ASM Pacific Technology Ltd

HKEX:522

Earnings Call Analysis

ASMPT’s Resilient Performance Amid Market Challenges

In Q1 2024, ASMPT reported revenue of USD 401.4 million, down 7.8% quarter-on-quarter. Despite this, group bookings rose by 17% to USD 409.3 million, fueled by strong demand for advanced packaging solutions. Gross margin slightly declined to 41.9%, while operating margin improved to 7.6%. Adjusted net profit was HKD 177.5 million, up 132.1% quarter-on-quarter. The company’s book-to-bill ratio surpassed 1 for the first time in seven quarters, indicating healthy future demand. For Q2 2024, ASMPT expects revenue between USD 380 million and USD 440 million, driven by structural trends in automotive electrification, smart factories, and AI growth.

Navigating a Challenging Macroeconomic Environment

The first quarter of 2024 has been tough for many companies, including ASMPT Limited. The global economic situation remains problematic, with geopolitical conflicts, persistent inflation, and rising interest rates hampering overall consumer sentiment, which has weakened the demand for electronics. Despite these challenges, ASMPT's diverse portfolio has helped it navigate through these turbulent times. The company's wide range of products allows it to offset weaknesses in some markets with strengths in others, which is a significant advantage in uncertain economic conditions.

Revenue and Segment Performance

ASMPT’s revenue for Q1 2024 was USD 401.4 million, marking a decline of 7.8% from the previous quarter. The revenue drop was influenced by a prolonged down cycle in the semiconductor industry, particularly impacting the SEMI segment, which saw a revenue decrease of 13.7% quarter-over-quarter. Despite a small decline of 2.6% in the SMT segment’s revenue to USD 225.5 million, it remained robust compared to SEMI. The automotive and industrial markets continued to dominate SMT's application and revenue growth, primarily in Europe.

Positive Developments: Book-to-Bill Ratio and Advanced Packaging

One of the standout achievements for ASMPT in Q1 was the recovery of the book-to-bill ratio, which moved above 1 after seven quarters of being below this threshold. This positive shift was driven by a 17% quarter-over-quarter growth in bookings, reaching USD 409.3 million. Both the SEMI and SMT segments posted higher bookings, with strong demand for advanced packaging (AP) solutions being a major growth driver. The group's backlog remained stable at USD 849 million.

Earnings Growth and Financial Health

Continuing to boost investor confidence, ASMPT reported an adjusted net profit of HKD 177.5 million for Q1 2024, a substantial increase of 132.1% quarter-on-quarter. Adjusted earnings per share also saw a significant rise, amounting to HKD 0.43 per share, a 138.9% increase from the previous quarter. The company maintained a robust balance sheet, with cash and bank deposits totaling HKD 5.25 billion and net cash of HKD 2.75 billion at the end of Q1.

Future Outlook and Guidance

Looking ahead to Q2 2024, ASMPT expects revenue to be in the range of USD 380 million to USD 440 million. At the midpoint, this represents a minor increase of 2.2% quarter-over-quarter but a 17.6% decline year-on-year. The anticipated revenue increase is primarily attributed to the expected higher performance from the SEMI segment, partially offset by a weaker performance from the SMT segment.

Investment in R&D

To sustain its growth momentum, particularly in advanced packaging solutions, ASMPT has committed an additional HKD 250 million investment in R&D and infrastructure for 2024. These projects are on track and will intensify through the remainder of the year. Advanced packaging, particularly thermal compression bonding (TCB) tools, remains a pivotal area for ASMPT, with significant customer engagement and new orders expected to grow.

Advanced Packaging and Growth Potential

Advanced packaging solutions, especially TCB tools for both logic and high-bandwidth memory (HBM) applications, are expected to be major growth drivers. The TCB tools are already in production for 12-high stacking at leading HBM players, and orders are coming in from other customers as well. The TCB tools' continued advantage in terms of cost versus performance positions ASMPT well for broader adoption in both logic and HBM applications.

Earnings Call Transcript 2024-Q1

[Romil Singh, executive]

All right. Since time is 8:31, good morning and good evening, ladies and gentlemen. This is Romil here from the Investor Relations team, 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 Investor Conference Call for the First Quarter of 2024. And we would like to thank you for your interest and your continued support in the company. Please note that all parties will be on listen-only mode when the management is presenting. We will start the Q&A only after the management has gone through the entire presentation. During the Q&A session, priority will be given to the covering analysts.As part of our standard 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 could 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 for our recent results is available on our website. On today's call, we have the Group Chief Executive Officer, Robin; and the Group Chief Financial Officer, Katie. Robin will cover the group's key highlights, outlook and the guidance for second quarter, while Katie will provide details on the financial performance, and then we will open the floor for Q&A.So with that, let me hand the time over to Robin now.

[Cher Ng, executive]

Thank you, Rom. Good morning, and good evening to everyone today. It is a pleasure to have you all on our earnings conference call for the first quarter of 2024. Before we begin, let me take this opportunity to share some thoughts on the overall macro environment and some key highlights of our business. The macroeconomic environment continues to present challenges. While the slow recovery of the Chinese economy continues, there have been dynamic and often rapidly evolving geopolitical conflicts that [ had void ] markets. Coupled with stubborn inflationary pressure and the more recent field interest rate hikes, overall consumer sentiment remained weak, trickling down and causing tepid electronics demand.Against this backdrop, our unique and broad-based portfolio accelerated to a certain extent as our 2 segments follow different cycles. For the first quarter, ASMPT delivered revenue at the midpoint of guidance with a higher revenue proportion from our SMT business. Our broad-based portfolio serves diverse end markets. And this continued to be an advantage for us because weakness in some end markets can at times be compensated by strength in others. For this quarter, the group's automotive applications continued to form the highest proportion of our overall group revenue. Revenue from SMT's automotive application also grew compared with the previous quarter despite softness in the overall automotive market. As for SEMI, this automotive solutions benefited owing to exposure to certain specialized technology areas of the supply chain, such as power and silicon carbide modules and smart head lengths for high-end vehicles.An important development for the group in the first quarter was a book-to-bill ratio that moved above 1 after 7 quarters. Bookings for the group grew in the first quarter as both business segments had higher bookings when compared to the previous quarter. SEMI's booking growth was also due to a low base effect. SMT bookings grew quarter-on-quarter and began stabilizing after softening in the second half of 2023, mainly due to automotive and industrial end markets. The group bookings growth in the first quarter was mostly propelled by strong demand for its advanced packaging or AP solutions with both SEMI and SMT contributing strongly to group AP's booking. The group's interconnect solutions, including thermal compression bonding, hybrid bonding and high precision die bonding were mainly driven by AI. Together with SMT's System in Package, or SiP tools, this contributed strongly to the group's AP bookings in the first quarter.Let me share more about the progress of our AP solutions, which have the highest growth potential under our portfolio. Undoubtedly, advanced packaging continues to be a bright spot for the group. We strongly believe that the group has the industry's most comprehensive suite of AP solutions that serve a diverse range of applications. Moreover, we are deeply embedded in the supply chain of major generative AI and high-performance computing customers and hence are in a commanding position to capitalize on the growing demand from an increasing range of such applications.Let me shift focus to our most popular AP solution, thermal compression bonding or TCB. For logic applications, we continue to win TCB orders in the first quarter from IDM and OSAT customers. For a leading foundry customer, we have started to deliver TCB tools in the first quarter for chip-to- substrate application, as part of the meaningful orders that we won from this customer in the second half of last year. To support these customers growing AP demand propelled by generative AI, we expect more TCB orders for chip-to- substrate application from this leading foundry and the supply chain partners in the second quarter and beyond. In addition, we also recently delivered our next-generation ultrafine TCB tool or chip-to-wafer application to this founding customer for joint development and we are confident of winning chip-to-wafer TCB orders in the coming quarters.Next, let me talk about high bandwidth memory or HBM potential. The group's TCB tools are already in production at a leading HBM player for 12 high stacking. We have shipped a demo tool to another HBM customer and have more tools in the pipeline. I'm sure most of you are aware of the news circulating recently since last month on the relaxation of the packaged thickness on the next generation of HBM. We have experienced heightened engagement with multiple HBM players as TCB is recently emerging as a preferred solution for stacking requirements of 12 high, 16 high and above. This is due to TCB's continued advantage in terms of cost over performance or total cost of ownership criteria.We remain confident on the strength of a TCB solution in terms of accuracy, thin or large die handling capabilities and our deep process knowledge [indiscernible] over more than a decade. With our competitive advantage and based on the above-mentioned customer engagement, ASMPT is in a strong position to benefit as TCB adoption accelerates for both logic and HBM application.Let me talk a little bit about hybrid bonding. Last quarter, we indicated that we expected more orders. I'm pleased to highlight that in the first quarter, we won orders for 2 more hybrid bonding tools for logic applications and we remain confident of winning more hybrid bonding orders in the coming quarters. In addition to our SEMI AP tools, booking for SMT AP tools also grew quarter-on-quarter, mainly due to SiP tools demand mostly coming from RF modules for high-end smartphones and wearables from leading global players and also from PC and server-related applications.With those highlights, let me now pass the time over to Katie, who will talk about group and segment performance.

[Yifan Xu, executive]

Thank you, Robin. Good morning and good evening, everyone. Let me take you through the group financials. This slide covers the group's key financial metrics for the first quarter of 2024. The group delivered revenue at midpoint of guidance. Revenue for Q1 was down quarter-on-quarter, mainly due to the prolonged semiconductor down cycle that impacted our semi business. Though SMT revenue also declined, it was at much smaller rate and SMT contributed a high proportion of group revenue. This highlights the advantage of our broad-based portfolio, as Semi and SMT segments follow different business cycles and provide some stability at the group level.Group bookings had growth quarter-on-quarter in Q1 as both segments grew and the growth was mostly powered by advanced packaging solutions. Our backlog remains stable at about USD 849 million at the end of Q1. Group gross margin remained at a relatively high level in the first quarter and was down slightly quarter-on-quarter. For Q1, Group's adjusted net profit was HKD 177.5 million, an increase of 132.1% quarter-on-quarter and adjusted earnings per share was HKD 0.43, an increase of 138.9% quarter-on-quarter. The group continued to have a robust balance sheet with cash and bank deposits at HKD 5.25 billion and net cash at HKD 2.75 billion at the end of Q1.In the first quarter, group revenue was USD 401.4 million. Revenue was down 7.8% quarter-on-quarter due to both SEMI and SMT, but SEMI's revenue decline was steeper due to the prolonged semiconductor down cycle. Group bookings in the first quarter grew 17% quarter-on-quarter to USD 409.3 million, as both segments registered bookings growth. As Robin highlighted earlier, this booking growth was supported by robust demand for advanced packaging solutions on both SEMI and SMT. Group gross margin declined slightly by 40 basis points quarter-on-quarter to 41.9%. This is still at a higher level compared with previous quarters. The slight decline was mainly due to SMT's lower gross margin but partially offset by SEMI.Group operating margin improved quarter-on-quarter by 218 basis points to 7.6% in the first quarter. This was mainly due to lower operating expenses from ongoing cost measures and seasonality effects. Last quarter, we announced that we will invest in R&D and infrastructure with an additional HKD 250 million for 2024. The projects are on track and will intensify in the remainder of the year. SEMI delivered revenue of USD 175.8 million in the first quarter, a decline of 13.7% quarter-on-quarter. The IC/Discrete business unit had quarter-on-quarter decline in revenue, mainly due to industry weakness for the group's deposition tools. However, there was some sporadic demand for consumer-related mainstream tools in the quarter.Optoelectronics business unit's revenue declined quarter-on-quarter. The business unit's revenue was mainly driven by high-end automotive headlamps and photonics-related applications. Revenue for CIS business unit grew quarter-on-quarter from a low base. Growth was mainly due to a high-end smartphone market. SEMI's bookings grew 25.1% quarter-on-quarter from a low base to USD 199 million, mainly due to consumer and computers end market applications. SEMI's advanced packaging solutions also registered quarter-on-quarter growth. It is worth noting that SEMI's booking turned to growth on a year-on-year basis in Q4 last year and continued this trend in Q1 2024.Despite lower volume, segment gross margin improved by 86 basis points quarter-on-quarter to 44.6%, mainly due to a one-off benefit from the sale of previously provisioned inventory. For Q1 2024, our SMT segment continued to deliver high revenue than SEMI for our seventh consecutive quarter and contributed about 56% of group revenue. SMT registered revenue of USD 225.5 million, a marginal decline of 2.6% quarter-on-quarter. SMT revenue performance continued to be dominant by automotive and industrial end market applications and mostly in Europe. Segment bookings grew 10.1% quarter-on-quarter to USD 210.3 million in the first quarter, mainly driven by growth from advanced packaging and automotive applications. SMT gross margin was at a healthy level of 39.7% in the first quarter. There was a decline of 123 basis points quarter-on-quarter due to product mix.Let me now pass the time back to Robin for next quarter's revenue guidance.

[Cher Ng, executive]

Thank you, Katie. The group expects second quarter revenue to be between USD 380 million to USD 440 million. At midpoint of USD 410 million, this represents a decline of 17.6% year-on-year and an increase of 2.2% quarter-on-quarter. The slight quarter-on-quarter increase is due to higher revenue from SEMI, partially offset by lower revenue from SMT. Based on the unique and broad-based portfolio, we remain optimistic about group's prospects and the potential for growth over the long term. This competence is further supported by long-term structural trends of automotive electrification, smart factories, green infrastructure, 5G, IoT and AI growth across cloud, data center and AI edge devices. On a broader level, these structural trends are also moving in tandem with increased CapEx spend from nations, securing their supply chains via more onshoring and organization preparing themselves to deal with a more dynamic global supply chains.This concludes our presentation for the first quarter of 2024. Thank you, and we are now ready for Q&A. Let me pass the time to Romil to facilitate.

[Romil Singh, executive]

Thank you, Robin. For asking questions, please either use the raise hand function or type your questions in the chat to ASMPT Q&A. Please ask your questions one by one and limit them to 2 questions at each turn. With that, can I first request Gokul to unmute yourself and ask your questions.

[Gokul Hariharan, analyst]

First question is on TCB. It looks like the progress is quite good on your foundry and OSAT customers. Robin, does it now feel that your kind of PCB order momentum and shipment momentum is materially better than what you had indicated 3 to 4 months back, where you talked about equaling the shipments that you did in the past 10 years until 2021? Or is it still pretty much in that same range?Secondly, on HBM, you were a little bit more cautious on the HBM adoption of PCB previously. Are you starting to see meaningful progress on 12 high and 16 high with many customers? I'm asking this because one of your competitors still insist that most of HBM though will be sticking with mass reflow. Are your TCB tools readily to be used on mass reflow or you basically require the customer to move to local reflow to start using your high-precision TCB tools in HBM? That's my first question.

[Romil Singh, executive]

Okay. Gokul, maybe I'll break it down into 2 segments, and Robin will answer these questions for you. First one is on the progress that's happening on the logic side, especially with the foundry and OSAT customers. So, I will request Robin to comment whether the order momentum for the order flow and traction with this customer better than it was 3 to 4 months back.

[Cher Ng, executive]

Thank you, Rom. Gokul, now for your first question, I think you were trying to gauge a sense of whether there's any difference 3 months ago, 3, 4 months ago compared to now. I think, yes, in a way, whatever that we were telling to the Street came to realization, right? So we won the orders for the chip-to-substrate application this quarter to be shipped to the leading supply foundry. And we have already started to ship a couple of tools already. In addition, as you can see in our MD&A in our announcement, we have also shipped next generation of ultrafine pitch to also to this leading foundry for joint development. And this is for the chip-to-wafer applications.So you recall, chip to -- TCB has started to use for chip-to-substrate at the logic side. And now, as we have alluded before, in time to come, TCB will also be used for the chip-to-wafer applications. So, I think that has come to in a way what we expected. Now, we are definitely on track. We said that our TCB in terms of dollar revenue for 2012 to 2021 compared with 2022 to 2024, that the amount would be the same, right? So in other words, in short, there is an accelerated adoption of TCB in the last couple of years going into 2024. Okay?

[Romil Singh, executive]

So, for the second part of the question, it's more on the HBM potential for TCB. Gokul noted that we were a bit more cautious previously. And now, whether the progress is more meaningful, especially in relation to 12 high, 16 height kind of HBM stacking? And how does the TCB compare in terms of tool-wise versus MR? So, maybe Robin can give an overview on all these engagements and his views on the HBM potential for TCB.

[Cher Ng, executive]

Now, Gokul there's a distinction. When you talk about MR, it's mass reflow tool. So, these are basically for what we call a flip chip kind of mass reflow. So, it's different from TCB. TCB is a local reflow process. So, don't mix up MR with local reflow process like the TCB tool, so they are different set of tools altogether. Now yes, we sounded more optimistic for HBM because as we have alluded before to the Street, that we see that increasingly when for HBM being growing from 12 high to 16 high and beyond, these are view that the MR has certain limitation in terms of accuracy and in terms of handling increasingly higher density memory die and also as you continue, we believe that as the industry continues to step higher and higher, the memory die has to be thinner and thinner.So in terms of accuracy, in terms of packaging more IO in the memory die and also in terms of thin die, it's our opinion that TCB has better handling capability in all these metrics comparing to a mass reflow tool. So that's why we have been saying that -- and also -- and also let me also highlight that in the recent development, there was some discussion that the HBM high can be relaxed of now 720 micron to 775 micron. And this bodes well for a TCB tool, right, because previously, at some point when there's a high restriction, there is some concern that TCB may not be able to use for multiple high APM because it will exceed the limit. But with this relaxation, there is certainly more room and more potential for TCB application for 12 high HBM and 16 high and beyond.Next question, please.

[Gokul Hariharan, analyst]

My second question, just want to follow up a bit more here. So, if you look at these 3 distinct buckets of TCB demand; logic, foundry, OSAT and memory or HBM, let's say, in 3 to 4 years, Robin, can you rank these in terms of the size of the addressable market you see for TCB? Because today, I think logic is still the biggest and then foundry, OSAT is catching up, HBM is kind of the long-term potential. But let's say, 3 years, 4 years later, do you have any view on what is the kind of rank order of these 3 distinct markets for TCB?And lastly, I think if you have -- could you share some rough thoughts on what percentage of your SEMI solutions business is going to support AI applications right now? Is it like mid- to high single-digit already? Or is it lower than that? Just wanted to -- given that a lot of other companies or your peers are also talking about the AI exposure in terms of total revenues?

[Romil Singh, executive]

Okay. So Gokul, first part of the question is basically on the demand. Can Robin break down the demand in terms of, say, logic IDMs, logic foundry and OSATs and HBM going forward.

[Cher Ng, executive]

Now, our internal view about these devices, HBM versus logic and versus the HPC, I think HBM in our view is that because as HBM continues to increase in high going forward, from currently 8 high to 12 high to 16 high and beyond, I think it's intuitive that more volume will be skewed towards HBM in time to come compared to the logic side. Now, it's difficult to clearly -- on the other hand, it's difficult to clearly distinguish or try to differentiate between the logic and the HPC side. To a certain extent, they are kind of interrelated. So, difficult to really draw a clear line. So, I think it's easier to try to distinguish between HBC [indiscernible]. So for that, we believe HBM potential for TCB is larger in time to come because 12 high at this point in time is still at low volume. HBM players are now mostly coming out with 8 high, but we believe 12 high will take on a more higher proportion in time to come, maybe starting from 2025 onwards. This is our view so far about these kind of applications.

[Romil Singh, executive]

Thanks, Robin. Gokul, I want to clarify your next part of the question. So you want to know on AP as a percentage of the SEMI business. Do you want to know more from a revenue perspective? Or do you want to know more from investment perspective? And AP, are you specifically targeting on AI?

[Gokul Hariharan, analyst]

Yes. I'm just asking of SEMI solutions, what percentage of your revenue is coming from AI applications. You probably have a rough idea where these tools are eventually going?

[Cher Ng, executive]

Okay. Gokul, how we understand, we can't be too definitive because of competitive reason. But I can safely say that TCB application at this point in time, possibly between HPC and also the AI. But it's sometimes difficult to clear, as I said earlier, it's difficult to clearly mark what is HPC, what is logic because they can be kind of overlapping. So, from that perspective, HBM is -- yes, from that perspective, I think TCB is looking at volume in terms of suite of AP solution, it's the highest contributor, right? So -- and also -- so that's mostly at this point in time for AI, I would say.And besides TCB, there are also other tools like our photonics tools. They are also AI related. Our -- in fact, also our SMT tool as well because SMT, we believe our customers are using our SMT tools to place what [indiscernible] passive devices on 2.5D packaging as well. So, we are also facilitating AI application also from our SMT side. And also not forgetting our next deposition tools, we are laying interconnect layers on organic substrates. So from that perspective, we are quite well represented in the generative AI space.

[Romil Singh, executive]

Thanks, Gokul. Next, can I request Donnie to unmute yourself and ask your questions.

[Donnie Teng, analyst]

My first question is a housekeeping question. So, could you kindly give us some colors on the booking trend into the second quarter this year? And when exactly you expect the conventional packaging order to start to recover more meaningfully in the rest of the year? And second question is regarding to the chip-to-wafer TCB progress. So, you mentioned about you have jointly developed the next-gen [ 22 ] wafer TCBs with leading foundry. So, does that mean we are providing new demo tools to the customer? And when exactly we can see repeating orders or the orders for mass production in the next couple of quarters?

[Romil Singh, executive]

Thanks. So Tony, first part of your question is more color for bookings for second quarter. And specifically, demand for the mainstream or conventional tools. So, will request Robin to answer that first.

[Cher Ng, executive]

Thank you, Donnie. Yes. So as you know, we don't give concrete guidance for booking, we only gave for revenue. But certainly, as usual, we can give you some color on how we see Q2 booking for this year trending. We expect bookings for Q2 to be kind of flattish on a Q-on-Q basis for both segments, SEMI as well as SMT. On a year-on-year basis, bookings will be higher and that's a good sign on a year-on-year because on a year-on-year basis, it really cuts off the seasonality factor. So, we expect the increase to come mainly from the SEMI segment, sorry, whereas for the SMT segment, probably a little bit down or kind of flattish compared to year-on-year.The reason is very simple because SMT last year first half, they were still on a high in terms of booking, whereas SEMI has already in a way corrected for some time already since the beginning of last year. Now, we expect this year-on-year increase in booking to actually continue into the remaining half of 2024. I think that is probably the positive sign that we are hoping to realize in time to come, right? At this point, this is our expectation. On year-on-year basis this should increase going forward. I can give you a little bit more color as you asked about mainstream, but when we look at bookings for Q2 in 3 areas, right? One area is, let me start off with advanced packaging booking first. We expect advanced packaging bookings to remain robust. In other words, the momentum for advanced packaging, in particular for TCB application will continue to be robust. And AP bookings in our opinion at this point will continue to increase Q-on-Q, that means Q2 versus Q1 and also year-on-year Q2 this year versus last year Q2. The increase -- I think we expect the increase mainly will come from the SEMI side rather than the SMT side.Now for SMT, the booking seems to be stabilizing and for a number of quarters already and we believe the bookings for SMT, the downside is limited. So, it's kind of bottoming out also for SMT already. Now for semi mainstream, we see bookings in Q2 continue to remain at a low level, mainstream. And mainly because at this point in time, we also do not have visibility in the near term. As you recall, for SEMI mainstream tools, typically, our lead times is only for 3 months, right? So in this current environment, our customers on the mainstream side tend to be a little bit more cautious. So, they only place order when they are sure of the timing of recovery. So because of that, we lack also the visibility in the near term for SEMI mainstream side.I hope I answered the first part of your question, right?

[Romil Singh, executive]

Yes. So the second question is more on the progress of chip-to-wafer application for our TCB. And we have demo tool for joint development already at a leading foundry. So, Donnie wants to know more on the potential of this. And when will this translate into order flow.

[Cher Ng, executive]

Certainly. I think one of the reasons we have been saying why the logic side [indiscernible] will have to move to TCB eventually because there is this increasing need for customers to pack more and more chips together a chip-to-wafer level. And also because of that, they need to -- the pitch requirement and the accuracy requirement will continue to increase. And from that perspective, the TCB in our opinion is superior to the mass reflow tool. Now, so as these trends continue, we are optimistic that our TCB tool will gain more traction in terms of chip-to-wafer application in time to come.In terms of timing, we just shipped that ultrafine pitch tool or chip-to-wafer to the leading foundry, so it will take some time for them to test it out. So, we are hopeful that maybe in the coming couple of quarters, we could see some concrete orders, which would be delivered either the later part of this year or maybe the beginning of 2025. This is how we see the chip-to-wafer application going forward for TCB tools.Next question, please.

[Romil Singh, executive]

Next, can I request Randy. Can you unmute yourself and ask your questions.

[Randy Abrams, analyst]

Actually, I want to come to maybe 2 follow-ups on those comments on TCB. Just given the interest. First for high-bandwidth memory, where we're starting to get the 12 high stacks coming into production later this year. Are you seeing potential for a steeper ramp up? You mentioned HBM could be the larger opportunity over time. So, do you see the potential at '25 could be the inflection for your business? Or more reasonably, is it more tied to the ramp-up of HBM4, so it could take a little bit longer to get qualified or at least for your tools' advantage to really be recognized? I'm just curious when that cuts in for the volume ramp. And then I had a follow-up on the chip-to-wafer versus chip-to-substrate. Do you view that opportunity larger like as you come into it relative to chip-to-substrate, could that ultimately be the more meaningful? And is it a higher-value tool that you'd get an ASP lift as well?

[Romil Singh, executive]

All right. Thanks, Randy. Okay. So for your first question, more towards TCB for HBM, acknowledging that some tools are already into 12 high production. So, maybe I would request Robin to comment on the demand, especially how it's going to take off, whether the demand and ramp-up is going to be steeper soon in 2025 and 2025 might be an inflection point or will it be timing, the HBM4 potential whenever that happens?

[Cher Ng, executive]

Thanks, Randy, for the question. Now, a little bit of a background first. I want to emphasize that for 12 high HBM, we already have a few tools already in production. So, we believe for 12 high TCB, we are probably the first mover in terms of such applications. So, we have, together with the leading customer, we have already generated a lot of data, a lot of process knowledge in that area. So, if 12 high takes off in a meaningful way, we believe we are in a good position to capitalize on the potential for TCB application for HBM 12 height and beyond. Now yes, I think in terms of 12 high, as I say, still high volume, but in small volume compared to say 8 high at this point in time. So Randy, we tend to believe also sharing the same sentiment that you that probably 12 high is more of a 2025 story and probably an inflection point for HBM application for TCB.

[Romil Singh, executive]

Okay. Then next question is on the potential of chip-to-wafer for TCB. Can this potential be bigger than the chip-to-substrate applications? And then in terms of value and ASP of the tool is chip-to-wafer higher than chip-to-substrate.

[Cher Ng, executive]

Maybe first part of the question. Technically and potentially, yes for chip-to-wafer because for chip-to-substrate, you're talking about packaging a large compound die in the subject. So basically, one die. Whereas at the chip-to-wafer level, you are -- they are using TCB or MR for that matter, to package to assemble more dies, right? So from that perspective alone in terms of the number of die that need to be packaged at chip-to-wafer level compared to one die at the substrate level potentially, there will be more TCB tools required for chip-to-wafer level.And not just in terms of number of die, but it's also in terms of technical requirement because as we continue, as I mentioned earlier, as we continue to pack more and more chiplets, I would say, at the chip-to-wafer level, the requirement for accuracy becomes much higher and that's why TCB is the choice of tool, the way we see it at this point in time. And coming back to your second part of this question, in terms of ASP, probably you can guess by now that because of the higher accuracy is needed for chip-to-wafer tools. So from that perspective, chip-to-wafer tools potentially has a high ASP compared to chip-to-substrate application because of the higher technical requirement in terms of pitch, in terms of placement and accuracy.

[Randy Abrams, analyst]

And I wanted to ask a follow-up, just going into the hybrid bonding, we have the two -- a couple orders for the tool. Could you discuss where you're seeing the traction like the application and how you feel now you're positioned versus the -- I think you had a competitor kind of early in the market, just how you see your position and also what you're expecting like now with the second batch of orders, how you see it ramping up over the next 1 to 2 years?

[Cher Ng, executive]

Yes. I think it all depends on how fast the 12 high will take off. But what I said earlier, we also shared the view that probably would be more like a 2025 story for 12 high HBM.

[Romil Singh, executive]

He was asking more from a hybrid bonding. What is the application, if you can disclose some details and also our positioning in hybrid bonding compared to our peers in the market.

[Cher Ng, executive]

Okay. So for hybrid bonding, we are not the first mover, right, for sure. And our G1, so far, we have managed to secure 4 tools already, 2 last year, 2 this year. So, as we said earlier, G1 is more like a tool for us to really understand a bit more about the intricacy of the hybrid bonding. At the same time, in parallel, we are working on a G2 relation. Now for hybrid bonding, I think we continue to understand that at this point, we still see TCB at [ 6-port ] in terms of whether packaging for logic, whether packaging for HBM because of really the cost of performance or total cost of ownership kind of perspective, TCB sits right in the middle between MR on one side and hybrid bonding on the other side.Now -- and also with the recent restriction relaxation of HBM high, I think it plays into the potential for TCB to have a higher potential in terms of also TCB for HBM rather than HP. So that's how we see it. And secondly, on the TCB side, in terms of progress, in terms of technical capability, together with our customers, we continue to push the boundary in terms of pitch accuracy, in terms of placement accuracy towards more and more closer and closer to the rim of hybrid bonding. Of course, hybrid bonding is still much more accurate compared to TCB. But because of this push of the TCB capability more and more towards HP, I think TCB potential from the perspective can continue to increase vis-a-vis HP. This is our view at this point.

[Randy Abrams, analyst]

If I can fit one last question, just back to the bookings outlook. Second quarter normally, you're still at a low base and traditionally used to have a seasonal pickup. Is the issue certain applications or certain segments like IDM, auto, industrial or from OSAT, I'm just curious where the softness versus history. And when you mentioned second half up year-over-year, if you could clarify, do you expect sequential that we get off the flat second quarter, we could get sequential, at least at this stage, your view for sequential growth in Q3 and Q4?

[Romil Singh, executive]

Randy, let me request Robin to comment on the bookings potential for 2Q because historically, seasonality-wise 2Q can be a bit higher than Q1. So, why is it not going up? Is there any particular applications or reason which Robin can share. And we did mention that bookings on a year-on-year basis are sort of increasing. So, will that trend continue for the remaining part of the year?

[Cher Ng, executive]

Okay. Randy, just now I answered a question on Q2 booking kind of color. I did mention that for the SEMI mainstream, we see that continue to be at a low level. So, if you look at our SEMI business right now, it's running on 2 tracks. One, on the advanced packaging side, the momentum is robust. We see that momentum will continue going forward in the near future, for sure. But on the mainstream side, like, for example, we are talking about wirebond, for example, or the basic die-bonder, not the advanced one, but more of the basic one, these tools are more closely tied to a number of things. One is really -- they are more consumer-related kind of applications. So, if the consumer demand for electronic goods are still kind of muted, we don't expect those tools to be in high demand.So, the consumer-related end market application quite good, for example, that's one good example. Notebooks is another example, smartphone is another example. So, all these more of the consumer-facing kind of end market-related demand have to come back in a more meaningful way before we can see a booking for mainstream SEMI side in order to show an update. But having said that, we see some a little bit more encouraging side, if I may build it a way compared to the last few quarters. Some of those customers, especially customers in China, they are a little bit more, I would say more active in acquiring like, for example, they say, guys, if I want to order these tools, what is the lead time. So there's some interest, I would say. But if you ask me whether they are willing to place an order today, they'll probably take a more wait and see approach to time their orders so that they kind of order that they can cash the upside rather than bind to the advanced and waiting for the upside to come. So from that perspective, we see that it's more sporadic demand coming from the mainstream side. So it's not an indication that there is any broad base recovery on the mainstream side anytime from now.

[Romil Singh, executive]

Thanks, Robin. Next, can I request Dylan. Can you unmute yourself and ask your questions?

[Dylan Liu, analyst]

Can you hear me?

[Romil Singh, executive]

Yes, Dylan.

[Dylan Liu, analyst]

So also 2 questions from me. One is on TCB. So TCB, I have 2 parts. One is on logic. So -- maybe sorry, one is on HBM. So you mentioned HBM, the inflection point is in 2025 and we see 12 high HBM to see more volume next year. And -- but according to our observation, do we see any competitor within our existing memory customer for 12 high HBM for TCB? And if so, what do we think the market share dynamic will be? And the second will be on logic on TCB. So, I think previous discussions suggest that for chip-to-wafer, the ASP is higher. But if we compare the margins, is there a major difference between the 2 variants chip-to-substrate versus chip-to-wafer in logic side of TCB?

[Romil Singh, executive]

Dylan, first part of the question, TCB for HBM on potentially having an inflection point in 2025. So, we'll request Robin to share a bit more on the market share dynamics and competition in the market.

[Cher Ng, executive]

Thanks, Dylan for the question. Now definitely, there will be competition, right? I think we are not only ones to see a lot of potential for HP and TCB application. I'm sure our competitors are also looking at it from the same angle as well. So, Dylan it's difficult to kind of predict the current market share. What I can say for now is that we believe we are the first mover in terms of TCB application for 12 high. We have already done a lot of data point to continue to improve this application going forward. And hopefully, that will put us in a good state or in a good position when the 12 high HBM takes off in a big way in a bigger way I would say in 2025 beyond compared to 2024.Now, your second question is on ASP. Right?

[Romil Singh, executive]

Second question is on the logic side of the TCB in relation to chip-to-wafer that has a higher ASP compared to chip-to-substrate. So, whether the margin is also higher for chip-to-wafer applications.

[Cher Ng, executive]

Yes, in general, Dylan, I think it's not just for advanced packaging tools, but also from mainstream when customers demand more and more technical requirement or specifications, right? Typically, because we invested -- we have to invest more and more R&D to come up with more advanced tools. So typically, customers are willing to pay more for more advanced tools. So, their speed are definitely higher. And from that perspective, margin-wise, I think it will be accretive compared to less advance tool.

[Romil Singh, executive]

Dylan, do you have a follow-up question?

[Dylan Liu, analyst]

Yes, sure. And my second question will be on gross margin trend. So, when I read the earnings release, I notice that for SEMI solutions, margin is expanding sequentially. But the part of the reason is because of the sales of provision inventory part of tools. But if we exclude that, how would the first quarter gross margin be? And I would ask this because I tend to think for first quarter for advanced packaging contribution could be higher sequentially considering the booking momentum. And combining with your previous comment of margin-accretive nature for advanced packaging, why haven't we seen an improvement of our gross margin? And when do we see improvement of gross margin because of advanced packaging and stuff?

[Yifan Xu, executive]

Dylan, this is Katie. Let me answer the question. There are 3 layers. So, let me just clarify a little bit on the sales due to the provision. So, you guys probably remember in Q3 last year, we were facing on some of the platforms and we have made provision for those. And fortunately, there are some sales activities in Q1. And I can share with you that it's a couple million U.S. dollars. So, you can't figure out what the impact is to margin. Now, so that's a one-off activity. But overall, you're correct, as we lean towards advanced packages more, margin is accretive, like what Robin mentioned. But specifically Q1, I want to call out that also Robin mention that there was some sporadic demand in China. And our margin, especially at this very low volume level, margin is very sensitive to product mix. So AP is accretive, but if we have demand coming from consumer or in the China side of consumer of mainstream, the margin will have a little bit of headwind.So net-net, we -- I think if you look at our historical margin rates, right, we've been running at a pretty steady level despite very low volume in the last 2 to 3 years. And I hope that gives you some confidence that going forward as the company continues to grow AP overall in the long, if the margin should have expansion. But I have to say like what I tell you guys every quarter, I mean, very short term or quarter-by-quarter, especially the slow volume, the segment mix, volume and the product mix would impact the margins quite a bit. I hope that's clear.

[Dylan Liu, analyst]

Maybe one quick follow-up on gross margin and -- but on the SMT side, because when we look at the past 2 quarters of SMT gross margin is either above 40% or like in the first quarter is still around 40%. How do we think about the longer-term trend for SMT? Because -- and before, I think it's in the range of 35, mid- to high-30s range.

[Yifan Xu, executive]

Dylan, exactly right. The SMT historical runs somewhere in the mid-30s. The last few quarters, actually, we have -- like Robin mentioned, right, SMT started normalization. So, we have come in to kind of a relatively low volume level. But the silver lining is that within that low volume, we actually have a really nice decent proportion that's coming from high-end automotive and industrial content and that really helps the SMT margin mix situation. So, if, I'm saying if SMT sees certain demand coming from markets that's actually [indiscernible] end market and market application that's like consumer, it will have impact. And again, at the low level, the impact to margin rate will -- it could actually be quite big. But overall, again, very similar to SEMI as SMT experienced some bookings from -- on the AP side, for example, we do feel that again, in long-run at the group level, both business value we should see margin expansion.

[Romil Singh, executive]

Thanks, Dylan. Next, Kevin, can I request you to invite yourself and ask your questions.

[Kevin Wang, analyst]

First, I have a question regarding TCB for HBM. So, I was just wondering how our capability in the addressable market, how far it can take us in terms of the -- our current technology? Because as the recent relaxation of HBM high [ 2775 ], is our current TCB capability and support up to like 12 to 16 high with no problem? Or do we need further development into our tool? And also for -- if one of the HBM maker were to switch technology to develop something, let's say, switch to MR-UF or develop some hybrid technology, similar to that? Would that impact our addressable market for HBM?

[Romil Singh, executive]

Okay. So first part of the question is more on the capabilities of our tool to handle HBM, especially when it comes to 12 high and 16 high, whether it's good enough or do we need some technological advancement or upgrades. Request Robin to answer that.

[Cher Ng, executive]

Good. Thank you. Now, let me comment on our own tools first. We are continuing to develop more advanced TCB tools going forward to handle final pitch, thinner die and also larger die. The thinner die specifically relevant for HBM. You can imagine that as the industry continue to stack more and more on to HBM, right? So, one way to keep to a certain high is to make the die thinner. So from that perspective, TCB has a better handing capability, say, compared to mass reflow. So as the industry migrate from 8, 12, 16 and beyond, that's what we have been saying, we continue to see TCB applications become more and more relevant.Now of course, TCB technology will have to progress at the same time, right? Because when you continue to increase the density of the HBM to sort of match the computing power at the logic side. These 2 are the same, right? So, as you continue to increase the computing power on the logic side, the industry also have to increase the density and the memory of the HBM. So, they have to increase the IO per die. And with that, we need more and more accurate TCB tools. So, we have already developed the next generation of ultrafine pitch tool that can go below 10 micron kind of pitch, 1 micron kind of accuracy. So that's put us in a good position to have this tool to serve both the logic side at the chip-to-wafer as well as for the memory HBM side as the IO density, the memory die also increases. So, we need more and more accurate TCB tool going forward. So we already have developed our ultrafine pitch tool that is ready for that kind of applications.

[Romil Singh, executive]

The next part of the question is if HBM players switch to certain technologies, say, MR-MUF or some other technologies, what does it mean for us? And are our TCB still relevant? Or how do we play in it?

[Cher Ng, executive]

Yes. Our view is that increasingly, as we move from AI to 12 high and beyond, for that reason, I just talked about a couple of minutes back, we believe there's really digitization in terms of MR application. First, MR tools are not as accurate as TCB tools. And two, MR tools, we believe, has also a certain limitation in handling thin die. So from that tool perspective, in terms of accuracy, in terms of the capability to handle thin die, especially for HBM, TCB stand as the preferred solution.Next question, please.

[Romil Singh, executive]

Kevin, do you have a follow-up?

[Kevin Wang, analyst]

All right. Yes. Just a quick follow-up on TCB for chip-to-wafer. I think previous discussion we're talking about increasing -- potential increase in ASP due to higher precision. I was just wondering what about in terms of number of tool needed? Would that be also requiring more? And what would you say, let's say, a total addressable market for chip-to-wafer compare to chip-to-substrate? Would it be like 2x, 3x addressable market?

[Cher Ng, executive]

Let me answer. So, I think I sort of talked about it just now, but let me sort of repeat again. Between chip-to-substrate and chip-to-wafer because a number of chips at the wafer level will increase, right? Because the industry play are packing more and more chips at the wafer level because of higher computing power requirement. So from that perspective, as you compare chip-to-substrate you're talking about one compound die essentially, right? So remember, at the chip-to- substrate level, you're talking about one compound die. At the chip-to-wafer level, you're talking about pitch high to reduce integration of chiplets. And the number of chips that we believe the trend is we'll continue to grow, right? The chips get smaller and the requirements of more and more chiplets into a kind of a fixed kind of real estate. So the requirement for accuracy in terms of packaging will continue to increase. So from that perspective, if you compare chip-to- wafer and chip-to-substrate in a number of TCB tools, will have to be higher at the chip-to-wafer level compared to chip-to-substrate.

[Romil Singh, executive]

Next, can I request Leping. Can you unmute yourself and ask your questions?

[Leping Huang, analyst]

So the first question is, can you share some color about your booking momentum by regions, especially in China? So, we saw the front-end equipment demand was very strong in China in the last, I think, 1 year or 1.5 years. But do you think the back-end equipment will pick up sometime this year, next year?

[Cher Ng, executive]

Leping, at this moment, I mentioned earlier, we don't see a very broad-based manner a sporadic demand, yes. I mentioned our customer base in China tend to be a little bit more active compared to the last couple of quarters. So they make more inquiries. They are a little bit more anxious if the RAM counts, will they be able to get their tools in time. So we see sporadic demand also coming from certain areas like, for the more consumer-related application. But as I said, in general, the SEMI mainstream level of business demand continue to be low as in the previous quarter. So sporadic demand, yes, a little bit more inquiry, yes. The utilization, we check, we do channel checking, right? Customer's utilization have increased. Have they reached a level whereby they will buy in terms of volume, maybe not at this point in time. So, we probably have to wait and see for what in terms of SEMI industry.

[Romil Singh, executive]

Leping, do you have a follow-up question?

[Leping Huang, analyst]

Yes, yes. So the second question, so I think the market has quite a large expectation on the growth of the Chinese memory makers or the -- from your side, do you see any or the order from the Chinese memory maker or the logic maker on the advanced packaging, especially on one of our HBM, similar to HBM like products?

[Cher Ng, executive]

Yes. In general, we do see. We do see for advanced packaging solutions, no specific tools, but across the full range of AP tools that we have, we see our customer base in China definitely getting more active over the last couple of quarters. That's the trend we see.

[Leping Huang, analyst]

And so do you think the Chinese makers has their own HBM like products or not, yes?

[Cher Ng, executive]

I can't comment specifically, but I think in general, that's a trend going to HBM is a trend to match the computing power at the logic SEMI, yes.

[Romil Singh, executive]

Simon, can you me yourself and ask your questions?

[Simon Woo, analyst]

Can you hear me well?

[Cher Ng, executive]

Yes.

[Simon Woo, analyst]

Very high-level question first. Would you recap the overall trend of the advanced packaging sales portion? What happened to 2023 and then the as I remember order packaging revenue portion out of total SEMIs about 20%. So would you recap the trend?

[Cher Ng, executive]

We don't report these metrics on the Q1 basis, right.

[Romil Singh, executive]

On a quarterly basis, only for half year and full year.

[Cher Ng, executive]

But I can give you some color. I think the AP trend is increasing, so versus the mainstream side. But, you have to wait, Simon, right? We have to wait, on the Q2 when we report, we give a little bit more color as to the composition of the AP proportion versus mainstream. At this moment, I can give you an indication that the AP momentum is robust compared to the mainstream side.

[Romil Singh, executive]

So Simon, just to add on, if you see our yearly announcements and if you see the breakdown of revenue from AP as a percentage of the entire group, that has slowly been increasing. And for 2023, what we reported was about 22% of revenue.

[Simon Woo, analyst]

Yes, that's great. And then the -- again, I know you guys are discussing a lot of TCB, which is very important for long-term growth for ASMPT. So maybe let's think about your customers. If they have to buy new TCB for every different generation for AI, 12 high, 16 high, is there any TCB which can cover broadly 12 high, 16 high, even 24, for each customer in a must purchase new TCB to follow the higher, higher DRAM die stacking. That's the question.

[Romil Singh, executive]

Okay. So Simon is saying that for different stacking requirements, 8 high, 12 high, 16 high, do the customers need to buy different equipment or different TCBs to handle different stacking? Or is there a TCB tool which can handle multiple stacking requirements or multiple height-related stacking requirements?

[Cher Ng, executive]

Basically, our TCB tools are quite fungible, right? So of course, but the customers -- because we said before, for AP, especially for AP, there's no standard way of packaging, right? It differs from customer to customer. But I think within customer itself, the TCB tools, I think the only distinction is whether you use the ultrafine pitch or the current generation of TCB tool. So there's already a distinction because ultrafine pitch is, as the word implies is really precise. So that will be different between the TCB tool.But within customer itself, they would probably stick to one type of TCB tool because they want consistency in terms of manufacturing. But if you talk about between customer to customer, the configuration can be different because there is no standard way of packaging. One customers have a different process from another customer. That is the intimacy of advanced packaging tools. So unlike a mainstream tool is plug-and-play but advanced packaging [Technical Difficulty].

[Romil Singh, executive]

Sorry, go ahead.

[Simon Woo, analyst]

How about this than the -- for example, HBM3E for new GPU is coming more meaningfully massively, not only the 8 high, but the 12 high is also coming. So, to have the HBM3E with a 12 high versus the HBM2E versus 3, your recommendation to the customer, the new TCB is needed or all TCB can be upgraded?

[Cher Ng, executive]

Between the current generation of TCB and ultrafine pitch, there are differences in terms of modules. So, not likely can be upgraded in the field. So, it has to be purchased brand new for the ultrafine pitch from TCB.

[Simon Woo, analyst]

Yes. Yes, that's very quick. So very lastly, so when the customer installed the new TCB for the more advanced HBM, obviously, the temperature should be higher and the compression level also higher, right? That's continuously the your TCB spec with a temperature level and the compression level must be increased, right?

[Cher Ng, executive]

In a way -- I mean it's a bit technical, but yes, it depends on the process. As I said, the process differs from one customer to another customer.

[Romil Singh, executive]

Thanks, Simon. Arthur, can you ask your questions?

[Arthur Lai, analyst]

Arthur Lai from Macquarie. First, I want to congratulation ASMPT team has delivered such a leading advanced packaging. And I think many people ask about TCB. So, I will not ask more. I want to ask another question. So, recall 2018, company acquired NEXX and also AMICRA and we actually believe that market is very important for the TSV or the other process. So, can Robin walk us through how you think the total adjustable market and the synergy to your existing equipment? And any good news you can share with us?

[Cher Ng, executive]

Thanks, Arthur. A lot of synergy, I just now also mentioned, in terms of our solution for AI packaging to 5D kind of package, we are playing in multiple fronts, so TCB for a chip-to-wafer, TCB for chip-to-substrate. Our next 2 depositions are also involved in laying interconnect layers on the organic substrate, right, in the panel form. So, NEXX is also contributing in the area. And for AMICRA, which is a photonics tool, we are also contributing to AI in terms of the transceivers market. So, we mentioned for the last 2 quarters that we see heightened interest in photonics tool because again, as a computing power increases on the logic as well as the HBM, right, the communication capability, bandwidth, accelerate all these factor increase in [indiscernible] to match with a computing power. So there's this heightened interest in photonics application, which we are also a leader for a whole range of tools that is required from 100G to 800G and beyond. So, we have a whole comprehensive of tools to cater to the kind of photonics transceiver packaging application.So, I hope I answered your question on NEXX as well as AMICRA.

[Arthur Lai, analyst]

Yes. And one quick follow-up. How about TAM?

[Cher Ng, executive]

We don't break out -- Arthur, we don't break out TAM by individual tools. We have the TAM for AP. So, what's it TAM.

[Romil Singh, executive]

Okay. Our TAM, Arthur is going to increase up to [ 3.3 billion ] in 2028 with a CAGR between 2024 to 2028 of about 18%. And this is for our entire AP addressable market. So, we have a sort of a cadence of giving this kind of number once a year and we just updated this number end of last year, which was announced towards end of February.

[Arthur Lai, analyst]

And Robin, just one qualitative comment. You mentioned that this market actually is getting very robust. So, did you spend a lot of resource need from your team, like they ask you to add more headcount on the [ NEXX ] or ask you more -- do corporate allocation?

[Yifan Xu, executive]

Arthur, this is Katie. Very nice to hear from you. So in terms of the investment, right, so at the end of February, when we did the annual announcement, we actually mentioned that due to all the activities and just the high potential of AP, especially right, so we have announced that we would -- in addition to the current investment level would be investing HKD 250 million for R&D, especially on AP side and also infrastructure of the company. And as I mentioned in the opening remarks, those investment projects are all on track and we do expect that the investment expenses as we go through this year will intensify.

[Arthur Lai, analyst]

No more question, congratulation. Yes.

[Romil Singh, executive]

All right. With that, we will conclude our Q&A session. But let me request Robin to say a couple of words and conclude this call.

[Cher Ng, executive]

Thank you, Rom. So, let me quickly highlight some key takeaways on today's call. Our book-to-bill ratio recovered above 1 after 7 quarters. This was mainly due to growth in our group bookings fueled by strong demand for our AP solutions. The AP solutions contributed strongly to bookings across both SEMI as well as SMT. AP remains a bright spot for us and some encouraging points on its potential base on the first quarter would include the following; TCB having accelerated adoption and also our combining position in the space. We see heightened levels on [indiscernible] with HBM players in addition to the order momentum we lost for TCB. We see traction also in our hybrid bonding. And last but not least, our market leadership in SiP or System in Package tools under our SMT business segment.So this concludes our call, and I'll see you all in the next quarter. Thank you, and take care. Bye-bye.