Earnings Call: Q1 2021

Apr 21, 2021

Morning and good evening, ladies and gentlemen. My name is Rommel. I am the IR Consultant for the company and I will be the moderator for today's call. On behalf of the management of ASN Pacific Technology, I would like to welcome all of you to ASN Pacific Technologies' 1st quarter FY 2021 Investor Conference Call. We would like to thank you all for your interest and continued support in ASM Pacific Technology. Before we begin with the presentation, let me highlight some housekeeping rules. To facilitate the identification process, Please kindly provide your company name and your name as your display name if you haven't done so. All participants will be muted to ensure good sound quality when management is presenting. Please also keep your videos in the off mode. For the Q and A session, please either use a raise hand And we will allow you to unmute yourself for your question or type your question in the chat to asnptqandahomul Singh. We will read out the question on your behalf. When asking questions, please limit to 2 questions at a time. But please feel free to Join the queue again on the raise hand function. We will start the Q and A only after the management has gone through the entire presentation. We endeavor to answer all questions during the Q and A session. But due to time constraints, if we are unable to answer your question during the call, We will follow-up with you through e mails later or please feel free to e mail us with your question and we will attend to those. Before we proceed, let me turn to the Asanda disclaimer. Do note that during the conference call, there may be forward looking statements with respect to ASM Pacific Technologies business and financial conditions. Such forward looking statements It would involve known and unknown uncertainties and risks that could cause actual results, performance and events To differ materially from those expressed or implied during this conference call, for your reference, the IR presentation related to our 2021 Q1 results and can be downloaded from our website, www.asnpacific.com. With us this morning are Mr. Robin Ng, our Group Chief Executive Officer and Ms. Patricia Cho, the Group's Chief Financial Officer. Robin will begin with a brief discussion about the group's key highlights in quarter 1 followed by Patricia giving some color to our financial performance Then Robin will provide the outlook for the business. Thereafter, there will be the Q and A session. So without further ado, let me hand over the time to Robin. Thank you. Thank you, Romeo. Good morning, everyone, and thank you for joining us today. Before we proceed with the details of our performance for the Q1 of 2021, I hope that everyone is keeping safe, N. Moriarty:] Healthy and well as we continue to grapple with the effects of the pandemic. Let me begin by giving some key highlights of our business in the Q1 of 2021. Before I proceed, let me emphasize that from this quarter, Our reported performance excludes contributions from our former Materials segment, which produces big claims. Thus, ASMPT's continuing operations will henceforth comprise only the semi segment or semi and the SMT Solutions segment or SMT. Now, let me highlight some key developments for quarter 1. Firstly, our revenue and bookings surpass guidance. Patricia will get into that in more details under financial highlights. But I will say that both the semi and the segment bookings level for the quarter were at record levels, indicating continued progress in the space of improving market conditions. Next, We saw sharp margin improvement. The performance of both segments contributed to the strong year on year and Q on Q growth in our group gross margins. We have also benefited from the overall automotive and automotive electrification trends, which will continue to be a longer term growth driver for our business across both semi and SMT segments. We demonstrated superior execution amidst supply chain challenges as well as key markets rebounded from the pandemic after a fairly August 2020 and with generally greater optimism about improving Global macroeconomic condition, this translated to the group experiencing a surge in customer demand for this quarter. The operational and field teams executed well to fulfill delivery commitments to our customers. Dear, please note that we were recently awarded a distinguished 2020 Supplier Achievement Award For our COVID-nineteen response by Intel Corporation. This is a special recognition for ensuring uninterrupted supply to them through the pandemic period. This exemplifies Our ethos of unwavering commitment. Last but certainly not least, there is an over ordering customer base for Advanced Packaging Solutions. We have been building up the industry's most comprehensive product portfolio of Advanced Packaging Solutions And I believe we have the broadest and compelling set of interconnect solutions for the whole spectrum of customer needs. This range from mainstream to the most complex interconnects for system in package or SiP solutions. For example, our clear leadership in thermal compression bonding or TCB is a testament to customer receptivity towards this approach, which we have carefully cultivated. We achieved a significant milestone with the delivery of a 250th TCP 2 to customers in February this year. Another significant area is hybrid bonding, which we are diligently working on with key partners to realize its potential. Hybrid Bonding solution is on track for delivery later this year and we believe that we are in an excellent position to drive greater adoption for this advanced technology in time to come. Similarly, our other advanced packaging solutions are experiencing a broadening of their customer bases led by the confluence of end user market demands in high end CPU, GPU and XPU applications. I will now pass the time to Patricia to run through the financials. Thank you, Robin. Good morning, everyone. Let me give some highlights of our Q1 2021 performance. I'm pleased to share that the group has delivered a strong Q1 2021 group financial results. This chart summarizes some of the key metrics for this quarter. Group revenue of US559 US39 million dollars surpassed the guidance, while $1,010,000,000 were at an all time high. Significant our gross margins of 39.6% represented a sharp improvement compared Thank you, sir. While net profit of HKD528 1,000,000 followed a strong gross profit performance this quarter. Finally, our total cash and bank deposits at the end of the quarter continued to strengthen to HKD4.6 billion. Let me now go into a bit more detail about our group performance, followed by each of our 2 segments performance. To begin, the key takeaway from the group financial performance This quarter was a record group bookings backed by growth based customer demand. Now, let's dive deeper. As you can see here, in the Q1 this year, both group revenue and bookings surpassed the Guidance. The group's 1st quarter revenue of US559 million dollars represented a strong 45.6 percent growth year on year. Notably, the quarter's revenue was Still as strong as the last quarter's, which was unusually strong and exceeded the top end of our guidance as well. Our Q1 revenue performance was underpinned by the move towards semiconductor self sufficiency, secular growth trends such as accelerated digital transformation, The continued general recovery, automotive electrification and the global 5 gs rollout. Booking momentum was even greater. This was an time high bookings level for us To the tune of US1.01 billion dollars significantly exceeding the US700 $1,000,000 bookings guidance. This is a phenomenal year on year of 73.4% and quarter on quarter growth of 86.4%. The group's gross margin this quarter of 39.6% is a quarter on quarter improvement of 412 bps and both the semi and SMT segments registered the improvement in this area. Significantly, our strong group's gross margin performance helped drive our group net profit to HKD528 1,000,000 a substantial 52.8 percent Q on Q improvement Over an already strong Q1 and nearly 20 times improvement a year This figure includes the share of results from our joint venture AAMI. We ended this quarter with a record backlog of US1.21 billion dollars and a high book to bill ratio of 1.8, Large part due to the surge in this quarter's bookings. Next, Let's look at our semi segment's Q1 performance. The most noteworthy effect of this segment this quarter where its record bookings and a strong rebound in gross margin. This segment delivered a strong revenue of 349 dollars representing robust growth of 78.7% year on year and 13.8% Q on Q. Let me give a bit more detail. For its IC is great business unit, demand A broad range of applications, including mobile and personal computing devices, high performance In 5 gs infrastructure and the devices, particularly in China and both discrete and power management applications related to general automotive, industrial and automotive electrification. The Optoelectronics business unit recorded a strong demand from conventional fine pitch display and general light And an encouraging increase in the number of mini LED customers taking delivery for high volume manufacturing activities. The segment recorded a strong year on year and Q on Q 14 growth. In particular, the record We're dominated by its Sky and Wire Boundary products. The IC District Business Unit saw record bookings. The Optical Electronics business unit had strong demand for its mini LED tools and the CIS business unit registered a As mentioned at the start of this slide, The segment gross margin rebounded significantly to 44%, which represents Q on Q 503 bps improvement. This can be attributed to a combination of higher volume and utilization, increased the productivity with the linear workforce and also some positive effects from the rollout of the group's Moving into the S and P segment's Q1 2021 performance, The key highlights was its record bookings that were driven by broad based demand across end markets. The segment delivered revenue of US210.6 million dollars this quarter, Accounting for 37.7 percent of the group revenue, this represented a year on year growth of 11.4%. While the segments of mainstream placement and the printing tools were still its largest revenue contributor, There was continued growth in its advanced packaging tools, which are high accuracy SMP systems for SiP applications, particularly for wearables and 5 gs related devices. Further, the segment's equipment services and spare parts also returned to healthy pre pandemic levels, indicating a normalizing of manufacturing activity levels among its European and American based customers. Gross margin showed a Q on Q improvement, mainly due to the relatively higher mix of advanced tools and smart manufacturing solutions. Despite this being a solutions, despite this being a seasonally lower quarter for revenue. As you can see, we have a well diversified revenue stream. The top 5 markets that contributed Group revenue were China, including Hong Kong, Europe, the Americas, Taiwan and Korea. We also saw increased contribution this quarter from Taiwan, Korea and Thailand. Among our customers, our top 5 accounted for less than 17% of our quarterly revenue, reflecting a high degree of customer diversity. I will now hand the time back to Robin to share about our application trends and our outlook for the business. Thank you, Patricia. Let me share some insights into this quarter's record bookings from the end market perspective. The key takeaway was a strong increase in demand for our tools, especially for automotive and industrial applications. In automotive, the continued rebound has been driven by the general automotive recovery momentum we began seeing in the later part of 2020, which has continued into this quarter. This was in tandem with the growth in automotive electrification applications, which increased demand for discrete and power management applications from the semi segment. For industrial applications, there is a growing demand for power management solutions such as EV charging stations and the rising adoption of efficient energy management for smart grids, smart industrial and automation solutions. As for the broader computers, communication and consumer category, there are a variety of trends. First, demand for high performance computing, wearables, gaming consoles, smartphones and appliances continue to drive both advanced packaging and SIP to growth. Next, the multiyear global 5 gs ROC continues to benefit semi And SMT at both device and infrastructure levels as customers increase their investments to address the higher volume of electronic contents in 5 gs components versus 4 gs, plus greater complexity requirements for advanced node chips and radio frequency modules. And for our optoelectronic business, we have seen increased adoption of high volume packaging tools for mini LED, while momentum continues for its conventional 5 pitch display and general lighting tools. Let me now give you some context behind our outlook. We believe that the current data centric computing era we're in, Along with the long term circular trends such as 5 gs, automotive electrification, autonomous driving, AIoT or artificial intelligence of things and advanced packaging is compelling industry to transform in order to prepare for the future. We believe this will drive significantly higher non discretionary silicon consumption and investment in Capital expenditure to meet these new needs. We also believe that the world is at the early stage of a multiyear data centric era and his potential for sustained growth. Here is an outlook for business in the near term. Global Semiconductor chip supply constraint continue to pose a challenge for the group as it does for other market participants. Based on current market expectations and support of our strong backlog and of course barring unforeseen circumstances, We expect to achieve quarterly revenue for the Q2 of 2021 of between US600 million to US650 $1,000,000 We also expect that the second half of Thank you, Robin. We will officially start the Q and A session. Let me remind you again for the Q and A session, Please either use the raise hand function and we will allow you to unmute yourself for you to ask your question or you can type your question in the chat group asnpt Q&A Vomil Singh, and we can read on your behalf. We have the first round of question from Citi, Ather. Ather, you can unmute yourself and ask your question, please. Hi. Congratulations, Robin and Patricia and also the management team. This is Arthur Lai from Citi. So I have two questions. Number 1 is on the margin and number 2 is on the EV. So on the margin side, I want to ask Robin, what have you done in the recent quarter to drive this margin up about 10%? And second question is on the EV. So we just mentioned that there is a security chain and what's the Good morning, Arthur. This is Patricia. I would like to answer your question regarding our Q1 gross margin. First of all, in our previous quarter call, we mentioned that The gross margin impact deconsolidating the material segment and some margin accretive effect Our product portfolio simplification initiative will help improve our gross margin by between 300 bps To 400 bps. So with that in mind, the Q4 2020 group gross margin, Excluding the material segment and the one off inventory provision would be around 37%. So in fact, our Q1 gross margin performance achieved more than what have been shared last quarter. So in Q1 2021, diluted gross margin is now 39.6% As a result of the favorable segment revenue mix contribution and the volume effect, Also improved productivity with senior workforce and also some margin accretive effect utilization after cutting down low material products and some procurement cost savings. Thank you, Patricia. For the second question, I would request Robin to answer. This is more on the EV side product offering. Yes, Arthur. We believe we have a really comprehensive offering of tools to address the EV market. This mainly in our opinion right now is a midstream tools, the wire bonders, the dye bonders, And also the test center, for example. Now, we have a lot of We have a good offering of a solution to cover spectrum of packaging and application needs, such as ICs packaging, power discrete modules, SiP control units, Power modules and of course, we are now also addressing prominent modules in cars as well for EVs as well as the general automotive. Thanks, Robin. Next round of questions will be from Leping. After that will be and Arthur again. Leping, you can unmute yourself again, please. Hi. Can you hear me? Yes. Please go ahead. Hi. This is Lu Ping from Huateng. So I have two questions. The first question is based on it's the first time I So that your BB ratio reached 1.8. And Robin, based on your operation, I mean, you run the company for many years. So What's the historical pattern if you earned the BB ratio? How sustainable of this such BB ratio is so high? And because also I see your 2nd quarter revenue is only 600,000,000 to 650,000,000 so Versus your booking is so high, so do you facing some capacity constraint now when to deliver your customers' Yes. And I think the B2B ratio is probably 1 of the highest I think, in history. Now as to your question, What's driving this booking high, right? Now, let me give you some a little bit of Color in terms of the bookings. We as you look at the headlines for our announcement, We are experiencing a very broad based kind of demand for our bookings. And we also mentioned in the announcement that really we are looking at The underlying long term growth trends are really driving this growth in terms of demand. We mentioned many times before for many quarters, accelerated digital transformation is definitely in the play. Also many countries are now seeking semiconductor self sufficiency. So that also drive a lot of demand in those areas. Improved automotive and industrial markets, we see in this quarter especially very active Demand coming from automotive and industrial markets. Now, you also mentioned about our The forecast for Q2 is around RMB600,000,000 to RMB 650,000,000. Whether we are facing any capacity constraint, I think certainly, as we also mentioned in the announcement, the supply chain constraint is still a prevailing constraint for us. So we are actively managing this and bringing in components, not just for ourselves, but also helping our EM or external manufacturing, as far as we can to also bring in the necessary components for EM to build our tools. So certainly, supply chain will remain a constraint, but we are trying our best to make sure that this can be mitigated in the next few quarters to come. Thank you, Robin. For next round of questions, can I request Keena to unmute yourself and ask your questions? Yes. Thanks for taking my questions. Actually, I wanted to ask about the outlook I'll look more color into the Q2 because we see upward base demand. And also you addressed CIS is also seeing a Q on Q pickup in the booking. And at the end, what should we expect about the business mix in terms of the growth rate That we could expect which one is higher in the 2nd quarter from like CIS, semis, I mean general semis or Operator, 20 or like SMT, eventually that will also affect the direction of like gross margin improvement. Yes. So, Kian, if I can give you a little bit more color into our Q1 booking, So that might help. So Q1 booking, I mentioned earlier, supported by those trends. A little bit more color is kind of tools that we are seeing. So at the kind of volume, obviously, the mainstream tools for semi and for SMT will have to feature competently. So these are The tools for capacity expansion. Now in terms of advanced packaging, we also See, advanced packaging tools for ourselves are pretty strong compared to the previous quarter. So in fact, bookings grew Q on Q and also year on year in excellence So we are happy that our advanced packaging tools are in fact gaining traction in the market. Now, besides advanced packaging tools, notably, we also mentioned in our announcement that we see mini LE tools are probably reaching an inflection point. We see more customers taking delivery for mini LE tools for high volume production. And AA2s, active and IMO2s, this quarter was also pretty strong and the demand has increased. So I hope this will give you some color as to what to come in a couple of quarters. And then I have a follow-up question on Advanced Packaging. We see like BaSy said that they have received the initial order for hybrid wonder. The ASM Pacific actually Expect the launch of PORTED in the second half. So what's the disconnect here because I think ASM has been leading in these advanced packaging And with like more cutting edge hyperborender to launch, that is the market expectation as well. So could you let us know more about Like the difference or like the progress in that area and what should we expect the contribution from these like You're glad to our hyper bond eventually in the future. When we look at news like this, in fact, on the contrary, We think it's good news. I mean, it's a sign that the industry is coming to accept Hi, Greg. So I think we for the industry, there was a So, of course, we can't comment On the progress made by our competitor, we can only focus on ourselves. Now as far as hybrid bond is concerned, we have been giving indications that We are engaging a broad spectrum of key customers in this particular area, both on the logic So we are working hard in order to deliver our hyperbilling tool in the later part of this year for some kind of low volume manufacturing. And we believe that the high volume manufacturing activities will come Maybe 1 or 2 years later. Now let's not forget that the hybrid bonding space is still a very nascent space. So we're not going to see high volume activities in this short period of time. Probably it will take at least 2 to 3 years before high volume will kick in. So assessment of the market and getting hybrid Bonding technology to gain wider market share, wider market adoption will take a little bit more time. And we are really focused on enabling this to happen in time. Okay. Thanks. Maybe I'll back to the queue. Thanks, Kina. The next 3 in the queue are Arthur from Citi, KGI, Laura and Dylan from Morgan Stanley. Can I request Arthur to please unmute himself and ask your question? Hi. Thank you. It's me again. So I have a very simple question. For modeling purpose, can you share the seasonality on feelings of this year? Thank you. Now if you look at Our strong bookings in Q1 already, so strong. We believe Q2 bookings will have to moderate because RMB1 1,000,000,000 is really a surge in terms of demand. But however, looking at longer term, I think there are a lot of news recently from research houses that they are Very bullish about the semiconductor market, including the our own market, The packaging and assembly market. In fact, one research house has been upgrading the outlook in a couple of months. So, based on all these sentiment, we believe going forward, Although Q2 booking will likely to moderate from Q1, but we believe that the demand going forward will be at elevated level. So now in terms of seasonality, Q2, as I said, bookings will probably moderate. In terms of billing, we are already guiding higher than Q1 at this point in time. Yes. Yes. So the second half could be a better Well, looking at the strong backlog that we have and We believe that the second half as in our outlook will continue to be strong. Thank you. Thanks, Arthur. Can I request Laura to unmute herself and ask your questions? Yes. Hi. Good morning. Can you hear me? Yes. Loud and clear, go ahead. Thank you. Yes. Thank you for taking my question. My first question is about the gross margin outlook Because look, looks like packaging order visibility is even stronger than SMT. So can we expect continuous gross margin Thank you so much your question regarding the outlook of our gross margin, first of all, as you know, we do not give immediate Term gross margin guidance. However, we can probably provide you some color in the mid to longer term trend of The near term gross margin improvement We'll maintain based on our good performance in Q1, but we all know that It's also influenced by volume and mix. And with that in mind, we expect Q2 billings Higher than Q1 billings and the favorable segment sales contribution will suspend. And for the longer term, the strategic initiatives are intended for our gross margin accretive effect. So, with the above, it should be a strong background for our longer term gross margin improvement. Thank you very much. And also on the growth outlook in various applications, We know that the demand outlook seems to be quite strong across the board, but that would be very helpful if you can give us more Details about your view on various application, particularly Like advanced packaging, hybrid bounder, I think you discussed that, Kina asked that earlier, but That will be very appreciated if you can give us more outlook about the CIS, the mini LED and the various The applications growth outlook probably in the near term and the longer term? Thanks. Okay. I take this Now, I think I can give you some very general outlook. Now, looking at the demand across the Few quarters. When the pandemic hit, we see computing was the demand was We strongly started with computing demand. And then followed by communications to enable all these computing devices to be connected and so forth. And then lately, since the last Q4 to Q1, we see automotive and in general automotive and the automotive electrification trend demand Seem to be picking up fairly strongly. And we believe with the general economic recovery of the world in Time to come, consumers demand will also start to pick up. So for example, I mean, we have been talking about 5 gs Smartphones, so we believe that this year as predicted by many research houses, 5 gs smartphone's demand will continue to grow and this will bode well for our CS, not just for our mainstream ICD tools, but also for CIS as well. Now for mini LED, I've already mentioned Just now, it will be worth repeating here. We see an inflection point for mini LED. We see customers are now Willing to take more volume LED delivery for their high volume activities. So LED is mini LED trend is very encouraging for us. Now in terms of heavy bonding, I've already mentioned about it when Kina asked just now. So I hope I answered all your questions, Laura. Thank you. Thank you very much. Thanks, Laura. The next 2 on the list will be Morgan Stanley, Dylan and from HSBC, Frank. So can I please request Dylan to unmute and ask our questions? Hi. Thanks for taking my question and congrats on the So my first question would be, for the capacity expansion, you mentioned we are going to expand Our mainstream tools, capacity for semi solutions and SMT. May I ask When do we expect this kind of capacity expansion to complete? Is it in the coming quarters or Any color on the timing would be helpful. Thanks. Yes, certainly. I mean, looking at the strong demand, we would definitely have to pace our capacity So we are looking, of course, also at Increasing our outsourcing activities because we are not going to rely solely on internal. So external outsourcing, increasing our capacity is probably the healthy way of expanding our capacity. So we are looking into that. Internally, we will also debottleneck some of internal capacity to strike a more balanced capacity workload between internal and external. Now for internal, we believe by we could add headcount Pretty easily. So in a short time, we could add the call to increase our capacity in the assembly area. If we have to add some tools for fabrication in house, then that may take a little bit longer because The world I mean, when we talk about supply chain constraint, it's not just affecting the semiconductor industry, it's also affecting the general industry worldwide. So 2 suppliers for our production are also facing supply chain constraints. So that's how we are dealing with. So we are pacing our Thanks, Robin. Can I please request Frank to unmute himself and ask your questions? Thanks. Hi, guys. Thank you for the question, for giving me a chance to ask questions. So I wanted to just follow-up a bit something on your presentation, which is You talked about your business is picking up from different regions, particularly I think you talked about business picking up from Taiwan, Korea and Thailand, The contribution. Can you talk a little bit about the China portion because it is the largest part of your revenue? Is that expected to increase in line with The growth we're seeing from other regions? Yes, certainly, Frank. Without a doubt, with this kind of Strong demand. The demand coming from China has to be the largest contribution. What we are trying to give you guys some color is that this Time around, the demand are not just coming from China in a big way, but also in other regions as well, like Taiwan, Korea, Thailand. And this is a healthy development. So we are not just dependent on one particular region for the demand. But now we are The demand are coming more widespread, more broad based from Taiwan, Korea and Thailand. Okay. Sorry. So just to clarify, Does that mean that the growth rate for Taiwan, Korea and Thailand is currently above what we're seeing out of China or is China still growing? You can say so, yes, Frank. You can say so. That's why we are calling out. In terms of percentage increase, they are bigger, yes. Okay. Sorry. And just one last question I have is, on an ASP, Pete, I mean, we talked about demand being very strong, units been very strong. We've seen the entire semiconductor supply chain see price hikes Across the board from foundry guys to IC Designers, from an equipment point of view, are we seeing the ability for pricing to go up as well? Certainly, certainly. But we will increase prices where it makes sense, because increasing I mean pricing is a very sensitive topic for customers. So whenever it makes sense for us to increase prices, we will do so. Okay. Thank you. Thank you, Frank. Next will be Dylan. Dylan, you can unmute yourself and ask your questions. After this, the queue is empty, so you guys can queue up again. Thank you. Okay. Thank you. Yes, just some follow-up on the capacity expansion. So probably Let me put it this way. Do we have any expectations of the removal of supply bottleneck from our end? Maybe it's due to supply chain improvement or maybe it's due to our capacity expansion? Yes. Dylan, as I said earlier, we are doing what we can to really ease the supply chain there. But That's it. Let me what we can do. So what we are doing is we because some of these components that we need are coming from our customers. So we are also working very closely with our customers to tell them, if you want our equipment, oil production, you also have to help us because we need some components, especially electric components. So we are in the kind of relationship right now talking to customers, helping, asking them to expedite delivery of certain components to us so that we can also expedite the delivery of such component to them as well, I mean our equipment to them. So this is how we are trying to manage the supply chain constraint on our end. Okay, got it. And my second question is to actually follow-up Frank's question. Because you mentioned a healthier pricing environment, probably it's due to the current Same conductor shortage. And I would like to know if the current gross margin level It's also helped by this healthy pricing environment. And if this healthy Pricing environment kind of mitigate in the future, can we still sustain our current gross margin levels? Thanks. I would say the current margin improvement, as Patricia has mentioned, is really coming more from The following fact and the fact that this time around, we have a much more productive workforce compared to many years ago. So as you can imagine, we have been managing our workforce in a very tight fashion And yet we are able to deliver the kind of performance. So productivity is the key. So as a result, We see improvement in terms of gross margin. Now for ASP, as I say, is something that we will do only when it makes sense. So the impact at this moment is not material. Okay, got it. Thank you. Thanks, Dylan. Next, can I request Frank to ask his questions and after Frank will be Kena? Frank, please go ahead. Okay. Thank you, guys. Just wanted to follow-up on this book to billing ratio. It's It ended at 1.8% in the Q1. Is that kind of an historical high level peak compared to what you've seen historically? Or what was the previous peak level that we've seen. Frank, I won't have the exact number, but Certainly, this 1.8, if it's not the pit, will be very close to historical pit, yes. Okay. And based on The guidance you gave us a bit more moderate. Should we imply then that the book to bill ratio would be lower in the second quarter? I can't really tell you at this point in time, but let me give you a little bit of color so far into our Q2 bookings so far. So for the 1st 2 weeks, we see the as I mentioned earlier, We see momentum still very healthy, although we believe we will moderate from the Q1 number. But as I said, the long term outlook for the semiconductor is still very bullish. So we believe going forward, The booking will be still at elevated level. Okay. And sorry, just a follow-up, just in terms of this, if we go into The overall trend of the bookings, if the current situation remains as tight as it is and the outlook is as positive as it is, But you guys are expecting a more moderate booking ratio. Is this more of a function that your customers are also Trending a little bit more moderately or is this more on your view that there's a potential sustainability of this kind of book to bill ratio may be difficult and therefore you guys are taking a more conservative approach. I'm just trying to understand, I guess, the overall moderate orders, is it more of From your end customer or is it more the management's view that this current state might be tough to sustain? Well, we always talk in comparison with Q1. As I say, Q1 was really a very high quarter in terms of booking. So we believe that this will moderate in Q2. So I can't really tell you in terms of book At this point going forward, I would like to reiterate again that the booking level we see going forward will be at an elevated level compared to maybe previous quarter because of the very bullish outlook everyone is saying about the Okay. Thank you. Thank you, Frank. Next will be Kaina from Credit Suisse And after that will be Arthur from Citi. Keena, can you please ask your question? Thank you. Thanks for taking my follow-up question. So I just wanted to ask because usually the booking will be shipped in the next quarter. But due to the pay constraint, we I will put this RMB1 1,000,000,000 booking, I mean, will be shipped in the coming quarters, I mean, in terms of Their allocation of the shipment and because these kind of booking could be customer could be for customer to We serve the capacity in the second half. So just wanted to have idea the sales deliveries flowing In the coming quarters or coming months and the second question is about the white I wonder how long is the lead time for now? And yes, I also have one question on SMT. Yes. Tina, thanks for your question. Now on the backlog, so if you look at our Q2 guidance, Around 50% will be fulfilled in Q2. So we believe that our backlog majority will be within 2 courses. So in terms of what you call the Now, YBON lead time, I think in general, we are seeing those mainstream tools, including Dibon, YBON, The lead time has been around 5 to 6 months immediate lead time. So that's kind of lead time that we are looking at. And I think despite this kind of lead time, customers are still very anxious about their delivery. They keep on Calling our sales guys and when are you going to ship our tools to them. So from that perspective, the customers are still very bullish about taking delivery of our equipment. Got you. So also FMT is in the low 30s, still below the older, The historical range that was well with good performance. So it does still an Mix issue and could and how could we raise this when the auto and industrial Get that up or like other strategy or from your strategy initiative will help the SMT to drive your Long term target of like 40% if I call. Yes, Gina, I know what you mean. So, yes, for SMT, I mean, We have been saying that we have been diversifying our manufacturing base to more Asian base. That has been ongoing for a couple of years. Right now, we are also looking more intensively into diversifying our supplier base as well, not just our manufacturing base, About our supplier base, from more of the European centric base to more Asian base, this will progressively Also improve the SMT margin. Of course, we also mentioned you rightfully pointed out, we have a initiative to improve the SMT gross margin going forward, but this will take a couple more years because we are talking about Product simplification kind of exercise, product enhancement kind of exercise, this kind of exercise It will take time in order to realize its full potential. So we are hopeful that in a couple of years to come, you will Thanks for your questions, Keena. Can I request Arthur to ask his questions? Yes. Yes, it's me again. Thank you. So some investors want me to give this feedback. They say, since we are not easy to travel to Semicon China And can company host a virtual Analyst Day to understand the company's product and strengths? Yes, certainly. This is at the back of my mind. Yes, certainly, I think this will be very So, for analysts and our shareholders to really understand ASMPT much better. We have not Done this before, I believe. So really, rest assured, this is really in our mind. We will let you know when we will that we intend to come. Thank you. Can I request Frank to ask his questions? Thank you. Yes. Thank you, guys. So just I had a follow-up question on the mini LED market. I think a couple of quarters ago, this was a big focus for investors and the management had talked We just had Apple's product launch overnight with iPad Pro. Can you give us a bit more color in terms of how the potential TAM of Mini LED, is it generally been in line with what you expected? Any changes So far from in terms of the market expectation. Yes. Prem, I think if you have been following us, we have been saying that we This journey, meaning LED journey much earlier than anyone in market. So our customers are key we are engaging key customers across So as I mentioned earlier, we are seeing perhaps really an inflection point for mini LED to take off this year. So Q1 in terms of Q1 booking, Q1 shipment, very, very encouraging. So now customers are really taking delivery for high volume production. Okay. I guess, sorry, just in terms of This is supposed to be a very important trigger year, not only for Apple, but for non Apple potentially customers to ramp up. Is that still the plan or has there been because there has been some a little bit of delay from Apple. I'm just wondering from your own perspective, Is there has there been any change in that expectation or is very much in line what you had expected previously? As far as the customers that we are serving, They are pretty much in line with what we are expecting. So this year is really an inflection point for us. Thank you. Can I request Laura to ask questions? Thanks. Yes. Thank you. I just got a question about the company's view on the geopolitical risk. We see that they are more like a technology constraint from the U. S, although it seems not really impact on the OSAT Industry and mostly on the foundry or wafer side. Since our business has about 50% revenue from China, And what's our view? How should we diversify the geopolitical risk here? Thank you very much. Laura, if you understand our business model, we have been already pretty much Very diversified in terms of manufacturing base. So, of course, our big manufacturing base is still in China. But besides that, we have a messaging base in Malaysia, assembly in Singapore, In Hong Kong and also we have because of true acquisitions over the year, okay, we also have messaging bases in Europe, You know, for example, in Munich, in Weymouth, in Netherlands, in Ravensburg, so and also in Of course, so we are already pretty much in good shape in terms of diversifying our metric Yes, understood. But when you talk to your customers in the OSEX Sectors, will you discuss about the potential impact from the upstream foundry space, Would that indirectly have some impact on the business outlook from your customer perspective in China? Thank you. Sorry, Nora, I don't quite understand your question. You can rephrase it? Yes. I mean, although the technology constraint or the U. S. Tension seems More in the foundry space. But since from the supply chain perspective, a lot of packaging Customers are still Chinese customers. Will they get some like indirect impact if there are some like From the foundry side goes to the downstream, would there be some like potential impact Looking forward, from your business engagement perspective or when you talk to your I still don't quite understand your question, but maybe I give you a general answer. I hope That helps. Now, if you're talking about ultimately Self sufficiency kind of drive among all the customers. I think in general, self sufficiency kind of Activities or priorities by our customers actually have a beneficial impact for equipment supplier to us because We are neutral as long as we can supply equipment to this customer wherever they are. This actually bodes well for our customer. I hope I'm giving you a general answer because I don't really know exactly where you're coming from, but I hope that helps. Thank you. Okay. Thank you. Thanks, Laura. The next 2 on the call will be Sunny from UBS and Simon from BOA. Can I request Sunny to please ask the question? Sure. Can you hear me? Yes. Loud and clear. Please go ahead. Thank you very much. Congrats on the good results. I have a few follow-up on my side. So first one on booking for Q2, When you said the booking will be more moderate, may I clarify with you, do you mean growth will be slower For the absolute amount for booking will decline? As I said earlier, Q1 booking is At RMB1 1,000,000,000, so we believe Q2 booking will have to moderate down from that number. Of course, in the end by Q2 report is another 1,000,000,000, I think that will be a very good news. But we don't think so at this It has to moderate from a very high level. Got it. That's helpful. My second follow-up If we look at your revenue for semis and S and P, pretty clearly semis is approaching historical record high. But I think S and P, there's still a bit of gap versus historical record in 2018. And I'm not sure if that's a good indication for your utilization rate for SMT. Meaning, if we think about next few quarters, we'd be fair to assume that there may be more upside coming from SMT since you Would have a bit of room for further loading rate? Yes, Sunny. Yes. If you I mean, if you have been following Our business model, right? We have been saying, intuitively, it makes a lot of sense because S and Actually, if you look at the whole supply chain, we have to start with the semi first before the chips before the chips can be placed on the PCB, right. So when we start to see such strong demand on the semi side, Ultimately, we believe it has to flow down to the SMT. I think this is very intuitive. So it's a matter of time. In fact, we probably already seen some kind of shift already because Q1 booking for SMT already a record So I think SMT going forward will benefit from this trend. Got it. Well, maybe a more detailed follow-up is because I'm trying to understand How much upside can you achieve for these two divisions? And I think you have mentioned that for semis, you are already running at very high loading, But I will assume for S&P, perhaps comparatively, the utilization rate will be slightly lower. And so with a broader recovery in SMT as well, should I assume stronger demand for SMT For Q2 and also into second half. As I said, looking at the supply chain dynamics, We're really seeing some strong demand in the semi side. So I think SMT, the industry SMT as a whole, I think we stand to see the Demand flowing into SMT in time to come. Now as for ourselves, we are preparing for that. So SMT are also poised to pace the capacity expansion in line with the demand signal. Got it. My last question is on your Manufacturing for back end, I think you mentioned you use both internal production and also outsourcing. Could you give us some idea around the split? Just try to understand if you try to increase the outsourcing, how much upside could you achieve In terms of the supply. I can give you some color. Now, at the moment, you can imagine with Kind of high level of billing and also the forecast going forward. We are already extensively using external manufacturing, our source partner basically, To complement the internal capacity and this will SCC will continue and we will Keep the pace of adding capacity both outwards and both external and internal in line with what we see from the market. Got it. Thank you very much. Thank you, Sunny. Next, can I please request Simon to ask the questions? Yes. Thank you very much. Can you hear me? You are breaking a little bit, but yes, please go ahead. Okay. Yes, great. Yes. So number 1, surely back to some to your political related question, any rough idea the So solution, for example, the wire bonders, dye bonders, what Percentage of your the sources patent belong to the U. S. Well, you can say very minimal given the fact mostly the Europe based or Hong Kong based. So could you share the color on this? Yes, you're right, Simon. I think for the mainstream tools at wirebond and diebondu, we have been developing this in Asia for decades already. So you can imagine, these are all developed from the Asian basis. Yes. And then secondly, given the fact the Q1, the bookings for the semi is kind of Over 100% up year on year and also the revenue growing strongly. So what are your cut on the Capacity utilization ratio and also how to meet such a strong timeline growth with your Almost the full utilization capacity there? Yes. I think as far as internal capacity is concerned, we already have a very high utilization. So that's why there's still some operating leverage over there. So that's why when Patricia mentioned about Volley, in fact, we still have some Operating leverage on the industry side. Now as for external capacity, as I mentioned earlier, Simon, we are actively Expanding looking for expansion or rather for external manufacturing capacity. So this, as I say, will have to be done carefully in tandem with what we see from the market in terms The demand signal, as I always been saying a few times already in this call, we will pace our capacity in line with our demand signal. Yes. And then lastly, very quickly, given the fact TSMC and Samsung is a world large Spenders for the same is areas and also they are very strong in the logic chip or memory. But when we look at your revenue breakdown by region or country, we do see very minimal exposure To Korea or Taiwan, sir, you don't have any direct business for TSMC or Samsung What kind of the wafer level packaging or SiP or because Tier X and Samsung continuously So Simon, you have to look back a few more quarters Because as I mentioned earlier, to one of the question posted by the one of you, we see Taiwan, we see Korea, we see Thailand increasing. So you can imagine, in this world of AP, Basically, it resides in a few regions, China, Taiwan, Korea, Europe, America at this point in time. And we have been saying, as far as our AP solution is concerned, We are perhaps the most comprehensive and we are engaging a broad range of customers in this AP space. So unfortunately, Simon, I cannot comment directly on whether we are dealing with certain companies, but this is the color I can give it to you. So you are saying the integrated Asia, like Asia Pacific region is collectively kind of the One big player, yes. The AP activities that we are seeing strong is really in China, in Korea, in Japan Japan, Jansong, sorry, in IPOs. And that's the Asian AP activity area. And of course, our speaker will be Europe and the U. S. Yes. Very clear, sir. Thank you. Thank you very much and congrats Thank you, Simon. Can I next request The person from CICC to ask questions? Thank you. Hello, thank you. And hello, Robin and hello, Patricia. This is Xiaoxing from CICC. So actually I have two questions. The first one is that can you share more color on your product mix on the IC and discrete side? Since last time I think you mentioned that the wire bonders actually carry lower margin, right? But in the Q1, I see your gross margin in the Semi side continues to improve. So I just wonder if the wirebonders still the main driver of the semi segment? Thank you. Yes, yes, Charlton. Now, if you look at the kind of demand, Obviously, it has the mainstream tools like Diborne and Viiborne will have to be will form the largest mix in the demand. There's no doubt about it. But that doesn't mean the rights like AP or mini LED or CS Absolutely. We are only talking about relative terms. But with $1,000,000,000 of demand, You can imagine majority will have to come from the mainstream tools. Now as to your question, yes, We see a strong wire bond demand. But however, Patricia has already mentioned, our Gross margin is also a function of volume. So when we have the volume, there will be operating leverages. So that will compensate somewhat the relatively lower YBON margin compared to the rest of the population. And also as I say, Main Street too and not just YBON, but also Dibon. So typically, Dibon have Relatively higher gross margin compared to or margin compared to the YBON. So It's a mixture of all this. You just can't say that because what I want is up, then the margin will be low. It's not as simple as that, unfortunately. Yes, I have one follow-up. Thank you, Robbie. And the next question is about the CIS outlook. So do you expect that the camera module I mean the camera module suppliers You project to have a large scale of capacity expansion this year. So and what's the main driver behind this It's still mainly related to the smartphone side or is the automotive Thank you. Yes. I think we mentioned earlier, as far as booking is concerned for our CRS, strong, especially Q on Q. So this is a sign that our CIS customers are confident in ordering equipment. So as we suppose, because if you look at the 5 gs, the stream of 5 gs phones coming out, so this works well for the Smartphone market. So, I think it's quite intuitive. Everybody is talking about the number of smartphone this year will Perhaps, it's been better than last year. So, we believe that is driving our CIS demand this year. Now, as for automotive, yes, we are also addressing the automotive camera module market. But we mentioned already before, this is still a very small market for us at this point in time. So largely, our camera module market It's really on the consumer side, the smartphone side. Hi. We will have one last round of questions. Kena, can you please go ahead and ask your questions? Thanks for taking my question. That's the last question. Actually, I have a question. It's more regarding, I mean, Joe, I mean as a peer investor and has already asked some of that, but we see the I mean, U. S. Government seems considering put stricter like procurement for those, I mean, Chinese customer to Buy with the U. S. Technology. Just wonder if there will be any impact on IASM Pacific because China's Market is accounting like for is it like 50% over 50% of the revenue. So understood that in the past, we have discussing about the some entity lease impact to certain customers. But if there's a broad based or stricter procurement lose From U. S. To Chinese customer, then any impact you could, right? I mean, Thanks, Jeff. Or like give us some idea what should we see on this issue. Tina, your question is very broad and perhaps also a little bit more Forward looking, so we can't really comment what's going to happen in the future. But at this moment, We I would say we are not impacted because we are really quite diversified in terms of Where our products are being made. So we have, as I said, we have manufacturing bases in Asia. Of course, next is in the U. S. We also have messaging bases in Europe or SMT in particular. So from that perspective, we are kind of well covered geographically in terms of Addressing issues like this. So I think I can only give you a general color. I can't really tell you in future what's going to happen when more and more Restrictions are placed on all these supply chain. What if like US government will ban, I mean, U. S. Company buying equipment from China, then you have some equipment actually made in China. Perhaps some is a G shift from like Singapore or Hong Kong, but do you think, yes, there will be the impact to your U. S. Revenue that may be Yes, high single digit revenue contribution. Sure. Thanks, Kina. I know where you're coming from. As I said, we not only have basis, a manufacturing basis in China, We also have a big manufacturing base in Malaysia. So in fact, we are already addressing some of these concerns. So by diversifying some of our product portfolio, not just manufacturing in China alone, but also manufacturing on Malaysia. So this will address perhaps a concern about shipment to certain country. Yes. Got you. Thanks. Thank you, Kena. With that, officially, we'll be ending this call. On behalf of Robin and Patricia, I want to thank all of you for attending the call And hoping to see all of you during our next call. Thank you everyone. Have a good day. Thank you.