I am Ken Chung, the Head of Investor Relations for ASE Technology Holding. Welcome to our fourth quarter and full year 2021 earnings release. Thank you for attending our conference call today. Please refer to our safe harbor notice on page two. All participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please disconnect at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially.
For the purposes of this presentation, our dollar figures are generally stated in New Taiwan dollars, unless otherwise indicated. As a Taiwan-based company, our financials are presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those represented by our subsidiary using Chinese GAAP. I am joined today by Dr. Tien Wu, our COO, and Joseph Tung, our CFO. For today's call, I will be going over our financial results. Tien will be providing our annual business recap and outlook, and Joseph will then provide an update on our China site dispositions and our quarterly guidance. We'll have a Q&A session following the prepared remarks. Please turn to page three, where you will find our fourth quarter consolidated results. Intercompany transactions between our ATM and EMS businesses have been eliminated during consolidation.
During the quarter, we announced and completed the disposition of our subsidiary, ASE Inc.'s major China sites. From a financial perspective, the sites were valued at an enterprise value of $1.46 billion, and the final consideration was $1.33 billion after adding cash balances and deducting the existing debt. We recorded in the fourth quarter a gain of $551 million net of related expenses and taxes. Joseph will give more details regarding this transaction towards the end of our prepared remarks. For the fourth quarter, we recorded fully diluted EPS of $6.99 and basic EPS of $7.20. Without the inclusion of our China site disposition gain, fully diluted and basic EPS would be $3.45 and $3.66, respectively.
Consolidated net revenue increased 15% sequentially and 16% year-over-year. We had a gross profit of TWD 32.9 billion with a gross margin of 19%. Our gross margin declined by 1.4 percentage points sequentially and increased by 3.3 percentage points year-over-year. The sequential margin decline is principally the result of higher EMS business mix. The annual increase is primarily the result of higher profitability of our ATM business. Our operating expenses increased by TWD 0.9 billion during the fourth quarter to TWD 13.3 billion as a result of higher profit-sharing expenses issued during the quarter. Despite the absolute dollar increase, our operating expense percentage declined 0.5 percentage points sequentially and 0.4 percentage points year-over-year to 7.7%.
Operating profit was TWD 19.6 billion, up TWD 1.2 billion sequentially and TWD 8.4 billion year-over-year. Operating margin was 11.3%, declining 0.9 percentage points sequentially as a result of higher EMS product mix, while operating margin increased 3.7 percentage points year-over-year as a result of higher profitability from our ATM business. During the quarter, we had a net non-operating gain of TWD 17.7 billion. The gain from the China site dispositions accounted for TWD 17.3 billion of this net non-operating gain. The remaining non-operating gain was from our foreign exchange activities, government grants, and other non-operating gains. This amount was offset in part by net interest expense of TWD 0.6 billion. Tax expense for the quarter was TWD 5.6 billion.
The effective tax rate for the fourth quarter was 15%. The lower effective tax rate during the quarter was principally the result of differing taxation methodology related to our China site disposal. Net income for the quarter was TWD 30.9 billion, representing an improvement of TWD 16.7 billion sequentially and an improvement of TWD 20.9 billion year-over-year. Excluding the gain, net of taxes and related expenses from the sale of our China sites, our net income would be TWD 15.6 billion, which would still represent substantial earnings growth of TWD 1 billion sequentially and TWD 5.6 billion year-over-year. The NT dollar-US dollar exchange rate was fairly stable from the third to fourth quarter, and as a result, did not impact holding company level margins meaningfully.
However, from a year-over-year perspective, we estimate that the strengthening NT dollar had a 1 percentage point negative impact to gross margin. As a rule of thumb, for every percent the NT dollar appreciates, we see a corresponding 0.3 percentage point impact to our holding company gross margin. On the bottom of the page, we provide key P&L line items without the inclusion of PPA-related expenses. Consolidated gross profit, excluding PPA expenses, would be TWD 33.8 billion with a 19.6% gross margin. Operating profit would be TWD 20 billion with an operating margin of 12%. Net profit would be TWD 32.1 billion with a net margin of 18.6%. Basic EPS excluding PPA expenses would be TWD 7.48. Please refer to page four. Here, you will find the 2021 consolidated full year results.
Fully diluted EPS for the year was TWD 14.40, while basic EPS was TWD 14.84. Fully diluted EPS for the year without inclusion of our China site dispositions would be TWD 10.86, and basic EPS would be TWD 11.30. For 2021, consolidated net revenues grew 20% as compared with 2020. ATM revenues grew 21%, while EMS revenues grew 17% annually. Gross profit for the year was TWD 110.4 billion, increasing TWD 32.4 billion year-over-year or 42%. In 2021, our gross margin improved 3.1 percentage points to 19.4%, principally as a result of higher profitability in our ATM business and slight improvement in EMS. Operating expenses increased TWD 5.1 billion for the year and came in at TWD 48.2 billion.
We were able to lower our operating expense percentage by 0.5 percentage points to 8.5% for the year. Operating profit for the year was TWD 62.1 billion, improving 78% or TWD 27.2 billion. Operating margin for the year was 10.9%, an improvement of 3.6 percentage points. We recorded a net non-operating gain of TWD 18.2 billion for the year. As mentioned earlier, TWD 17.3 billion of this was attributable to the disposition of our China sites. The remainder was primarily attributable to investment income, government grants, and other non-operating income, offset by net interest expense of TWD 2.3 billion. Total tax expense was TWD 14.3 billion. The effective tax rate for the year was 17.8%.
Our full year effective tax rate was primarily lower as the result of differing taxation methodology related to our China site disposals. For ongoing purposes, we believe our effective tax rate to be about 20.5%. Net income increased by 132% to TWD 63.9 billion. On a full year basis, we estimate that the strengthening NT dollar had a negative 1.6 percentage point impact to growth and operating margins. Removing the effect of PPA depreciation, our gross margin would be 20%. Our operating margin would be 11.8%. Our basic EPS would be TWD 15.96. On page five is our ATM P&L. It is worth noting here that the ATM revenue reported here contains revenue eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses.
During the fourth quarter, our ATM business continued to run at a fully loaded rate. Operationally, it was almost a continuation of the third quarter with slightly more business. We had a reclassification of bonus expense from cost of goods sold to operating expense during the quarter. We will explain sequential fluctuations that are impacted by this after the reported numbers are presented here. For the fourth quarter, 2021, revenues for our ATM business were TWD 92.0 billion, up TWD 1.9 billion from the previous quarter, and up TWD 19.2 billion from the same period last year. This represents a 2% increase sequentially and a 26% increase year-over-year.
Our ATM revenues came in slightly ahead of our expectations due to higher than expected customer loading. Gross profit for our ATM business was TWD 25.7 billion, up TWD 1 billion sequentially, and TWD 9.3 billion year-over-year. Gross profit margin for our ATM business was 28%, up 0.6 percentage points sequentially and up 5.4 percentage points year-over-year. The year-over-year gross profit margin improvement was primarily attributable to higher loading, improved efficiency, and a friendlier ASP environment, offset in part by stronger NT dollar appreciation. During the fourth quarter, operating expenses were TWD 9.7 billion, up TWD 0.6 billion sequentially, and TWD 1.2 billion year-over-year. The year-over-year increase was primarily driven by higher employee headcount and incremental bonuses tied to corporate performance.
Our operating expense percentage was 10.5%, up 0.4 percentage points sequentially, and down 1.1 percentage points year-over-year. During the fourth quarter, operating profit was TWD 16.1 billion, representing an improvement of TWD 0.5 billion quarter-over-quarter, and an improvement of TWD 8.1 billion year-over-year. The year-over-year mark represents a 101% increase from last year. Operating margin was 17.5%, improving 0.2 percentage points sequentially, and 6.5 percentage points year-over-year. The NT dollar exchange rate did not have a significant impact on our ATM sequential margins. However, on a year-over-year basis, we estimate that the strengthening NT dollar had a 1.5 percentage point negative impact.
During the quarter, we made a one-time reclassification of $0.4 billion relating to how bonuses were classified between cost of goods sold and operating expenses during the first three quarters of the year. In the fourth quarter, this reclassification lowers cost of goods sold compensation expenses while increasing OpEx level compensation expenses. Adjusting for bonus reclassification, our gross profit margin would be 27.6% or flat sequentially. Our sequential operating expenses would be flattish, up $0.1 billion, and our operating expense percentage would be 10.1%, down 0.2 percentage points sequentially. This reclassification has no impact to ATM operating margins. It also has no impact at a full year level. Without the impact of PPA related depreciation and amortization, ATM gross profit margin would be 28.9%, and operating profit margin would be 18.7%.
On page six, we have our ATM full year P&L. On this page, you can see how we saw significant improvement in all aspects of our business during the year. 2021 revenues for our ATM business increased by 19%, with our packaging business and test business up 22% and 6%, respectively. Gross profit for the year improved 49% to TWD 88.7 billion. Gross margin was up 5.3 percentage points, primarily as a result of higher loading and efficiency, a friendly ASP environment, and offset in part by NT dollar appreciation. Our operating expense percentage declined by 0.9 percentage points from 11.4% to 10.5%. Operating profit improved 94% to TWD 53.4 billion, with operating margin improving 6.2 percentage points to 16%.
On a full year basis, we estimate that the strengthening NT dollar had a 2.3 percentage point impact to gross margins. Without the impact of PPA expenses, gross profit margin would be 27.5%, and operating margin would be 17.3%. On page seven, you'll find a graphical representation of our ATM P&L. The commentary we would like to reinforce here is that we believe the improvements in our business are not only related to a prolonged semiconductor cyclical uptick. We strongly believe that we have substantial systemic improvements from our combination with SPIL. While cyclicality in the industry is a given, from a longer-term perspective, we believe that our margins still have further room to rise given our strengthened market position after the combination with SPIL. On page eight is our ATM revenue by market segment.
There is not a significant change here. However, it is worth noting that our computing segment appears to be outperforming our communication segment. This appears to be driven by strong demand from high-performance computing products. On page nine, you will find our ATM revenue by service type. As we have mentioned, we expected a significant uptick in our advanced packaging services during the quarter. We expect continued strength within advanced packaging to persist through 2022. We also expect our testing revenues to outperform during 2022 after a muted 2021, which was impacted by EAR-related business adjustments. As a percentage of revenue, our wire bond revenues have declined, but we're flattish on an absolute dollar basis. On page 10, you can see the fourth quarter and full year results of our EMS business.
The information we provide in regards to USI may differ materially from the information directly provided by our A-share listed subsidiary as they report independently using Chinese GAAP. During the quarter, demand was stronger than anticipated, driven by stronger than expected demand for our SiP services. As production was slowed by component and chip shortages in its third quarter, such operating conditions continued to persist throughout the fourth quarter. Further, in 2020, our consumer SiP business had a significantly later start as compared to the current year, 2021. We believe the combination of these two factors distorts fourth quarter year-over-year comparisons. As such, we believe that comparing back half numbers may be more telling of our EMS business' performance in such situations. For our EMS business, during the fourth quarter, EMS revenues increased 33% sequentially and 3% year-over-year.
As a result of component and chip shortages, this year's production cycle of certain SiP products was more evenly spread out across our third and fourth quarters. Some production will push into the first quarter of 2022. In 2020, the production cycle for some of our consumer SiP products launched later than 2021. As such, the year-over-year percentage increase was a bit muted. If we compare second half numbers between 2020 and 2021, we saw a 13% improvement in revenues. Our EMS gross profit was $7.1 billion, improving $1.2 billion sequentially and $0.1 billion year-over-year. The sequential gross profit improvement is the result of the seasonal ramp of our SiP related products. The year-over-year improvement is again the reflection of comparing two manufacturing cycles at different times.
Comparing second half gross profits, we saw a 7% improvement from 2020- 2021. Gross profit margin for the EMS business unit came in at 8.7%, which is a decline of 0.9 percentage points sequentially and 0.1 percentage points year-over-year. The margin declines are primarily the result of product mix shifting to higher material pass through products. Our EMS business unit's fourth quarter operating expenses were $3.5 billion, increasing $0.3 billion sequentially and flat year-over-year. Operating expenses increased primarily as a result of increased employee profit sharing recorded during the year-end. Our EMS unit's operating expense percentage was 4.3%, down 1 percentage point sequentially and 0.2 percentage points year-over-year. The sequential decline in operating expense percentage is primarily attributable to higher revenues while containing operating expenses.
Our EMS operating profit improved $0.9 billion sequentially and $0.1 billion year-over-year. The sequential improvement was primarily due to increased seasonal demand for SIP products. Our EMS operating margin was 4.4%, which is up 0.1 percentage points sequentially and is flat year-over-year. On a full-year perspective, our EMS business in challenging conditions delivered another strong year. On a full-year perspective, our EMS business revenues increased 17%. Gross profit increased 14%. In these challenging operating conditions characterized by wafer and component shortages, our full-year gross and operating profit margins each declined by 0.2 percentage points. On page 11, you will find a graphical representation of our EMS revenue by application. With sales increasing 33% sequentially, interpreting this chart gets a bit tricky.
What is fairly straightforward to see is that our consumer segment increased by 5 percentage points as a result of product seasonality. Other categories generally grew in absolute dollars, however, their growths were not as pronounced as that of the consumer segment. On page 12, you will find key line items from our balance sheet. At the end of the quarter, we had cash equivalents, and current financial assets of TWD 79.1 billion. Our total interest-bearing debt was TWD 227.2 billion. Total unused credit lines amounted to TWD 278.8 billion. Our EBITDA for the quarter was TWD 51.9 billion. EBITDA for the year was TWD 136.8 billion.
Our net debt to equity was 54% at the end of the year. On page 13, you will find our equipment capital expenditures. Machinery and equipment capital expenditures for the fourth quarter in US dollars totaled $472 million, of which $231 million were used in packaging operations, $160 million in test operations, $68 million in EMS operations, and $13 million in interconnect material operations and others. For the full year, machinery and equipment capital expenditures were $2 billion. $1.3 billion was spent on packaging, $0.5 billion on tests, and $0.2 billion on EMS. Our ATM business continues to be constrained by substrate and wafer availability in addition to a lack of our own manufacturing capacity.
Given that we can generally put in capacity faster than our upstream foundry partners and our substrate suppliers, we can be a lot more nimble in our approach to our business. Although our smart factories do take somewhat more investment and time to build, we still believe that many of our investments are granular, which allows us to adapt quickly to market conditions. We continue to provide our EBITDA in US dollars here as a reference. The earnings related to the China site disposition are separated for better comparability. We believe that the company's EBITDA relative to our equipment CapEx serves as a key financial performance metric for the company. Before we move on to Dr. Tien Wu's and Joseph Tung's sections, I would like to inform everyone that they will make forward-looking references on a pro forma basis, removing the results of the China factory sold.
As a reference, we have included an appendix to the slide deck that has a set of quarterly pro forma financial statements for the consolidated holding company, and one for our ATM business unit. With that said, I pass the presentation over to Dr. Tien Wu. Dr. Wu.
Hi, everyone. I would like to give you the 2021 recap as well as the outlook for 2022. I will also touch base on the industry perspective from what we can see. First of all, 2021 was a good year. We have seen a revenue and margin improvement better than target. For example, in 2021, the ATM revenue grew 26% year-over-year, or 45% year-over-year if we exclude the EAR-affected business. The ATM margin, gross margin was 26.5%, approaching historical peak level of 27%. ASE consolidated revenue grew 26% year-over-year. ASE consolidated operating margin improved 3.6 percentage points versus the target that we set at the beginning of the year of 2.5%-3%. Overall, 2021 was a good year.
We have seen broad-based growth in all sectors with momentum that carry over to at least 2022. For example, the 2021 wire bond revenue grew 36%. We continue to see the wire bond to be fully loaded, and we do expect wire bond revenue in 2022 will achieve double-digit growth. Even with the EAR impact, which was very significant in test business, the 2021 test revenue grew 12% year-over-year. We do expect the test business in 2022, without the EAR impact, the growth rate will double from the 2021 level. We do expect the testing business to play more of an important role for our business in 2022 and beyond. At advanced packaging, based on the customer's requirement, we're seeing more complexity and more demand.
In 2021, we have seen the advanced packaging revenue grew 23% year-over-year. We do expect the growth rate in 2022 to be better than that number, which is another important sign that we're migrating more mix to the testing business as well as advanced packaging business while we're maintaining the established base in wire bond and everything else. ATM automotive revenue grew over 60% year-over-year. The momentum will continue in 2022 and beyond. The good news is we do expect to achieve $1 billion automotive revenue in 2022, which will be a significant milestone for our ATM business. Let me talk about the 2022 outlook. We do expect the revenue and margin to continue to see improvement in 2022.
Our demand and forecast indicating a very strong 2022, and Joseph will talk about the specific guidance for Q1. We're seeing a better than seasonal Q1, followed by our traditional pattern of quarter-to-quarter growth for the remainder of the year. The larger semiconductor industry, without a better number, we believe will be in the 5%-10% range for reference. Our ATM revenue year-over-year growth should be 2x of that. We have been following this traditional pattern for at least the last 15 years. 2022 will be of no exception. The reason being, market demand is very strong, and we are seeing signs of IDM outsourcing accelerating. The pricing environment is friendly and stable, with a higher mix of testing and the packaging s-business, and our margin, also our position, will continue to be improved.
We are expanding the SiP customer portfolio, and we're happy to report that in 2022, our new SiP customers, with a diversified background from all sectors, for the first time, our new SiP customers' revenue will break the half a billion mark in 2022. It's another good news. The 2022 ATM growth and operating margin should surpass historical peak levels set in 2014. Consolidated operating margin should see further improvement versus 2021. Next page, let me comment a little bit on the industry. We do see a solid outlook for year 2022. Capacity and supply constraint. Last year, I commented in Q1 time frame that sometime in 2023, we will see a holistic balance of the supply versus demand. Right now, we believe the capacity and supply constraint will last maybe beyond 2023.
Scale, technology leadership, flexibility, and proven record for the past two years is making ASE an indispensable manufacturing partner. We're gaining trust, support from customers, and which is signified by the long-term service agreement, as well as the design in and socket that we have been receiving, for the last, two years, particularly. Customer long-term service agreement are in place through 2023. We will continue to discuss, collaborate with our customer and see how do we extend this beyond, as we're building additional capacity for our, loyal customers. IDM outsourcing ratio accelerating. We do see healthy growth of HPC, automotive, 5G migration, IoT, and also the expanding silicon content, leading to a quite robust end market environment. We are optimistic about the long-term prospects.
I would like to comment a little bit on what ASE is doing to prepare for years beyond 2022. We have started a new round of smart factory building and infrastructure investment. As you know, building takes the longest time, and the smart manufacturing environment infrastructure does take a long time to develop. In 2021, 2022, as well as in years beyond, we have launched a new wave of smart manufacturing building. The purpose of that is working with our customer. We do believe that in 2023 and beyond, there will be impending wave of wafer supply coming. In case the market demands a much higher volume of wafer and silicon devices supply, ASE should be ready for that. With that, I would like to pass the to Joseph. Joseph.
Thank you, Tien. Let me start with a bit of a recap of what we did on our China sites. In fact, we actually sold ASE's major manufacturing sites in China, and the deal was closed in December, on December 16, 2021. The total value of these sites that we sold are the combined enterprise value was $1.46 billion. As Ken mentioned earlier on, after adding the cash balance and deducting the existing liabilities or debts that we have, the total consideration was $1.33 billion. Now, the disposed sites accounted for about 7.6% of our overall ATM revenues in 2021, and about 4.5% of our consolidated revenues in 2021 as well.
EPS-wise, it generated about a little below TWD 0.80 in 2021. The purpose of doing this transaction is really to better realign our resources and to focus on the investments in our mega sites, which is namely SPIL Suzhou to continue to address the China opportunity. In fact, in this year, we're expecting very high growth in our Su-
The recording has stopped. This meeting is being recorded.
customer base, mostly of Chinese customers, in the region. This transaction does provide us with more cash resource for our continuing, organic expansion, as well as we seize the opportunities we'll make further strategic investments to enhance our overall, market position. Now, with that, let me give you a bit of a, first quarter outlook. Based on the current business outlook and exchange rate assumptions, management projects overall performance for the first quarter of 2022 to be a very strong quarter to start with the details as follows. Now on a pro forma basis, in US dollar terms, our ATM first quarter of 2022 business will slightly be impacted, around 4%, because of the, lower working days in the quarter and also the SiP seasonality.
That really implies that the, aside from the, SiP business, our overall ATM business continued to be running at full loading, and the momentum is continuing throughout the year. On a pro forma basis, our ATM first quarter 2022 gross margin should be slightly higher than our second quarter 2021 gross margin. The margin will be a bit lower than our first quarter, largely because of the, first of all, of course, the lower revenue, but more so on the increase of labor costs and also depreciation, as we continue to plan for the support our overall business going forward.
In terms of EMS, our first quarter business level should be similar to the quarterly average of a full year 2021, which follows a normal seasonality pattern. In terms of operating margin, it should be close to the average of second and third quarter 2021 operating margin as we continue to run our EMS business, following the seasonality pattern. This is the guidance on the first quarter, and we will now open the floor for questions. Thank you.
If you have any question, please raise your hand. We have a question from Randy Abrams of Credit Suisse. Randy?
I wanted to ask the first question on the new view that you have further out, so extending the period of tightness in the industry beyond 2023. We have seen more CapEx announcements from the supply side. I'm curious about your commentary which drove the change, and then how much it's a reflection of what you're seeing on supply, if that's a commentary on the front end, the foundry, the back end or substrate, or if it's a commentary on demand side, a different confidence on the demand driver.
The comment that I made was referring to a holistic supply chain line balance. What we're seeing today is the foundries are making major investment. The IDMs are making the front-end investment. The OSAT industry, equipment industry, the substrate industry, leadframe, epoxy, everyone has increased the CapEx. Judging on the fact that the equipment delivery are extremely slow compared to historical norm, and that typically is the first indicator that we're not back to normal yet. The second indicator is the amount, all of the wafers. Sometimes we're waiting for 8-inch wafer, sometimes we're waiting for 12-inch wafer for different technology nodes, and sometimes we're waiting for substrates of different technologies. Sometimes we're waiting for leadframes. We do not see a holistic balance of all of the material, equipment, capacity, balance versus the overall demand.
Now, in 2021 timeframe, we were calculating, we believe in 2023, sometime in 2023, we should see the squareness back. Based on the last year, as in all of the conversations with our suppliers and customers
Now we believe that line balance on the holistic view will be beyond 2023. For example, some of the technology substrates, we're confident that the demand will be oversupply for a much longer than 2023, just as an example.
Okay, great. No, that's helpful. The other question on the IDM and you mentioned about the CapEx, that we're seeing the investment in a few. I mean, TI was one that talked about raising the ratio, and I thought all the time they mainly focused on outsourcing that, but they're mentioning the ratio. A few other IDMs are talking about actually adding capacity as well to backend. I'm curious your comments for IDM. Are they seeing that as a fix over the next year as they try to put in capacity? Are you seeing a different trend that's multi-year for behavior of IDM? Because some of their tone on calls sound like they wanna also do more just for self-sufficiency, add some more capacity on the back end.
I'll try to be more careful in making this comment because you're asking a very sensitive question, right? Now, based on our discussion, as was the news release, in general, the U.S.-based IDM, they will declare they will reduce their outsourcing. But let's put that comment in a separate category. Let's focus on everybody else. In all other geography, no one comments on increasing the internal or everyone agree in public a specific milestone to talk about increasing outsourcing ratio. But what that is telling us is, as the foundry in the OSAT world is gaining technology positioning, I won't even use the word leadership, but you can make that judgment yourself.
The economic scale and in the last two years, the foundry world has clearly demonstrate a flexibility and agility that the IDM cannot match. Otherwise, we will not have the automotive issues until today. If you judge on all of the facts, and you fast-forward, you look at the total dollar amount of CapEx of all company, IDM included, what is the percentage they wanna put it into the design, service, as was front end? What is the percentage they wanna allocate to the back end? It is not difficult to go figure out because the competition is multidimensional. You do a parametric study in the OSAT world with the scale, with the fungibility, agility and flexibility and the supply chain or the cost, in fact, and the economic benefit, how do you judge upon the outsourcing ratio?
Now, the US-based, we do understand politically, and also incentive-wise, there are reasons, but at the end of the day, this world is competing. The semiconductor industry is competing on efficiency, right? That's why we have a solid trend, socket complexity, that we're leveraging, the foundry world of technology, and we're trying to, you know, position ASE as well as our partner and our customer. I think the outsourcing ratio absolutely is increasing. You can use the same argument. Go back to 25 or 30 years ago, how does the outsourcing started? Today, in the outsourcing world, much stronger, much more flexible, and even politically, it makes a whole lot more sense. I think the outsourcing ratio per se, it will increase.
Geographically, where do you do the manufacturing? How do you manage the logistic route? That can be discussed, right? I mean, it's a long answer, but I have to answer this carefully because it's very politically sensitive. I feel obligated to give you my best perspective, explaining the difference between the declaration or the sentiment and the reality.
Okay. No, I appreciate that. I feel in their comments they're mentioning back end, there's an efficiency to the clusters in Asia. A question on the CapEx. If you could give a sense now also with the growth outlook and confidence, the view relative to, I think last year it was about TWD 2 billion equipment CapEx, how you're seeing that, and then, it sounds like the mix, it's the IC test with bonder decent but coming down from last year.
Well, this year, the CapEx dollar amount will be either equal or more than $2 billion. We will have a different mix, you know, maybe more towards the testing, maybe more towards the advanced technology. We have to wait for how the year evolves, right? Then we'll just move dynamically. The comment that I was making is, in addition to the equipment CapEx, we're spending more on the building and the smart factory and the infrastructure of CapEx. That number, we normally don't report it. The reason why we're doing that is it shows our aspiration as our customers' collective confidence that they really would like us to get ready in case 2023, the market demand doesn't come down, and there's a surge wafer and the line balance is better.
You will have a lot of back-end demand. The question is now, who will have the most readiness, flexibility, and also the willingness to support that surge?
Okay. The last one is a couple kind of housekeeping, but a few metrics. One is the wire bond and tester. If you could note how many you actually sold in the quarter, because it did drop, so trying to see how many you added or sold. Then a couple others I was curious. Since you gave us the 2022 for SIP and auto, if you could give the base for 2021. The other housekeeping, because of the one-time gain, how do you see the payout because you have that sale in terms of the dividend?
All right. Let me comment on a few questions, and I'll pass the floor to Joseph for the payout. The automotive in 2021, the base was TWD 700 million.
ATM.
ATM. Now, the wirebonder. Roughly, I think we add 4,000 wirebonder in 2021.
No, I'm
I'm sorry.
Let me give you the.
What, Joseph, why don't you talk about it?
Yeah. At the end of fourth quarter, our total wirebond count was about 25,800. That number is actually reduced from third quarter, given the fact that we sold the four factory of the China sites. The number of bonders that we sold is about four. Total is over 4,000 units, 4,221 to be exact. In terms of testers, our total count at the end of fourth quarter is 4,890 testers. In the quarter, along with the sell of the sites, the testers that we sold out is about 15. Or 1,522 units of testers that we sold out.
Okay. The last one was or last two, the SiP, I think TWD 500 million, if you have what the SiP other customers was. Also your view on the payout, just factoring the big one-time gain.
I'm sorry?
The SiP
Oh.
The SiP rev-
Oh, sorry.
The SiP revenue.
Yeah, the SiP.
The SiP revenue will break TWD 500 million in 2022.
Okay. What was that in 2021?
In 2021, I think the revenue from new customers was about $340 million.
Right. The payout?
Oh, in terms of the dividend payout, we do not plan to have a special dividend payout. I think for this year, the dividend will continue to be paid out from the earnings that we make for the year from operation.
Okay.
The payout ratio will remain at about 60%-65%.
Okay. That includes the gain. Like, you'll pay out a proportion even on the additional amount for SiP sale.
No, that does not include the special gain that we got from transaction.
Okay. Okay, thank you.
It will be paid out from the operational earnings that we made.
Okay, great. No, thanks a lot, and congratulations.
Thank you.
Thank you. If you have questions to ask, please keep two questions at a time. Our next question is from Gokul Hariharan of J.P. Morgan.
Yeah, hi. Good afternoon, and congrats on the good results. A couple of questions from my side. I think obviously, second half 2020 and 2021, we have seen some degree of price adjustment, especially in the older technologies, like wire bonding, but also in some of the advanced packaging. If we think about the roughly 10%-20% pro forma growth that you're guiding for, could we talk a little bit about how much of that is roughly units, how much of that is roughly pricing? Are we expecting any further adjustments in price, or we think the pricing is basically going to be largely settled and kind of stable from here on?
Well, I think it's very difficult to break it out by with the volume growth as well as the price increases. I think the so-called pricing adjustment is really across through a very different, many different ways of adjusting our pricing, including some are from expediting fees, some from discontinuing discounts and longer term agreements and so on and so forth. There are many ways of dealing with the pricing issue. I think the bulk of the growth really still come from the revenue from the volume increase that we have and also the different product mix.
That we generated in a year. In terms of overall pricing environment, I think 2022 will continue to be what we call the pricing-friendly year for us. At this point, we're seeing very, very stable pricing. You know, what we meant by friendly pricing is really a pricing environment that can help us better protect in order to improve our return.
Understood. Thank you. If we look at CapEx, now I think we are expecting $2 billion or more CapEx in 2022, higher than where we were maybe middle of last year, given the increased confidence in the market. We're seeing that some of your Chinese peers are starting to invest even further, especially for their outside China capacity by, like, 40%-50% increase in CapEx. You know, how do we think about competition with some of these China companies, especially their competition in advanced packaging? Are we starting to see more competition for future bids? Obviously, currently things are clearly tied. Around a year back, Dr.
Wu, you had mentioned that some of the China capacity or China market-related demand is starting to become a little bit more segregated, and you're kind of not really competing in the same markets. Is that still the case, or are we starting to see that there is still some linkage between what we are seeing in China OSAT, because some of those companies are also seeing some utilization slack in the near term?
I think it is natural for our China competitor under the support of the industrial market as well as the government to build up capacity. Because the midterm or even the short-term objective is to recreate a self-sufficient ecosystem in China, per se. Many of the equipment as well as the capacity built up in China, they're mainly targeted at the internal consumption in China. I commented on the parallel universe. I think we're seeing the beginning of that. For example, our long-range forecast from customers primarily comes from the non-China based.
Mm-hmm.
The technology requirement is different. The end market, the system is different. Of course, there are overlaps into the China consumer market. But there are a lot of market that we have no access to. Therefore, we're not privileged to understand some of the long-range capacity requirement. We're monitoring the situation closely. For example, we do understand some of our OSAT competitor continue to order some equipment, because we do have a total bird's-eye view on where the equipments are going.
However, at this point in time, we don't believe the China competitor, based on technology as well as access to the design of our key customer, we don't believe that the competition is anywhere near.
Right.
We are mindful of that. So far, we think we do have a clear leadership and also a clear firewall between, you know, not just the ASE, but ASE customer base versus the China base.
Got it. Maybe one last question from my side. When you talk about under supply or supply-demand not coming into balance into probably 2023 and beyond, what is your underlying industry growth expectation through this period? Given, I think, in 2022 itself, we are expecting to see the logic semi growth normalizing back to the 5%-10% kind of growth rate compared to like the 20%+ growth or 15%-20% growth that we saw last year.
I mean, we're the last person to be able to tell you what the overall semiconductor can do. I mean, we don't know any better. We always use 5%-10% like everybody else. I think there is a demand. The COVID is still very much in place, and we are seeing the continuation of 5G migration. The PC number, you know, they went up, and it did not have the kind of phenomenal growth. However, it's not coming down. If you wanna order any auto today, your waiting time is six-nine months. We clearly know at the channel inventory, system manufacturers, we do not have enough components to ship what the consumer wants. That's a fact.
It doesn't matter how we project the macro economy and all of the potentials, but in the market, we know we're not shipping enough components. We're managing the scarcity of the line balance. Today, the fact is we are short of wafer, we're short of substrate, we're short of leadframe. For different customer, we're short of different things. Under a very complex logistics and the line balance maneuver, I think all of us have been trained that how do we grow our business and satisfy the end customer demand to the best of our capability. Along the way, you will have the expedite fee, you will have a commoditized surcharge, you have all kinds of things, and that's why it's adding to the pricing increase.
Overall, we think 2022, we need to struggle for another year and the things are getting better. However, we're not seeing a line balance by far. You know, I know we don't believe in 2023 you will see that line balance. Of course, the end market, you know, if there's any black swan or any kind of major impact that we won't be able to see. But based on all of our customers, the short-term and long-range forecast, the design pipeline, and we look at the end market, the electric vehicle, IoT, and smart manufacturing demand, you know, we're quite optimistic, which is why Joseph and myself, we're giving all of you a solid confident 2022 outlook.
We're trying to extend that a little bit beyond 2023, and we're building additional footprint in smart factory just in case 2023 and 2024, 29 new fabs, wafers are coming out, and if they need a backend partner, at least we are, you know, we have been inspired in the last few years to make investment just to get ready for the next wave.
Fair enough. Thank you. Thank you.
I think if I may comment. I think, you know, from a higher level perspective, a more linear kind of a growth pattern actually helps us in terms of managing our overall business. It gives a better planning. Also, you know, during the last year, I think the whole industry is scrambling and there's a lot of that that needs to break through and it makes overall planning a very difficult task. I think this more linear type of growth does help the industry as a whole, and it certainly helps the outsourcing as well.
Understood. Thank you very much. Thank you.
Our next question is from Bruce Lu, please go ahead.
Hello. Can you hear me?
Yes.
Okay, great. Thank you for taking my question, and congrats for great result. I think one thing, management mentioned that, a strong growth in 2022. I just want to double-check. Like, is it like in apples-to-apples comparison or even you exclude your divestment in China and you still can generate like 2x of the, semi growth? The question I'm trying to ask here, another one is that you suggest that your testing business growth and, you know, is substantially higher than your wire bonding growth. Is that for a company-specific issue, or is that for the market share issue, or do you really see a testing dollar content per devices is going up?
Well, let me comment on the testing business. The testing business have two components to it. The first one is we would like to do turnkey. As the packaging becomes more complex, the testing naturally becomes proportionately more complex. In that scenario, it makes more sense for ASE to handle the packaging and the testing from design qualification all the way to manufacturing and ramp up. Now, under that understanding, strategically, ASE is increasing our appetite and aspiration to improve our testing business percentage. I think I pretty much covered your question. All right? That's that. In terms of the overall growth pro forma versus the China side, I will let Joseph answer that.
Yeah. I think the growth that we were mentioning is really an apple-to-apple comparison, which means that for last year's numbers were based on the pro forma number that we were giving, which excludes the China sites that we sold out.
Tien. To follow up that, we should expect a stronger growth for the final test versus wafer test, and we should see the testing business growth will be faster than the overall ATM business growth even for the coming years. Is that the right assumption?
All right. I'm not gonna get into the final test wafer as far as how do we do the breakdown. The overall testing business will grow at a faster than the corporate average, yes.
Even for the following years?
Correct.
That's right. That's great. The second thing is that I think there are several counter to traditional wisdom things at this moment. Maybe, you know, Tien can help us to understand it, right? We do see that, you know, end demand fluctuation. Right. Some of the end demand is not as good as expected. We do see some EMS overall inventory is going up. We also see your competitor was citing a wafer bank increase. However, we do not see, like, meaningful orders come in, foundry side. We do see, you know, at ASE, at least your ATM business, is still doing very, very good. Where is the discrepancy and, you know, is that more like company specific, like ATM is, ASE is getting some market share?
At the end of the day, the fundamental demand is still very strong and, you know, can help us to understand the discrepancy.
Okay. Well, I think you're talking about a short-term disconnect.
Mm-hmm.
Because in the marketplace, for example, you might see one area specifically, they're complaining about the inventory, also the order drop. You have some supplier that talk about specifically, they're seeing slowdown in particular area. At the same time, you know, you have different company serving a different segment, and then they will use the idle capacity from some of the idle sector, and then they will support the higher growth. I think that's the nature of the outsourcing industry. Now, one of the key thing that we have is we have 400 customers. Some customer are growing very fast, and some of the customer are growing in step function, like 50%, 100% a year.
How do you support this kind of customer and you have to have fungible capacity? In the foundry world, there's some fungibility. In the assembly world, the fungibility is quite good. Therefore, we're riding between the foundry and the materials. Our job is to make sure we will support the high growth rate in that particular timeframe to the best of what we can do. We do see some of our customer are having a slowdown, and they're going through inventory adjustment. This is the kind of thing that we do for the last 30 years. A localized slowdown and seasonality for different customer in different sector is on a rotational basis. It's very normal and very healthy. As a matter of fact, industry needs that break.
You know, if you look at 2020, the second half in 2021, we've been running straight line, going nuts. I think it's very healthy for the industry to go through some localized, you know, adjustment. That's what we're seeing. We're giving you a solid outlook because the overall forecast is very strong. I would not comment into which company or which sector, but overall, we have to manage the logistics, the line balance, and the fungibility between all requirements. I think the ASE has clearly demonstrated over the last few years that we're very good at that. This is particularly appealing to IDMs, automotive, or as well as some of the very high growth, like high-performance computing. They really would like to have that flexibility.
I think the overall industry will continue to grow because of the increasing IC contents as well as IC applications. I think the overall market will continue to grow. In ASE in particular, I think we're very confident that we are gaining market share, and we are taking the lion's share of the increasing IDM outsourcing. You know, with all the volume growth and all the industry trends that are working to our favor, I think our growth is we're gonna see a very healthy growth pattern in the foreseeable future for us.
Just one additional comment I feel obligated to explain is the new product design cycle takes 2-3 years. For example, if we're not pre-positioning for capacity and technology ahead of the curve-
Mm-hmm.
The design-in will not occur. Once you have the technology and the infrastructure, the early stage, then the designs start coming in, then you start developing the volume. I think we're all very used to it. We are sitting in 2022. If we believe 2023 and 2024, there's gonna be a recession. If we, let's say, if we believe that, and you publicly announce that we're not investing CapEx, we're not building infrastructure, then your customer will have concern. What is your aspiration and what is your view and appetite for much longer term? What helps us greatly is to ask yourself the question, in the next 5 to 10 years, how do you see semiconductor going up in total content or going down in total content?
Everyone that I talk to believes in the next decade, semiconductor will provide more efficiency to the world, so it is going up. Now, if you see that, you ask yourself. Well, how about the next five years? People move beyond the impending wave of semiconductor of the wafer in 2023. They believe the next five years is still good. If you believe in that, the infrastructure investment, the capacity investment to us makes perfect business sense. You start asking, what is your service agreement, pricing, margin? How do you do granularity with each one of your customer? Then that's what the Management do. You do long-term, midterm, as well as quarter-to-quarter report. I think there's a lot of disconnect between the mid to very short term.
That's why when we talk about our view and our customers' view, sometimes are distinct, different from the analyst view, the analyst's view. I'm just trying to offer you my perspective on the disconnect. I don't think there's a disconnect, but I think the timing, difference between how when we talk about things, we don't talk about quarter. We talk about three-year design cycle, sector growth, content growth, electric vehicle, autonomous driving. What kind of infrastructure do you need to have in place? In five-10 years' time, we can start work, partner all of the design with you and expect the efficiency and the ASP for the kind of volume that the world needs. I think the Taiwan and ASE as a member of the cluster, we understand that obligation.
That's why we're building technology and economic scale and all of the smart factory, the lights-out factory. You know, we're developing all of this just to receive the next five, 10 years of different waves, you know, of semiconductor.
Oh, thank you. Thank you. I think the disconnect is actually pretty big between the investors and what industry we're seeing. I think thanks again for the explanation. Then one last quick question from me is that we do see increasing new customers, new revenue contribution from the SIP business. Do we expect a better, much better profitability moving forward, given that the newer customer or newer projects?
I'll give you the direction. The direction is yes. You know, with a diversified portfolio and then the assuring of IP technology and equipment set. I mean, that was the whole idea of building a strong base of SiP and then offer that library and the expertise to the other customer. I mean, that's the whole idea of foundry and then outsourcing. The answer is yes.
Thank you. I'll go back to Rick Hsu. Thanks.
Thank you. Next question is from Roland Shu of Citigroup.
Hi, good afternoon. Hi, Tien. I know you don't want to talk about for this quarterly view, but I still have a problem, a question on this first quarter, IC ATM and guidance. Look at your IC ATM and revenue guidance. You guided the first quarter to decline by 4% quarter-on-quarter. However, if you look at, you know, the foundries have reported, they all guide first quarter revenue up sequentially. And also, some of your key customers also reported sequential up first quarter. For your IC ATM and revenue to decline by 4% in first quarter.
Again, is there any disconnection between your IC ATM and revenue with, you know, foundry or your key customers, you know, first quarter guidance? Thanks.
By the way, there is no disconnect. I offer you two parameters to think about it. First of all, there is a time lapse, right? Typically between, you know, the six weeks time. There is a time lapse between wafer to assembly. Therefore, that will explain some of it. Now, the second comment, which Joseph already made it, our assembly tasks continued to run at a full run rate. Now, we have like two fewer days, so that's like 2% some. You do have seasonality between one of our largest customer on the SiP shipment. When you look at revenue, they're reporting whatever they have.
They're selling for inventory, or they're reporting the revenue of the last quarter. Our key customer revenue versus our shipment to them, you're off by, you know, one or 1.5 quarters. Foundry to assembly, you're, I mean, you're typically off by like a quarter. I'm not sure that explain it, but you know that's what we see.
Yeah. I agree. You know, the foundry and your customer also have, you know, two fewer days working days in first quarter. Is there any business, you know, from you have been gapped by or constrained by the component or shortage in first quarter?
I will not comment on why the foundry is growing. Yes, we have component shortage that we already talk about it. You know.
Uh-huh.
We have a variety of line balance issue, which I will not comment the more on that.
Okay. Thanks. My second question is, since Tien, you are on this call, so can you give us more colors on your progress for your 5G millimeter wave smart factory and also on the lights-out factory? How did they contribute to your profitability or efficiencies and improvement last year, and what's the target for this year? Thanks.
All right. Last year, we talked about our target was to build 27 lights-out factories.
Okay.
We're happy to report that we actually built 25, and two of the factories was delayed because we couldn't get the equipment in time.
Mm-hmm.
Well, anyway, this year, we will have a new target for 37.
Wow.
We continue to add 10 lights-out factories per year. All right? Maybe accelerating over time based on the customer volume. How do we aggregate the volume into smart factories? In terms of the overall efficiency, I think you can see that from overall operating margin improvement. That to us continue to serve two purposes. First is efficiency that goes to the margin. What is more important is I talk about the ramp of the SiP and also automotive. Our automotive customer per se, they're extremely delighted to have lights-out factory where you document our data of every single process station, every single process. Then it demonstrate the unparalleled quality as well as traceability. I actually talked about this a few years ago.
I'm not sure we all remember that. One of the key things going forward is in the heterogeneous integration world, things will become more complicated. The liability will become bigger. You really have to have much better granularity as well as traceability. Without the lights-out factory of every single process, you will not be able to demonstrate that. We have demonstrated a 100% automated factory versus a 90% automated factory. They are different in nature. A lot of people couldn't comprehend that, but when you talk to the automotive guys, you will understand. In the heterogeneous integration going forward, as the microsystems become smaller, more difficult, more complex, and then the material set become more intricately involved.
I think the lights-out factory will play a great role in our engagement with our key customer in the complex design arena.
Okay. Thanks. Just a follow-up for the operating margin. Last year, you have the target to grow operating margin by 2.5%-3%, last year. You end up you know have a you know better a 3.6% improvement last year. How about this year? Do you have any operating margin improvement target for this year?
We don't have exactly a target per se, but what I can say is we'll continue to see margin improvement, both on the sequential quarterly basis as well as on annual basis. We'll continue to see our margin, both at the gross and the operating margin level to improve for the year.
Okay. Okay, thanks.
Thank you. Our next question is from Rick Hsu of Daiwa Securities.
Hi. Can you guys hear me?
Yes.
Okay. Yeah, just one quick housekeeping question from me, maybe to Joseph. What's your utilization rate across the board of your wire bond testing and flip chip for Q4 last year and this year, Q1 this year? Thank you.
Q4, our overall assembly utilization rate is about 85% and test above 80%. I think it's gonna be very similar in Q1 as well. Packaging will be 80%-85%, and test will continue to be above 80%.
Okay, just one quick follow-up. When you state about 4% impact to your ATM, IC ATM sales in Q1 this year, that also has taken account of the capacity loss because of your China disposal, right? It's not really an apples-to-apples comparison, right?
I don't quite get your question. I'm sorry. Can you repeat that?
Okay. Because your ATM revenue in Q4 last year-
Uh-huh.
That was still, yeah, including the China operation. Starting from Q1 this year.
When we say reduced by 4%, it's really apples to apples. In quarter four, we excluded the China operation.
Oh, I see. All right. Thank you so much.
Thank you.
Next question is from Ziho of China Renaissance. Ziho.
Good afternoon, gentlemen. Two questions from me. The first one, you mentioned that you are seeing more IDM outsourcing this year. Is it fair to assume that IDMs nowadays are turning more receptive to turnkey outsourcing to us? Yeah. Because in the past, they tend to only outsource the assembly part.
When I talk about IDM outsourcing, I mainly comment based on the fact from the last two years.
Mm-hmm.
As you know, automotive is the most difficult one to outsource, simply because the automotive manufacturers and tier one, and they're not flexible at all. We all know this.
Mm-hmm.
Now, in the last two years, because of the supply chain disconnect, people are more accepting alternative route, different material set, different suppliers and different qualification standard. I think the COVID-19 has done great for the outsourcing industry, as it broke that constraint.
Mm-hmm.
As a result of that, if the automotive end customers and the tier one are directly connecting to the outsourcing industry.
Mm-hmm.
the IDM becomes one of the acceptable alternative as well as the outsourcing industry. By that standard, it is good long term that the assembly and test will increase the outsourcing ratio from the IDMs. We talk of fabless, it's meaningless because
Mm-hmm.
The fabless has been outsourcing all of it. IDM, we're seeing a clear trend, not only in the automotive, you actually have the same issue even with the computing. We are seeing the outsourcing acceleration. Of course, I'm not addressing the location of the manufacturer, which is a totally separate issue, the rationale not purely based on economics.
The second question on chiplet. Do you think OSAT or ASE in specific will play a meaningful role in the chiplet market? If that's the case, in what areas can management see the contribution to us?
Well, I do see in the future ASE will continue to play an important role in the outsourcing market, you know, whichever segment.
Mm-hmm.
I think you talk about the chiplet.
Right.
I mean, the chiplet that without naming, there's only a handful.
Mm-hmm.
of customers are dealing with the chiplet architecture.
Right.
I believe all of them have more willingness to do outsourcing. Then the question is, for the back end of the chiplet, should I go to foundry or should I go to the OSAT?
Mm-hmm.
If you have that view and I would advise you to have a bigger, long-term, longer term view.
That's why I'm asking your opinion. Yeah.
Outsourcing is one trend. That's binary.
Mm-hmm.
Once you outsourced, how do you partition the outsourced volume? That's a totally separate questions.
Mm-hmm.
I think having the binary from zero to one is a whole lot more meaningful than how do you partition the one afterwards.
Mm-hmm.
Afterwards, you have to look at technology, you have to look at the overall presence, logistics, business model, whether round is more meaningful or square is more meaningful. Then you get into an argumentative arena, which I'm not ready to discuss online.
Mm-hmm.
I believe outsourcing per se is very meaningful.
Mm-hmm.
Now, once the customer outsourced, it becomes a competition. Who can ramp up faster? Who can manage the cost better? Who will have better service and the less constraint? I mean, the outsourcing, we've been doing this for 40 years. We understand how it works. Yeah.
That's true. Yeah. Last question, maybe to Joseph. Can you share with us the CapEx breakdown between assembly and test this year? A very rough number would do.
I think the number, Joseph. Yeah, why don't you?
Yeah. This year, I think we'll start increase our investment in test.
Mm-hmm.
From a very rough sketch, I think this year we're looking at about roughly 50% of the CapEx, the total CapEx will be assembly, about 30% in test. At EMS, we're also because of the new projects that we're taking on, I think the percentage will increase to about 15%, and the rest will material.
Okay. All right. Great. Thank you very much, and Happy Chinese New Year.
Happy New Year. We have one last question, online question from Mr. Charlie Chan of Morgan Stanley. I'm going to read it for the management. Any observation for the chip inventory trend in the supply chain? Will company's ATM utilization stays high through the year? How about the pricing and gross margin trend? Thanks. As we mentioned, I think we're still expecting a very strong year this year. I think the loading will be kept at a very high level. In terms of pricing, it's still a very pricing-friendly year for us. As I mentioned earlier on, in terms of our margin, we are expecting a sequential margin improvement on quarterly basis. For the whole year, I think there will be further improvement in terms of both our gross and operating margin compared to last year.
Chip inventory. Well, in terms of the chip inventory, we have seen some reports from some customers, but not all of the report. We think the chip inventory is low overall. Of course, the chip inventory can be high in a very highly localized application sector. All right. That's all we want to share. Thank you.
There is no more question. Thank you everyone for joining us this quarter. See you next quarter. Thank you.