Question-and-Answer Session
Operator
Your first question comes from Shailesh Jaitly - Nomura Securities.
Shailesh Jaitly - Nomura Securities
Could you help clarify your comments in the prepared remarks about the inventory situation? You had mentioned that inventories continue to improve across the board. Do you see any pockets there? Do you still see excesses? Particularly if you can comment on the wireline communications segment, please.
Lora Ho
Could you please repeat your questions again? Sorry, we don’t have a very good sound system to completely hear your question.
Shailesh Jaitly - Nomura Securities
I just wanted to get a bit more color on the inventory situation across the board. I am wondering if there are any pockets of excesses, particularly if you can shed some more light on the wireline communication sector with respect to inventories?
Rick Tsai
We do not see that. However, I want to caution that I’m not sure we have that fine granularity. I had said in my remarks earlier that we are seeing the inventory level in general go down at a very healthy level. We certainly expect to see that continue into fourth quarter.
I might also add that from our output, or from our shipment schedule and our customers’ business expectation, we do not see a concern of inventory buildup.
Shailesh Jaitly - Nomura Securities
So more or less across the board, it has improved dramatically and you don’t see any excesses anywhere?
Rick Tsai
I think we have seen a continuous improvement over the last two to three quarters. So it’s a continuing process, I wouldn’t use the adjective dramatic as that would imply a sudden improvement. I think it is a continuing improvement, and also we see that going forward, also.
Shailesh Jaitly - Nomura Securities
I understand. Finally, if you could also comment on your strategy about the increase in stake at Vanguard, and whether you would be open to increase it beyond 50%?
Rick Tsai
Yes, we have increased our shareholding by 10 percentage points and reach about 37% of Vanguard’s shareholding. Our basic position with regard to Vanguard really has not changed. Vanguard has been and continues to be our strategic partner in the mature technology business. We have worked very closely with Vanguard, both from technology covering all the way from 0.5 micron to 0.18 micron.
Vanguard also can cover certain business that we have not been able to cover, also. I think definitely a win-win situation. The increase of the shareholding further solidifies the relationship. Of course, as of now, I cannot comment. I mean really, we do not have a firm plan as to what we will do in the future as far as the shareholding is concerned.
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