Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WIN Semiconductors' Results Webcast Conference for the third quarter of 2024. My name is Joe Tseng, Spokesman and Associate Vice President of Finance at WIN Semiconductors. Joining me today on today's call is Steve Chen, our General Manager of Corporate Administration at WIN Semiconductors. Today's call is organized into three sections. First of all, Steve will comment on company's results and provide brief guidance for the fourth quarter of 2024. Secondly, I will go through the financials in detail. After that, we will open to the floor for Q&A. Please freely submit your questions in the input box on the webcast window throughout the conference. Before we begin, I would like to draw your attention to the safe harbor notice on page one of the presentation slides.
Please note that this presentation contains forward-looking statements, and these statements are based on our current expectations. The actual result may differ materially from our expectations, and the company undertakes no obligation to update these forward-looking statements going forward. Now, let me hand over the call to Mr. Steve Chen, General Manager of WIN Semiconductors.
Thank you, Joe, and welcome everyone. In the third quarter of 2024, our consolidated revenue was TWD 4.3 billion in NT dollars, up 4% year-on-year and down 12% quarter-on-quarter, which was slightly softer than our previous expectation. As the capacity utilization rate declined from 65% in the previous quarter to 50% this quarter, our gross margin dropped from 27.2% in the previous quarter to 21.6%, and operating margin fell from 10.1% to 2.9%. Net profit attributed to the parent company from the third quarter was TWD 0.27 billion in NT dollars, which was an EPS of TWD 0.54 in NT dollars. For the first three quarters of 2024, cumulative revenue increased by 25% year-on-year, with an EPS of TWD 2.64 in NT dollars.
While the third quarter is typically the traditional peak season for U.S.-based iOS smartphones, we had previously anticipated that due to the soft demand in the Chinese Android smartphone market, the third quarter this year would be below seasonality in the peak season. It now appears that the decline in the demand was greater than we previously expected, and the last cellular PA revenue had the most significant quarter-on-quarter decline in the third quarter. Wi-Fi PA revenue also declined from the previous quarter as the peak season of the inventory preparation of the new model launched in the second half of this year had passed. However, driven by the introduction of Wi-Fi 7, Wi-Fi revenue in the third quarter and the first three quarters increased by 50% and 70% year-on-year.
Respectively, in addition, revenue of the infrastructure was better than expected in the second quarter due to customer inventory restocking, and the revenue in the third quarter was also better than expected, even though it was slightly lower than the second quarter. Finally, optical revenue entirely in the peak season as expected with the launch of the new iOS model, making it the best-performing segment in the third quarter. The current inventory levels of the smartphone customers are much healthier than the first half of last year, but the end-market demand was fluctuating since the beginning of this year due to factors such as geopolitical tensions and the economic downturn in China. This fluctuation continues to test the stability of both upstream and downstream suppliers in the supply chain.
In response to the market change, in addition to maintaining our existing business, we have invested heavily in R&D, focusing on the best high-value-added products business opportunities in the coming years. Taking low-orbit satellites as an example, we not only continue to develop high-power semiconductor devices for signal transmission and reception between satellites, but also provide customers with data transmission solutions between satellites to gateways. Meanwhile, to meet the further demand for AI data centers, we not only participate in industry alliances to develop collaboration with the upstream and downstream suppliers, but also collaborate with several customers to develop related optical data transmission, reception, and also modulation components, as well as Optical Driver ICs. We aim for this development to become another mid-to-long-term growth driver on top of mobile wireless communication.
Looking ahead to the fourth quarter of 2024, as the demand in China's smartphone market remains weak and the peak season of Wi-Fi 7 PA inventory builds for the new model launched in the second half of this year has passed, we expect revenue to decline by mid-teens quarter-on-quarter, with gross margins at around high-30s levels. Overall, for the full year of 2024, we still expect revenue to increase from last year. Thank you. I will turn the call back to Joe.
Okay. It's our pleasure to present our financial results for the third quarter of 2024. Please refer to the presentation slides. Starting from page two, please read over the safe harbor notice. And then, starting from page four, we discuss about revenue and the margin. And the Q3 2024 revenue was TWD 4.35 billion, and QOQ down 12%, and the YoY was up 4%. As has been mentioned by Steve on his management comment, for the Q3's revenue down, the most of the sector will be what's the cellular and the Wi-Fi, which is on the high-volume business. And because of that, the high-volume business went down most, so the utilization rate also went down significantly to 50% from 65% last quarter. And then making the unit costs went up dramatically and then impacted the gross margin. So therefore, the gross margin declined by 5.6 percentage points to become the 21.6%.
The operating margin therefore also declined 7.2 percentage points to become 2.9%. Because of the cellular and the Wi-Fi, the weaker of the cellular and Wi-Fi demand in Q3, and given the slower inventory pooling by customers and also declined the utilization rate, therefore the earnings, please take a look on page five. The net profit attributable to the parent company was TWD 228 million, and therefore the Q3's EPS was TWD 0.54. The accumulated Q1 to Q3, the EPS was TWD 2.64. That's for the income statement from top line to the bottom line. Now, please flip to page six. We can discuss about the product mix in Q3. In Q3, as we mentioned, the slowdown mainly coming from cellular and Wi-Fi. So you see that the cellular PA, the percentage was between 35% and 40%. It went down from 40% to 50% in last quarter.
The Wi-Fi, it looks like remained on the same range, between 15%-20%, but actually still have the double-digit slowdown. The infrastructure, see that the infrastructure maintained about between 25%-30%. And actually, the QOQ only went down about low single-digit, which is better than our expectations in the very beginning. Overall, we see that infrastructure has been a better performance this year from last year. Finally, the optical business, it's 16% of the total revenue. It's coming from 12% last quarter. In this quarter, optical is the only sector which grows of the business. That's all because of the second half, new flagship model launched, the new phone, new model on time, and then it actually benefits our customer, which is 3D sensing, so that's what happened.
And next page, please flip to page seven, talk about our guidance for Q4. I think on Steve's management comment, I already mentioned it. We expect Q4 revenue to decline about mid-teens QOQ. I think the reason and pretty much the same as Q3, which means we see that the China smartphone market still remains weak. And Wi-Fi, I think the Wi-Fi pool, the inventory pooling for the second half new model is almost over. And so the high season, the peak season for the inventory pool for the second half new model of Wi-Fi components, I mean, the Wi-Fi PA, the peak has already happened between Q2 and Q3. And Q4, we see that significantly going down. So this is the two major products will be weaker in Q4.
And then on the contrary, we see the rest of the infrastructure and optical business will remain flattish in Q4, which is good. And then, however, because of revenue going down mid-teens, we expect the utilization also will impact it again. And then so the gross margin also impacts the gross margin to be around the level of high teens. That's our view for Q4. Okay. Then after a couple of pages of the summary, then we can quickly go to the financial results, financial statement. First of all, the income statement for Q3. Before I begin, any number of figures I mentioned that will be on an audited basis, and the actual result should be based on the CPA's report later. Q3 net revenue was TWD 4,348 million, and QOQ was down 12%, YoY was up 4%. And the gross profit was TWD 938 million, and the gross margin became 21.6%.
Under the 50% of the utilization rate, you see that the most similar utilization rate a year ago, Q3, also 50%. And the gross margin is pretty close to this quarter. And operating expense is TWD 813 million. Excuse me. Although this figure is lower than last quarter, but however, because of Q3's top line, QOQ was down 12%. So the operating ratio was a little bit higher, became 19%. And therefore, the operating income was TWD 125 million. So operating margin became 2.9%. And the non-op item was non-operation income was TWD 121 million. And so the income before income tax was TWD 247. And then the net income became TWD 210 million. Sorry, TWD 210 million NT dollar. And the net margin was 4.8%. The net profit attributable to the parent company became TWD 228 million. So the EPS for this quarter was TWD 0.54. And the ROE for this quarter is 2%.
And depreciation expense, TWD 1,133 million. It was a little bit lower than last quarter. But the CapEx is TWD 424 million, a little bit higher than last quarter. So that's Q3's number. And now, we go to page 10, accumulated Q1 to Q3. The net revenue was TWD 13,754 million. And the YoY was up 25%. The gross profit, TWD 3,284 million. And then therefore, the gross margin for the Q1 to Q3 is 23.9%. And operating ratio for the three-quarter total was 18%. And operating income was TWD 810 million. And therefore, the operating margin became 5.9%. The income before income tax was TWD 1,011 million. So the net income for the accumulated three-quarter was TWD 870 million. The net profit attributable to the parent company became TWD 1,120 million. And therefore, the EPS for the first three quarter was TWD 2.64. And the return on equity for the first three quarter was 4%.
The optimistic utilization rate was 55% average. The depreciation expense was pretty close to the same turn last year, was TWD 3,462 million. The CapEx is lower than our expectation of also lower than the same turn of last year. It became TWD 1.7 billion. Okay. This is the income statement for the first three quarter. Next page, on page 11, it's a non-op item. I think we can leave it for your own reference. The last page on my presentation slide will be the page 12. It's a balance sheet. At September 30th, 2024, the cash and the cash equivalent was TWD 5,673 million. The total assets were TWD 64,209 million. The total liability was TWD 26,009 million. Therefore, the debt ratio, it went down 1% to become 41%. The total equity, it went up to TWD 38,200 million.
Also, the book value per share also went up to TWD 87.29 from TWD 86.52 last quarter. Finally, the SEG ratio is 41. The current ratio went up from 110% to 141%. That's my part. Okay. Now we can begin the Q&A. Please submit your question in the input box on the webcast window now. Thank you.
Okay. First, I think I will update some more pictures about the Q4 guidance, about the application segments. For Q4, right now, what we see, the optical and the infrastructure should be flattish. Due to the smartphone, it's weaker than Q3. So we see no matter Cellular PA and Wi-Fi PA, that will be also decline in Q4. Yeah. So for the fourth segment, looked like optical and infrastructure will maintain flat. But Cellular PA and Wi-Fi PA will be decline in Q4. Thank you.
Okay. There's a question asking about related to Wi-Fi. The question is, when all of the new model of U.S. Tier 1 smartphone launch this year, adopting Wi-Fi 7, do we see this kind of adoption will also happening in the Android market? And something like that. And some other also, I will talk about some other view about Wi-Fi. First of all, yeah, thanks to the Wi-Fi 7 this year. And actually, we already have a customer step into the Tier 1 smartphone market last year, which is still Wi-Fi 6E. But this year, their share remains strong. And when all of the new model this year, Tier 1 smartphone adopting Wi-Fi 7, and then bring the significant growth for the business. And then we also see part of the Wi-Fi router customer also adopting Wi-Fi 7.
At the same time, we still shipping the Wi-Fi 5 and Wi-Fi 6, but already see the adoption happen in the Wi-Fi router for Wi-Fi 7. And that's a good thing. And then regarding the Android market, actually, Wi-Fi 7, the first adoption should be in Samsung flagship model, which is very early of this year. And we expecting this kind of adoption from the Tier 1 smartphone market, including Samsung, including iOS, the more adoption for Wi-Fi 7 is supposed to have more adoption happen in the rest of the Android market. And then year over year, from the high end to the mid end, from the mid end to the low end, based on the experience in the past. And because of that, I'll also update some of the number for our Wi-Fi business growth in WIN Semi.
For example, actually, Steve's management comment have mentioned it, our Q3 Wi-Fi business, YoY has growth about 50%. And accumulated Q1 to Q3, the Wi-Fi business growth more than 70%, which is making the Wi-Fi business the strongest product in WIN Semi for the year of 2024. Although we expecting for QOQ basis, Wi-Fi business will going down because of the peak season has been ended. But the Wi-Fi business and Wi-Fi product should be the strongest product for the whole year of 2024 in WIN Semi, no doubt. Thank you.
Okay. There's a lot of question was related to did Samsung increase the new vendor list for some China supplier will benefit about somewhat? Actually, I think, yeah, I think both of the new vendor in the vendor list, I think they are all WIN Semi's customer, especially those China design house.
And definitely, WIN Semi definitely will benefit for loads of new opportunity in Samsung with our customer in the future. Yeah. But because of, as everybody know, WIN Semi is always taking the technology leading position in the foundry market. And we always will provide the most advanced technology to our customer to design a better value-added product to compete in the market. So it's really, again, showing that WIN Semi technology can provide our customer very value-added profit to making their product become more high performance to join the Tier 1 Samsung vendor list. Yeah. So I think maybe that will not really directly give us some rush order in the very short term. But I think for long term, it definitely will increasing WIN Semi's coverage for all those Tier 1 high-end smartphone customers' vendor list. Thank you.
Okay. There's a couple of questions asking about the infrastructure business. It's about asking about the infrastructure for this year and then for the future, and also the growth driver, something like that. I put it all together. And first of all, we have to admit that infrastructure demand has been weaker for a while since the 2023 and the beginning of 2024. And starting from Q2 this year, we see some kind of inventory replenishment happen in Q2. And in the very beginning, we don't expect Q3 will happen the same. But the Q3 actually come out only down about low single-digit, which is better than our expectation. So making the Q2, Q3, all become YoY growth. And then the accumulated Q1 to Q3, the accumulated Q1 to Q3, we see infrastructure growth will be growing about double-digit.
I think the most different between this year and the last year will coming from some momentum from satellite industry and satellite business. Of course, low Earth orbit, it's a major one. And then except that, we also see some, other than LEO, and GEO and MEO customer also have a very good growth in this year. Now, making the overview, in the very beginning, we expect the whole year of the infrastructure may not be growth or even only flattish. But now, it looks like infrastructure become better. As I mentioned it, for YoY basis, the first week of the infrastructure have double digit growth. And the Q4, the guidance for infrastructure is flattish. That's also good.
So I think taking the satellite business as an example, we already in the supply chain of low Earth orbit industry, and then we providing the components for the high power semiconductor devices for the signal transmission between satellite. And also, we do have a customer also working on the data transmission between satellite and the gateway. So even more, this kind of capability is coming. So I think that making the infrastructure become a better performance in this year. So yeah, this is about infrastructure, the question. Thank you.
Okay. There's a couple of questions asking about the AI application WIN Semi involved, and also the supply chain regarding the silicon photonics, something like that, which is touch of our optical business. Okay. In general, because of AI, the AI supply chain, the huge data rate is going up.
And so that pushing part of our optical customer doing more aggressive involved with WIN Semi, developing the technology between not only the server to server, server to leaf, leaf to spine, and also the data center interconnect, those kind of application. And because inside the optical transceiver, no matter the data transmission, the laser diode or photodetector, modulator laser, modulator laser driver, optical driver, those kind of components, the compound semiconductor is the major application. And also in the silicon photonics, you have to, the lasers have to leverage the compound semi, especially III-V compound semiconductor. So give us some opportunity. A couple of customers have some technology development with WIN Semi. Again, the components involving like a laser diode, photodetector, and the modulator laser and the modulator laser driver, those kind of application.
So from now on, we already input a lot of resources, and we will continue to input a lot of, especially R&D with our customer. That's regarding the AI and AI data center and silicon photonics. Thank you. Okay. I think it's some question about the utilization rate, and I think for Q4, definitely because of revenue is going down. And so I think right now, what we suppose the utilization rate maybe still will going down with the revenue, especially we just mentioned most of the decline for Q4 will come from cellular and Wi-Fi, low segment. And so the impact of the bottom maybe will certain revenue. So I think we suppose the utilization rate will going down in Q4. And on the other question that is about our new Kaohsiung fab, I think we already has mentioned that before that right now we just finished the shell.
That means the buildings themselves. But for the cleanroom and equipment, I think it's, well, pending until we see a much bigger improvement from the utilization rate. Thank you.
Okay. I think there's a point in last hour's management section. The question about in the past couple of quarters, we have explained some impact from our subsidiary holding some of our China customers' listed shares. And because of their stock price volatility impact the gross margin in the past few quarters, and then how come this quarter we haven't mentioned anything about that? I think I would like to address this question in this hour. That's because normally that will be based on their closing stock price quarter by quarter to evaluate any kind of impact, and for the end of Q2, almost very close to end of Q3, their stock price.
So that's why the impact is very, very limited, very, very minor. So we can skip that from the impact of any gross margin or the revenue for the Q3. That's the reason why. Thank you.
Okay. There are no further questions on the question box. So thank you for your participation in WIN Semi's conference. There will be a webcast replay within hours. And so please visit www.winfoundry.com under the investor relations section. Thank you very much. And you may now disconnect. Thank you and goodbye.