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Good morning, and good evening, ladies and gentlemen. I'm Romil, the Group's Head of Investor Relations, and I will be the moderator for today's call. On behalf of ASMPT Limited, let me welcome all of you to the Group's First Quarter 2023 Investor Conference Call. And I would like to thank you for your interest and your continued support in the company. [Operator Instructions]
Let me quickly go through the disclaimer. Please do note that during this conference call, there may be forward-looking statements with respect to the company's business and financial conditions. Such forward-looking statements would involve known and unknown uncertainties and risks that could cause actual results, performance and events to differ materially from those expressed or implied during this conference call.
For your reference, the Investor Relations presentation related to our recent results can be downloaded from our website.
On today's call, we have Mr. Robin Ng, the Group CEO; and Ms. Katie Xu, the Group CFO. Robin will begin with a brief discussion and group key highlights, and then Katie will provide details on the financial performance. This will be followed by an update on the guidance and outlook, and then we will open the floor for Q&A.
Without further ado, let me hand the time over to Robin now.
Thank you, Romil. Good morning and good evening, everyone. It is a pleasure to have you all on our earnings conference call for the first quarter of 2023. Let me comment on some recent developments in the industry and the overall macro environment before I update about our performance for the first quarter.
At the start of 2023, there was some optimism for recovery in the global economy and improvement in consumer confidence. However, escalating trade tensions and a persistent inflationary environment impacted consumer sentiment and resulted in a more cautious tone in the semiconductor industry overall.
Navigating through the ongoing industry down cycle, I'm pleased to highlight that our diversified business model enabled ASMPT to deliver revenue above the midpoint of our guidance for the first quarter of 2023.
I must emphasize again that our unique broad-based portfolio provides much needed resilience and competitive advantage. This was apparent during the quarter. While the SEMI segment was still impacted by the semiconductor down cycle, the SMT segment delivered its strongest ever first quarterly revenue performance. This first quarter of 2023 was also the third consecutive quarter in which SMT accounted for a higher proportion of our group's revenue.
Looking at the end market acquisitions that we serve. Our Communication, Computers and Consumer end markets or what we like to call the CCC markets continue to be weak. However, the Automotive end market remained robust and continue to be the highest contributor to the group's revenue for the first quarter of 2023.
Looking closer, as silicon and electronic content per vehicle increased due to automotive electrification, our automotive solutions, including sintering, laser singulation and molding tools gained traction and our strength in Automotive was also powered by a range of solution servicing more EV players.
I will now take you through today's presentation. Let me begin with our SMT business. The SMT segment had robust revenue and bookings. SMT bookings were about 58% of the group's booking for the first quarter of 2023, and this was the fourth consecutive quarter where our SMT bookings were higher than our SEMI bookings.
SMT bookings for the first quarter grew quarter-on-quarter, even though the overall market our SMT business plays in declined. We strongly believe that SMT has gained market share in the first quarter of 2023 and commands a leading position.
SMT's robust segment performance was also buoyed by ongoing strength in the Automotive and the industrial end market applications. The latter driven by the need for smarter factories, greener infrastructure, EV charging and the expansion of power and green [ bridge ].
This slide highlights the progress of our advanced packaging solutions. I have mentioned this before. But let me iterate that our suite of solutions under advanced packaging are perhaps the most comprehensive in the industry and positions us well to meet varied demands across a wide spectrum of application areas. The bottom of the slide highlights the breadth of our AP solutions and the application areas.
Last quarter, in my interactions with many of you, the trend concerning generative AI applications such as ChatGPT was a popular topic. As the generative AI market grows, we believe that this trend will benefit the providers of GPU, CPU, FPGA and high bandwidth memory or HBM solutions to support the exponentially growing demands of AI applications for both computing and memory power.
In this regard, we are well placed to receive more orders for Thermo-Compression Bonding or TCB tools for HBM applications. Later, I will shed more light on the role TCB and hybrid bonding solutions are playing in the evolution of AI applications.
Overall, there was more traction for TCB solution as we expanded our global OSAT customer base and delivered our first generation. Our next -- sorry, delivered our first next-generation TCB tool featuring green, ultra-fine pitch, chip-to-wafer capabilities to a leading global foundry customer.
In addition, we are on track to deliver hybrid bonding tools to leading customers for use in varied applications. Here, I'm pleased to highlight a breakthrough with a main customer order where hybrid bonding tool will be used for 3D integration and delivery of this -- and delivery to this customer is scheduled for next year.
Let me now describe how the evolution of AI application is expected to create robust demand for our TCB and hybrid bonding tools going forward. The AI requirements for combining GPU, CPU, FPGA and HBM in a very complex heterogeneous integration architecture is creating more interconnects between components on a AI package. For majority of this interconnects, TCB is presently the tool of choice as they effectively address the total cost of ownership challenges arising for such complex architectures.
Let me be very clear that this picture is just one example of a high-end, high-performance computing device. Different packages and different proportions of components handled between TCB and hybrid bonding. And this will also depend on the evolving total cost of ownership and performance for each of this process over time.
This package consists of 6 chiplets colored in green that utilize hybrid bonding to form a 3D integrated IC. On the other hand, there are 4 HBM [ straight line ] colored red surrounding the 6 chiplets bonded using TCB. And each of these 4 HBMs is made of stack of 12 layers or more on memory time also bonded using TCB.
The 4 HBMs and the 3D integrated IC are in turn bonded onto a passive interposer colored grey using TCB to form a compound die.
Moreover, the resulting compound die is bundled onto the HDI substrate colored green at the bottom of the picture, also using TCB. Therefore, other than the 6 chiplets that utilize hybrid bonding, all the other interconnects in this package are handled by TCB.
This usage ratio will vary with different AI packages or HPC applications, but I trust you get the general idea.
Overall, high-performance computing devices will generate a growing need for both TCB and hybrid bonding. Since ASMPT has both TCB and hybrid bonding solutions, we are confident about the combined growth potential for the group.
Let me now hand over the time to Katie, our group CFO, who will talk about our group and segment performance.
Thank you, Robin. Good morning, and good evening, everyone. This slide shows our key financial metrics for the first quarter of 2023. Robin earlier mentioned that the macroeconomic environment and the industry conditions are far from rosy. Despite this challenging external environment, the group delivered a creditable performance in Q1.
The group delivered some growth in bookings quarter-on-quarter for Q1 2023 from a low base in the previous quarter. Our backlog was USD 1.1 billion at the end of March. This reasonably high backlog provides some cushion for the group as we navigate through the ongoing industry down cycle. The group's net profit came in at HKD 315.1 million. This was up by 18.2% quarter-on-quarter as there was an unfavorable foreign exchange impact in the previous quarter. Earnings per share for Q1 came in at HKD 0.77, and this was an increase of 18.5% quarter-on-quarter.
Let me take you through some detailed financials in the next few slides. For the first quarter of 2023, the group's revenue was USD 500 million, higher than the midpoint of guidance of USD 490 million. This was a decline of 9.5% quarter-on-quarter as revenue for both SEMI and SMT segments declined, with SEMI's revenue declined higher due to the ongoing semiconductor down cycle.
As I highlighted a bit earlier, group bookings grew at about USD 453 million, an increase of 13.8% quarter-on-quarter. Bookings growth was mainly supported by robust demand from the Automotive end market.
The group registered gross margin of 40.4%, a decrease of 98 basis points quarter-on-quarter. The decline was mainly due to segment mix as SMT delivered more than 60% of group revenue. In line with lower sales volume, the group's operating margin declined by 181 basis points quarter-on-quarter to 11.9%.
The SEMI segment delivered revenue of about USD 197 million, which was a decline of 18.1% quarter-on-quarter. The IC/Discrete business unit registered decline in revenue sequentially as mainstream tools continue to experience weak demand. The highest revenue contributor to this business unit continued to be the Automotive end market.
The Optoelectronics business unit also recorded lower revenue sequentially. As this revenue was mainly driven by high-end Automotive, Silicon Photonics and advanced displays applications. The CIS business unit registered revenue growth quarter-on-quarter, but the revenue remained at a relatively low level due to ongoing weakness in the global smartphone market.
From a bookings perspective, SEMI recorded first quarter bookings of about USD 192 million, which was a growth of 33.6% from a low base in the previous quarter. Main contributors to the bookings were Automotive end market and Advanced Packaging solutions.
SEMI's gross margin was 45.1% in the first quarter, which was an increase of 66 basis points sequentially mainly due to favorable product mix and ongoing cost control measures.
Our SMT segment continued strong revenue performance and recorded its highest ever Q1 revenue. SMT contributed 60.7% of group's revenue for Q1 2023. It delivered a revenue of about USD 303 million, a marginal decline of 2.9% quarter-on-quarter.
SMT's revenue performance was mainly powered by industrial and automotive end market applications with demand coming mostly from Europe. Similar to the revenue drivers, SMT segment bookings were also driven mostly by automotive and industrial end markets for the first quarter. Bookings increased 2.6% quarter-on-quarter to about USD 261 million.
In the first quarter, SMT contributed about 58% of group bookings. SMT's gross margin was 37.4% in Q1, which was a decline of 168 basis points quarter-on-quarter due to product mix.
Now let me pass the time back to Robin to cover Q2 revenue guidance.
Thank you, Katie. We have been monitoring the industry and macroeconomic environment closely. Persistently weak consumer sentiments, coupled with the ongoing inflationary pressures make it more challenging to form a clear picture of the timing and the pace of recovery for the industry. We are, therefore, cautious in our outlook against the backdrop of this present uncertain external environment. Thus, for the second quarter of 2023, the group expects revenue to be between USD 455 million to USD 525 million. At USD 490 million midpoint, this represents a decline of 26.2% year-on-year and 2% quarter-on-quarter.
Let me conclude with a couple of points on our longer-term outlook for the group. Over the longer term, we are optimistic of the group's growth potential, which is supported by the longer-term structural trends of automotive electrification, smart factories, green infrastructure, 5G, IoT and high-performance computers fueled by generative AI growth.
This slide comprehensively sum up our unique broad-based portfolio, which not only provides the group competitive advantage, but also the needed resilience to the industry cycles. This unique broad-based portfolio was in play during the first quarter of 2023, that witnessed our SMT side, delivering a stronger performance than SEMI.
On that note, I will end the presentation. Thank you. We are now ready for Q&A. Let me pass it to Romil to facilitate.
Thank you, Robin. [Operator Instructions] With that, can I request Gokul to unmute yourself and ask your questions.
Maybe my first question, I will focus on the more near-term dynamics. Robin, I think you mentioned things have become a little bit more conservative since the beginning of the year. Could you talk a little bit more in detail what you're hearing from your customers and on different verticals, especially on the Automotive and Industrial side, there have been some concerns recently that demand has become a little bit weaker. Are you starting to see some of that when you look at the forward-looking bookings or backlog? And maybe you can also give us a little bit of color on what you are looking at the bookings for semiconductor segment -- Semiconductor Solutions segment into Q2? Are we going to continue to see that sequential recovery that we saw in Q1.
Gokul, let me break down your question into a couple of parts. The first part is more on the near-term outlook, and especially whether the company is seeing any weakness in Automotive and Industrial side. Let me request Robin to update on this.
Thank you, Gokul, for your question. Now for the -- maybe I talk about the -- some kind of Q2 booking kind of because we don't -- as you know, we don't give guidance on booking but only on revenue. Now obviously, I think we are cautious for Q2 bookings due to the continued weak consumer sentiments as a result of the prevailing macro uncertainties. So based on this stance, we think group bookings will continue to -- will come down Q-on-Q by maybe between 10% to 20% Q-on-Q.
On that note, we also expect SMT demand to decline after a few quarters of strong bookings. As you can recall, if you look back, SMT has been experiencing, I think, about good 9 -- 8, 9 quarters of bookings above $250 million. So that's historically on the high side. So they were -- SMT booking will sort of normalize in the coming Q2.
Now on this, a little bit more color on the SEMI side. SEMI bookings, as you can see in Q1, already grew quite a fair bit. I believe it's around 34% from a low base in Q4 2022. So for Q2 2023 because of the cautious and consumer outlook, Q2 '23 for SEMI booking may remain kind of a flattish level compared to Q1.
Now on to your question about Automotive. Yes, we do see on the SMT side, automotive demand will start to moderate again because we have really few 8 to 9 quarters of strong Automotive demand for the SMT ready. So this -- we don't think this can continue forever. So it has to come down and normalize to a level that is comparable to historical.
So yes, we do see Automotive and SMT kind of normalizing. However, on the SEMI side, the picture is slightly different. I think one reason we can attribute to the difference between automotive and the SEMI and Automotive on the SMT side is there's still a lot of innovations in terms of packaging devices on the SEMI side for Automotive. As I see materials, for example, this is a new material altogether compared to prior years. So there's a need for the industry to use different packaging solutions for such material. This is just one example.
And there's also many other, I would call, packaging evolution in terms of how we want to make the automotive -- the power devices more efficient. So that requires a lot of new technology in terms of packaging. And from that perspective, I think we play to the strength of ASMPT on the SEMI side because we definitely have the bandwidth, the capabilities to develop new solutions for the semiconductor automotive side.
So I think in short, we do still see some legroom in terms of auto demand -- Automotive demand on the SEMI side for that reason because a lot of these Automotive demand on the SEMI side, they are -- capability buys.
So for Automotive, this capability buys were gone for a number of years before they turn into high volume. So from that perspective, we think there's still some legroom to go on the SEMI side. On the SMT side, we do see some normalization in terms of Automotive demand.
Gokul, do you have a follow-up question?
Yes. And I think that was very clear. Maybe if I move a little bit to the more longer-term areas. Thanks for the update on TCB and hybrid bonding progress. Is there any way you could give us some degree of quantification, whether it is from third-party data, et cetera, in terms of how big these market sizes are?
We have seen from some of the third-party research that TCB market is roughly about USD 1.2 billion to USD 1.3 billion. And I think there are -- some of your competitors who are talking about hybrid bonding itself going to between USD 1 billion to USD 2 billion size in the next 5 to 6 years. I just wanted to understand how much of an upside you have seen from your customers' orders, et cetera, for HBM and other products, especially with this push towards generative AI and more HPC solutions for both TCB and hybrid bonding? And small supplement is, are you seeing any of these getting deployed in the smartphone segment? Or these are mostly in HPC?
So Gokul, I think 2 parts of your question. For the first one, the exact, say, addressable market, or SAM, for TCB and hybrid bonding, I'm sorry to say, unfortunately, we don't provide. In last quarter's earnings call, we did provide our APs overall SAM from 2023 to 2027. But giving sort of outlook for TCB and hybrid bonding, I will request Robin to provide some more color on this.
Then second part of your question is whether some of these solutions are going towards the smartphones. For that also, I will request Robin to answer your question.
Thank you, Gokul, for your question. Now in terms of TCB, I think, Gokul, you saw this -- today's presentation, we want to give a little bit of color on how we see the TCB and the hybrid bonding demand going forward. I think even without the generative AI application trend, we have been seeing, I think, going forward, advanced packaging will continue to grow in the industry, for a reason that there's a lot of cost advantage and time to market for such solution. .
Now with the advent of the generative AI application, I think this will add on top of the demand that we've already seen in the advanced packaging area that we have articulated before.
Now it's exciting for AI application because as I mentioned during my opening remarks, AI application requires more complex packaging solutions. And for that reason, we are confident that we have the technology bench strength. We have the [indiscernible] to cope with all this demanding involving technology, both on the TCB side as well as on the HP side.
So I think in short, having these tools in our arsenal actually position us well to take advantage of this growing trend in terms of HPC. And then hopefully, this AI trend can turn into something big for the industry. I think this is what we're hoping for in the future. I hope I answered the first part of your question.
Now on the smartphone side, I think, at this moment, we don't -- I think most of the -- I'll say TCB -- the TCB application or high-end precision die bonding kind of applications so far, we don't see smartphone application, mostly HPC application.
I think because of the total cost of ownership consideration. This device -- these solutions are expensive solution even for TCB. So the cost of ownership must make sense in order to employ such solution. So for that reason, we see TCB and HB more for HPC rather than smartphone, at least in the present time.
Next, can I request Leping to unmute yourself and ask your questions.
The first question is about your -- the second quarter booking trend. So if I hear correctly, so you expect the second quarter booking for SMT and SEMI will decline. Is it correct?
No, we expect SMT to decline after few quarters of high booking. But for SEMI, we expect it to be kind of flattish from Q-on-Q.
Okay. So just for -- by application, can you share some color which type of application for the -- both side are declining? And why? Because we see the first quarter booking are recovering, is it just because of the seasonal effect? Or it -- what's the reason Q1 is recovering, but Q2 seems to be a little bit weak?
Leping, good question. Now Q1, because of a low base, right? So if you look back Q4, our SEMI booking was around $140-ish million, right? So in Q1, it went up to about $190 million thereabout. So when you compare Q-on-Q from the perspective, it is clear that there's a 34% increase, but we are coming from a low base. .
Now because of the cautious environment with consumer sentiment, I think we all know, right, for semicon, especially for the semicon segment, the demand dynamics that it has to be -- it is sort of correspond with the general economy, right? So the general economy is not -- it's just sluggish. Consumer are not opening on a wallet and spending. So semiconductor will still be constrained in terms of demand. So this is exactly what we are experiencing right now. So that's why we want to be a little bit more cautious for Q2 in terms of color for booking on the SEMI side. So we expect it to be kind of flattish.
Now in terms of what's driving this, I think the near-term dynamics is the same. I think for SEMI, I would say, continue to be -- Automotive continue to be HP -- AP because however, on the AP side, it tends to be lumpy. So quarter-to-quarter, it may vary. But momentum-wise, I think Automotive, AP will continue on the SEMI side. For SMT, we also continue to see Automotive and Industrial being the driving force for SMT demand. So I hope I answered your question, Leping?
Yes. The second question is, can you see some -- can you share some color about the difference between your order in different geographical regions? I remember last quarter, you mentioned that there's -- you see quite strong demand in [indiscernible] Malaysia, Vietnam or the Southeast Asia region. Do you see any difference this quarter between the region in terms of orders?
There is a small difference, I must say, which is some are a little bit positive, but don't be too excited. Now, we see -- when we talk to our Chinese customer or we do China checking. The utilization of some of our Chinese customers are picking up, okay? But it has no picked up to a level that excite us. So is sporadic interest, a little bit more inquiries about tools. If I want this tool, when can you deliver. I mean those are positive signs arising from the Chinese market, positive. But sporadic, it does not signal a broad-based kind of recovery yet from the China side. So that's what I can share is something, a little bit different from the previous quarter.
Next, can I request Nicolas to unmute yourself and ask your questions.
You mentioned in the presentation an expansion in global OSAT customer base. Could you clarify or specify what this means?
Okay. So now I think probably you guys probably who follow us for a long time, we have been saying we have a very dominant logic customer for TCB. But increasingly, we see more interest for TCB coming from the OSAT, not just on the IDM or the foundry space. But increasingly, we see OSAT, not just OSAT in one location, but is coming from a different region, right? But having said that, Nicolas, the demand coming from OSAT is still small compared to IDM.
So this is a TCB specific comments?
Yes. TCB, yes.
Okay. The bookings of the SEMI solution, the division is increasing a lot Q-on-Q, right?
Sorry?
The bookings for SEMI solutions is increasing a lot Q-on-Q, right?
Q1, yes, booking, right?
Right. Yes, exactly, right.
When Q1 compared to Q4, yes.
Yes, yes, right, plus 30% Q-on-Q, right? .
Yes.
So does this suggest that the revenue of SEMI solutions increase in 2Q?
Let me put it this way. Although, as I said earlier, in answering one of the earlier questions, right? So [ 2Q ] Q-on-Q semi booking has increased by 34%. That means Q4 to Q1. But let's not forget Q4 was at very low level, right? So -- and looking at the SEMI bookings in Q1, we registered about $192 million-ish, right? So if you look back historically, this is not a high level, right? It's not a high level at all. So that's why we're trying to say this, we are coming off from a low base from Q4.
I understand the low base. What I'm wondering is, if an increase in SEMI solutions revenue, in 2Q also implies that the operating margin could go up. So your SEMI division has a lot of fixed cost and R&D and so forth, right? So in 1Q '23, you reached a fairly low segment margin of 2.5%. And I'm wondering if that's the bottom.
Hard to call a bottom because maybe, Katie, you want to take this.
Yes. So on the margin, let me take a shot at that, Nicolas. What Robin said, hard to call the bottom. As you probably can tell, right, the group in previous quarters has managed to deliver at margin at a fairly consistent level. It does demonstrate the group's ability to deliver steady performance in both up and the down cycle. However, you probably know the group margin really is, I think from quarter-over-quarter may fluctuate due to volume, segment mix or product mix, right? So in this downturn, relatively low volume in the SMT segment mix and also any potential increase of mainstream product that could be a headwind for us.
Could be. Okay. My last question, sorry. the bookings for SMT so $260 million, the book-to-bill is, let's say, 0.6 -- 0.8, 0.9, right, in that range. Is this partially because order visibility or delivery time or lead time is a lot shorter for SMT than for SEMI solutions?
Nicolas, not really because we have a broad range of tools. So I cannot generalize, honestly cannot generalize. But if you're talking about mainstream SMT tools, typically is a quarter or -- of a quarter, unless it's for a very advanced -- tool for advanced packaging then the lead time will be longer. So it's just a general comment for you.
Next, can I ask Gokul can unmute yourself and ask your questions?
If we look at within Semiconductor Solutions, could you talk a little bit about how you're seeing both the imaging CIS-related and camera-related packaging tool? I think last time we did discuss that there is potentially some upgrade possibilities coming through. Could you talk a little bit about how that is progressing since you did call out in the presentation that CIS still remains a little bit weak.
Secondly, I think for the slowdown that we are seeing in SMT, is it specific to any segment that we are seeing the slowdown? Or is it broad-based? Is it mainly Auto and Industrial that you're seeing a slowdown in your SMT business in second half? Or is it across the board?
Thanks, Gokul. Your first question is more on CIS and the camera module side. Let me request Robin to give you a bit more color on that.
So on the CIS front, we do see some increase -- again, a very small -- very low base kind of level. I think for the CIS mobile market, we were engaging key customers. I think we have a good base of key customers for our tools for sure. We are engaging these customers for a lot of capability buys. And this capability buy would probably turn into some kind of high volume in time to come, maybe a year or 2. But it also depends on the market dynamics at the point in time whether there's a recovery in terms of the smartphone area. Now -- but at least, we are -- they're using our solutions for future camera modules packaging. So if the end market demand comes through, then there is a good chance that demand -- the demand for our CIS tool, especially the Active Alignment will also increase correspondingly. .
So there are 2 things here. One is -- one thing we're happy about is that we'll continue to engage key customers in their capability buy. We're providing them capability buy, so the volume is not high. And hopefully, this can turn into high volume in time to come. So that's for CIS.
On that front also, we are not just depending on CIS. I think on mobile, we have been saying that we are diversifying our CIS solutions into the Automotive market as well. So hopefully, in time to come because of the increasing adoption of higher level ADAS solution. So more and more cameras are needed in cars. Going forward, I think this could also give us some demand for CIS, Automotive tools in time to come. So this, on the CIS side.
Yes. So let me repeat the second question. This is more on our guidance that SMT bookings will come down. And there's some slowdown on the SMT side. So is the slowdown more broad-based? Or is it because of some particular industries and sectors? Robin will update on this.
Sure. So I'm not saying -- let's look at things in perspective. For a good number of quarters already, what was driving our SMT demand was HD for the automotive and the industry end market. So the other markets that consumer, smartphones and computers, right, they're already at a low level. .
So when we say we see Automotive kind of moderating for SMT, we are -- I think the other segment, the CCC, what we call it, already at a low level. So it's only the Automotive that we think will moderate. However, I have to say that we are also very strong in the Industrial side. So we don't see -- we still see industrial has the momentum is still there. So for SMT, it's actually the Automotive that we are seeing normalizing to a certain level compared to the prior period. Does that answer your question, Gokul?
Yes, I think that's very clear. Maybe one last question. Robin, you have seen many cycles and you guys are in very constant touch with your customers. I think how do you see this cycle panning out? Are you starting to see -- like we discussed earlier, you've seen a bit of improvement in semiconductor solutions bookings recently in Q1. Do you feel like we're kind of reaching that bottom in terms of the semiconductor cycle itself and you start to see a little bit improvement in bookings as we look a little bit further out? What are the feedback you're getting in conversation to your OSAT, as well as the IDM customers, especially from a semiconductor solutions perspective?
Gokul, I think generally, when we talk to our customers, in general, I think we sense our customer base is feeling a bit more cautious than before. Although some still are hopeful to see some sort of a recovery in the second half of 2023. So we hope this time our customer base is, right.
I think for the semiconductor industry, in our opinion, is closely tied to the general economy. So the economy has to pick up and this will drive consumer spending and expenditure, and this will help to boost demand on the consumer end market, the communications end market and also maybe even computer end market. Because these 3 markets, what we call as CCC market are really weak for a number of quarters. So these 3 markets are big markets compared to Automotive and Industrial. So if these 3 markets don't recover, semiconductor can remain in the down cycle from that perspective.
Now to be honest, Gokul, we can't see too far. We are back-end equipment makers. We are SMT. Our visibility really, we've been seeing -- quarter-over-quarter, our visibility is one quarter the best if you ask me. And beyond that, we can't really give you any good answer.
So we also take reference honestly from industry experts as well, research experts, research houses. If you look at their kind of -- their forecast, in fact, most of them have revised their 2023 outlook for semiconductor as a whole, the market as a whole. And even for the PA market or the semiconductor equipment market, they have also revised downwards. So they're also taking a more cautious stance or position for 2023 versus 2022. So we also have to take reference from all these research houses. So I hope we give you a little bit of color on that, Gokul?
Yes, that's very clear.
Let me read one question from the chat. This is for our CFO, Katie. Gross margin for the SEMI side improved slightly, but the SEMI side registered declined in the segment margin and profit. So can Katie comment on that?
So I think this is referring to the operating -- the steadiness of the operating expenses for our business. As we have mentioned before, the SMT is a technology-driven company. So we're very committed to the investment in R&D in regards of the cycle, especially for SEMI business, we have been investing, and we'll continue to do so in the leading edge technologies like advanced packaging. So that will continue on. At the same time, also, we have some other strategic projects that we're probably showing in the operating expenses, like upgrading of our ERP and HR systems. And we believe those investments will position us for a more productive company going forward.
Having said that, if you look at our quarter-over-quarter OpEx, right, it is actually 7% down. So in this kind of environment, the company just like in previous quarters, have engaged in various corporate initiatives and cost control measures, and we'll continue to do so. So I hope that answered the question.
Next, can I request Nicolas to unmute yourself and ask your questions.
So to go back to Gokul's question in a way. In 2021, '22, you had a very large SEMI revenues, right? So declined a bit in 2022, but still HKD 10 billion. So really very -- a big number for 2 years, big revenue numbers for 2021 and '22. At the same time, there was a bottleneck or shortages in wire bonding with OSAT companies during those years. Do you think there is overcapacity of wire bonding now?
Yes, Nicolas, yes, if you look back, obviously, a few quarters in '21 and '22 was a -- '21 was really a semiconductor peak ever, right? So at a point, wire bonding sales, you were right, were very robust. We had the best year in terms of wire bond sales. No, I think this is the dynamic of the industry, right? So when we go to a high, you will come down. This is the typical cyclical pattern that we are seeing now. So obviously, opinion, there is some true behind the fact that there is still some overcapacity on the mainstream side, especially on the wire bond side. That's why the wire bond demand over the last few quarters have been relatively low compared to history.
So you are right. However, having said that, I think, in answering one of the Gokul's question earlier or someone else, I think, [indiscernible] right? So we do see -- having said that, we do see some sporadic interest from some of our customers inquiring about wire bond. I think that is a small positive sign. At least they're thinking of ordering some a wire bond tools. We did see some increase, but nothing to show about. The increase is still coming from a very low base, right? But at least there are some sporadic interest about wire bond in particular. So this is what we are seeing right now.
[Operator Instructions] Let me read 1 or 2 questions from the chat box. This question will be for Robin. Would you be able to comment more on the repeat order of HBM [ in ] TCB and the progress of your next-generation TCB tools in terms of qualification?
In terms of HBM, yes, I think we highlighted in Q1 as well. We are pleased we have won orders for TCB tools for HCM applications. Now we are -- in fact, this is -- those who follow us closely, this is a breakthrough for us. We have been openly telling you that ASMPT SEMI side has never been strong on the memory side. So with the advent of new technologies, requiring advanced packaging solution timing that play into our strength. That's why we are able to win this order for HBM application. .
We see the trend will continue. But don't ask me how big it's going to be is anybody's guess. But with the recent interest in generative AI applications, we believe that HBM will be a key component for AI, or for HPC packages, they are more due to AI application because AI application, you need a lot of memory power. So I think HBM will be a key to the kind of packages. So we are pleased that we are already in HBM. So hopefully, that demand will give us -- will continue well into the future. The other question?
There's one more question on the chat. This is more on hybrid bonding. Can Robin give a bit more color on the recent order. And is that a volume order?
Which one is it?
For hybrid bonding.
Hybrid bonding. No. I think we clearly stated it's our first order for hybrid bonding. I think in the last quarter, we also did mention that we are developing the next generation of hybrid bonding tool, there are more attuned to the evolving needs of our customer base in terms of accuracy, in terms of yield, in terms of cost consideration for hybrid bonding going forward. So hybrid bonding, as I have presented just now, it is together with TCB. We believe the combined potential of TCB HB hybrid bonding to going forward were interesting, not just for the semiconductor industry, but for a key player like SMT in this area.
Next, can I request Frank to unmute yourself and ask your questions.
So just to follow up, I think, on some of the previous questions people have about where you guys see this SEMI cycle going. It seems like earlier, the expectation was that we would see content growth and that would help offset the downside risk of any kind of slowdown. That doesn't seem to be materializing now. I guess the question is, we've talked a lot on this call about autos seeing some slowdown. Where do you guys see, I guess, the implication from this beyond, I think, just what we're seeing in the near term? Because it feels as though we're not seeing a real meaningful recovery in areas such as smartphones and things like that. And we may have to deal with the fact that smartphones are going to start to go into more of an x growth phase. Well, there's enthusiasm around AI. The actual contribution still seems to be not going to be as significant as we're seeing on SEMI.
So I guess, just to put it in context, though. How should we think about this upcoming -- this cyclical downturn period? I think 2 quarters ago, everybody thought this would be a normal cycle, it would be over by the first quarter this year. That doesn't seem to be the case or by the first half of this year. So how do you guys see -- as you talk to your clients and how are people starting to come around in terms of this downturn period? Just wondering if you guys could share any thoughts on this.
So I think Frank, maybe let me request Robin to comment that how we are seeing this down cycle. And if you can comment anything on the bottom and the potential recovery from a perspective maybe of what we are seeing on the ground and indications from the customers.
So Frank, I think let's talk about automotive a little bit. I did mention after 2 years of high demand for our SMT Automotive tools, it's kind of a normal cycle. Don't take it as a normal. It's normal that after 2 years of high growth, it has to normalize. I use [ on a lot ] normalized, I'm not saying it's going to be a steep decline for SMT Automotive. Don't get me wrong. Normalized level that is before the peak. But this is -- in fact, this is healthy for the industry, right? So what goes up has to come down before it goes up even higher again. So I think I just wouldn't -- that you guys are clear about the SMT side.
Now on the SEMI side, I mentioned also, I just want to touch a little bit on Automotive. I say there's still a lot of legroom for the SEMI side in terms of Automotive because of the continued innovation in terms of packaging requirement at the SEMI side. So SEMI side, we still see legroom in terms of Automotive.
Now overall, you talk about how do we see where is the bottom. Now this is really a million-dollar question, right? So I don't think we can give you a very clear answer on that. We -- as I mentioned in earlier answers to some of the questions, we take guidance from industry holders, how they look at things from China checking of customers. I will say some pockets of feedback that they are still hopeful for second half recovery. Now I mentioned many times on the call, it all depends really on the economy. The consumers expenditure or spending has to come back for a meaningful recovery in the semiconductor cycle. I think that's still -- this is how we see it in the short term.
Okay. And maybe just as a follow-up, though. Do you think there's going to be a likelihood then -- I mean, it seems like everyone is hopeful for a recovery and it keeps getting pushed back. Do you ultimately see a scenario where the CapEx spend has to start to decelerate more, just like not quite the same extent we've seen in memory, but to a certain extent, I think that ultimately can help if the market gets bad enough or there's no recovery. Do you see a risk of CapEx spending slowing overall for the industry, even more than we are?
Yes. If you -- I just want to look at things from another perspective. If you look at our bookings for SEMI, $192 million Q1 2023, looking back historical is already at a low level, right? So the question is how low can it go, all right? So it's already at a low level. So I'll give you some perspective, as I said, nobody can predict when it's going to be [ important ], but looking at SEMI bookings are already at low level.
If there are no more questions, then we will end this earnings call. Let me thank all of you again for attending today's conference call, and we hope to see you during the next quarter's call. Thank you. Take care.
Thank you.