Ladies and gentlemen, thank you for standing by, and welcome to AAC Technologies 2017 Annual Results Investor Cast and Conference Call. At this time, all participants are in listen only mode. There will be a presentation followed by the question and answer session. If you wish to ask questions, you will need to press star one on your telephone. I will now hand over to host today. Please go ahead.
Good evening. Welcome to our conference call. I'm Ricky Man from auditing of AAC. Joining us today, we have our CEO, Mr. Benjamin Pan, our Managing Director, Mr. Richard Mok, and our new Head of Investor Relations, Mr. Eddie Kung. Before we start, we would like to remind you some information you may hear during our discussion today may contain forward-looking statements. As a result, our trends may turn out differently. We'll briefly review the results before opening up the floor to questions. Richard, please.
Hello. Good afternoon, everyone. AAC, the company, has another great year for 2017. New heights were recorded on both revenue and net profit. The year-on-year revenue rose 36% to CNY 211 billion. Net profit was up 32% to CNY 5.3 billion. We have proposed a total dividend for the year of the amount HKD 2.10, HKD 2.10, implying up 43%, roughly equal to a payout ratio of 40%. This year, as forecasted, sales of haptics and the RF mechanical segment combined exceeded the acoustic segment for the first time. Gross margins of both segments were over 40%. For the past three years, as we ramped up our new businesses, we continued to deliver continuous growth of acoustic. We have maintained the good profitability and overall revenue growth of 30% plus in each year.
When we look at the performance of each major product segment, sales of the speaker module was up 42%. We have experienced greater specification upgrade for better stereo sound solutions, which deliver ASP expansion. At the same time, total shipments of the speaker module have been lift by continuous migration from our speakers design and some even transformed design from receivers. That's the main factor for receivers and speaker being slightly down for the year. As a whole, the acoustic segment was up 20% year-on-year. Also, during this reported year, 2017, over a third of our total CapEx was spent on acoustic, and that was for our new platform, Super Linear Structure. That would migrate new user experience to a new milestone. Also, we expect wider adoption of this new platform, which will drive our acoustic growth along with dollar content increased.
I'll talk a little bit about haptics and RF mechanical. The sales revenue of haptics and RF mechanical surged 51%. Both segments, haptics and RF mechanical, hosted very good growth. It showed our strong capabilities on production and design. For haptics in 2017, we saw some of our advanced solutions started shipment in Android phones. Furthermore, we expect much wider adoption for this year. In our mechanical business segment, last year we shipped mostly metallic casings and some volume of 3D cover glass already. This year we will continue our work on our focus to further improve production efficiency and further penetrate into more Android flagships with different design solutions. Last but not least, most importantly, the optics segment. The development of WLG is on track. It has received wide market attention and very positive interest.
The unique properties of Wafer Level Glass will continue to deliver the WLG hybrid lens solutions for better 3D structure light applications. At the moment, we have built 5 million monthly capacity for WLG. Meanwhile, for our plastic lens, we have already prepared a monthly capacity of 20 million sets, and throughout this year we will continue
To implement further expansion capacity plan. Thank you. Great. We can go into Q&A session.
Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. We are limiting to two questions at each time. First question comes from the line of Nasty Chung from JP Morgan. Please ask a question.
Hi, Richard and management team. This is Nasty from JP Morgan. Two questions from me. The first question is, could management share more details on the optics division performance last year? We noticed total revenue of around RMB 200 million from these others. Could you share more detail on how much lens set were shipped during last year to give a little bit color on whether the margin trend and ASP trend on this division? That will be my first question. Thank you.
Thank you for your question. Last year, as you know, the plastic lens business really started late in the year. We did not have a full 12 months period for plastic lens business. The revenue for plastic lens have been lumped in others, as you rightly said. Most importantly, we are looking at the yield and efficiency on our plastic lens manufacturing. As I said, last year, we already reached 10 million pieces monthly shipment capacity, and currently we already have established 20 million sets monthly capacity. The margins definitely are on the uptrend, because this is very much showing a lot of potential in improving our efficiency and use as we grow our capacity. Also, I think we are on a very good positive learning curve to deliver better efficiency.
This year we expect overall performance margins to further improve from what we see as current indicators of our production efficiency.
Thank you. Your next question comes from the line of Cherry Ma from CLSA. Please ask a question.
Hi, Benjamin. Richard. Thanks for taking my questions. My first question is also related to optics. In the remarks you made earlier, you mentioned that your customers are showing strong interest for WLG hybrid lens. Are these customers you are working with preferring WLG hybrid over 7P plastic lens for the future roadmap? Do they accept AAC's price range given it is higher than the traditional plastic lens? Could you give us more color in terms of the competitive dynamics or mass production schedule, the scale of project we expected to deliver, and if margins could be closer to the corporate average? Thanks.
我觉得就刚刚讲，我看了一下我们去年的一个plastic lens的具体的number。我们去年大概shipped 40个million左右plastic lens。然后我们去年的均价应该是超过4块人民币，大概4块3左右人民币，因为我们是以5P的shipment为主，很少量是4P。从今年的一个我们展望来说，刚刚也讲到，我们目前的产能已经有20个million左右，所以我们是希望在这两个月的shipment，或者这两三个月shipment能够把20个million完全用起来。从我们目前手头的项目来说，也完全有这样的一个可能性。然后WLG，因为我们其实前面也在讲，AAC进入光学行业，我觉得我们要来获取这样长期的一个市场的一个技术地位的话，WLG是我们的一个重点。而且我的判断的一个基础是，大概在七八年前，我们买Kaleido的时候，我们判断一直是认为就是说混合滥用一定会是趋势，当然那时候还没想到会有3D传感的一个产生。当时我们只是从camera这个项目来看，但是camera不光是mobile device行业以外，还是mobile device要用玻璃的混合，这是必然趋势，因为我们一直讲玻璃的这种遮蔽也好，这种杂光的一个控制也好，肯定是强过塑料的，只是说一个成本和大量的问题。从目前WLG的情况来看，我们目前是在准备整体5个million的一个产能，包括我们欧洲部门的一个模具的准备，和在国内的整个一个molding equipment这边我们全部在往这方面走。那当然目前来说，我们已经有跟客户合作的项目在开展。那当然我们也不方便讲具体哪个客户。从整个shipment的一个计划来说，我们是希望在于二季和三季之间开始有shipment。到今年年底的话，我们现在是建5个million的产能，我们希望在今年能够把5个million的产能填满。那至于说到年底我们要建多少，我们会继续来看。而且从今年全年的CapEx的计划来说，我们主要的CapEx在2018年会布局在光学上面。
The plastic lens, related to the previous questions that asked, the total shipment came up to approximately 40 million for 2017, at the average price of RMB 4.30, 4.3, and mostly are for 5P. As we said already, 20 million per month production capacity, which means that looking at the projects on hand, looks like the 20 million capacity will be fully utilized as shipments in some time in two months' time. On WLG, as we said, it is an important technology platform, AAC process, through our investment seven, eight years ago in Kaleido. At that time, we believe the unique properties that WLG give to the hybrid lens design will definitely be an important trend and in terms of innovation in the image quality and properties.
3D sensing at that time was more kind of far-fetched, but we are very pleased to see the properties of such hybrid lens being fully considered. We believe the good characteristics of better reflection indexes, better flare control, etc., that are found in the current applications of mobile devices are very possibly extended to other use applications in the non-mobile devices market. Hence, the 5 million pieces per month capacity that we have prepared, clearly the preparation includes tooling and our molding facilities in China as well. Looking at the project underway, we believe most likely shipments will start in second quarter or third quarter this year, and we expect the 5 million capacity will again be fully utilized then. Very exciting, very strong progress.
Thank you. My second question is related to MEMS microphone business. The revenue scale of this business has declined between 1Q 2016 and 2Q 2017, and started picking up again in second half last year. Profit also started picking up as well. How should we think about this business segment going forward? In terms of cost structure, were we able to see increasing in-house ratio of MEMS die and to again see better improvement in growth margin?
我觉得MEMS的方向就像AAC目前发展的几个方向一样，我们会有侧重点，把外部的技术能力和内部的技术研究整合在一起，然后让AAC整个变成有自己的核心价值，来达到我们追求的毛利水平，从而在市场上也非常有竞争力。我觉得MEMS Microphone我们去年产生了几个方面的变化，我们在此次也有提到。第一个，我们ASIC，包括digital的ASIC，有自己的design方案，由此ASIC已经大规模用，然后digital的ASIC也已经开始，我觉得在18年应该会大规模用，到19年的话更大的比例会采用。然后第二点，我们跟一个行业内也是做MEMS这种technology的，它的MEMS Microphone的die曾经大批量ship给我们，我们也卖去过市场。它因为退出这个MEMS Microphone市场，我们把它这个技术方案，或者叫设计方案和IP交换。设计方案，我们也是等于买下了它的解决方案。这样就变成我们原有的MEMS die的设计能力，跟我们这次得到的一个设计方案会整合起来。所以我们在18年应该看到，我觉得应该会至少超过100个million的shipment，来自于我们自己整合以后，自己带的一个shipment。再加上我们控制了digital的ASIC，从而在下一步，在MEMS die方面的一个继续发展。我觉得MEMS Microphone的方向，AAC的目标也早晚是行业的number one。我觉得这是我们一直在追求的一个目标。
This year, we have continued to not only work on our in-house development on developing capabilities to be a very competitive MEMS microphone supplier, but also the fact that our efforts in developing ASIC have come to a very fruitful stage in our digital ASIC design. I think we will see more growth in shipment volume, not only this year, but continue to 2019, whereby that would help us to capture a stronger AAC value. Also, we have mentioned that during 2017, we have made an acquisition of an established industry players design and IP portfolio of MEMS die, which have been already used by AAC before. That acquisition of owing the design will definitely not only bring new, but already can reinforce and enhance our capability to have our own kind of products. We expect in this year, 100 million pieces of our own AAC MEMS die with our own digital ASIC will be shipped. Definitely, our objective like the other technology platforms that we have interest in, we aim to be the industry number 1. That is a very clear mission that we set out, not only last year or this year, but all along. This is a key technology, we have strong capability and roadmap how to get there.
I'm sorry, quick follow-up. How much is 100 million out of the total shipment?
我们今年的，按照这个来说，我们自己的MEMS die的应用在今年至少会突破10%。
We expect more than 10% of the total shipment will come from our own AAC MEMS die.
Thank you very much.
You're welcome.
Your next question comes from the line of Sam Lee from Credit Suisse. Please ask your question.
Thank you moderator. First congratulate on the very good earnings, and secondly, welcome Eddie to get on board. I have two questions. First is still about the hybrid lens. I'll just express it in Chinese. 潘总，我想请问一下，这个混合镜头这边，我们有看到它其实有蛮多的用途，在3D里面，在拍照里面，甚至在可能拍照后面还会有更多的一些复杂的一些应用。但是我们同时可能也看到，在不同的项目里面，或者不同的用途里面，进展的速度好像有不太一样。但当然我们可能理解有偏差，我觉得可能好像也许3D快一点，拍照慢一点，或者是怎么样。我想这个背后的他们用在不同用途的这个技术上的区别，或者包括您的客户的这种对于这个市场用途，它的fitting，这方面的dynamic能不能给我们share一下？这样的话，我们应该怎么去看待hybrid lens在各个用途的一个进展的情况？这是我的第一个问题。谢谢。
我们的理解是，在3D申请方向，要用玻璃的一个重要用途，主要是温度的稳定性。所以我们判断温度的稳定性是3D申请一个最主要追求的，这是一个。另外一个，在拍照上面，那就看很多的功能，它可以包括下一步对大光圈的一个追求。另外一个包括杂光，还有一个就是说可以做更矮的一个高度，这些都是玻璃能够带来的。对我们来说，WLG这个制程带来的，我认为不仅是说做出混合镜头，最关键的是说WLG我们要带来的是玻璃晶片跟原有的molding，纯粹就是这种用球的这种molding技术，对比来说原来传统的，我们希望得到一个更高的性价比，也就是说可以更容易大规模，相对来说成本会更低。这是我们所追求的。这个在大规模以后会是一个革命的制造方法，对这个行业来说。所以我们在6P和7P的一个目标上，我们是希望全面地导入混合镜头，不是说以塑料为主。所以AAC当然我们有塑料的技术，而且从现在来看，5P上面我们也是越来越成熟，凉热各方面，还有包括6P，有些包括对寒湿客户端的一个追求，我们也在这里中间。但是在主流的6P和7P的市场，我们是希望用混合镜头，因为我们WLG出来有这种规模和成本的优势，我们希望用这个来全面取代将来6P和7P对光学性能追求这方面的一个需求，这是我们的一个主要的竞争目的或者竞争手段。
The topic or the questions asked related to the various considerations in promoting hybrid lens design. What AAC, clearly, we have developed and conclude the 3D sensing consideration for glass is based on the advantage of its thermal stability, which is the key in giving good 3D sensing performance. As we have said before on photography imaging requirements, aspects like low flare, large aperture and the Z-height considerations that hybrid lens can give, definitely are key advantages considerations. Overall, when we look at the encryption of WLG in hybrid lens design, I think if we look at the AAC approach in terms of WLG and the traditional molding techniques process for a piece of glass lens. Clearly, we believe there's a lot of momentum and advantages behind what we call the costing, the value for the specs consideration, i.e., on a volume production basis.
This is a very clear, interesting roadmap for WLG process to deliver the glass lens. When we discuss the future kind of specs requirements that are capable from 6P or 7P, which obviously AAC is also partaking in the 6P plastic lens business. We believe the optic images improvement are clearly presented much stronger with a costing value proposition under the WLG process.
Thank you. My second question is about the RF business. 我们蛮高兴看到在公司的材料里面有提到，在天线或者RF的部分有一些新的想法，就是有提到毫米波，然后还有LCP的天线，包括LTCC的。所以我想这个部分，我们是有什么样的一个优势跟积累，然后之后的话希望是一个什么样的速度，或者什么样的一个路径去期待新的生意呢？谢谢。
我觉得首先，我觉得在往5G发展的时候，比如说5G部分的天线，因为5G的天线会有很多新的材料，也会有一些很新的挑战。我们希望至少第一个在天线方面，我们能抓住5G的机会。那第二个，其实我们在前年买了WiSpry，它是做MEMS tuner的，所以我们这个部门本身也在做5G的。我们在看除了MEMS tuner在5G的应用以外，我们也在看开关在5G方面的一个应用。其实除了5G的天线以外，再或者用WiSpry这样的一个technology来做一些，比如MEMS开关或者这些components的一个整合，是我们在看的。因为我觉得我们大概花了七八年的时间，在optical方面做了一个技术的储备，然后现在看来，慢慢地在今后的5到8年中间，可以给我们将来在新的增长带来一个很大的驱动力。所以我们必须要考虑在optical，还有sensor和tactic以外，甚至一些精密加工以外，我们将来的一个趋势，增长要往哪里。我觉得5G的components是我们在看的一个重要的方向。
We strongly believe that 5G will present exciting opportunity. As indicated by our preparations on this business, the application, the usage of new materials in the designing and producing antenna on their own, also the acquisition of WiSpry, the MEMS tuner capability. In addition to those potential, we are looking at the various components in the design overall antenna, including these what we call on-off switches, etc. The importance is that AAC should develop or should clearly present a what we call an integration capability that we could encompass all these important components for a 5G antenna. As we have done in the past, we have spent seven years time on preparation for optics capability.
We believe antenna, possibly in a period of five years, based on our current already incurred experience in the precision processing and precision manufacturing, the 5G antenna business deliver enormous exciting opportunities to show all our preparations.
我只想很快地follow up一个很快的问题，就是说这个里面我们像材料部分也会去做吗？刚才我没有太理会，这个部分我们有考虑吗？
我觉得5G天线的材料部分我们肯定要看，因为如果你离开材料部分去看5G的天线是毫无意义的。
OK。
Definitely we are very interested in assessing and developing new materials suitable and appropriate for the 5G antenna. We believe it's a critical part of a solution. Otherwise, it makes the kind of platform uninteresting and unmeaningful.
That's it from me. Thank you very much.
Thank you. Thank you.
Your next question comes from the line of Leping Huang from CICC. Please ask your question.
你好，谢谢管理层。我有两个问题，第一个问题想问一下，我们看到一个很有趣的现象，就是今年的年报里面，RF Mechanics这一块的利润的占比已经超过了Dynamic Component，而且增长得非常快，如果看gross profit的话，是60%。过去一年，什么东西是主要推动的这块RF Mechanics和Haptics的驱动力？然后往后看，是不是继续的，是casing呢，还是说Haptics operate？然后今年怎么看这两块主要的revenue的growth，就是声学和Haptics，哪一块会成长得快一点？就今年看，我们看的这个timeline。谢谢。
I think in both the segments, Haptics and RF Mechanics, 2017 has been a very exciting, very interesting year. Actually, it showed off our preparations for business to come. In both segments, AAC as planned, has further progress with a more advanced approach, not only in terms of specs upgrade, but also in the value adding for both business segments. I think as targeted, Android markets are opening up for both segments in a nice way as planned. What's more important, I think 2018 we are in a very, very good position to capture more growth in both business. I think we are not done with the growth in both segments so far.
然后第二个问题就是想问一下，就是我们在选择进入新的业务的时候的一个principle是怎么？因为我们看到手机现在不同的component的公司之间的互相渗透的一个趋势蛮明显，就做connector的也开始做acoustic，然后做这个component。那我们刚才提到那个天线的业务，我们觉得什么是一个我们的核心的竞争力，就是有兴趣，就进去以后能够保证deliver这样40%或者现在非常高的毛利的水平，谢谢。
其实我们在原来的一个扩展中间，比如讲在六、七年前或者三、五年前，我们那时候想法也比较简单，觉得说因为我们的主要客户布局在手机用户，所以我们沿着手机用户为主，我们能专长的这些领域去布局，这是我们最初的出发点。然后在这几年，我们慢慢从客户的用户体验，还有包括整个一个技术平台，我们慢慢慢慢来看，实际上我们现在目前布局的主要有两个方向，一个是我们叫磁电技术，我们的声学、haptic，甚至将来camera module的VCM，都属于磁电技术。这个是我们最初起家的一个技术，这是一个。然后第二个同时是我们叫精密加工技术，精密加工当然来自于我们的一个模具，我们整个的一个fixture。我们的fixture现在来说，我们做的这种模具和fixture横跨光学，横跨刚刚讲的磁电，所有的微型零件方向，还有包括我们的RF Mechanics的一个方向。所以这个是我们两个最基本的技术，而且我们在看这两个基本技术的同时，我随便举例，包括这两年我们在lens，不管是plastic lens还是WLG上面的一个技术的累积和这种认识，使我们有很多同样的技术或者平台，反过来去影响刚刚讲的磁电技术的方向，不管是声学还是haptic，或者是下一步我们的VCM，实际上我们也在内部的研究中间，只是说我们还没有去布局一个大的capacity，我们要看整个的光学整合在一起以后，看一下市场的需求才会去弄。所以这是我们两个最重要的一个支点。那当然RF方向，因为最初speaker box要用antenna，所以我们布了一个RF的一个team，去把原有的antenna整个设计，然后跟ALD资产，ALD资产再加上更多还是一个Mechanic的一个资产整合起来了。那从RF技术的一个出发点，和包括我们MEMS Microphone的一个出发点，这是一个MEMS的一个结构。那我觉得我们下一步5G的一个零件方向，包括跟MEMS这种结构的方向，是我们值得去研究发展的方向。所以我们在做任何一个新的方向的时候，我们都会考虑到我们原有的一个技术平台的一个进步，能不能产生将来新拓展方向，跟我们原有技术平台结合起来以后这样的协同性，这是我们所看到的。这个是我们用来判断的一个基础。因为我觉得我对或者我们整个管理层对公司的一个观点是，我们绝对不希望自己成为仅仅是某个方向的一个项目公司。因为这个方向，或者说最近客户的使用很热，或者需求很大，那你在这个阶段就增长非常高，但是过了以后，其他出来的趋势跟你毫无关系，这个是我们要避免的，所以这个也是我们在看的。当然，我刚刚讲的，因为我们不管在声学还是光学，还是haptic方向，我们有很多equipment是我们自己设计或者对外合作来整合的。实际上我们这种精密加工技术的一个发展，本身也对我们整合这种自动化生产的能力和关键装备的能力带来一个很大的提升。所以如果简单总结来说，我觉得到目前阶段，我们比较有技术或者优势的，在行业的或者有突出技术优势的，一个是磁电技术和精密加工技术，这是我们两个核心技术。当然除此以外，包括RF其它也是我们在看能不能来不断地来整合的。
The discussion centers around sustainable growth to go after business which can deliver 40% or above gross margins. I think Benjamin was describing a little bit about the heritage of AAC some years ago. I think the company's focus, as we have done very well in the traditional mobile phone market, we were looking at the various kind of capabilities that we can serve and deliver within what we call the customers of the traditional mobile phones. I think it's very obvious that in these years, the capabilities of delivering these products or solutions are very much tied to the extent how these technology platforms can deliver user or interesting innovative user experience via what we call technology platforms, which could help us on delivering a sustainable progress meaningful way. In summing up, I think there are two directions that AAC have undertaken or categorized. I think the first one is the electromagnetic capability, whereby that's very much our DNA, our heritage, of which we've done a great acoustic business, and that also to some extent include the at the moment untapped voice coil, motor, VCM products and solutions, which is also this fundamental of physics, dynamics and production capability that AAC is very strong in.
The second direction or the second feature that AAC possess definitely is the capability of improving and delivering what we call precision manufacturing, whereby not only about the scale that we could do this, but also in terms of the details and the fine-tuning fixtures that we design, we control throughout the production process. Interestingly, I think if we look at the experience we have so far in developing the design and production process for plastic and WLG, there are some what we call cross inferencing.
What we meant by cross inferencing is that the experience or some of the process capabilities have benefit the other direction as well. That is a mutual kind of beneficial way that the two are linked together and serve a very great purpose. Going forward, I think we discussed briefly about 5G components and the related MEMS kind of solutions, which brings back the subject of although in the past when we developed the RF capability product business segment team, in early stage, we have this mechanical capability of applying LDS on our acoustic products.
That has again, served us a great extent in terms of improving how we could not only on the existing capability but adding to our core competency. We believe those are the things that we have learned a lot, we continue to focus on these two directions and will serve us very well in the segments that we have identified so far.
而且我要补充两点，第一点，就是我们这次这种基本技术建起来以后，我们后面的计划，我觉得我们大概用五年左右的时间，要考虑如何走出mobile device。我觉得当然mobile device还是会随着5G到来，物物相连带来很大的增长。但是随着我们mobile device上面各个方向的增长，我们的规模会变得越来越大。所以走出mobile device，要变成一定比例的话，那也需要一个相应的更大的规模。所以我觉得我们应该早一点布局，用现有的基本技术来怎么拓展出去，走出mobile device。这是一个。然后另外一个，我想提醒大家一点，这个也是我们内部一直在做很多检讨或者总结的。我们在做任何一个新的领域的时候，我们基本上不会去现有行业里的一个对手，去挖一个团队出来，或者是找很多人出来建一个团队。我们的做法基本上还是利用我们现有的基本技术，去建一个或者有的革命性、革新技术也好，或者是有一个理论背景的也好，研究也好，去建一个这样的理论基础，然后再配合我们现有的一些管理经验也好，我们这种精密加工技术，原有的基础也好，整合起来。所以实际上，我觉得AAC真正的一个追求是在行业拓展中，我们希望或者我们相信将来的硬件制造是完全可以数据化的。然后我们通过这种数据化的模型，将来很多包括机器学习深度学习这种数据的建立，跟我们的装备能力、整合能力整合在一起，然后拓展到我们希望去的不同的领域。我觉得这个才是我们真正跟行业，不管是现有对手也好，还是将来对手也好，真正能够差异化的地方。
We want to reiterate and add that the fact that, the fundamental capabilities that we already possess and we are on the way of developing, will help us expand our business further than the current mobile devices market, maybe in five years time.
What is recognized is that we are already on the way to process the scale in order to go into these exciting markets. The fundamental capability will serve us very well. In addition to that, in the last few years, we already started reviewing and looking at ways to enhance our management kind of capability in a meaningful way. What we meant is that, as we have indicated in the past, we have not been interested and we do not rely on what we call existing teams of people of our competitors to join AAC in order for us to have that capability. We are very much interested in looking at our kind of work design and production experience and added to that our own kind of theoretical fundamentals, which give us the targets, which give us the genuine directions for us to come up with a sustainable path in order to deliver such capability. One of the important kind of capability or mode of practice that we have already adopted, is how we could turn all this interesting, useful information and capture in what we call a digitalization process, whereby when we look at such production improvement processes, can be represented by digital information, numbers, etc. We believe through that process, we can definitely very clearly present the differentiation between ourselves and other players in the industry or our competitors. That would be the AAC kind of method in not only utilizing the current platform capabilities, not only serving the current mobile devices market, but achieving how we grow by our scale production, by our fundamentals, by our digitalization, by clear management methods, scientific methods to get us there.
非常清楚，非常的谢谢。
Your next question comes from the line of Wei Chen from Goldman Sachs. Please ask your question.
Okay, thank you. Yeah. A lot of good question was asked across business lines. It sounds like the setup into 2018 is pretty robust. Richard also showed that for the past few years, sales has been growing over 30% every single year. Can you talk about what kind of growth can you be expecting in 2018? Also the gross margin in fourth quarter was also pretty strong. How should we think about gross margin in 2018? That's my first question.
Previously, we have already said this year we're gonna work the same hard way as we do every year. We are committed to deliver sales top line revenue growth of not less than 25%. This is unchanged. The management is very focused on delivering that. In terms of gross margins, as we said all along, I think the gross margins is something that we really kind of have a lot of kind of very clear open kind of targets, not only for management, but for our stakeholders as well. Hence, for not only the new business, but existing acoustic business, and very much established now the RF mechanical and haptic, we have still the same target of delivering that kind of level of gross margin. That is clearly definitely not changed.
那我第二个问题是想问一下潘总，在声学部分，大概还是我们的一个很重要的一个核心项目。去年有很大的升级，尤其在北美的客户。那今年就是说我们是不是声学的升级是不是走到尽头了，或者说我们今年可以看到什么样的趋势？还有市场上面一直有听到竞争对手好像很低的价钱去跟我们竞争，然后让整个价格的环境非常的恶劣。那可不可以也讲一下，声学这一块的项目在2018年大约的竞争环境的方向大约是怎么样？谢谢。
从我们的这种看法来说，声学还是比较会是有三位数成长的一个产品线，主要基础还是说Android系统的升级，我们认为刚刚开始。实际上我们也有提到，我们新出来的超线性结构，这种结构本身跟算法配合，能够带来一个跟原来相比非常明显的一个体验，而且这个只是出来的第一代，我们后面第二、第三代跟现在有更明显的一个差异的，已经在研发中间，甚至有些我们已经在开始做一些demo。所以我们的一个期望是，在Android平台，高中低，除了超linear的，在今后的若干年中间都应该变成现有的一个平台，现在的或者是超线性这个平台。这个是我们一个基本的，我觉得是帮客户带来更大的用户体验或者价值的同时，又能帮AAC带来价值的一个地方。
In acoustic, we are definitely very much in the expectation that 2018 will bring what we call a double-digit growth rate. Clearly, we've mentioned the new super linear structure that are very much catered or looked at by the Android camp. Bear in mind, this is the first generation, as we have said, the second and even the third generation are already in the pipeline. For the second generation, prototypes actually are being done, and they are made demos for our customer. We believe this platform has genuine capability of lifting the very much required user experience, not only in the high tier, but also in what we call high tier, mid tier, and low tier, except for the ultra-low market that we are not interested.
Overall, I think our customer has shown initial kind of very strong interest in this new user experience that this platform can bring. More importantly, we believe this is only a beginning, or as we said, a first-generation new platform that enables a lot of our customers to fully promote another upgrade of genuine, very easily detectable user experience in upgrading their products and devices.
然后刚才那个问题应该还有一个，就是在Non-Android上面，价格上面的竞争的状态大约是怎么样？然后还有就是说，我们面对价格竞争的时候，我们是会用什么样的模式，或者我们怎么去思考说要不要跟这个更低的价格，还是维持我们自己现在的价格？思考的思维到底是怎么样去决定的，可以分享一下吗？
其实这样，第一，我们在mobile device上面，我们从不评价Android以外的，这是第一。第二，我觉得从AAC的一个竞争格局来说，AAC从来不是仅仅依靠高的销售价格来获取高的毛利的公司。我们一直强调，我们要强调技术平台，强调我们的竞争力，还是在于说，我在使用户得到更好的用户体验的同时，我要有更佳的性价比，更好的一个价格。而且我觉得我们的利润率也主要是来自于这里。而且从现在这个发展的方向来说，我前面已经讲到了，就是说我们AAC的一个竞争能力，不仅是来自于我们components的设计和manufacturing，而来自于我们能够更深入地整合产生或者高度自动化制造这些components的equipment。当然，除了有些标准的equipment我们是对外合作的，但是中间的不管的equipment tooling fixture和它的自动化和智能化程度的能力的高低，都是受AAC的管理和影响的。我觉得这个能力才是我们将来不管是在声学上面，还是其他产品线上面，长期竞争的一个生命力。所以我觉得我们本身在声学的一个效率上面，我认为我们还有很大的一个改善空间，而且今年整体来看，我觉得我们本身就会看到我们在声学的制造效率上面会有一个很大的进步。
We have always reiterated that we don't comment on the non-Android market. We talk about Android market only in the current discussion. What we like to emphasize is that as always, our business model is not reliant on driving up or getting what we call good margins from a high ASP product. What is most important that we believe on a demonstration of AAC being a leader in our business segment is the capability of delivering what we call a good pricing in terms of the best performance over the solutions we are capable of bringing to the various customers via the different technology platform.
At the back of the capability of doing that is what we call our in-depth or clear direction focus on high level of automation and developing our proprietary, not only on just buying the equipment, but really having our own influence and design and control over the various kind of tooling, molding, and the various adoption of the standard equipment. That is what we meant by our capability of fully utilizing our smart manufacturing in order to come up with such good business, good pricing for lifting the user experience, not only in acoustic platform, but the same approach is applicable for our other business as well. That is the same theory that we will carry on driving AAC to a new height.
Your next question comes from the line of Alice Chen from UBS. Please ask your question.
Hi, Benjamin, Richard, and the team. Thank you for taking my question. My first question is about the acoustic business, especially for the receiver module. Receiver module actually record year-on-year decline, especially for the fourth quarter. Can we have a rough idea about, is it because the shipment decline but ASP actually increased on a year-on-year basis? Looking into 2018, are we still expecting a receiver module, maybe shipment to stay flat but ASP continue to expand? That's my first question. Thank you.
Thank you for your question. In every quarter, our different performance for various business products will very much reflect what is being shipped over that quarter. There are different happenings in individual quarters. One fact, as I mentioned in my opening speech, there is some indication that the speaker module design has encompassed the receiver. To some extent, there is some adjustment in the shipment of receiver due to overall acoustic speaker module design, which takes up the traditional receiver as well. The receiver module design going forward, we will continue to demonstrate a capability of specs requirements by different customers and fully leverage on our automation production. We don't expect much big variation to the overall profitability and production hurdles will be faced by AAC.
Overall, we are very confident that receiver module will have a very strong growth and potential for AAC to deliver even in 2018.
Okay, thank you. My second question is about the non-acoustic business. Is it possible to have a rough breakdown of the haptics and RF in 2017 or fourth quarter, or at least maybe have some rough idea about which business among the non-acoustic showing stronger growth? The reason I'm asking is, I think, if my guess is correct, fourth quarter haptics actually showed quite strong growth with the design upgrade and ASP expansion. Just want to have a rough idea whether this could be continued into 2018.
At the moment, we are still not in a stage to give definitive clear breakdowns between the two components within that business. I think generally, as I said, the combined business, the two business in both the haptics and RF Mechanics, have made very strong, very interesting progress in the year 2017. I think each has its own kind of development path. What's more important, I think 2018, both business segments will continue. We have high confidence in that both segments will do very well in 2018. At the moment, no breakdowns are available, I'm afraid.
Okay. Thank you. Very quick follow-up on the haptics. For 2018, because I think the management team just mentioned Android will also widely adopt haptics product. Does that mean that the shipment volume on the haptics will also grow, combined with the expansion in 2018?
Optics definitely will grow as we said in our production capacities, we are planning for further capacity expansion, which is on the way already. At the moment, I think, earlier on, we have said the optics revenue, possibly a single percentage of overall revenue. Again, that's unchanged. Overall, bearing in mind the guidance that we set the top line growth for the year 2018, I think the four business segments that we discussed in the last 15 minutes are very much on track and to deliver that growth potential.
Okay. Thank you so much.
Your last question comes from the line of Yunxin Cai from Morgan Stanley. Please ask your question.
I think usually we don't talk about the first, second half until May. I think definitely by that time we will have much clearer light. At the moment, I think, as you have seen, various different customers projects are already happening. Not only the new acoustic platform that we talk about, but the various new projects are very much on the way. I think in a couple of months time, we will have definitely more information to share about the split.
谢谢。第二个问题，因为潘总刚刚提到说我们慢慢地未来要走出这个mobile devices。那现在有没有哪些特别的领域是我们现在已经刚开始或是已经开始在做的方向？比如说像汽车电子这方面的部分，有哪些零部件的应用或是刚开始比较快速的运用？
我觉得像现在的很多智能音响，或者当然AR、VR还没有那么明确，包括像汽车，包括汽车的无人驾驶。所以从这个来说，我觉得我们的声学，包括我们在看一些磁电技术的一个components，还有光学同步地扩展出去，尤其我们现在声学的话，超线性机构出来以后，其实给我们整合原有的传统扬声器，把它做得小型化，然后有非常大的功率和更好的performance。还有包括我们WLG在今后这种汽车或者这些方向的一个镜头方面的应用，我觉得这个是我们在现在在充分或者积极布局的。
There are many kind of interesting opportunities in the smart market, including the AR, VR, and also smart automobiles. Clearly, when we talk about the new acoustic platform, SLS, they are very much suitable and appropriate for the kind of upgrading specific acoustic design that are desirable in these smart automobiles, and the WLG sensing capabilities that these automobiles form. I think at the moment, we are keeping our hands open and looking at various design opportunities to fully reflect how these miniaturized technology platforms can blend into the design.
那最后一个，想很快地请教马达这个部分，目前看起来这一两年，Android这边大概应用，现在看起来不知道情况是怎么样？我记得上次有提到一个量的guidance，我不晓得现在看起来有变化吗？谢谢。
We have not changed our kind of target shipments for the new kind of business in that haptic segment for 2018. I think progress are, again, normal and on track. Pretty much we believe haptics again, as we said earlier or late last year, haptics in the other new market will continue to emerge.
谢谢。
Yeah. Yes, the last time we have mentioned numbers of 30 million-50 million shipments, that's remained. For clarity, I'm repeating the numbers that we mentioned last time, and thank you for your question.
Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to the host today for closing comments.
Thank you all for your time to dial in and all your questions for the management to give us the opportunity to clarify and discuss more about various interesting developments of our technology platforms. On the fact that we delivered the results for 2017, the management and the board and our management team are very committed to stay focused on what we're doing. We believe a long-term sustainable development on our capability, including some of the topics that Benjamin and myself discussed in the call today, will continue to be an important part of our management daily operations in order to deliver the results and the various projects that we discussed, and we are so excitedly making that to happen. All in all, again, we have the different growth drivers in the various different product platforms. Again, I think first quarter we are tentatively scheduled in mid-May.
We hope all of you will have time and continue to support AAC, and thank you again on behalf of Benjamin. Thank you all again, and we look forward to speaking to you again. Thank you. Have a good evening.
Thank you for your participation, and this concludes today's conference. You may go ahead and disconnect.