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Good morning, and good evening, ladies and gentlemen. I'm Romil, Head of Investor Relations, and I will be the moderator for today's call. On behalf of ASMPT Limited, I would like to welcome all of you to ASMPT's Third Quarter FY 2022 Investor Conference Call. And I would like to thank you all for your interest and your continued support in the company.
Please note that all participants will be in listen-only mode when the management is presenting. We will start the Q&A only after the management has gone through the entire presentation. We endeavor to answer all questions during the Q&A session, but due to time constraint, priority will be given to the covering analysts. I will highlight the instructions for asking questions just before the Q&A session.
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 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 related to our recent results can be downloaded from our website.
With us this morning are Mr. Robin Ng, the Group Chief Executive Officer; and Ms. Katie Xu, the Group Chief Financial Officer. Robin will begin with a brief discussion and key highlights about our latest results, and then Katie will provide color 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. Robin?
Thanks, Rom. Good morning, everyone. First, let me thank all of you for joining our third quarter 2022 earnings call. I hope all of you are keeping safe and well. Before I dive into the details of our performance update, let me also highlight that since 1st August this year, the Group's name change has been completed, and we are now known simply as ASMPT with a new brand identity across all our global operations.
As ASMPT, we believe this accurately reflects our distinctive position as the leading global company. Arguably, the largest of its kind, serving a very wide range of customers across the world, with our unique and broad portfolio of semiconductor and electronics manufacturing solutions. This will benefit the Group in the cultivation of its distinctive business identity and is in the interest of the company and the shareholders as a whole.
Looking at the performance over the past 9 months, there were key external factors in play, such as the start of the Russian Ukraine conflict in early 2022, followed by sporadic COVID-19 lockdown in some key markets, plus the progressive increase in interest rates to tame inflation, coupled with the ongoing trade tensions. Although the supply chain situation gradually showed improvement, there were still bottlenecks for certain materials and key components. The combination of all these factors resulted in a sharp drop in consumer sentiments that led to the industry players, softening the near-term outlook.
Notwithstanding challenging macroeconomic environment, I am pleased to update that the Group's 9-month 2022 performance demonstrated resilience and despite a decline in revenue, our gross margin improved, and we continue to deliver bottom line growth. The advantages of our unique broad-based portfolio is the main reason for this resilient 9 months performance, and I will share more about this.
Let me now go through today's presentation. ASMPT solutions are very well diversified, across not just our semi and SMT segments, but also across mainstream, applicative and Advanced Packaging solutions. Collectively, this unique and broad portfolio functions both as a source of competitive differentiation and as a key contributor to the Group's resilient performance. The effects of our unique broad-based portfolio became even more evident, as we navigated the business through the challenging macroeconomic environment of 2022.
Let me now highlight some aspects of this unique broad-based portfolio. First, Automotive market. This experienced strong performance, and it was the highest contributor to both our Group bookings and revenue for the 9 months of 2022. Automotive had strong growth year-on-year in revenue. The quickening pace of Automotive electrification across the world, aligned well with the Group's broad range of Automotive solutions, that helped propel this revenue growth. For bookings, Automotive also did very well, with a bigger share of Group bookings for the 9 months of 2022.
The Group has also been progressively expanding its Automotive customer base, with the semi segment acquiring new customers and the SMT side is strengthening its foothold with key wins.
Another interesting development is that the Group's Automotive solutions have been increasingly servicing pure electric vehicle players on top of hybrid and conventional Automotive customers. This broad and expanding customer base is supported by the Group's unique Automotive solutions, such as laser singulation and sintering, that address the current and future packaging needs for third-generation semiconductor materials, which include silicon carbine and gallium nitride.
Next, let me touch on Advanced Packaging. The Group has the broadest and most comprehensive suite of solutions under Advanced Packaging. In the 9 months of 2022, demand for advanced tools remain robust, and these solutions continue to yield stable year-on-year contributions to the Group revenue. Advanced Packaging 9-month booking also remained stable on a year-on-year basis, despite the overall decrease in Group bookings. This signifies that Advanced Packaging is generally less impacted by industry cyclicality.
Let me share some key developments of Advanced Packaging tools. I'll start with our thermal compression bonding or TCB solutions. Our TCB solutions continue to enjoy order wins, following a big order win in the early part of 2022 for our chip wafer TCB tools. Delivery of these tools also have been progressing well and consistently contributing to the Group revenues. Notably, we have continued to expand our customer base in more diverse end market application, such as advanced memory. The Group's innovation in next-generation ultra-fine chip-to-wafer TCB technology is also showing good progress, and we aim to deliver demo tools by the first quarter of 2023.
Next, our Advanced Display business, which includes both mini and micro LED. This experience has picked up in demand, and drove revenue growth for the first 9 months of 2022. We also registered significant year-on-year moving growth for the same period with increased demand for our ultra-fine pitch mini LED for indoor displays, coming in tandem with an expanding customer base.
Concerning our hybrid bonding solutions, our plans are on track as we continue to work actively with key customers. Our focus remains on delivering hybrid bonding tools for qualification to leading customers to support their plans, to move towards some more advanced nodes over the next few years.
Summing up Advanced Packaging, let me conclude that we are bullish on its longer-term growth, as major semiconductor customers have committed significant investments announced in advanced nodes. This bodes well for the demand for Advanced Packaging tools and solutions.
Now let me share about the strong 9-month 2022 performance from the Group's SMT segment, which was entered by both revenue and gross margin improvements. In fact, the SMT segment revenue achieved a record for 9-month revenue in 2022. This growth was mainly supported by Automotive and Industrial end markets, with robust demand coming from Europe and Americas. We firmly believe that the Group's SMT business has gained market share during the year, with robust demand for its high-end placement tools leading the way.
The strong performance of our SMT segment is a great example of how our unique broad-based portfolio came into play, to help balance out the business segment cycles between SMT and semi.
Let me now give you a quick update on our share buyback plan. On top of our dividend policy of around a consistent 50% payout annually, the board approved a share buyback plan on 20th July, 2022 to enhance shareholder value. Since the start of this plan, approximately 2.5 million shares have been steadily bought back for about $152 million, representing 0.6% of total of selling shares.
This is a quick summary of some of the key financial metrics for the first 9 months of 2022. The Group's resilient performance revenue -- revenue performance can be seen, and the fact that even though there was a revenue dip of 4.5% year-on-year. The Group reaped some positive effects from the 2 business segment cycle, as a 12.7% year-on-year decline in the semi segment was partially mitigated by the 7.6% revenue growth from the SMT segment.
Group gross margin also improved year-on-year, and the Group delivered net profit growth for the 9 months of 2022. Earnings per share was HKD5.71 for the same period. Concerning bookings, the decline of 26.6% year-on-year for 9 months of 2022 was mainly due to a record base effect for 2021, coupled with challenging macroeconomic conditions. Notably, Group Automotive and Advanced Packaging end markets continue to account for a relatively higher proportion of overall Group bookings.
As at the end of September 2022, the Group had a backlog of USD1.28 billion and a book-to-bill ratio of 1.02. Our backlog has remained at a reasonably high level with a higher proportion of Automotive and Advanced Packaging tools in the mix.
This slide sums up our unique broad-based portfolio, which provides the Group competitive advantage and needed resilience through industry cycles. I have explained this slide in detail in the previous call, so I'll just mention a couple of key messages here.
With macroeconomic conditions impacting overall consumer sentiment, the communication computers and consumer end markets or what we call the CCC markets, witnessed a combined drop in revenue for the 9 months of 2022. However, the dip was partially offset by stronger demand in Automotive and the Industrial end markets.
As I mentioned earlier, our semi and SMT segments also typically experienced peaks and trough at different periods, helping to mitigate industry cyclicality. Similarly, from a tools perspective, even though I mentioned to weakness -- sales weakness, our Advanced Packaging tools remain stable. Overall, our unique broad-based portfolio helped steer the Group during turbulent times such as the period we are in, but also positions the Group for growth, when the market eventually picks up.
This slide is one more aspect of the effects of a broad-based portfolio. When analyzing and comparing consecutive 3-year periods, you can see that the Group has been able to continue revenue growth through various cheap industry cycles. We have highlighted here that for the most recent period from 2020 to 2022, our 3-year average revenue is roughly 19.4% higher than the preceding 3-year period.
Let me now hand over the time to Katie, our Group CFO, who will cover our financial performance.
Thanks, Robin. Good morning and good evening, everyone. This slide highlights our key financial metrics for the 9 months of 2022 on a year-on-year comparison. The Group revenue decreased by 4.5%, due to a record base effect in 2021. To put things into perspective, if we look through the pandemic years of 2020 and 2021, the Group's 9-month revenue was about 30% higher when compared to 2017 to 2019 average. From an end market perspective, Group revenue was impacted by a decline in contribution from communication, computers and consumer or CCC end markets.
This decline was partially offset by the growth from Automotive and Industrial end markets. For bookings, the decline was again due to a record base effect in 2021 and challenging macroeconomic conditions. The Group's Automotive and Advanced Packaging end markets continue to account for a relatively higher proportion of the Group bookings.
Backlog of the Group remained reasonably high and book-to-bill ratio was 1.02. The Group's gross margin achieved 41.1% year-to-date, 77 basis points better year-on-year. Both semi and SMT segments contributed to margin improvement due to favorable product mix, targeted pricing adjustments and ongoing strategic initiatives. However, some of these improvements were partially offset by higher material prices and logistics costs, due to stretched global supply chains. This is the sixth consecutive quarter for the Group to exceed gross margin of 40%.
For the third quarter of 2022, the Group achieved its revenue guidance provided at the previous earnings announcement. Revenue registered declines both year-on-year and quarter-on-quarter, mainly due to dampened consumer sentiment, with some delivery push-outs requested by customers. Bookings declined both year-on-year and quarter-on-quarter, due to a high base effect, coupled with weakness in the CCC end markets. Group gross margin remained robust, above 40%. This resilient performance was driven by both semi and SMT segments.
Our semi segment contributed 48.4% of Group's revenue in the third quarter of 2022. By business units, the IC/Discrete units revenue declined quarter-on-quarter with its mainstream tools, namely die-attached and wire bonders due to weak demand. The deliveries of tools to customers serving Automotive and Advanced Packaging has outperformed other end markets.
The optoelectronics business registered quarter-on-quarter revenue growth, mainly due to improving demand for its more advanced chip, serving ultra-fine pitch mini LED displays, silicon photonics and automotive applications. The growth was partially offset by a persistently weak conventional lighting market.
The CIS business delivered quarter-on-quarter growth in revenue, but still faced weakness due to the ongoing softness in the smartphone markets, partially offset by Automotive and other applications.
Semi's bookings declined year-on-year, mainly due to a high base effect and quarter-on-quarter as customers became more cautious overall. Semi's gross margin was flat quarter-on-quarter, but improved year-on-year, mainly due to a better product mix.
SMT segment's revenue accounted for 51.6% of the Group's revenue. While segment revenue declined year-on-year due to a high base effects, revenue increased quarter-on-quarter, propelled by strong contributions from high-end placement tools, and a strong demand mainly from Automotive and Industrial applications. Segment bookings declined both year-on-year and quarter-on-quarter, with the quarter-on-quarter drop mainly due to seasonality and weakness in the CCC end markets. Notably, Industrial and Automotive increased their contribution to segment bookings.
Segment gross margin was flat quarter-on-quarter, but improved year-on-year, mainly due to increased contributions from high accuracy tools.
I will now hand the time back to Robin for Group Q4 guidance and our long-term outlook.
Thank you, Katie. I am sure most of you are aware of the recent downgrades for 2022 done by agencies such as TechInsights. In line with this, the Group continues to face challenging macroeconomic conditions, which have also led to some industry players moderating the near-term outlook. Moreover, the Group fourth quarter revenue has historically been lower than its third quarter, revenue due to seasonality factors.
Consequently, the Group expects revenue for the last quarter of 2022 to be between USD455 million to USD525 million, representing declines of 38% year-on-year and 16% Q-on-Q at midpoint.
Taking a longer-term perspective, we believe that the prevailing short-term volatility and big industry settlements would eventually phase out, as the industry gets back on track again for longer-term growth. This optimism is backed by the strong tailwinds from a sustained and growing demand for chips and silicon contained in an increasingly digital driven world. Moreover, agencies such as TechInsights has forecasted growth in the semiconductor industry over the longer run.
What the Group will continue doing, is to execute on this strategic initiative and keep investing in R&D. We firmly believe that a strong emphasis on R&D will put us in an advantageous position to capture opportunities, when they arise.
As a leading global provider of hardware and software solutions for the manufacturer of semiconductors and electronics, ASMPT is poised to continue its long-term growth trajectory.
Thank you, and we are now ready for Q&A.
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 time. Thank you.
With that, we have the first round of questions. Can I request Donnie to unmute yourself and ask your questions.
My first question is as usual. Just wondering if you can comment on the booking trend for different product lines into the fourth quarter? And also, looks like the semiconductor solution booking has been pretty low in the third quarter already, like below USD200 million? I think it has been a relatively low quarter booking in the history. So just wondering if you think that has been pretty low or the pressure could be continuing for a couple more quarters? This is my first question.
I think let me break your question into 2. The first part, you want to know booking trends more from different production lines going into Q4? So maybe for this, let me request Robin to highlight.
Okay. Thanks, Donnie for the question. I think you guys are aware that we don't give quarterly guidance on bookings. But usually, we can give you a little bit of the color on how we see that in the coming quarter. Now we have to take into account the current challenging macroeconomic conditions that we are experiencing right now, and also from the perspective that the Q4 bookings historically and also due to seasonality trends tend to be lower than Q3. So the overall, I think we still expect the bookings in Q4 to decline on a Q-on-Q basis, by probably around 15 to 20 kind of percent high teens kind of number.
You're right, Donnie, I think relatively low level in terms of Q4 bookings compared to recent years. Primarily also due to the fact that, especially for semi, we believe semi will continue to remain soft. But SMT, relatively speaking, will be still at a higher level compared to semi. SMT, as you're aware, have been on a relatively high basis in terms of bookings compared to semi for a number of quarters. I think this trend will probably continue into Q4. Again, we highlighted a lot about our unique portfolio. So there's this balancing out effect between the semi bookings and the SMT booking, because both segments were actually beginning to grow at different times.
Now you also wanted to know a little bit of color, what kind of end market bookings we're expecting for Q4. We believe for both semi and SMT, Automotive, Industrial segment will continue to drive the demand for these 2 sectors. And overall, we believe also for semi, Advanced Packaging will continue to be strong relative to the other segments of Automotive, Industrial and Advanced Packaging, will continue to be strong, relative to the other segments, I would say.
Thanks, Robin. Donnie, I think Robin did address your question on the semi bookings part. Do you have a follow-up question?
I'm fine. I think I can go to the second question. So recently, U.S. government published a more stricter export control. So wondering if management team has any preliminary evaluation or idea on the impact of this export control? Particularly, we have quite some meaningful business in China. And also, we have NEXX business in U.S. So also curious about if we have -- if we have calculated how much U.S. content we have in our equipment, so whether it will have any impact for our business in China going forward?
Thanks, Donnie. I think for the preliminary evaluation of the impact of the recent U.S. control regulations, particularly because of our large business in China and also because of our NEXX subsidiary. Let me request Robin to answer this question.
Yes, you're right Donnie. We have done our preliminary assessment of the new sanction. I think first and foremost, I must say that our Group ensures that its global operations are always in compliance with applicable laws and regulations, right? So based on a preliminary assessment of the latest export -- U.S. export regulation, we believe we -- and there is no material impact on the Group. However, it's a long and complicated rules and regulation. So nevertheless, we are also engaging trade compliance experts to do a thorough review. But we don't expect -- again, there's no any material impact on the Group performance going forward.
Now for those that have been following us for a long time, I think you guys know that most of our products, as said, I think Donnie headed the NEXX and AEI. AEI is the recent acquisition for Automotive, CIS Camera module. So except for NEXX, AEI, all other products for the Group are developed and made in Asia and the European region. So technically, these are not subject to any U.S. export restrictions and regulation Moreover, the latest sanctions are really targeted at production of advanced chips in China for logic and memory using very advanced node. Like for example, for logic, the rule says that it should be logic -- the nodes to be at 14-nanometer and below, and for DRAM around 18-nanometer and below. And for NAND, with certain restriction for those -- at 123 layers or more.
So this very specific target that we have to -- the industry have to make, right, have to assess. So very advanced chips. So when we do this assessment, looking at what we have on hand, there is really no material impact on the Group.
Now you mentioned about NEXX. Now NEXX is obviously an American entity, and all along, we have been compliant with the regulation imposed by the U.S. authority. So with this latest new sanction, there is just this additional due diligence that we have to do, to make sure that whatever NEXX -- when you sell to China, we have to make sure that the customers are not using our tools for those 3 areas that I mentioned earlier, for the very advanced logic and memory applications.
Back to you Romil.
Thanks, Robin. Next, can I request Kyna to unmute yourself and ask your questions.
Yes. I have 2 questions. The first one is a follow-up on the U.S. ban. Because I remember that previously, the company is working with a memory customer on the high-bandwidth memory, and that will be the opportunity for TCB equipment, et cetera. I think the company has been working with current customers, but for some time, and the progress not that satisfied, but the progress with Chinese property will be much better. But right now, do you see that this kind of U.S. ban will actually push out the original expectation on the TCB high-bandwidth memory business in the future? That is the first question.
The second question is, could you share about the ATM's auto contributions in the 9 months 2022 or third quarter? Because last quarter, we probably got an idea about the contribution in the first half. Can we say that the contribution is still in a similar level like 18% and also 20% for them?
Thanks, Kyna. Let me repeat your first question. We want to know more from our memory potential related to the high-bandwidth memory customer potential in China, specifically that whether this recent U.S. controls, export controls will have any impact for future of the business. For this question, particularly, let me request Robin to answer.
Noe, as I said earlier Kyna that, most of our products are developed and made in Asia and EU, including Advanced Packaging tools like TCB, for example. So on that account, we are not subject to U.S. export regulations, right? So the latest -- even the latest sanction covering the end use of the tools for those advanced chips, we are not -- we are clear. So it's business as usual for TCB.
Thanks, Robin. Kyna, for your...
Sorry, do you have a follow-up question...
Yes, yes. I mean because the customer itself is also facing a challenge, that in terms of the expansion in the advanced memory development. So it will eventually eliminate the demand opportunity. This is more like a direct impact?
Yes, you're right. I think -- you're right. You're talking about the indirect impact. I'm not addressing the direct impact. You're right. I think this is an industry-wide issue and affects all players in the semicon space, right? So as I said, the direct impact to the Group is not material. The indirect impact to the whole industry is something that we have to monitor and the rest of the industry. They also have to monitor very carefully. We believe it will take some time for the demand and supply picture to clear, and then find a new equipment or new footing going forward.
But on our own as an organization, what we can do is, we will continue to navigate this challenging landscape, right, carefully. And our primary goal is still continue to serve our customers well, okay?
Kyna let me repeat your second question. And for this one, I will request our CFO, Katie to answer. You wanted to know more about the contributions of Advanced Packaging and auto for our 3Q or 9 months? And is it a similar level to first half. Let me highlight here, that we generally provide the breakdown and exact numbers only for first half and full year results. But maybe let me request Katie to provide some more color on this.
Hey Kyna, so this is Katie. Like Robin mentioned, right, due to the nature of these tools, actually we would encourage you guys to look at AP in a longer-term lens, right? So let me address AP first model. So for AP, 9 months year-to-date, booking has been pretty strong and also basically it's flattish year-over-year and 9 months year-to-date for revenue, slightly down, but still quite steady. So this really signifies that AP is less dependent on cycle effect. And because much of that is technology or capability buy.
Also, as we are looking into our backlog, right, Robin mentioned in the opening remarks, that AP is -- the contribution in the backlog for AP is actually quite strong. So it's gradually increasing its share in our backlog.
As to auto, you mentioned about the level of 18% to 20% is about right. Although actually, it was a very strong area for us in Q3 and the booking pretty much is flat quarter-on-quarter. I hope I addressed your question.
Thanks, Kyna. Next, can I request Gokul to unmute yourself and ask your questions.
My first question, could you talk a little bit about what you're expecting ASMPT outlook for next year? I think you outlined packaging industry declined [indiscernible] industry declined around 9%. I think that is from VLSI research. Do we think ASMPT can outperform this or we are going to be largely in line? And also your book-to-bill seems -- on the semiconductor business seems to have gotten to like 0.7x book-to-bill. Based on your commentary, it looks like it will get worse in Q4. Do we see this improving, as we go into first half? Or do you feel like it's going to take some time to get better. So probably wait until second half of next year.
Thanks, Gokul, for your first question, I will be requesting Robin to answer this. It will be more on the outlook for 2023. I want to highlight here that we provide material guidance only for the next quarter. And for this 2023 outlook, Robin will provide more of a qualitative guidance. But he will also touch base on a bit on the book-to-bill, and how he sees the situation going into 2023. Robin, please?
Yes, as Romil said, we don't provide an outlook -- a quantitative outlook for 2023. We probably have a better picture Gokul, at earnings conference call sometime in February. But I can certainly give you some thoughts on how we view 2023 at this point in time.
Now if you look at ASMPT other than mainstream tools, ASMPT offers a breadth of really innovative submissions to a variety of end markets. This is broad-based portfolio, we believe very strongly that it will enable us to win in these various end markets in the future, and position us well to continue our long-term growth trajectory.
Now I would like to probably give you a color through -- what we see to the end market that we serve from the perspective -- from the end market perspective. Now if you look at the communications segment, because of a wide product portfolio, we serve this segment in particular, the smartphones sector in a variety of ways. First is through our CIS or camera module market. Now these 2 CIS tools. These tools are not solely dependent on smartphone volumes to be sure. But this segment is also driven by camera innovation and new features. So what I'm saying is that, the business -- the volume coming from this segment don't depend on just smartphone volume. We all know smartphone volume don't grow very much, in fact, it's a decline, right? But we are not just dependent on volume, but we are also depending on innovation to drive this business. So we are currently engaging very key customers, who are developing the next few generations of camera modules, which will be rolled out hopefully in 2023 and beyond. So this business will continue to generate good demand in the years to come.
Now also, if you look at this sector, we don't need to sell this sector through to CIS market. Of course, this sector, we are pretty entrenched. If you look at the 5G phones, or those smartphones overall may not grow very much. But the 5G phones will continue to grow in our opinion. And because of that, the devices at front end RF modules that require our SMT SiP tools System in Package tool, will still continue to be in demand in the years to come. And this basically really highlights our unique feature, that we can provide solution to a same customer base, from both semi and SMT anchor.
Now if you look at computers, right? So aside from notebooks and desktops, which are obviously experiencing a downturn now, the server market is expected to grow, with key drivers being high-performance computing, cloud and servers, data centers and in the future, we are talking about metaverse as well. Now these areas, apart from our mainstream tools, we are serving these areas that require AP tools, Advanced Packaging tools, our next acquisition tools. Our TCB, our silicon photonics that serve the telecommunications segment, and in time to come, hybrid only for sure. So we have both mainstream again, as well as Advanced Packaging tools well positioned to continue to serve the semi, going forward.
Let me quickly move on to how we look at -- there are a few segments in the Automotive industry. And this is clearly a bright spot even now in this 2022 situation. The bright spot is, sales of EVs remain and continue to be strong, right? I think there's a lot of statistics out there, you guys probably know better than us, the EVs in China especially grew year-on-year despite all the lockdowns that we -- we know, right? So this bodes well for ASMPT as a whole. Why? Because we are very strong in the Automotive market. We are a complete solution provider, both on the semi side, as well as on the SMT side.
On the semi side, we have solutions that really -- innovative solutions, complete solutions that help our customers package power modules that go into key systems of EV cars. And for SMT, traditionally, we are a very dominant player in both the ICE, and as well as in the EV market.
Next, a little bit on the Industrial market, right? So we are seeing power devices growing this year, alongside Automotive. We're also a key player in the Power and Industrial market. This market, EV market -- in the Industrial market, is poised for growth in the years to come. Things like EV charging infrastructure will continue to grow, in order to support the growth of the EV industry going forward. Our tools for SMTs are also being used for a lot of packaging for IoT factory automation, power, green energy sectors, these are increasingly using a lot of also our selling tools, especially when they require the third generation of materials that SIC, for example, silicon carbide, we have a good solution for those applications.
Last but not least, if you go to the consumer market. Now this segment is mostly served -- I have mentioned, to no doubt that the die bonder and wire bonder, but embedded with this segment, we also have tools serving the Advanced Display segment. So our mini LED demand this year has indeed reached an inflection point in 2022, and we believe the demand for such tools are really ready to continue to grow -- because the customer base that we have cultivated over the last few years, are poised to grow beyond -- in 2023 and beyond.
So besides mini and micro LED in the consumer segment, we're also serving the wearables, the AR, the VR and in time to come, metaverse related applications. In fact, our R&D team is working furiously with key customers to realize the innovation roadmap in these few areas like metaverse, AR and VR.
It's a long answer to your question, right? But I hope I give you a little bit of color how we look at 2023 and beyond from the perspective of end market. Next, please.
Thank you, Robin. Gokul, do you have a follow-up question?
Yes. Quick question on your optical and CIS related business, especially as it deals with the camera-related stuff, that used to be a pretty big driver for overall revenues. I think last few years, it has cooled down, especially in the smartphone side. Looking into the next 12 months, do you see any signs of that recovering, either in the smartphone segment or given some of your recent acquisitions on the Automotive or other camera segments, so we expect that this could be a segment that continues to grow, even if overall revenues are going to be under pressure, because of other -- like overall industry factors?
Okay. Thanks Gokul. For this I think I have to request Robin again to answer that question. It will be more on the outlook for both the Opto and the CIS businesses.
Thanks Gokul for the question. Now, I alluded just now that our CIS business are not just dependent on smartphone volume, but also on the innovation and new features that our customers are working on. So yes, you're right. I think the CS business has reached a pretty low level in 2022. So the way we look at it is -- as more and more new innovations coming on stream, on cameras, we will continue to benefit from this growth path going forward.
Now I must say also -- I must add also that we are not -- our CIS business is not solely dependent on consumer or smartphones area. We are now very much a key player in the Automotive camera module market. Gokul you're right, I think you've been following up closely, we make a good acquisition in our opinion -- in our opinion in the Automotive camera market space in February this year by acquiring AEI. We had a key active alignment tool supplier to the Automotive market. So we believe that as Automotive continues to grow in terms of putting more cameras in cars, because of need of requirement, because of electrification, more cameras than needed to -- for cars, I think this area will also continue to grow in tandem.
Besides serving the consumer market in terms of smartphones, Automotive, we are also diversifying into serving the surveillance camera market, right? And in future, areas like metaverse, AR and VR will probably also need our tools for active alignment. So these are some exciting new areas we are moving into for the CIS market. Next, please?
Thank you, Robin. Let me ask one question from the chat. This question is from Yikang from CICC. I would like to note that since the Chinese power semiconductor, IDMs and some of the design houses are investing heavily in packaging for both discrete end modules, such as IGBT modules, how are we finding this market, and how much did the power semiconductor sales accounted for in 3Q? Can you also provide some outlook on this?
Yikang, I will highlight here that, in the quarterly, we don't really break down by particular segments. But since you want to know a bit more color on this and also the outlook, let me request Robin to highlight on this.
Now as I said earlier, I talked about the power market, power devices now and also the Automotive. Now these 2 are in a way related, right? And we have been stressing a lot that we have really good solutions in the packaging on these 2 areas, complete solutions from a die bond to sintering, in fact, I shall say we should start with laser singulation process. From laser singulation to die bond to sintering. So we are addressing indeed not just in China, but outside China as well. So this is a key market for ASMPT now -- as of now in 2022, and also going forward. For those reasons, we have very good solutions to provide for customers in that space. Next question, please?
Next, can I request Sunny to unmute yourself and ask your questions?
So my first question is on profitability. Any thought that you could share with us on how we should think about your margin into next couple of quarters. Are you seeing any pricing pressure for your mainstream equipment? And then secondly, on advanced package, I understand it's a pretty resilient longer-term trend. But if we look at the shorter term HPC high-end smartphones are all decelerating, whether or not it could also affect your momentum going to early 2023?
Thank you, Sunny. For your first question. I have to request Katie, our CFO to answer. You want to know basically our gross margin for the next few quarters, and whether there is any pricing pressure for our mainstream tools?
Sunny, this is Katie. So let me try to address your question on profitability first. As you know, we don't provide quantitative margin guidance, but I can share some commentary with you. I'm sure you know very well, Group's margin depends on volume, sentiment mix and profit mix. Under the current dynamics, volume is a headwind for Q4 gross margin and beyond probably. And also, we see inflationary impact will persist, especially on labor inflation, freight, utility, et cetera.
Having said that, I believe there are some tailwinds for the Group. A few things I would like to mention, one is you've heard us talking about already that we are driving growth with high-end products like auto, like Advanced Packaging products. And also, the Group has developed muscle in the operational efficiency through corporate initiatives in both businesses, and we've been talking to you about the strategic corporate initiatives for a while now. Just the fact that we achieved 6 consecutive quarters of gross margin higher than 40%. This demonstrate that these initiatives are sticking.
We have leveraged the flexibility of our contract workforce, on external manufacturing and have been hiring sensibly, and will continue to do so in Q4. And also last quarter, we shared the point on pricing, and we'll continue to have a targeted pricing strategy, and that's helping the gross margin expansion as well.
So in short, I cannot provide you with a quantitative answer. However, the Group knows where the margin levers are and working on them. So from quarter-to-quarter, our margin may flux. But in the long run, our margin has certain tailwinds. I hope I answered your question?
Thank you, Katie. Sunny, for your next question, you want to know more on Advanced Packaging. Advanced Packaging has remained resilient, but with certain aspects and areas of Advanced Packaging in the market showing declines like smartphones and all, do you want to know will it affect our momentum going into 2023? For this, let me request Robin to answer.
I think Sunny, I gave a rather long answer to Gokul just now on how we look at 2023. And if you realized that, during that answer, there are a lot of Advanced Packaging tools in there, Automotive tools in there, that we still continue to see very bright prospect for ASMPT going forward. Now it's really hard to answer your question directly. With smartphone declined, I think one of your answer is, whether AP will sort of offset the volume coming down, due to the decline in smartphone. So it all depends on how fast the Advanced Packaging arena will also pick up. But nevertheless, if you look at ASMPT, the beauty of ASMPT, the strength of ASMPT is that -- we are not -- we don't just have a mainstream tools as we have said. We also have a suite of Advanced Packaging tools to serve our customers. So we are really very appropriate and that's really how we differentiate ourselves than the rest of the market.
Next, can I request Leping to try and ask your questions again?
So the first question is based on the -- your discussion with your customer and their experience. So where are we now in the semi CapEx cycle? And can you see some indicators such as CCC, sold so many equipment to the customer, the utilization rates of your equipment on your customer side?
So again Leping, I think we probably have to answer this question on deep clarity, from the end market perspective, okay. Now when we talk to Automotive and Industrial companies, generally, they're still very bullish in the last 6 months, right? Still very bullish, and they back up -- most of these players back up their bullishness with really, we can see they are building factories, new factories. And mostly, these are catered for the Automotive and Industrial market.
So that's really a good sign, because when these factories come on stream, they have to tool up, right? So we still feel that the Automotive and Industrial market has some legroom to grow for sure.
Now compared to the other market, obviously, we mentioned many times also in the announcement, the 3 Cs market, communication, the consumer the computer markets are obviously feeling the downturn right now. So when will this reverse, it's really hard to say exactly when. But if you look at the long-term outlook, as I said in the opening statement, we will pass this space, and then the demand for this period will start to come back again. But exactly when, it's really hard to predict this point in time, right?
So the good thing about ASMPT, as I always say, we are broad based, we don't just sell 3 Cs, but we sell in Automotive and Industrial rate market as well.
Thanks, Robin. Leping, do you have a follow-up question?
Yes. My second question is about also the U.S. sanction. So what's your view on the impact of U.S. sanction on the Advanced Packaging market in China. So since there are some theory that -- it seems that if Chinese customer cannot migrate to the advanced geometry, so they need to rely more on the Advanced Packaging. Can these additional [indiscernible] offset the loss on the memory customer, if they start going down?
Yes. So I think generally speaking, I don't want to comment on specific geographies. But generally speaking, the way -- just for Advanced Packaging is such an exciting segment actually for the whole industry, because instead of relying on the front end, we can use Advanced Packaging to package chips to mimic the chip as close as possible to the finer side. So from that perspective, Advanced Packaging is really an exciting area, and we are really glad that we have a really strong solutions for the area. So even if the other areas may not be doing very well, I think as strong as we continue to focus on the Advanced Packaging area. I think that, that could be an area will help us grow in the future for ASMPT. Yes. Next question, please?
Thanks, Robin. Leping that's it, do you have any follow-up questions on that, Leping?
No, I don't have further questions.
Everyone, can we have one last one of questions, if any? Hi Gokul, you can unmute yourself and ask your questions?
Could you talk a little bit about the Advanced Packaging, including NEXX and the partnership with EV Group? I think in most of the industry conversations, we primarily hear names like BESI or AMAT, the front-end equipment vendors in a lot of the 2.5D/3D kind of conversations. Could you help us put ASM specifics into that mix, in terms of where you are contributing, and when do these initiatives start to become more meaningful, especially as it regards to 2.5D and 3D packaging?
I think in terms of meaningful, it's already been around for what, 2.5D packaging. We have been engaging key customer in that space already been using. For example, our TCB solutions, our NEXX acquisition tools, the RDL on substrates. So we are already engaging key customers and delivering really good solution for that space for some time already. So Gokul, if you remember, if you recall, in Q2, we had a couple of slides on Advanced Packaging -- how we look at Advanced Packaging from the perspective of tools like TCB and hybrid bonding. By the way, we have been saying ASMPT is rather unique, we have both TCB tools as well as hybrid bonding tools coming onstream very soon in the very near future. So we are rather unique, we have both solutions. And we see that there's an overlap between TCB and hybrid bonding, depending on the specs that the customers are talking about.
So TCB tools -- in our next-generation of TCV tools, we are talking about addressing a pitch down to about maybe 20 micron pitch and accuracy down to below 1 micron. So I think with the kind of specs, TCB has a long legroom to move, in terms of Advanced Packaging in the future. So there's an overlap between this and hybrid bonding.
So our second hybrid bonding by the way is that, yes, it's going to be an important technology solution going forward, but it will probably take a little while for you to fully mature, because at this point in time, certain requirements that I mentioned before, certain requirements can be served by TCB, right? You don't -- the customers do not need to go heavy volume for certain applications.
Hybrid bonding, at this point in time, we believe reserved for very high-end applications. But of course, hybrid bond is an important solution. We are in it, and in the future, I think it would be important for ASMPT as far as a revenue stream.
Thanks, Robin. Gokul, do you have a last question?
Yes. Just to follow up on that, and thanks Robin, for the explanation. Our understanding -- and correct us if we are wrong, but our understanding is ASM is a lot more kind of aligned with IDMs on the Advanced Packaging solutions, and very little presence in the foundry landscape. Is that true? And if it's true, could we talk a little bit about what are the steps we are taking to address some of those? Because when we talk about TSMC, Samsung, usually we encounter some of your competitors or some of your front-end kind of competitors, rather than ASMPT itself. So just could you address that as well?
We have been addressing not just key IDMs, but foundry. And we have also a recent -- very good engagement with a key memory maker, using a TCB tool for high-bandwidth memory packaging. So we are engaging key customers across -- I repeat, across IDM, across foundry, as far as memory device matters. I hope I answered your question?
Okay. And with that, if there are no more questions, then we will end the earnings call. Let me thank all of you again for attending today's call, and we hope to see you during the next quarter's call. Take care and stay safe.
Thank you.
Thank you.