Good morning, good afternoon, good evening, ladies and gentlemen. Welcome to the conference call. Mr. Leonard Lee, please see your call in. I will be standing by. Thank you.
Good morning, good evening, and good evening, ladies and gentlemen. Welcome to the ASM Pacific Technology 2019 third quarter results announcement investor conference call. Before we proceed, I would like to note that during this conference call, there may be certain forward-looking statements with respect to ASM Pacific Technology's business and financial conditions. Such forward-looking statements may involve known and unknown uncertainties and risks which 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 Q3 results can be downloaded from our website, www.asmpt.com. With us this morning are Mr. WK Lee, CEO of ASM Pacific Technology, and Mr. Robin Ng, CFO of ASM Pacific Technology. Our CFO, Robin, who is also our CEO designate, will start with a brief discussion about our 2019 Q3 results, followed by a Q&A session.
Without further ado, let me hand this over to Robin, please.
Thank you, Leonard. Good morning and good evening, ladies and gentlemen. We appreciate you joining us for our 2019 third quarter investor conference call today. I will first provide you with a summary of the company's performance, followed by the Q&A session. All three business segments increased their revenue in Q3 compared with the preceding quarter. These were in line with our projections. SMT Solutions segment revenue at $235.6 million saw the biggest increase at 19% compared with the preceding quarter. While revenue of the Back-end Equipment segment achieved 12.8% quarter-on-quarter growth at $232.9 million. The Material segment revenue continued its uptrend, achieving Q on Q increase of 9.8% with $62.8 million. The group revenue for the quarter was $531.3 million, which was an increase of 15.1% over the preceding quarter.
This was slightly below the low end of our revenue guidance, primarily due to the revenue recognition of some tools being deferred to Q4 this year. During the period, booking for the Back-end Equipment and the Material segment increased 6.2% and 7.6% against the preceding quarter, respectively. These were more than offset b y a reduction of 36.5% Q on Q in the SMT Solutions booking segment. This was because in the preceding quarter, bookings of the SMT Solutions segment were at a high level, close to the record quarterly bookings set in Q3 2018. The group bookings at $513.8 million was a moderate decline Q on Q of 14.6% over the preceding quarter. This was partly seasonal and partly a reflection of market sentiments given the uncertainty of the continuing global trade discussions and the world economy at large.
However, we note that their customers in China seem to be once again leading in the market recovery. By geographical distribution, China, inclusive of Hong Kong, Europe, Malaysia, the Americas, and Japan, were the top five markets for ASMPT in the current quarter. The Back-end Equipment segment in the current quarter maintained a steady growth from last quarter with billings of $232.9 million, representing a growth of 12.8% against the preceding quarter. The segment achieved a gross margin of 43.4% in the current quarter, representing an improvement of 267 basis points Q on Q. As a result of the aggressive cost reduction efforts carried over the past 12 months, gross margin in the current quarter only declined by 0.1% year-on-year, while revenue for the segment declined to 23.2%. The Back-end Equipment segment achieved a profit growth of 168.9% Q on Q.
At the product level, revenue for advanced packaging and CMOS image sensor equipment together contributed to over 50% of the revenue. Demand for die attach and wire bonders also show signs of stabilization after a long period of compression. In terms of application segment, 5G infrastructure, high-end computing, Mini LED and MicroLED, and multi-camera modules continue to drive customer demand across the IC discrete, opto, and CIS business segment. China contributed to a significant increase of the Back-end Equipment orders in the current quarter. This could be due in part to the localization of supply chain within China in response to the imposition of trade tariffs and restriction by its trading partners. Booking for the Material segment have grown consecutively for three quarters. It has reached a level similar to that achieved in 2016 and 2017.
The segment also saw a 9.8% increase Q on Q in its current quarter billings to US$62.8 million. The leadframe market is clearly on track for a recovery. The segment achieved segment profit margin of 3.7% in the quarter. The SMT Solutions segment achieved billings of US$235.6 million, which was a 19% increase from the preceding quarter. The order book of SMT Solutions segment continues to be underpinned by the 5G infrastructure demand, but also by a weaker automotive application market. The segment achieved a segment profit margin of 12.3% in the current quarter. The segment achieved a gross margin of 32.7%, which was lower than expected due to our sustained efforts in penetrating into the Asian customer base, which has a relatively lower margin.
Despite the uncertain market sentiment, ASMPT is still on track to realize revenue resulting from the substantial orders for the advanced packaging panel and deposition tools for high-volume production of high-end computing devices. Also, our best-in-class packaging and assembly solutions for Mini LED and MicroLED has been well accepted by leading players in this space. As the dominant tools supplier for camera modules, we are also poised to benefit from the ongoing migration to multi-camera modules and the relentless innovation in camera differentiation features. We are positively optimistic of the longer-term growth potential in advanced packaging, CMOS image sensors, 5G-related applications, IoT, automotive electrification, silicon photonics, Mini LED and MicroLED displays, which are expected to accelerate chip demand, and this will in turn broaden our market outreach. With this, we thank you for your attention and we are ready to take your questions.
Sir, are you ready to take questions?
Yes.
Thank you. We will now poll for questions. If you would like to register for a question, please press star one on your telephone. Ladies and gentlemen, should you have any questions, please press star one. Thank you. Our first question comes from Johnny Zhang from Nomura. Thank you.
Good morning, Robin, WK. My first question is regarding your guidance. You have given a sales outlook, but for booking momentum, could you elaborate more on different business segments, including IC discrete, LED, SMT in the fourth quarter and probably some color for next year? My second question is regarding the gross margin. SMT gross margin has declined to a low 30% level. When should we see the recovery or what kind of products or application can drive gross margin to be higher? My third question is regarding to WK's retirement. I think because investors are curious about when have we started this kind of preparation for retirement and whether the company's strategy or future direction will be a little bit different after Robin takes over. Thank you so much.
The first question on your booking. Yes, we guided double digits Q-on-Q decline in terms of group booking. If you look at the past pattern, this is really seasonal from Q3 to Q4. Typically, the equipment segment, SMT segment, typically will see a double-digit Q-on-Q drop. It's nothing really exceptional for this coming quarter. In terms of, I think the second question, you talked about the SMT low margin. As explained or highlighted in our announcement as well. You probably know that we have been making good inroads into the Asian customer base. Typically, for those machines that we ship to the Asian, especially for China and the rest of Asia, they command a relatively lower margin compared to those equipment that we ship to the U.S. and the European segment.
We see that as really the main reason why the margin for Q3 for SMT has come down by two percentage points compared to last quarter. As to your question, how we foresee SMT margin going forward, I think continuing product cost reduction is definitely on the cards. One way to really mitigate this low margin when we sell to Asian customers is to really improve on the cost. These efforts are ongoing. This is really something that we will embark and hopefully in the future, we see gross margin also improving. We also making some structural change in terms of increasing our production in Malaysia. Our Malaysian additional plant that we have highlighted a couple of years ago has just recently been completed.
We are tooling up the factory, but of course, this will take a period of time, probably one to one and a half years before we are fully operational. I think with the completion of this facility in Malaysia, we will take advantage of the relatively low-cost location in Malaysia to do production, not just for SMT, but also for the rest of the business segment Material, as well as for the Back-end Equipment. I think with this plan in mind, we should be able to see progressively the SMT margin improving. Now, another initiative that we have undertaken for SMT to try to improve the gross margin going forward is we also have expanded a small site in Hungary to support our production in Munich. As you know, in the Eastern European country, it's also relatively low cost compared to Munich.
I think with this initiative, we also will see a gross margin for the SMT will continue to improve going forward.
Well, as for my retirement, by next year, I will be 66 years old. Actually, it's an electoral call. I have been working the board for almost two years to prepare for this transition. The board also formed a global search, considering all the internal and external candidates. Finally, the board came down to the conclusion, Robin Ng is the right choice to take. Actually, it's not only Robin Ng this time. The whole idea we have is that Robin Ng, together with three other senior executives, our COO, Stanley Chui, our CTO, Ryan Wong, and also Guenter Lauber, who's currently the CEO of SMT Solutions. Together they will form an executive office. Robin Ng will be supported, backed up by all these three gentlemen. They all have a very long and good knowledge in the area they're strong with.
They're sure to grow. I'm very confident, these gentlemen will be able to lead the company to new heights. As for your question on whether there will be any future change in future direction, I think I leave discussion to Robin Ng.
Certainly there will be a continuity. The four gentlemen that WK mentioned, we have been working together for a long time, and we have been part of the senior management team that together with WK formulated the long-term strategy of ASMPT. Actually your question whether there will be changes, I think the strategy is in place. I think there'll be continuity. I don't think there should be any concern about that in terms of our strategy going forward.
Thank you. Our next question come from Lu Peng Hua from CICC Hong Kong. Thank you.
Thank you for taking my question. My first question is that how you look the China opportunity. I think you also in the speech mentioned that you see a surge on the Back-end Equipment order from China. Do you think how you will capture this business opportunity? It seems to me your growth is not as strong as what. Do you see any other markets declining or because it seems your Back-end is coming back, but it's not as strong as the Chinese customers saying. Yeah. Thank you.
Yeah, certainly. I think we highlighted that we definitely see the localization effect of the China supply chain because of the ongoing trade tension. As you're aware, our region market is very strong. The Chinese market is very strong. I think we should be able to capture opportunities that come along in that respect. What we see in the other market, I think it's also probably timely to give you a sort of a glimpse. Besides China, we also see in particular Malaysia closing the gap in terms of catching up in terms of booking momentum. Of course, the other areas are still relatively weak. For example, Taiwan, Korea, the other markets are still weak.
However, it could be a sign if Malaysia is closing the gap and that could be a sign that if the other markets start to pick up the momentum, that will be probably a sign of a recovery. We don't see that in the other market yet. So far, only Malaysia is really reflecting this trend.
Thank you. The next question come from Mr. Arthur Lai from Citigroup. Thank you.
Hi, good morning, WK, Robin, and Leonard. Thanks for taking my question. I will focus my question on the advanced packaging. Can you elaborate on how much advanced packaging we have of the total IC backend? The reason I ask is because we understand there's still a lot of foundry or traditional IC backend equipment, and the investor want to separate those two parts. That's my question number one. Number two is, I think last time, management talked about there is a significant backlog on the NEXX backend, sorry, mid-end equipment, and that we expect to deliver it at the end of this year. Can you share with us what's the current progress? Is those equipment will be billing or install at the end of this year? Thank you.
For your first question, Arthur, in terms of AP contribution, we also have highlighted that the AP contribution, plus the CIS contribution, are more than 50% of our third quarter billing. AP, roughly around 20%. AP contribution to our Back-end Equipment is roughly around 20%. In terms of your second question on NEXX, yes, we are on track to realize a substantial portion of the booking that we have in the backlog in the Q4. On a quarter-on-quarter basis, you will see NEXX contributing more than Q3 in Q4.
Maybe I supplement a little bit. Actually, most of it, or I would say, quite a number of those tools actually has already been delivered. Okay. However, because of these tools are relatively new, one of the factor contribute to our slightly below our revenue guidance in Q3, as highlighted by Robin earlier, was some of these tools, revenue recognition has been delayed. These tools are already delivered to customer, already been installed. We are in the stage of getting those tools buy-off. Before officially buy-off, we can't recognize those revenue. I think the delay is mainly of this kind of nature. The delivery is on track, and actually, Japan is continue to deliver these tools in Q4 and also beyond 2019. We have strong backlog for all these tools.
Thank you. Our next question comes from Kyna Wong from Credit Suisse. Thank you.
Hi, Robin, WK, and thanks for taking my question. I have a follow-up question on top of Arthur question. In terms of the delayed tools, the revenue recognitions in the tools. It also caused the gross margin to decline more in the third quarter. Supposedly, advanced packaging will have higher gross margin. Why we should expect fourth quarter continue to have decline the gross margin if some of these tools are with a higher gross margin to support in the fourth quarter. Of course, maybe there's some other reason from the other product mix, but this is the first question in terms of this related revenue. The second question is about the outlook and trend in the Mini LED and also MicroLED, because it's also one of the driver. What do you see about your new machine being recognized by the customer?
How much they will actually contribute to the growth next year? Do you see that the Mini LED will soon to pick up from your understanding? Thanks.
Yeah. Your first question, Kyna, thank you. Yes, I think for Q4, we guided the margin to be slightly lower than Q3. Now, primarily as you know, volume is also a factor in terms of margin, because we also have fixed costs to cover. If the volume comes down, typically the margin will come down. Yes, you're right. I think for NEXX, being an advanced packaging tool, typically, the margins are better than the traditional tools. That's the reason why on a group basis, if we recognize more advanced packaging tools, typically it will give the group margin a lift. However, because of the volume factor, Q4, we are guiding slightly down in terms of the gross margin for the group. Yeah.
Thank you. We have our following question come from Arthur Lai from Citigroup. Thank you.
Thank you for taking my follow-up question. On the NEXX equipment, can you share with us which country the clients take these machines? Is it Malaysia, Japan, Taiwan, or others? Second small question is, I recall several years ago, management told us that Material is a leading indicator of Back-end Equipment orders. This time we see the quarter over actually Material getting stronger. Is there any upside potential of our current booking number? Thank you.
Yes, Arthur. In terms of geographical distribution contribution, if you look at on a nine months basically on the year, all countries were down except for Vietnam and Japan. These two were the only countries that showed increase in terms of contribution on a year-on-year basis on the nine-month period. The second question is? Arthur, what's your second question?
Just give me a second, I'll get back, Arthur.
Do you hear?
Arthur, please go ahead.
I'm asking about the upside potential of the current booking, because we already see the Material, the momentum is really getting stronger. I think previously management talked about Material is a leading indicator of the Back-end Equipment. I'm asking any upside risk of your current forecast.
You're right. We have been saying the leadframe booking is indicator. It still is because, look, you can see for the past three quarters, our booking for leadframe has been growing. I think that it's an indicator that the market is recovering. However, having said that, against the backdrop of the current macro environment uncertainty, so it's kind of difficult, okay, to predict when the recovery will really kick in. We are vigilant and constantly looking at demand signals. I think we also highlighted that if you look at China seems to be leading the recovery. Majority of bookings in Q3 actually came from the China booking. That could be also another signal. The other signal that we are watching carefully is that, as you're aware, our die attach and wire bonders have contracted for a period of time.
In Q3, we see stabilization in terms of these two particular tools. Potentially that could also be an indicator that the market could be stabilizing and poised for a recovery. As I mentioned just now, we are also looking at geographical contribution. Malaysia seems to be picking up a little bit, relatively speaking, compared to the other region. I think all in, I think we are looking at all these demand signals. We are cautiously optimistic. However, as I said, against the backdrop of this macro uncertainty, we can't really tell.
Thank you.
Thank you. Our next question comes from Sebastian Ho from CLSA. Thank you.
Ladies, gentlemen, thanks for taking my questions. My first question is, I want to ask about the delayed revenue recognition in SMT. Are you seeing any abnormal behavior first?
Sorry, can you speak a bit louder? You're breaking up.
Okay. Sure. Yeah. Can you hear me better?
Yes.
My question is regarding the delayed revenue recognition in SMT tool in the third quarter. Are you seeing any abnormal behavior at your customers, or you see this pretty normal?
By the way, it's not the SMT tool, it's the next tool that we talk about, the advanced packaging tool. Q4 revenue was down slightly because of the delayed revenue recognition of advanced packaging panel deposition tools. Q3.
Okay.
Q3 revenue, yeah, was slightly lower than guidance.
Okay. Now also we saw the SMT, the booking also come down quite a bit. Can we attribute the second quarter update to be pretty abnormal and now we're just back to the very normal situation?
Yes. I think, yes, on Q2 booking was high, relatively high in this current environment. If you look at the overall, we expected this year SMT also to come down. Q2 in a sense, a little bit on the high side. Q3, and I think Q3 will be a kind of normal booking for us.
Thank you. Our next question comes from Christine from Bocom. Thank you.
Hi, good morning. I just have a couple of follow-up questions. First one is on Mini LED. I was just wondering if you can tell us, when Mini LED start to ramp up, what type of equipment we see an increase in order? Is it the upgrade in wire bonders, or are there any other equipment that we should see a stronger growth? My second question is on the CIS. I just want to know if you can give us an update on how the CIS related orders are looking over the next couple of quarters. Thank you.
Your first question on Mini LED and MicroLED. Typically for Mini LED and MicroLED, we cannot use the normal packaging tool. It's just too slow. What we have developed is really a best-in-class mass bonding tool. Typically these two are high price and also command a better margin than the traditional die and wire bonder. The question on CIS. Yes, the first half of the year, typically we see a higher CIS booking. However, this year, we see Q3 booking are also particularly strong. However, in Q4, it will also come down.
In terms of CIS momentum, I think we would like to also probably share with you that looking at the momentum in terms of shipment and billing, of course, depending on Q4 performance and in terms of CIS, we may even, on a full year basis, be very close to last year billing or maybe even surpass it a little bit. This is to give you an indication that this year's CIS business is pretty strong compared to the other business segments.
Thank you. Our next question comes from Kyna Wong from Credit Suisse. Thank you.
Yes, Hi,
Sorry, line got disconnected. Can we move on to the next one? [Sunny Lin] from UBS in Taiwan. Thank you. Sunny, please go ahead.
Yeah. Hi, this is Bill Lu from UBS. Back to the deferred revenues, I'm wondering if you can give me some color on the mechanics of how that works. Do you have to meet certain benchmarks, or how do you get to the revenue recognition?
Typically, according to accounting standards, you have to meet a certain criteria. Now, typically for a new tool, customer acceptance is the threshold. NEXX being a panel deposition tool being a new tool, so we have to meet that criteria. As a result, in Q3, we only managed to recognize some of it. Some tools were deferred because those tools that were deferred have not been bought off yet. Although, like what Lee Wai has mentioned earlier, those tools were already shipped to the customer. Typically, that's the pattern in terms of revenue recognition.
Maybe I will supplement a little bit. Those are revenue recognition delay, does not reflect any market sentiment. It's more customer business environment has changed. They want to push back the delivery of those machines. It's not of that nature. It's more of, as Robin just mentioned, those are new tools. By the accounting standard, we cannot really recognize the revenue upon shipment. We have to recognize the revenue upon customer acceptance. Those situations also not we are in a benchmarking exercise competing with our competitor, no. We are the only tool over there. Just we have to go through this process. As a new tool, sometimes there are bound to be some unexpected issues coming up, so customers and us have to get together to team it up. We are very confident those revenue recognition will take place in Q4.
If it takes place faster, earlier, then we pass the threshold criteria of the new tool. The revenue recognition no longer needs to wait until the acceptance. Once we pass through that threshold, then you will see higher contribution from NEXX in our building. We are expecting, hopefully this can happen in Q4, then this will become an upside. If not, it will take place in Q1 next year.
Yeah.
Thank you. Our next question comes from Donnie Teng from Nomura. Thank you.
Thank you, management, for taking my question again. We are expecting bookings to decline for Q, but if we break down to our Back-end and SMT, which one would decline more? My second question is also a follow-up on the China localization policy. I have seen that some China OSAT companies are starting to add CapEx or maybe have some CapEx expansion next year. I'm wondering when will we see some booking from OSAT companies, particularly China OSAT companies, next year? My third question is regarding to SMT. We have seen quite strong 5G infrastructure demand this year. We provide SMT for 5G base station as well. Can we say that the 5G infrastructure momentum should be continuing into next year, or probably it's a multiple-year trend?
At the same time, are those SMTs for 5G infrastructure carry a lower gross margin as well? In your presentation remarks also mentioned about the customers in China normally have lower than corporate average margin. Thank you.
Let me take this question. First of all, on the booking trend, actually Q4 typically is a low season. Booking comes down is very normal, except in the year when customers have a very high expectation on the following year, then they will take advantage and try to order equipment in advance. This will be, I would say, rare years we will see a very strong booking in Q4. If probably we can understand this one, right? While generally people start to become a little bit more optimistic about 2020, but cannot be too bullish about it yet. We have not seen that kind of booking momentum trend. We are forecasting booking will come down in Q4. We do not see a significant difference in the change down rate between the Back-end Equipment and also the SMT.
I think probably a normal pattern in our opinion, whereas Material probably will be very stable. We can't exactly predict whether the momentum will show a very low single-digit, Q-on-Q booking growth or flat or slightly down. I think that our prediction for the midterm booking will be fairly stable. That is the Q4 effect. For China, you see that some customers in China start to increase their CapEx. We did see that, and actually in Q2 we already reported the growth. We see some of those orders start to come in. It's much more obvious in Q3. As Robin also has pointed out, unfortunately, some other territories continue to show a contraction, except Malaysia has started to close in the gap.
That's why this kind of booking effect also, there's a strong growth in China, continued contraction in the other market, they OSAT a little bit from each other. Even in Q4, we continue to see customers in China, I would say, different customer, they continue to give us indication and some of them continue to order new equipment. We see some positive momentum in the market in China, okay? However, we are very eager to see a similar pattern happening overseas market, but that's not obvious yet. With the 5G infrastructure, we believe this will be a multiple year demand for our SMT, because 5G infrastructure roll-out will take quite a number of years. However, we also expect the 5G handset start to come in 2020. That should be another factor driving our business.
On your question on the margin for the SMT for the 5G infrastructure. Far, those equipments are very high-end equipment. Because these are very advanced equipment, their margin was not as low. However, in the China market, when we are selling to a more general market, those requirements, those products drag down our margin, and not so much on the 5G infrastructure.
Thank you. Our next question comes from Kyna Wong from Credit Suisse. Thank you.
Hello? Can you hear me? Hello?
Yes.
I just wanted to follow up the last question I asked is about the time for Mini LED and also MicroLED to get in the contributions in the LED segment. I think we quite expect when to see the market to pick up because this is kind of a trend, but a lot of difficult and challenge in the equipment or in the manufacturing process. This is the first question that if we see or when we could expect the demand to come. When could we see the products more mature in the market?
Well, I think this is a very interesting market. There are some very good solutions, as Robin has highlighted, this mass bonding solution. We have delivered quite a number of tools to a number of customers. These customers are building their prototypes. From what they have produced as a prototype, very exciting. These customers confirm our solutions are very interesting. At least one customer is giving us an indication they are trying to secure their own business. If that's the case, the significant revenue contribution to us could happen anytime. Of course, that part we can't control, this is on the customer side. Whether they are able to really show a very convenient solution to their customer. In our opinion, probably not too far away, because it's not just one customer working on it. Many customers are working on it.
We see different people having different solutions using our equipment. I think, well, it will be in the near future, not too far away, Kyna.
When could we expect?
I can't-
Which application? I mean, is more on the wearables or mobile device or TV, et cetera?
Looking at our customers' first application, we believe wearable is the first application, easier to be successful with them. Our customers also aiming at the mobile phone, but in our opinion, the challenge for mobile phone still will be the cost. Are they able to produce the MicroLED display at a competitive cost? But wearable, we think, will be the first application to take off.
Got you. Thanks.
Thank you. Our next question comes from Mr. Lee Myer from Moore Abbott. Thank you.
Yes. Hi. My question has to do with your SMT business as it relates to the auto OEMs. You mentioned that in the third quarter, shipments to the auto OEMs may have been a little bit weaker than expected. What's your outlook for SMT to the auto OEMs, and how is that affecting the gross margin on the SMT business right now and in the future?
Just to clarify, we didn't mention OEM. What we mentioned is more geographical. If we ship more to Asian-based customers, China, rest of Asia, typically, these margins will be lower than those that we ship to Europe and America.
Okay. Well, Was there a mix shift away from auto more towards smartphone? Has that impacted your margin? Do you have an outlook as it relates to the use of SMT in the auto business and what your outlook is there?
Typically, we are very strong in automotive, but unfortunately, for this year, as you're probably aware, the automotive market in general has come down. As a result, we ship less for the automotive application. That also is a factor in terms of gross margin.
Yeah. Something a little bit. In terms of margin for the SMT equipment, typically, we enjoy a better cost margin for automotive applications, communication infrastructure, servers, high-end smartphones. These are the applications we can enjoy a better margin because these customers will demand a very high-end machine. Whereas for the mid to lower-end smartphone, for the general consumer applications, some industrial application is high-end, but some industrial applications, just normal high SMT. For that kind of a demanding application market, for those equipment, plus shipping to Asian region, so then the cost margin will be lower.
Thank you. Our next question comes from Samson Hong from HSBC Taiwan. Thank you.
Hi. Good morning, WK, Robin, and Leonard. Thanks for taking my question. I have a quick question. First one is that on your fourth quarter guidance, just wondering, have you factored in those NEXX revenue delay recognition? Have you factored that into your Q4 revenue guidance now? Second question is also regarding the Mini LED. I'm wondering, can you maybe share some of your thought regarding your solutions versus your competitors' solution? Whether actually you do have a chance on top of this very strong growth for the industry, can you again further expand your market share in this Mini LED equipment space? Thirdly is that, I think yesterday, ASE mentioned that for the first quarter next year, they're seeing for the semiconductor space, they're looking for a shallower than normal decline for first quarter.
Yeah, just as a whole, do you see similar trend from what you can see right now, in terms of your equipment and Material trend? Yeah. Thank you.
I think the first question, in terms of whether we have included NEXX tools in the future, certainly we have. As we also said, we are on track to realize a substantial portion of the deposition tool from NEXX in Q4. We have taken that into that guidance. Yes. For the Mini MicroLED, I will say today, if you are aware of who are the people, who are the companies are making or showing off the MicroLED or Mini LED display samples, then I would say a very high chance they were using our equipment to produce those samples. I think as of this moment, that's what I can share with you. For Q1, we have not really provided any guidance on Q1. In our opinion, looking at the future market, we are generally more optimistic about 2020.
We believe the industry cycle has worked its way out. We should have reached the bottom. Our booking for the leadframe is a clear indicator that we've grown sequentially for three quarters. Actually, if you look at our Back-end Equipment booking in Q3, we are almost flat year-on-year. All this actually gives us confidence. I think the market is turning around. We should have reached the bottom. Okay. Now, however, why we guide our booking for Q4 down, as I mentioned earlier, it's the low season, the last quarter of the year. Okay. Now, interesting to note is that Chinese New Year holiday is relatively early in 2020. From our traditional wisdom, from our experience, customers, in particular customers in China, they'll be more aggressive in ordering new capacity after Chinese New Year.
If that is the case, that continues to be the case in 2020, well, I would say 2020 Q1 may not be that bad. Of course, it's a bit too early to really make a concrete forecast at this point in time.
Yeah. Great. Thanks.
Thank you. Our next question come from Donnie Teng from Nomura. Thank you.
Thank you very much for taking my question again. My first question is regarding to Mini LED. Could you elaborate more on what kind of sales % is from Mini LED equipment now? Second question is regarding to the tax rate. Tax rate in the quarter is still 36% level, I guess. How should we look at the tax rate going forward? Thank you.
Like we mentioned, I think the market for Mini and Micro are still at a infancy stage. You can imagine the contribution won't be material at all at this point in time. Now, for the tax rate, unfortunately, or fortunately, depend how you look at it, our SMT has been doing well, relatively to the Back-end. As you're aware, the tax rate in SMT are much higher than the Back-end operation. As a result, we see tax rate kind of sticky, has not really come down. We see that the tax rate trending for the whole year will probably be around 30%-mid-30% kind of a percentage, unfortunately, for this year.
Thank you. We have another phone question come from Kyna Wong. Thank you.
I think Johnny has actually asked about the tax rates question, but I remember you guided around 20%-25%, right?
Yes.
Yeah. I can still assume this range for full year?
Maybe not. Looking at the Q3 also development, the share of the SMT profit are actually good, also compared to the Back-end. In fact, in terms of segmental level, they are higher than the Back-end section. As a result, unfortunately, we cannot bring the tax rate down for that reason. Trending-wise, I think for the full year, we unfortunately have to elevate the tax rate to, as I said, 30%, maybe slightly above 30% level for the full year.
Oh, okay. 30% or more.
Yes.
Okay. Thank you.
Yes.
Thank you. Ladies and gentlemen, should you have any question, please press star one on your telephone. Another question come from Flora Lai from Hang Seng Bank. Thank you.
Good morning, senior management. Thank you for taking my questions. The first question I would like to ask is about the distribution of the geographical revenue. I see that there is a growth of revenue in China from 44.8% to 50.2% in this quarter. While Malaysia and Vietnam has also experienced quite a growth. Do you think that your company has been benefited by the relocation of the production plant of your clients because of the trade tensions between the Sino-U.S.? This is my first question. Do you think the trend will be going forward, that's why your margin will be improving in the long run? The second one is, I would like to know the percentage of your revenue that is contributed by the die attach and wirebonds, which is the traditional part of your business. Thank you.
Well, for the geographical distribution, you're right, China is catching up. Although overall, it's still down compared to last year, but it's starting to catch up, followed by Malaysia. Vietnam is because in the first half of the year, actually, due to some advanced packaging treatment tools relating to advanced packaging and also the CIS. Okay? As I have shared with you, the investors before, the Korean customers, they like to have their subcontractors, their outsource partners in Vietnam. We benefited from that. Whether these are really relating to customers shifting their manufacturing base, their supply base from China to Vietnam or Malaysia because of trade war, we don't really see that, to be honest.
As I mentioned, the customer who installed a lot of advanced packaging tool in Vietnam in the beginning of this year and also second half of last year, it was long pending. Similarly, for the Korean customer, their supply base Vietnam also have been started way before the trade war. It's continuous effort. We don't really see trade war is a triggering point. Okay. For the die and wirebond percentage, I would say the percentage is not very reliable for the past two, three quarters, because while the other application continue to grow, the die and wirebond has been contracting for a number of quarters, until, what we reported to you earlier, we start to see stabilizing in Q3. You can easily say that the die and wirebond contribution to our Back-end Equipment revenue was below 50% in Q3. Okay.
They used to be around the 50% or slightly above 50% level. Unfortunately, in Q3 it has come down. We expect in Q4 it may go up. Of course, it also depends on how quickly we can do the revenue recognition with all those advanced packaging tools. If the revenue recognition is smooth, then their contribution to the Back-end Equipment revenue, die to wirebond will still remain lower.
Thank you.
Thank you, ladies and gentlemen, that is star one to register for a question. Sorry, we have another question come from Kyna Wong from Credit Suisse.
Hey. Hello. Just wanted to know more about CIS outlook next year, because this year, I think in the second half, it's actually better than expected.
Yes.
Catching up the revenue and then closing to last year level. Next year, what do you see about the growth momentum? Should we expect that it should be going back to 2017 level or even higher?
Well, to be honest, this is a difficult question. We see on one hand, there's a good market trend. This is the multiple camera, three camera, four camera. This positive trend will continue to drive the demand for our CIS equipment. Not only the AA machine, but also the assembly equipment. Furthermore, we also are anticipating the customer will probably introduce a 10x optical zoom cameras. Those will also increase the demand for active alignment requirement. I would say there are positive factors driving it. We're also expecting 5G handsets will start to come to the market and certain customers also are demanding or using a very high-resolution camera sensors, over 100-meg sensors. All these are positive factors driving the demand for the CIS equipment. Whether in 2030, we will see the demand go back to the 2017 or levels, we are not sure.
We also don't rule out it will continue to grow, actually. 2018 was higher than 2017. If this year we are very close to 2018, at this point in time, I will say I will not rule out a possibility we will grow even further. Of course, at the same time, depends on all these new applications, how quickly, how fast our customer are able to introduce these new application. The market acceptance of this. I also will not rule out it's slightly down compared to 2019. Certainly, we will not see a major adjustment, major correction in the CIS market. It will be either relatively flat or continue to grow.
Okay. Thank you.
Thank you, ladies and gents, gentlemen. Should you have any question, please press star one. Thank you. Mr. Lee, there seem to be no further question at this point in time.
Okay. Yeah. Thank you. I think there being no other questions, I think we would like to thank you for joining us today, and we will talk to you again next time. Thank you very much. Goodbye.
Thank you.
Thank you for your participation. This conclude your conference. Thank you.