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. I would like to thank you all for your interest and your continued support in the company. Please note that all participants 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. 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, Romil. 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 a performance update, let me also highlight that since first of 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 nine 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 market, 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 their near-term outlook. Notwithstanding challenging macroeconomic environment, I'm pleased to update that the group's nine-month 2022 performance demonstrated resilience. Despite a decline in revenue, our gross margin improved, and we continue to deliver bottom-line growth.
The advantages of a unique broad-based portfolio is the main reason for this resilient nine-month 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 applications 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 nine months of 2022. Automotive had strong growth year-on-year in revenue.
The quickening pace of automotive electrification across the world align well with the group's broad range of automotive solutions that help propel this revenue growth. For bookings, automotive also did very well with the biggest share of group bookings for the nine 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 strengthening its foothold with key ones. Another interesting development is that the group's automotive solution 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 3rd generation semiconductor materials, which include silicon carbide 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 nine 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 nine-month booking also remains stable on a year-on-year basis, despite the overall decrease in group bookings. This signifies that the advanced packaging is generally less impacted by industry cyclicality. Let me share some key developments of our advanced packaging tools. I'll start with our thermo-compression bonding or TCB solutions. Our TCB solutions continue to enjoy order wins throughout, following a big order win in the early part of 2022 for our chip-to-wafer TCB tools. Delivery of these tools also have been progressing well and consistently contributing to the group revenue.
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 pitch 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 LED and Micro LED, experienced a pickup in demand and drove revenue growth for the first nine months of 2022. It also registered significant year-on-year booking 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 the 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 investment amounts in advance, in advanced nodes. This bodes well for the demand for advanced packaging tools and solutions. Now, let me share about the strong nine-month 2022 performance from the group's SMT segment, which was anchored by both revenue and gross margin improvements. In fact, the SMT segment revenue achieved a record for nine-month revenue in 2022. This growth was mainly supported by automotive and industrial end markets, with robust demand coming from Europe and the 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 a dividend policy of around a consistent 15% 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 HKD 152 million, representing 0.6% of total outstanding shares.
This is a quick summary of some of the key financial metrics for the first nine months of 2022. The group's resilient revenue performance can be seen in the fact that even though there was a revenue dip of 4.5% year-on-year, the group reaped some positive effects from the two business segment cycle as the 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 nine months of 2022. Earnings per share was HKD 5.71 for the same period.
Concerning bookings, the decline of 26.6% year-on-year for nine 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 $1.28 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've 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 are what we call the CC C markets, witnessed a combined drop in revenue for the nine months of 2022. However, this was partially offset by stronger demand in automotive and the industrial end markets. As I mentioned earlier, our Semi and SMT segments also typically experience peaks and troughs at different periods, helping to mitigate industry cyclicity. Similarly, from a tools perspective, even though our mainstream tools saw weakness, our advanced packaging tools remain stable. Overall, our unique broad-based portfolio helps shield 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 three-year periods, you can see that the group has been able to continue revenue growth through various chip industry cycles. We have highlighted here that from the most recent period, from 2020 to 2022, our three-year average revenue is roughly 19.4% higher than the preceding three-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 nine-month of 2022 on a year-on-year comparison. The group revenue decreased by 4.5% due to a record-based effect in 2021. To put things into perspective, if we look through the pandemic years of 2020 and 2021, the group's nine-month revenue was about 30% higher when compared to 2017-2019 average. From an end market perspective, group revenue was impacted by a decline in contribution from communication, computers, and consumer, or CC C 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-based effect in 2021 and a 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 the logistics cost 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 pushouts requested by customers.
Bookings declined both year-on-year and quarter-on-quarter due to a high base effect, coupled with weakness in the CC C 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 unit's revenue declined quarter-on-quarter with its mainstream tools, namely die attach 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 tech, 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 effect, 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 a 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 a long-term outlook.
Thank you, Katie. I'm 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 their 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 $455 million-$525 million, representing declines of 38% year-on-year and 16% QoQ at midpoint. Taking a longer-term perspective, we believe that the prevailing short-term volatility and weak industry sentiments 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 content in an increasingly digital-driven world. Moreover, agencies such as TechInsights have forecasted growth in the semiconductor industry over the longer run. What the group will continue doing is to execute on its strategic initiative and keep investing in R&D. We firmly believe that our 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 manufacture 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 two questions at each turn. Thank you. With that, we have the first round of questions. Can I request, Donnie, to unmute yourself and ask your questions?
Yes, thank you. Can you hear me?
Yes, Donnie, go ahead.
Okay, thank you, Robin and team, for taking my question. My first question is, as usual, just wondering your comment on the booking trend for different product lines into the fourth quarter. Also looks like the semiconductor solution booking has been pretty low in third quarter already, like below $200 million. I think it has been a relatively low quarter booking in the history. 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. Thank you.
Thanks, Donnie. I think let me break your questions into two. The first part you want to know booking trends more from different production lines going into Q4. Maybe for this, let me request Robin to highlight.
Okay. Thanks, Donnie, for the question. Now, 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 a color how we see that coming in the coming quarter. Now, we have to take into account the current challenging macroeconomic conditions that we're experiencing right now. Also from the perspective that the Q4 bookings historically and also due to seasonality trend tend to be lower than Q3. We overall, I think we still expect the bookings in Q4 to decline on a Q o Q basis by probably around, you know, 15%-20%, kind of high teens kind of number. You're right, Donnie.
I think a 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 a 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 to Q4. Again, you know, we highlighted a lot about our, you know, unique portfolio. So there's this balancing out effect between the Semi bookings and the SMT booking, because both segments were actually peak and trough at different times.
Now, you also wanted to know a little bit of color, you know, 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 two sector. Overall, we believe also for Semi, advanced packaging will continue to be strong relative to the other segments. Automotive, industrial, and advanced packaging will continue to be strong relative to the other segments, I would say. Yeah.
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. Well, I think I can go to the second question.
Sure.
You know, recently, U.S. government published a stricter export control. 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. Also we have NEXX business in U.S. Also curious about if we have calculated how much U.S. content we have in our equipment. Whether it will have any impact for our business in China going forward. Thank you.
Thanks, Donnie. I think for the preliminary evaluation of the impact of the recent U.S. export control regulations, particularly because of our large business in China and also because of, you know, our NEXX subsidiary, let me request Robin to answer this question.
Thanks. Yes, you're right, Donnie. We have done our preliminary assessment of the new sanction. I think first and foremost, I must say, that, you know, our group ensures that its global operations are always in compliance with applicable laws and regulations, right? Based on our preliminary assessment of the latest export U.S. export regulation, we believe there is no material impact on the group. However, it's a long and complicated rules and regulations, so nevertheless, we are also engaging, you know, trade compliance experts to do a thorough review. We don't expect, you know, again, there's no any material impact on the group performance going forward.
Now, for those guys who have been following us for a long time, I think you guys know that, you know, most of our products, except I think Donnie highlighted NEXX and AEI. AEI is the recent acquisition for automotive CIS camera module. Except for NEXX and AEI, all other products for the group are developed and made in Asia and the European region. 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 at the nodes should be at 40 nm and below, and for DRAM around 18 nm and below, and for NAND with certain restriction for those with 123 layers or more. This very specific target, you know, that we have to make, right? The industry have to access. Very advanced chips. When we do this assessment, we're looking at what we have on hand. There is really no material impact on the group. You mentioned about NEXX. Yes. NEXX is obviously an American entity, and all along we have been compliant with the regulation imposed by the U.S. authority.
With this latest new sanction, there is just this additional due diligence that we have to do to make sure that when we sell to China, we have to make sure that, you know, the customers are not using our tools for those three areas I mentioned earlier, you know, for the very advanced logic and memory applications. Back to you.
Thanks, Robin. Next, can I request Kyna to unmute yourself and ask your questions?
Yes. Thanks for taking my questions. I have two questions. The first one is a follow-up on this U.S. ban because I remember that previously the company is working with like this memory customer on the High Bandwidth Memory, and that would be the opportunity for TCB equipment, et cetera. I think the company has been working with current customer, but for some time, and this progress not that satisfied, but the progress with Chinese probably will be much better. Right now, do you see that this kind of a U.S. ban will actually push out the original expectation on the TCB for High Bandwidth Memory business in the future? That is the first question.
The second question is like, could you share about, the ASMPT also auto contributions, like, in the nine months, like, 2022 or third quarter? Because, like, last quarter, we probably know 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? Thank you.
Thanks, Kyna. Let me repeat your first question. You 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. you know export controls will have any impact for future of the business. For this question particularly, let me request Robin to answer.
Hi, Kyna. Now, as I said earlier, Kyna, that most of our products are developed and made in Asia and EU, including advanced packaging tools like the TCB, for example. On that account, we are not subject, you know, to U.S. export regulations, right? The latest sanction, you know, covering the end use of the tools for those advanced chips, we are not, you know, we are clear. It's business as usual for TCB. Yeah.
Thanks, Robin. Kyna, for your.
Sorry.
Sonal, do you have a follow-up question on it? Sorry.
Yes, yes. I mean, because the customer itself is also facing a challenge that in terms of the expansion in the advanced memory development. It will eventually eliminate the demand opportunity if this is more a direct impact, but.
You're right. I think. You're right. You're talking about the indirect impact. I'm more addressing the direct impact. You're right. I think this is an industry-wide issue and affects all players in the semiconductor space, right? So as I said, while the direct impact to the group is not material, the indirect impact to the whole industry is something that we have to monitor. The rest of the industry, they also have to monitor very carefully. We believe it will take some time, you know, for the demand and supply picture to clear and then find a new equilibrium or new footing going forward. On our own as an organization, what we can do is we will continue to navigate this challenging landscape, all right, carefully.
Our primary goal is still continue to serve our customers well. Okay?
Mm. Gotcha.
Thanks, Robin. Kyna, let me repeat your second question. This, 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 nine-month, and is it 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. Maybe let me request Katie to provide some more color on this.
Hey, Kyna. This is Katie. Like Robin mentioned, right, due to the nature of these tools, I actually would encourage you guys to look at AP in a longer-term lens, right? Let me address AP first auto. For AP, nine-month year-to-date, bookings been pretty strong. Also, basically it's flat year-over-year, and nine-month year-to-date for revenue is slightly down, but still quite steady. This really signifies that AP is less dependent on cycle effect and because much of that is a technology or capability buy. Also, looking into our backlog, right? Robin mentioned in the opening remarks that 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%-20%. It's about right. Auto actually was a very strong area for us in Q3, and the booking pretty much is flat, quote-unquote. I hope I addressed your question.
Got you. Thank you.
Thanks, Kyna. Next, can I request Gokul to unmute yourself and ask your questions?
Yeah, hi. Thanks for taking my question. 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 decline 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? Also your book-to-bill on the semiconductor business seems to have gotten to, like, 0.7x book-to-bill. Based on your commentary, looks like it will get worse in Q4. Do we see this improving as we go into first half, or you feel like it's going to take some time to get better, so probably wait until second half of next year? Thank you.
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. For this 2023 outlook, Robin will provide more of a qualitative guidance, but he will also touch base on, you know, a bit on the book-to-bill and, you know, how he sees the situation going into 2023. Robin, please.
Thanks, Gokul. Yeah, thanks, Romil. Yeah, like Romil said, we don't provide a quantitative outlook for 2023. We probably have a better picture, Gokul, at the next conference call sometime in February. I can certainly give you some thoughts of 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 solutions to a variety of end markets. This 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, you know, to continue our long-term growth trajectory.
Now, I would like to probably give you a color through what we see through the end market that we serve from that perspective. From the end market perspective. Now, if you look at the communications segments. Because of our wide product portfolio, we serve this segment, in particular the smartphones sector, in a variety of ways. First, you know, is through our CIS or camera module market. Now, these tools, those CIS tools, these tools are not solely dependent on smartphone volumes to be sure. This segment is also driven by camera innovation and new features. 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 year on year. In fact, it's declined, right?
We're not just dependent on volume, but we're also depending on innovation to drive this business. We are currently engaging very key customers who are developing the next few generation of camera modules, which will be rolled out hopefully in 2023 and beyond. This business will continue to generate, you know, a good demand in the years to come. Now, also if you look at this sector, we don't only sell this sector through the CIS market. You know, of course these sectors, we are pretty entrenched. Now, if you look at the 5G phones, although the smartphones overall may not grow very much, but the 5G phones will continue to grow, in our opinion.
Because of that, the devices that front end RF modules that require our SMT, SIP tools, system and package tool, will still continue to be in demand in the years to come. This basically really highlights our unique feature that we can provide solution to same customer base from both semi and SMT angle. Now if you look at computers, right. Aside from notebooks and desktop, which are obviously experiencing a downturn now, the server market is still expected to grow with key drivers being high performance computing, cloud and edge servers, data centers and in 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, like our NEXX deposition tools, our TCB, our silicon photonics that serve the telecommunications segment.
In time to come, hybrid bonding for sure. We have both mainstream again, as well as advanced packaging tool, well-positioned to continue to serve this segment going forward. Let me quickly move on to how we look at the other few segments, like automotive and industrial. This is clearly a bright spot even now in this 2022 situation. A bright spot as the sales of EVs remain and continue to be strong, right? I think that 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 know, right? 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. For Semi side, we have really innovative, complete solutions that help our customers package power modules that go into key systems of EV cars. You know, for SMT, traditionally, we are very dominant player in both the ICE and as well as in EV market. Next, a little bit on the industrial market, right? We are seeing power devices growing this year, you know, alongside automotive. We are also a key player in the power and the industrial market. This market, the EV market, the industrial market is also poised for growth in the years to come.
Things like EV charging infrastructure will continue to grow, you know, 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 grid, green energy sectors. These are increasingly using a lot of also our semi tools, especially when they require, you know, the 3rd generation of materials like SiC, for example, silicon carbide. You know, we have good solution for those applications. Last but not least, if you go to the consumer market. Now this segment is mostly served by our mainstream tool, no doubt, like the die bonder and the wire bonder. But embedded with this segment, we also have tools serving the advanced display segment.
Our Mini LED demand this year has indeed reached an inflection point in 2022, and we believe the demand for such tool, our Mini LED tool, will 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. Besides Mini and Micro LED in the consumer segment, we are 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, you know, with key customers to realize their innovation roadmap in these few areas that metaverse, AR and VR. It's a long answer to your question, right? I hope I give you a little bit of color how we look at 2023 and beyond from the perspective of our end market. Next, please.
Thank you, Robin. Gokul, do you have a follow-up question?
Yeah. 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's smoothed 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, do 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.
Yeah. Thanks, Gokul, for the question. Now, I alluded just now that, you know, our CIS business are not just dependent on smartphone volume, but also on the innovation and new features that our customers are working on. Yes, you are right. I think the CIS business has reached a pretty low level in 2022. 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, you know, going forward. Now, I must add also that we are not solely. 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 very closely. We make a good acquisition in my opinion, in our opinion, in the automotive camera market space in February this year by acquiring AEI. We are a key Active Alignment tool supplier to the automotive market. We believe that as automotive continue to grow in terms of putting more cameras in car because of ADAS requirement, because of electrification, more cameras are needed to you know 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? In future, areas like metaverse, AR and VR will probably also need our tools for Active Alignment.
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 know that since the Chinese power semiconductor IDMs and some of the design houses are investing heavily in packaging for both discrete and 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.
Thanks, Romil. Now, as I said earlier, I talk about the power market, power devices now, and also the automotive. These two are in a way related, right? We have been stressing a lot that we have really good solutions in the packaging of these two area. Complete solutions from a die bond, you know, to silver sintering. In fact, I should say, we should start with laser singulation first. From laser singulation to die bond to sintering. We are addressing indeed not just in China, but outside China as well. 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 customer in that space. NEXX question, please.
Next, can I request, Sunny to unmute yourself and ask your questions?
Sure. Thank you. Can you hear me?
Yes, Sunny, go ahead. Thank you.
Thank you. 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 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 on HPC, high-end smartphones are all decelerating, whether or not it could also affect your momentum going into early 2023. Thank you.
Thank you, Sunny. For your first question, I have to request Katie, our CFO, to answer. You would want to know basically our gross margin for the next few quarters and whether there's any pricing pressure for our mainstream tools.
Sunny, this is Katie. 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 commentaries with you. I'm sure you know very well group's margin depends on volume, segment mix, and product mix. Under the current dynamics, volume is a headwind for Q4 gross margin and beyond, probably. 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.
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. You know, just the fact that we achieved six consecutive quarters of gross margin higher than 40% does demonstrate that these initiatives are sticking. We have leveraged the flexibility of our contract workforce, external manufacturing, and have been hiring sensibly, and we'll continue to do so in Q4. 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. In short, I cannot provide you with a quantitative answer.
However, the group knows where the margin levers are and are working on them. From quarter to quarter, our margin may fluctuate. In the long run, our margin has certain target. 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, you want to know will it affect our momentum going into 2023. For this, let me request Robin to answer.
Thanks, Romil. I think, Sunny, I gave a rather long answer to Gokul just now on how we look at 2023. If you realize 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. You know, if smartphone decline, I think your answer is whether AP will sort of offset, you know, the volume coming due to the decline in smartphone. It all depends on how fast the advanced packaging arena will pick up.
Nevertheless, if you look at ASMPT, the beauty of ASMPT, the strength of ASMPT is that we don't just have mainstream tools, as we always say. We also have a suite of, you know, advanced packaging tools, you know, to serve our customers. We're really very broad-based, and that's really how we differentiate ourselves from the rest of the market. Thank you.
Thank you, Robin.
Thank you very much.
Thanks, Sunny. Next, can I request Leping to try and ask your questions again?
Okay. Hello?
Yeah.
Can you hear me now?
Yes.
Sorry for the line. Yes. The first question is based on your discussion with your customer and the experience. Where are we now in the semiconductor CapEx cycle? Can you see some indicators such as since you sold so many equipment to the customer, the utilization rates of your equipment on your customer side? Thank you.
Thank you. Again, Leping, I think we probably have to answer this question and give clarity from the end market perspective, okay. Now, when we talk to automotive and industrial companies, generally they're still very bullish, you know, in the last six months, right? Still very bullish. Most of these players back up their bullishness with really, we can see they're building factories, new factories. Mostly these are catered for the automotive and industrial market. That's really a good sign because when these factories come on stream, you know they have to tool up, right? We still feel that the automotive and industrial market has some leg room to go, you know, for sure.
Now, compared to the other market, obviously, we mentioned many times also in our announcement, the CC C's market, the communications, the consumer, and the computer markets are obviously getting the downturn right now. When will this reverse? It's really hard to say exactly when. If you look at the long-term outlook, you know, as I said in the opening statement, you know, we will pass this phase. The demand for this area will start to come back again. Exactly when, it's really hard to predict at this point in time. All right. The good thing about ASMPT, as I always say, you know, we are broad-based. We don't just sell the CCC, but we sell automotive and industrial market as well. Thank you.
Thanks, Robin.
Okay.
Leping, do you have a follow-up question?
Yes. My second question is also about the U.S. sanctions. What's your view on the impact of U.S. sanctions on the advanced packaging market in China? Since there are some theory that if Chinese customer cannot migrate to the advanced geometry, they need to rely more on the advanced packaging. Can this additional amount offset the loss on the mass memory customer if they are going down? Thank you.
Yeah. I think generally speaking, you know, I don't want to comment on specific geographies, but generally speaking, you know. That's why 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, you know, to package chips to mimic the chip as close as possible to the front-end side. From that perspective, again, advanced packaging is really an exciting area, and we are really glad that, you know, we have really strong solution for the area.
Even if the other areas may not be doing very well, I think as long as we continue, you know, to focus on the advanced packaging area, I think that could be an area that will help us grow in the future for ASMPT. Yeah. NEXX question, please.
Thanks, Robin.
Leping, that's it. Do you have any follow-up question on that, Leping? Maybe move on. That's it.
No, I don't have further questions. Thank you very much.
Thanks. Thanks, Leping. Hi, everyone. Can we have one last round of questions, if any? Hi, Gokul, you can unmute yourself and ask your questions.
Yeah, thanks. Could you talk a little bit about the advanced packaging, including NEXX and the partnership with TB Group? I think in most of the industry conversations, we primarily hear names from like Disco 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? Thank you.
Thanks, Gokul. 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 using, for example, our TCB solutions, our NEXX deposition tools that lay, you know, RDL on substrates. We are already engaging key customers and delivering really good solution for that space for some time already. Gokul, if you remember, if you recall, you know, in Q2, we have 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, you know, ASMPT is rather unique.
We have both TCB tools as well as hybrid bonding tools coming on stream very soon in the very near future. Now, we are rather unique. We have both solutions and we see that there's an overlap, you know, between a TCB and hybrid bonding, depending on these specs that our customers are talking about. TCB tools. In our next generation of TCB tools, we are talking about addressing a pitch down to about maybe 20-micron pitch and accuracy down to below 1 micron. I think with that kind of specs, TCB has a long runway to move in terms of advanced packaging in the future. There's an overlap between this and hybrid bonding.
Our take on hybrid bonding, by the way, is that, yes, it's gonna be an important technology and solution going forward, but it will probably take a little while for it to fully mature, because at this point in time, certain requirements that I mentioned before can be served by TCB. Customers do not need to go hybrid bonding for certain applications. Hybrid bonding at this point in time, we believe are reserved for very high-end applications. But of course, hybrid bonding is an important solution. We are in it and in the future I think it will be important for ASMPT as well as a revenue stream down the road.
Thanks, Robin. Gokul, do you have a last question?
Yeah, just to follow up on that, thanks, Robin, for the explanation. Our understanding, correct us if we are wrong, but our understanding is ASMPT 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? 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. Just could you address that as well? Thank you.
Yeah. Not true. Not true, Gokul. We have been addressing not just key IDMs of foundry and we have also a recent very good engagement with a key memory maker, you know, using our TCB tool for High Bandwidth Memory packaging. We are engaging key customers across, I repeat, across IDM, across foundry as well as memory device maker. I hope I answered your question.