortage situation has been gradually alleviated and we have been able to fulfill more customer orders. We expect the capacity shortage to further loosen going forward. We also continue to make wafer level optics (WLO) and wafer level module (WLM) shipments to leading laptop and handset brands."
"Our immediate challenge is to improve our overall gross margin, particularly by bringing up the gross margins of the two fastest growing non-driver product lines: CMOS image sensor and LCOS micro-display.
As we reported in the previous earnings call, our CMOS image sensor, the fastest growing ondriver product line, is suffering from low margin as we are still shipping a relatively high proportion of older generation products, which will gradually be replaced by a newer generation of products with improved cost and margin. While we are confident that our margin in this segment will improve as our customers make the switch, we are seeing third quarter gross margin from our sensor product line still lower than our overall average."
"We also mentioned in the previous earnings call that we faced low production yield and certain product rework charges in the second quarter when starting to ship wafer level optics to a leading handset brand for the first time. We do foresee a steady yield improvement in the third quarter."
