Good afternoon, everyone. Welcome to BizLink's second quarter 2024 earnings English conference call. This is Mike Wang, Investor Relations Manager. I am joined by Roger Liang, our Chairman, Felix Teng, our CEO, Florian Hettich, our COO, and Charles Tsai, our CFO. Our results were just released and are available on our IR website, where you can download the latest earnings release material as well as access them from MOPS. This one-hour call will start with Felix providing the corporate highlights before switching to Charles to share our latest financials, and then end with Florian giving our operational highlights. I will then open the floor for participants' Q&A before concluding today's call.
Before we continue, please kindly be reminded that today's discussions may contain qualitative forward-looking statements based on our current expectations, which are subject to significant risks and uncertainties, and may cause actual results to differ materially from those contained in these qualitative forward-looking statements. We're not obligated to update these statements, which are to be used for information purposes only. We will not provide any quantitative forward-looking comments. Please refer to the Safe Harbor Notice in our earnings deck for more details. I would like to remind everyone that today's call is being recorded. This recording and these prepared remarks will be uploaded onto our investor relations website within twenty-four hours after the conclusion of this call. We sincerely appreciate Yuanta Securities for hosting today's call. With that, I will turn the call over to our CEO, Felix.
All right, thank you, Mike. In terms of business diversification, the execution of our four-by-four strategy over the past few years have successfully led BizLink out of the post-COVID overheating and subsequent destocking situation that many companies are still tackling. Our results show that the worst is over. Our gradual recovery will persist with productivities and efficiency gains, as well as favorable product mix, boosting our growth margins. IT Datacom recorded its second straight Q-o-Q growth, rising 13% Q-o-Q in first quarter 2024, and 15% QOQ in the second quarter. As HPC continued to grow post our sales category recognition, reorganization. EV led our prior growth, which phase, and HPC will lead our next one. Growth will accelerate as new data centers are built and filled in with AI racks.
This shows our ability to adjust to market rate changes and strategic shifts by being able to identify, address, and benefit from new growth drivers. Industrial already tough and troughed, and has since been bouncing along the bottom. It is looking to grow again, initially driven by capital equipment and by tailor-made products, as factory automations and healthcare need more time to bottom. Electrical appliances grew to become bigger than auto for the first time in recent history, given divergent business conditions as EA benefited from stronger demand. Auto remains under pressure as industry downcycle persisted. There are initial hints of a potential bottoming out appearing, but we are keeping our conservative view for now. The global operating environment remains challenging, with rising geopolitical and macroeconomic risk, but our strong institution will continue to show through.
Our Q2 full sales growth, gross margin improvement, stringent operating expenditure and spending controls, debt payback, lowering of inventory and accounts receivable, and positive free cash flow are all evidence of this. Our healthy cash balance gives us more room to make high-impact strategic moves to allocate capital for various growth projects, engage in MA, and to continue to deleverage while rewarding our long-term shareholders for placing their confidence in us. We strongly view that the semi-cap industry as being one of the key enabler to fulfill tomorrow's computing needs. HPC and capital equipment sales represented roughly a quarter of our second quarter 2024 sales. We are therefore excited to announce that our board of directors have approved our latest deal to acquire ESS SRO for an enterprise value of EUR 51.5 million .
This is roughly the same size as the enterprise value of our EA business when we acquired it in twenty seventeen. We anticipate signing the definitive purchase agreement to wholly own ESS before the middle of September 2024. The SemiCap industry is gearing up for the next upcycle. We are preparing to maximize our gains here to realize above industry growth over the next three to four years. ESS has a similar business model as Speedy Industrial, which we acquired in twenty twenty and had a similar enterprise value. We have been focusing on addressing the growth, high volume, Box Build, and system integration demand from our semiconductor production equipment customers since then. This latest acquisition will add to our Capital Equipment sales exposure ahead of the upcoming multi-year upcycle, which Florian will get into later in this call.
We have issued a press release and filed an announcement on MOPS to share initial information on this deal. More details will be provided by our IR team after both parties sign a formal agreement and we close this deal. In terms of footprint diversification, the execution of our four-by-four strategy over the past few years also led to select market share gains as global supply chains decoupled and become more localized. This trend will not reverse and is, in fact, quickening as protectionist government policies emerge, which may mean high tariffs and export-import restrictions. We continue to rationalize our footprint in two major regions. We are enhancing those in North America and in Southeast Asia, both in terms of capacity and capabilities, to fulfill more of our customers' demand.
Global brand name customers are looking to their global suppliers to reduce their risk while servicing their need, and to give more and higher value wallet share over the long term. Our two new sites, one in Batam, Indonesia, and one in Tainan, Taiwan, have since finished constructions. We are in the process of moving in, moving equipment with pilot productions to begin in early 2025, once all certifications and qualifications are passed. We aim to tap into the strong local R&D talents and gain industrial sales exposure at our Tainan site, and to tap into the growing regional economies and gain IT Datacom, and industrial sales at our Batam site. We are also aiming for greater site utilization and stronger localization of production at our Penang, Malaysia, and at our Juárez, Mexico, site, to share resources and cost more evenly between more business.
This effort will take time, and we may see some initial benefits from as early as late next year. They have vital roles to play in our global footprints. This will provide our global customers with more robust production location options. It will also result in improved profitabilities at those two sites. Our latest MA target is in Eastern Europe. They will add to our regional ability to fulfill Semi-C ap demand there by adding box build and system integration solutions to our leading-edge, high-vacuum, low outgassing cable solutions. We look to assure existing and future customers of our resilience and long-term viabilities despite various challenges by innovating and remaining competitive as their preferred long-term partners. We began to disclose quarterly regional sales mix from last quarter to give everyone an idea of how our regional footprint is changing over time. Noteworthy ESG milestones.
We recently released our seventh CSR report, showing our deep multi-year commitment toward achieving greater sustainability despite our smaller market capitalization. Our GHG, greenhouse gas emission intensity, has more than halved since its twenty nineteen peak. Our energy consumption intensity has fallen more than 26% since its twenty eighteen peak. Our water consumption intensity has also more than halved since its twenty eighteen peak. Our FTSE Russell defined green revenues continue to increase, rising from 8% of total sales in twenty nineteen to 17% in 2023. This ratio will continue to grow over time as we grow ourselves. Although the absolute value of our donations dropped, our donation as a percentage of our net profit continued to rise and is slowing, inching toward 1%.
Our efforts to achieve a zero accident rate for our global staff to provide an optimal work environment began in 2019. Our incident rate since has more than halved. We have been rated by the TWSE in their annual corporate governance assessment for the past 9 years in their top 20% category or better, only missing their inaugural year back in 2014. We target to consistently rank in their top 5% category, which we have achieved three times. We aim to publicly disclose more of our key corporate, financial, and operational updates through our award-winning IR team every quarter. Finally, we recently released the second version of our code of conduct and periodically offer relevant online learning courses and in-person training sessions to promote employee integrity and talent building.
In terms of corporate cultural update, various group-wide efforts to update our brand image over the past year have resulted in the emergence of and rolling out of unified global corporate culture. We have revised our corporate slogan from Interconnect Made Easy to Where Possibilities Connect, to better reflect BizLink's updated purpose and mission. This will serve as a permanent expression of what BizLinkers aspire to be, a commitment to achieving connections, to bring our customers' visions to life. There are no material changes to our core value, integrity, customer orientations, innovation, teamwork, and sustainability, which was renamed from Environmental Protection. These four values make up our brand DNA, which we see as being customer-centric, being an impact maker, and relentlessly advancing in our efforts. We also introduce our leadership principles.
The goal is to find new talent and cultivate them into tomorrow's leader, to maximize long-term value for all our shareholders. Our customer value proposition is zero distance service in proactively enabling our customer future visions through our perpetual performance optimization. Many follow-up efforts are planned in the coming year, including revamping our corporate website. We are eagerly looking forward to progressing along this roadmap. Charles will now provide updates on our latest financial takeaways.
Okay. Thank you, Felix. Let's look at our income statement first. Our quarterly sales kept a slight Q-o-Q incline as our business continued to slowly recover as we enter further into our next growth phase. As Felix mentioned earlier, the benefit from our ongoing efficiency and productivity improvement and an increasingly favorable product mix are flowing into our P&L. Our gross margin improved from 26.34% in the first quarter of 2024, and from 21.92% in the second quarter of 2023, to 28.11% in the second quarter of 2024, showing both quarter-on-quarter and year-on-year improvement. Our persistent control in OpEx, which have averaged about 2 billion TWD since the first quarter of 2022, when we began consolidating INBG's financials, led to operating margins to rise to 11.42%.
Non-OP was marginally positive, while our tax rate fell to 32.69%. We achieved initial progress in optimizing our global tax structure. We further lowered our open foreign exchange position from last quarter. This will help us reduce the volatility in our net profit from rising geopolitical tension due to foreign exchange impacts. We saw ECB conversions into our common share toward the tail end of the second quarter of 2024, and we saw more quarter to date so far, as announced on MOPS. The second quarter 2024 EPS rose quarter on quarter and year-on-year to $6.13, and is at the highest level seen since the first quarter twenty twenty-two's $5.83.
While the first half 2024 EPS is $9.69, which is up 44% year-on-year. On product sales, looking at the second quarter 2024 first. IT Datacom sales rose by 15% quarter on quarter, or 8% year-on-year, and accounted for 23% of total sales. HPC sales rose by 15% quarter on quarter, or 32% year-on-year, and accounted for 65%-70% of segment. Our industry sales were flat quarter on quarter, and year-on-year, and accounted for 40% of total sales. Tailor-made product fell by 3% quarter on quarter, or 16% year-on-year, and accounted for 20%-25% segment, while capital equipment rose by 14% quarter on quarter, or 32% year-on-year, and accounted for 15%-20% of segment.
Auto sales fell by 19% quarter on quarter, or 34% year-on-year, and accounted for 18% of total sales. Combined EV, silicone and charging fell by 23% quarter on quarter, or 38% year-on-year, and accounted for 70% to 75% of segment. Finally, EA sales rose by 26% quarter on quarter, or 13% year-on-year, and also accounted for 18% of total sales. IT Datacom and EA both reported their second straight quarter of quarter on quarter sales increase, while industry sales were roughly stable for the fifth straight quarter. Stronger category within industrial continued to offset weaker one with the first quarter and second quarter sales actually seeing minor quarter on quarter sales increases. HPC has become our single largest category.
It will stay this way for the foreseeable future, helping to drive not just sales, but profit growth. EA grows to be larger than auto for the first time in our recent history, as auto works through an industry down cycle. By region, the key highlight remains Southeast Asia. The US and China both improved, while Europe stayed relatively weak. All four product segments are tracking below original sales expectation as a lower for longer recovery persisted. This may continue into the second half of 2024. Overall, the stocking is near an end, but restocking has been minimal and selected thus far. We remain conservative about underlying near-term global demand. Excess is being slowly worked down via end customer activity. Our pricing power remain intact as we continue to work closely with our partners to get through this challenging time together.
Most importantly, we're seeing pocket of optimism and growth. Their impact on our overall business outlook continues to gradually improve as we move deeper into the second half of 2024. Looking at the first half of 2024 last, IT Datacom sales rose by 1% year-on-year, and accounted for 22% of total sales. HPC sales rose by 15% year-on-year, and accounted for 65%-70% of segment. Industrial sales fell by 3% year-on-year, and accounted for 41% of total. Tailor-made products rose by 15% year-on-year, and accounted for 20%-25% of segment, while capital equipment rose by 14% year-on-year, and accounted for 15%-20% of segment.
Auto sales fell by 25% year-on-year, and accounted for 20% of total sales. Combined EV, silicone and charging fell by 28% year-on-year, and accounted for 75%-80% of segment. EA sales rose by 12% year-on-year, accounting for 16% of total sales. On balance sheet and cash flow, our cash balance remained elevated as we look to strategically deploy capital towards spending area with greater long-term potential. We currently plan to mainly fund our pending ESS SRO M&A without significant external funding, showing our emerging capability to internally fund smaller acquisition now. Our accounts receivable, which we are closely monitoring, and our inventory both increased quarter on quarter as business improved. Our free cash flow stayed positive for the seventh straight quarter, but was lower quarter on quarter as we increased our CapEx.
Our continued positive cash flow has allowed us to deleverage with our liability to asset ratio, dropping from a peak of 64% in the second quarter of 2022. We expect this to drop to our historical level by the end of this year. Our cash conversion cycle fell from the fourth quarter of 2022 to the first quarter of 2023, peaks of just over 130 days to more healthy levels. However, it will not fall back to prior lows, given rising local for local customer demand. On a bigger picture, we're actively enhancing our cash management to free up even more cash to allocate for future growth, which will also help to reduce our reliance on bank loans.
We seek to depend more on the cash generated from our operations, and to grow high-value and value-added areas of our business to boost profits and free cash flow. It's a virtuous cycle, and momentum is building up. Our diversification effort has been successful. We're building on top of this solid foundation. The results of this are beginning to show up in our financial results. Operational improvement along with efficiency and productivity are ongoing, which is a program we're going to next. It will take time to fully realize the expected benefits. We're intently working to improve the durability and quality of our earnings growth for all stakeholders, to return sustainable gains to them over the long term. Our results show that we are maintaining business and financial stability despite fluctuations in our operating environment, and that we're navigating through this time to become stronger.
Our IR efforts are essentially helping us to communicate with the investor and analyst community, BizLink's strategic directions, our various efforts, and the important milestones that we achieve. Our near-term outlook is optimistic about IT datacom and we expect industrial to begin growth quarter on quarter again from the second half of 2024. Weakness may persist, and we are still cautious on orders. Florian will now provide an update on our latest quarterly operational takeaways.
Thank you, Charles. So we will start our overview. Greetings, everyone. This is my second time being one of the speakers during our results call, and I will be sharing BizLink's operational updates from now on. It has been an honor to become BizLink's first Chief Operating Officer, and this results call marks my one-year anniversary in this position. I want to share some progress with our ongoing efficiency and productivity efforts so far, before going into four product segments and select categories. Recall that we mentioned the kicking off of excellence initiatives across sales, operations, and finance over a year ago, and that we said we anticipated seeing impacts from this year onwards. We have worked on various cost of goods sold, down-focused efforts with our two business groups heads and their respective business unit leaders to execute at select production sites.
We have generally followed a two-fold approach. First, striving for operations excellence and cost management. And second, preparing for and capturing new growth opportunities. The result is that we are helping to shore up lower gross margin areas and raising the sales exposure to higher gross margin areas. We are not done yet, and more benefits are incoming over the next few quarters as we progress along such efforts. So let's have a view on the AI IT Datacom product segment. Our HPC sales are increasingly driving this segment, and while peripherals was behind our pre-AI era growth phase, it has become a more minor business. We are showing our ability to successfully reinvent ourselves and repurpose resources to realize new multi-year opportunities. This transition is in full execution, and we are looking to considerably gain from the coming wave of AI-driven CapEx spending from major HPC companies.
We are the most excited about our growing HPC business, as we expect it to be one of our two major sales and profit drivers for the next three to four years. Our first half 2024 HPC sales increased 15% year-over-year. Our HPC sales mix has risen from 4.7% of total sales in the first quarter 2019 to now 15.5% in the second quarter 2024, rising 7.5 times during this period, and we expect this ratio to continue to increase. Current third-party CapEx of the four U.S. CSPs is forecasted to grow up to 55%-60% year-over-year in 2024, and then by another 10%-15% year-over-year in 2025, which should have upside potential from our view.
Year-over-year growth in CSP CapEx is accelerating due to investments in next generation AI data center infrastructure and AI servers. Only these CSPs have that kind of capital, and the government support and access to technically strong talent means that they will only get further ahead. This is where we are focused on. We anticipate seeing much greater content exposure to GPU-based AI compute, which is expected to be visibly start to boost our HPC sales from 2025. This growth will likely persist for the next few years, as most machine learning code needs to run with CUDA optimizations that only one company can support right now. BizLink is one of the very few qualified and recommended interconnect suppliers to design, manufacture, and supply customized high-speed data and high power solution to this new platform.
We will also see continued growth from ASIC-based AI compute, especially from second half 2024, which is currently still driving our HPC business. Our multi-year track record with major US CSP customers, who have since rebranded themselves as AI service providers, global production footprint, R&D and automation know-how, and full data and power solutions portfolios, are our key competitive advantages. Active electrical cables will likely become the de facto high-speed data solution for large Ethernet-based HPC clusters. Rising power needs for advanced computing platforms means more opportunities for BizLink to supply our high power cable and connector solutions. We see additional long-term growth opportunities for our production in Southeast Asia, with growing population and rising purchasing power there. These population will eventually graduate from needing basic cloud services to more advanced computing workloads.
Many companies recently announced multi-billion-dollar, multi-year data center spending plans there, with some already having initiated their plans. There are also plans for hundred-billion-dollar data centers. Data sovereignty regulations also means that major European nations should see more similar announcements in the quarters to come. We are also looking at our addressable areas beyond AI servers and racks into edge AI, where our decades-long peripherals expertise can play an important role in offering standalone devices that do not need to constantly rely on cloud infrastructure. Finally, we aim to add more Tier One U.S. and Tier Two regional CSPs, as well as known OEMs and system integrators as HPC customers from next year onwards.
Now, coming to the industrial product segment, sales stayed stable quarter on quarter for the fifth quarter straight, as categories that are growing, accounting for 45%-50% of the segment, are offset by those that remained weak, accounting for 50%-55% of total. Industrial sales may begin to grow quarter, quarter again from second half of 2024, but clearer signs of recovery may not occur until 2025, given especially the continued weakness in Europe. This recovery will be driven by growth in our higher margin areas, which will help us to realize more cash from our operations here. We are expanding our market, product, and regional exposure across this segment, leading to stable business for nearly a year and a half now.
We first noted in our second quarter 2023 results, that capital equipment sales would slowly rise in the second half of 2023, before stabilizing first half in 2024, and then pick up again in the second half of 2024. We have kept this same outlook since then. Sales are up plus 4%, H over H, in second half 2023, and up 9% HOH in the first half 2024, which was stronger than expected. Demand is noticeably beginning to rise as our semiconductor production equipment customers ship more tools to their foundry logic and eventually their memory customers, who, for the moment, are mainly just upgrading existing equipment as per their service agreement with their semiconductor production equipment suppliers.
Three quarters, third quarter 2023 sales rose 11% quarter over quarter, stabilized from fourth quarter 2023 to first quarter 2024, and then rose 14% quarter over quarter in the second quarter of 2024, as our sales growth kept up to our key customers' sales growth. There is a good chance that our sales growth will catch up with our key customer sales growth over the next year, meaning an acceleration of second half 2024, as expected. Demand for traditional wire harness and cable assemblies are up, and high value box build and system integration demand is even stronger.
The SemiCap industry has exited its down cycle and is entering in the initial stages of its next upcycle, which may last for the next three to four years, benefiting our segment mix in a similar way that our HPC business is doing for IT Datacom. Current third-party wave of fab equipment spending is forecasted to be flat year-over-year in 2024, at $100 billion, grow to $110 billion-$120 billion in 2025, grow again to $120 billion-$140 billion in 2026, before we will then see a slowdown to $120 billion-$130 billion in 2027.
The next upcycle will be started by HBC, before being further boosted by consumer electronics, including PCs and smartphones, and then later by industrial, and finally by automotive. Many of the end applications for these industry do not need the latest EUV machines, meaning that existing manufacturing steps will still be used, and that the same manufacturing equipment surrounding the lithography machines will still be needed, with many of them coming from our key customers. They are gaining market share in their respective target process markets, and we are starting to see pockets of order backlog forming. The trend for customers' demand at the high end of the spectrum for cleaner cable and system solution is ongoing in SemiCap, for which sales is up by 35% year-over-year in the first half of 2024.
This area has only seen customer and order activity pick up, and we anticipate this to last for the next few years, regardless of the geographical location. Now, let's have a look at the electrical appliances product segment. This segment became larger than our automotive segment for the first time in recent history. Last quarter, we mentioned we were in the process of adding new functionalities for appliances into their power supply interface. This is a multi-year, complex technological system product model that our teams designed from the ground up, that is much smaller than the comparative design from our competitor, who is an expert in this field. We had no previous project experience to reference from, but we overcame all electrical and mechanical obstacles to become the major supplier for this product with a large customer.
Our EA teams are very proud of this milestone, and it's just the beginning in their journey into becoming an innovation-led business. This is just one success story. First half 2024 sales are up by low 10% year-over-year, driven mainly from the mass production and initial shipments of our new value-added systems level projects. We will be ramping up these projects throughout the second half of 2024. Now, having a look at the automotive product segment. We began offering directional qualitative indicators of how we see our four segments perform in the upcoming quarter from the middle of last year. We initiated our automotive outlook as conservative and have stayed at conservative since then, making second quarter 2024, the fourth straight quarter of quarter-on-quarter sales declines.
Excessively high consumer price inflation and high interest rates have hurt both EV and non-EV business in the automotive industry. This is leading to overall higher channel inventory and subsequent price cuts to stimulate demand. EV business are also being hurt by the recent stopping of EV subsidies in major European markets, and similar moves are due to be taken next year in U.S. Our automotive business has been a casualty of these and industry dynamics. While we see further weakness ahead, sales declines going forward may begin to become slightly more manageable from as early as second half of 2024. Automotive become our smallest business this quarter, and its impact is smaller than it used to be.
Automotive may start to look for a bottom, and while we currently do not see major downside left, it may bounce along this bottom for some time after probing, forming an L-shaped trend similar to what our industrial business just went through. Our major EV customer may benefit from the removal of EV subsidies. It is also encouraging to see that EV expansion plans from various automakers and their suppliers are being put on hold to allow time for supply demand to get back into balance. Product and market development have thus far led to early gains with EV startups. We are also seeing progress in transportation and energy distribution for our silicone business. There is low visibility heading into 2025, and customers are toning down their near-term expectations and delaying project timelines. But we still see long-term growth potential here.
Automotive customers within the silicon business are looking for industry conditions to improve next year, but there are no signs that point to this yet. We are working on our transformation efforts in automotive, and we anticipate this may take two years or more, starting from early this year. The segment is looking to undergo a similar process as our electrical appliances and our industrial businesses by raising module and box build project exposure with some early success seen so far already. Automotive is still one of our key segments, and while it is behind our last growth phase, this position will be taken over by IT Datacom in the next one. Now, let me turn the call over to Mike.
Thank you, Felix, Charles, and Florian. This concludes our prepared statement section. Now let us begin the Q&A section. Please type in your questions, and then we will answer as many of them as possible in the time remaining. Let me see. Looking at some of the questions that we see so far, there's quite a few about our HPC and the sort of the AI part of the IT Datacom business for BizLink. This question, I won't read through everything, but talks about what our competitive advantages are, what our business development efforts are. And so for this one, I would like to hand it over to Florian.
Yes, thanks, so HPC servers are getting thinner with more power consumption and higher data rates, and more components are required to do more in that space to fit more of them into a single rack, such as the NVL72. This kind of rack density and compute performance is no simple technical feature and is resource-intensive to achieve bleeding-edge technological progress. This means familiarity with the technology, the design, the supply chain landscape, and the potential future trends to offer customers data and power solution customization options. The function is more of the focus, and the technology requires engineered solutions which are not easy to make and are high-end cable systems. Customers value our expertise and our service in those fields of high spec requirements.
This includes flat-to-round-to-flat data cables, high amperage power whips, 800 gigs per second active electrical data cables, various 48-volt busbar power connectors, 1.6 T direct attach OSFP data cables, and many more. Being able to produce such advanced products across more regions is a must-have, given geopolitical concerns, supply chains interruptions, and end consumer requirements. Being able to follow our customers and suppliers' technology cadence is also very important. Customer service is often overlooked and not considered as a competitive advantage, as it is seen as a basic table stakes requirement. However, as a relatively smaller global supplier compared to the tier ones, we are much more flexible and can put forward more resources sooner to build long-term business with our customers, becoming their desired partner.
Our sales and field application engineer staff can go to the customer offices daily to support them, given our U.S. headquarters, servicing them in multiple states, including California, Washington, and Texas, where we have full coverage. This leads to very short lead times, and our decades-long cable know-how leads to better solutions. We have created quick response teams to dedicate them to certain short or long-term projects as they arise and require this kind of VIP customer service. The race for U.S. CSPs to become the first to become the largest is on, and we can help to enable this. If you do not get in line to get your place, then others will do.
Our solid track record and close relationship with our two U.S. CSP customers from even before this AI era means BizLink is often one of the first to be considered for select project needs, which can be anywhere from very low volume to very high mix, as CSPs have their own preference based on their infrastructure. We innovate with them to see what works best and establish ourselves as their trusted partners. There are high power and high-speed data solution development projects ongoing that may make it into the market later next year or the year after. We are also in customer acquisition mode, as we mentioned earlier. Last but not least, we now see the results of integration of HPC business of INBG and CTBG. The combined resources and know-how give us more opportunity to fulfill high-tech customer requirements.
Thank you, Florian, for providing the color on those questions. Looking at the next set of questions, given that SemiCap is a big area for us going forward. We see it talks about our entry barriers, technology, and also business development for our SemiCap. Again, that's within the capital pieces within our industrial segment. I'd like to hand this over, much appreciate again, Florian.
Yes, thanks, Mike. So we talked quite a bit about the HPC business in the prior question, so let's focus on the SemiCap portion now. So BizLink is more financially sound and has diversified businesses if compared to many of our competitors, and it takes many years to build this. This allows us to fully support our U.S. SPE customers longer. Smaller suppliers are often too risky to support their future growth aspirations, and our focus on corporate sustainability is important to many of our customers, which is increasingly see strong ESG performance as a must-have. The continued execution of our corporate strategy has led market share gains over the past few years, given rising local for local demand requests from our U.S. SPE customers.
Our strong presence in Asia and our deep domain and landscape knowledge allows us to become their consultant in their effort to build an Asia-based footprint. This means helping them to rationalize their supply chains, some of whom have production sites in Southeast Asia, allowing them to cut shipment costs and lead times, as well as to reduce supply chain risk as global supply chains continue to decouple and suffer from unexpected interruptions. We look to follow a similar strategy in our growing footprint in Europe over the next few years. Convincing our SPE customers to just come to us to fulfill more and more of their highly customized, very short project lead times for general cables, for their wafer service, conditioning or cleaning processes tools, or high technical barriers for specialized cables, for their lithography tools, box build and system integration.
Low volume demand means sustained wallet share sales and margin growth. Added scale also means procurement cost advantages and room for efficiency and productivity improvements. Out of the global top 10 SPE companies, more than half of them are already our customers, and many of them have been customers for many years. We are known as a key supplier with strong track record. We have a few new potential customers that are in various business development stage, from scheduling to come to select production sites, to perform audits, to quoting prices for various projects. There may be some good news to share in the coming month, and we may see initial sales contributions from next year onwards. Now back to you, Mike.
Thank you, Florian. For the next question, we read this upside or downside potential for the revenue growth margin expansion of each segment. I'd like to, let me see. Charles, you can provide a bit of feedback on this one?
Oh, yeah. Thank you, Mike. Okay, let's focus on our ID data comm and industrial segment for this question. As our sales exposure to HPC and to capital equipment increases, it is possible to see our growth margin further improve, assuming all else is equal. We talk about raising our sales exposure to projects, higher ASPs and content, and/or higher growth margin during our prepared remarks. These two categories match this criteria. We have others, but these are the ones that we have chosen to share with everyone today, especially given their foreseeable high impact potential on our growth. We're also continuing with our various efficiency and productivity improvement efforts, which many of you will notice help to improve our profitability this quarter, despite USD sales being lower year-on-year, year-to-date.
The key drag in these two segments are FA and peripherals, given their continued demand weakness and their below corporate average growth margin. However, we're intently working on improving the profitability of both categories, and this involve a bit of business transformation, including repositioning them to align with more favorable market and/or product development to better future-proof their growth and their roles in BizLink. We will share more about our effort in the coming quarter. Now back to you, Mike.
Thank you, Charles, for that feedback and to the audience for that question. And we have about six minutes left for this call. So for the last question, there's a question about our M&A. What would we want to achieve in the next three years? Balance among our financials, what kind of business growth we're looking for. So for the last one, I'd like to hand it over to our Chairman, Roger.
Sure. We seem to get this question every quarter, but I'm glad that there's continued interest in this aspect of our corporate strategy, especially given our potential in the acquisition. Last quarter, we introduced the concept of looking for the three Cs related to where we are in our corporate strategy when evaluating the potential M&A target. These three Cs are customer, capability, and capacity. Essentially, we try to answer this question: What this target can do for what set of customers and the way? We are mainly interested in targets within industrial, also with footprint in North America, and all those that have connection capabilities. We look to not just to scale, but also to improve profit and cash generation. Our last two M&As, Speedy and INBG, and the potential Easys acquisition all fit this profile.
Our EAB also does, and it is a very tidy one, and a profitable operation with more upside potential. We have just seen our finest quarter of positive free cash flow, and we look to continue this track record. Generally speaking, we look to be able to increase the M&A deals with minimal to no external funding for smaller deals, while still have ample buffer for working capital needs. But there is always the possibility that we see larger targets that need extra external funding. Our continued strong cash generation will slowly be allocated across fewer spending areas as we deleverage to more comfortable levels, and our CapEx picks up in the coming year or two, giving us the ability to look at larger targets and to potentially receive a higher dividend payout. We currently do not see such a target. Thanks, Brian.
Thank you, Roger, Felix, Florian, and Charles. This concludes our Q&A section. A replay of the conference call today will be available on our IR website within 24 hours from now. If you have any further questions, please feel free to reach out to the BizLink Investor Relations team. We thank you very much for joining today's call. You may now disconnect.