The investor conference is about to begin. Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WIN Semi's result webcast conference for the fourth quarter of 2022. My name is Joe Tsen, Spokesman and Associate Vice President of Finance in WIN Semi. Joining me today on today's call are our CEO, Kyle Chen, and the General Manager of Corporate Administration, Steve Chen. Today's call is organized into three sections. First of all, our CEO, Kyle, will comment on the company's results for fourth quarter of 2022 and provide a brief guidance for the first quarter of 2023. Secondly, I will go through the financials in details, and Kyle will have the industry outlook to share with you. After that, we will open to the floor for Q&A.
Please freely submit your question 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 1 of the presentation slide. Please note that this presentation contains forward-looking statements. These statements are based on our current expectations. Actual results may differ materially from our expectations. The company undertakes no obligation to update this forward-looking statements going forward. Now, let me hand over the call to Mr. Kyle Chen, our CEO in WIN Semi.
Joe, thank you, and welcome everyone joining the WIN investor call today. In the fourth quarter of 2022, given the continuous inventory adjustment in the global entry smartphone market, WIN Semi's consolidated revenue was TWD 3.53 billion, which was down 10% quarter-on-quarter and 51% year-on-year as previously expected. Due to the decline in the demand, our capacity utilization rate further declined to 30%. However, as our product mix improved slightly from the previous quarter and expenses were under well control. Our gross margin was 22.1%, and operation margin was 0.5%.
On the other hand, our net profit was impacted by the non-operating losses, including the foreign exchange and the disposal of a plant by our subsidiary to adjust its operating scale. Therefore, the EPS for the fourth quarter was -0.22 TWD. For full year of 2022, our revenue was TWD 18.33 billion, which was 30% down year-on-year. EPS the whole year was TWD 4.21. Looking at the product mix in the fourth quarter, which we did receive a few large order from the cellular PA also, and the Wi-Fi PA as well at the end of 2022. Volume is not continuous.
We also see that the cellular PA revenue still have the largest sequential decline among all product category. 3D sensing revenue also declined from the previous half-season quarter, which was a traditionally strong season with a new product launch. The infrastructure revenue was also slightly below the previous quarter, it has surpassed the cellular PA and become the largest revenue contributor in the quarter. Wi-Fi revenue also increased slightly, but not too big, driven by some customers' inventory restocking. In respect the year 2022, the war between Russia and Ukraine was still ongoing. China experienced a surge in COVID infections across the country after strictly epidemic control was lifted. The trade tension between the U.S. and China was intensified. This have disrupted the global supply chain.
Inflation also impact the end customer's demand. Comparing with 2022 to previous year, 2021, in terms of product mix change, consumable related application, including the cellular PA, Wi-Fi PA, and 3D sensing are all experience a varying degrees of decline given softer macro environment. Comparatively, the non-consumer applications-related infrastructure segment increased slightly from the previous year. Here, I would like to say some good news is gallium nitride, our product... The foundry service revenue, which was highly related to the 5G infrastructure, has performed particularly well. Looking ahead to the new year, which we're still facing the pressure of economic weakness and the inventory adjustment in the short term. The supply and the demand are expected to gradually return to normal as the global pandemic was released.
COVID restrictions are lifted, and the global economy reopens, and the inflation gradually gets under control. In the coming years, we are still very optimistic about the long-term developing of the compound semiconductors. 5G smartphone penetration is expected to further increase and drive the demand for 5G infrastructure. Wi-Fi spec upgrade will be gradually adopted by the routers and the smartphones. Wi-Fi 6E expected to become popular, and the developing of the Wi-Fi 7 is expected to officially started. Leveraging all our experience on the 3D sensing in the past few years, we have actually worked with the client on automotive application, including the both in-vehicle sensing and other vehicle ADAS system, as well as the V2X and OTA, which use our existing wireless communication technology.
All of these related application, no matter in conventional vehicles or electrical vehicles, are getting closer and closer to us. In order to meet this trend, we have been actively working on the Development of the related new technology, including the filters. Here, I would like to emphasize the filter. This filter is help our PA customer to strengthen their product competitiveness, which we will already start provide a customer filter foundry service together with our existing product, that's PA, to further increase the customers' thickness. Amid of the headwind, last year and also the first half, we have never relaxed the commitment to ESG.
In 2022, We were ranked in the top five among the Taipei Exchange-listed companies in the corporate governance evaluation survey by the TWSE for the 8th consecutive years. We were selected to join the Dow Jones Sustainability World Index for the 3rd year. It is encouraging for us to be included in this index again, along with our global leading companies, it also has the driving force for us to keep improving. Looking ahead for the 1st quarter of 2023, due to the continuous soft demand and the impact of the traditional off-season effort of the smartphone, our revenue this quarter is expected to decline around the high 20s quarter-on-quarter, and the growth margin will be about low teens level. Right now, I turn the call back to Joe.
Okay. Thank you for our CEO's and management comment. It's my pleasure to present our financial result for the fourth quarter of 2022. You also can refer our presentation slide. Please read it over for the safe harbor notice in page two. Now we started to talk about revenue and the margin trend starting from page four. In Q4 2022, the revenue was TWD 3.5 billion. QoQ was down 10% and YoY down around 51%. Due to the 3 Qs one-up factor no longer exists, and also in Q4, we have a better product mix and also expense well control. Our gross margin increased by around 6.1% point, become 22.1%.
Operating margin also increased by 5.6% points to 0.5%. Now, please flip to the next page, in page five. We talk about earnings. Our Q4 2022 was a net loss of TWD 177 million. QoQ was down 172% and YoY was down 110%. Therefore, the EPS come in at negative TWD 0.22. It was impacted by the non-operating loss. The majorly was foreign exchange loss. Secondly, the disposal of a plant and a property by our subsidiary to adjust its operating scale. Please flip to the next page in page 6.
We discuss about, what a change in our product mix in the Q4. In the Q4 because of experiencing the continued inventory adjustment in the Android smartphone market. Cellular PA still weak and the percentage went down to between 25% and 30% from 30%-35% last quarter. On the contrary, although the infrastructure also decreased about single digits, but the percentage we went up to between 35% and 40% from 30%-35% in Q3. As our CEO mentioned that some of the Wi-Fi customer restocking in Q4.
Although the Wi-Fi has a single-digit growth, but still within the same range of a percentage, which is between 5% and 10%. In the optical, and including 3D sensing and others, it decreased a similar level of the total revenue. It remained the same percentage of around 26% in Q4. Please flip to the next page, in page seven. Page seven talk about Q1 2023's guidance. I think our CEO already mentioned it, I gonna repeat again. We expect Q1 2023, the revenue to decline around high 20s% QoQ. We also expect the Q1 2023 gross margin to be around the level of low teens. Okay?
We can quickly go over the financial statement starting from income statement in page nine. For Q4, the income statement, before we begin, I still want to remind everybody this is under the unaudited basis. The actual results based on the CPAs report. Q4 2022, the net revenue was TWD 3,527 million. QoQ was down around 10% and YoY down around 51%. Gross profit was TWD 781 million. QoQ was up 25% and YoY was down 73%. Gross margin was 22.1%, which has improved about 6.1 percentage points from last quarter. Operating expense was TWD 762 million. The operating expense ratio is a similar level, around 22%.
Operating income was TWD 19 million. QoQ was up 109%, and YoY was down around 99%. The operating margin become 0.5%. The QoQ was improving around 5.6% p oints. The non-op item was a loss around TWD 168 million. The detail will be in page 11. The income tax was lost, was a negative TWD 145 million. Income tax expense was TWD 28 million. The net loss was TWD 177 million. The net margin become negative 5.0%. The EPS for the Q4 was a negative TWD 0.22.
Therefore, the ROE, which is, return on equity, was -1%. The Q4, approximately the utilization rate was at 30%, which is, went down from 40% last quarter. The depreciation expense a little bit less than last quarter, which is, TWD 117 million. The CapEx for Q4 was TWD 916 million. This is. Those are the Q4's financials, income statement. Please flip to the next page in page 10. The accumulated whole years 2022, the net revenue was TWD 18 billion 330 million. The YoY was down around 30%. The gross profit was TWD 4 billion 720 million, and the gross margin was 25.8%.
The operating expense was at TWD 3,238 million. The operating expense ratio for the whole years become 18%. Operating income was TWD 1,482 million, and operating margin become 8.1 percentage point. The non-up item was again on TWD 327. The income before income tax was TWD 1,809 million. The income tax expense for the 2022 whole year was TWD 411 million. Therefore, the net income for the whole year was TWD 1,398 million. The net margin becomes 7.6%. Therefore, the EPS for the 2022 whole year was TWD 4.21.
Therefore, the ROE, which is return on equity for the whole year, was 5%. The utilization rate accumulated whole year 2022 was 50%, which is going down from 90% of 2021. The depreciation expense is TWD 4,164 million, which is a single digit increase from last year. The CapEx for the whole year was lower than our original expectations, which is TWD 7,124 million. Since it's already 2023, would like to share with the investor that for the 2023's depreciation expense and the CapEx expectations.
For depreciation expense for the whole year 2023, well, we expect should be increased about single digit, which is less than 10%. The CapEx for the 2023 whole years should be around TWD 4 billion plus and minus, which is mainly the existing fab equipment and machine and equipment maintenance and the replacement. Secondly, will be continued to complete the first building for our new fab construction in the Southern Taiwan, Kaohsiung science park in Kaohsiung. This is for the whole year 2022, the income statement. The non-up item in page 11. The major item other than we already mentioned it earlier, foreign exchange loss and the loss on disposal of property and train.
Another one will be the gain on our ECB buyback in Q4. Okay. That's a non-op item. Finally, the balance sheet in page 12. As to the 2022, December 31, I just pick up couple major item. Cash and the cash equivalent was TWD 10.38 billion. The total assets was TWD 68.982 billion. The total liability was TWD 33.936 billion. The common stock remained the same as last quarter. The total equity become TWD 35.047 billion. Therefore, the book value per share was TWD 78.28. The major index, like a current ratio, was 276%. The debt ratio with the total liability over total assets was 49%, pretty close to last quarter. This is my report. Thank you. I gonna turn the call over to our CEO for industry outlook. I think that's most important portion for this quarter's earnings call in the conference. Thank you.
Okay. Thank you, Joe. Next, I will present and share how we see this market trend status. I will divide into several categories. Smartphone, infrastructure, retail, Wi-Fi, et cetera, and also introduce our new technology to all. Please go to page 14. The this page shows, first is, of course, it definitely is a smartphone related PA. Based on the chart you see, the Morgan Stanley forecast, also we observe as well, the 5G penetration rate will surpass the 4G in this year, 2023. That's good sign for the semiconductor, for compound semiconductor, because the 5G, the PA content will definitely more than the traditional 4G smartphone, especially the 5G.
There is a new frequency band we call the ultra-high band, from the 3 gigahertz, maybe, around 3 gigahertz to 5 gigahertz. This band also need MIMO, we call multi-input, multi-output. That means the PA count will be increased. We foresee this smartphone, 5G smartphone will surpass 4G, and content of the 5G smartphone will much more than the traditional 4G phone. Go to the next page 15. Also is about the infrastructure, about 5G. We have a very good technology on gallium nitride, which we have cooking for a few years, and the traditional gallium arsenide technology keep improving for the performance. Among the base station of the typical 5G massive MIMO base station, lot of the technology using WIN's foundry service.
For example, gallium nitride as a PA, PN as a LNA, low noise amplifier, and HBT is typical for the driver IC and integrate passive device. These four component is the key element for the base station. WIN can provide the total solution for the 5G infrastructure operators. Go to the next page, is page 16, is a Wi-Fi. Wi-Fi last year already many, the router and smartphone adopt the Wi-Fi 6, but it's still that dual band only. This year we foresee this more and more router will migrate to Wi-Fi 6E from Wi-Fi 6. Smartphone also will adopt Wi-Fi 6E, we believe in this year.
Based on the wireless connectivity market analysis in this chart, you can see the Wi-Fi 6E will start it and the volume will increase as well. Okay. Let's go to the next page 17. Wi-Fi 6E is a triple-band . It's 2, 5 and 6 GHz. Based on the modulation improvement, Wi-Fi 6E, we're gonna have a 3.6 data rate faster than the Wi-Fi 6. Under this roadmap, we have a co-work with our IBM and PA design house to have Wi-Fi 7 design. Right now is ongoing, and the progress is good.
To take over these Wi-Fi 6E, Wi-Fi 7, we believe for next few year will be the mainstream because it covers a more wider band and a high data rate to have all the IoT, the change to reality. Okay, next page. Next page is about the sky, the satellite. You can see, the Starlink already launched more than 33,000 satellite LEO in the sky, and more and more application is launched. They already start to give the sky service. In addition to the Starlink for the LEO, and their gen two system already approved by the FCC, December last year. This gen two, which we know is about more than 20 ,000 or even 30,000 satellite will be launched.
Also, another system, other system like OneWeb, Kuiper, and Telesat, and others, which are not on the list, also have at least a few hundred to several thousand. We believe this satellite will be a very, very hot topic and need more gallium arsenide, gallium nitride solution for the next few years. Go to the next page, is about application for the automotive. Since the 2017, WIN's VCSEL on the 3D sensing on smartphone, we are take leadership in this industry. We have a very good VCSEL technology. Based on this, more application opened. We see the VCSEL will start to adopt in in vehicle, such as DMS, driver monitoring system, and occupant monitoring system we call OMS.
Out of the car, you can see a different color by different range. We'll also adopt the VCSEL related technology for the ADAS. In addition, the sensing in vehicle and other vehicle, also the wireless connectivity for the automotive. The eyes will be installed in every car for the auto-drive. Next, the mount on the top of the car, which can connect together with a satellite. This is drive all the connectivity worldwide, including the user terminal on the road. It's like, you know, vehicle and in the sea, like boat or in the sky, the airplane. Okay. This is what we see the different category for the future. For this year, it will be gradually open. Next is about the new technology. Please go to page 21.
Based on the VCSEL with, applied, adopted for the different kind of application. More the application such as VR, virtual reality, augmented reality, AR, and more sensing on the handheld system, like on the different frequency band, SWIR, and also have some perpetuity sensor on the biometrics on either the watch or the clothing. We can foresee this VCSEL market will grow, keep growing. The other is about optical, but on the data of communication. The different color shows these the green color. The orange color shows the emitter side, DFB, and the blue color is for the receiving. We have a good technology on the, no matter on the emission side and the detection side.
We have a capability to provide this photonics. We call PIC, integrate all the device in one chip. This will help this data center to have a quick data rate to support this very, you know, tons of the data rate requirement gradually. This is visual market as I mentioned in previous two page. You see the red circle one is about the mobile. We call it like a handheld system, consumable mobile phone or the iPad and the P notebook. It's still from the 2022 to 2027, still has about like a compound annual growth rate, about 16%. The other new is application we expect is telecom and infrastructure. This is the blue one, from TWD 6,782 million grows to TWD 2.1 billion.
The compound annual growth rate is about 22%. This is the two major market which we expect from the VCSEL technology. Okay. Last page is to show we are very excited to introduce the WIN provide builder service, foundry service. We provide, we cooking this technology for a few years now. Some of our customer already adopt our filter into their new PA module, which can provide a better performance, better footprints and the size to compete with the worldwide IDM company. The filter not only contribute revenue, but also provide this strengthiness to co-work with our customer to increase their performance on the smartphone. In the technology we develop, it covers SAW and BAW. Okay. Hope that this will be bundle our customer for the best technology. Okay. That's all my view and sharing to us about business outlook. I go turn the call back to Joe .
Okay. Okay. Thank you, our CEO's comment. Now, we begin the Q&A section. Please submit your question in the input box on the webcast window now. Thank you.
Okay. There's a question want to know about utilization rate for 2022, fourth quarter and how's the outlook for Q1 in 2023. As we mentioned at the beginning, the Q4 utilization rate is around 30%. Because of the revenue for the decline, high 20% in Q1, definitely, I think the utilization rate will be going down again. Because how the product mix is still not so fixed right now. I think right now we only can say the trend will be going down, it still cannot have the exact number of the rate about Q1 yet. Thank you.
Okay. There is a question from the investor asking about the progress and the schedule or any plan for our new fab in Southern Taiwan Science Park.
I think I have mentioned a little bit earlier when I talking about our CapEx guidance for 2023. I think we still will continue to complete the construction for the first building for our new fab in Kaohsiung. After that, we probably will stop there and then I'm waiting for any signal of the demand. Before that, are we not gonna, we're just not gonna do any further on the cleanroom construction or even the equipment moving. That's exactly what we will do for the.
The CapEx in our new fab in Southern Taiwan Science Park. Maybe I repeat again another part and also the major part of the CapEx in 2023 will be mainly the existing fab equipment maintenance and the replacement. That's a major two portion for this year's CapEx. The total amount roughly around TWD 4 billion plus and minus. Okay, thank you.
Discuss the product line status of Q1. Right now, what we foresee, I think, all the product lines will decline in Q1. I think the main reason is, I think, Q1 usually is our traditional low season. So what we see right now is that all the product lines will decline fairly equal. That means the sales percentage may not change, but all the product lines will decline like high 20%, this kind of range. Thank you.
Okay. Next, I will answer a few question about filter. Just I mentioned, we provide, we have a SAW and BAW technology. Still the model, business model is still foundry. We provide, wafer, manufacturing to serve our PA customer. This is, as I mentioned, to provide this, competitiveness, to our customer, to inventory level and our customer. In the guidance of the Q4 and the Q1 and out, the outcome, we have say that, we got some small rush orders by different customers. This a good sign that inventory, some of the product is, you know, it is some healthy condition, but some is not still, inventory is still high. It's not totally.
It's hard to tell you that the inventory, some may be right now in healthy, but some maybe take few months. This is what we observe from our customer about inventory. About this question about Wi-Fi 6E, it ask about the opportunity and the competition for the silicon. Yes, Wi-Fi is always compete with the silicon and also the silicon germanium. We see this Wi-Fi 6E because, more wide range, the frequency band. We see these, gallium arsenide for the native, you know, transcend. It have a better performance on the silicon germanium. We see the, there's some high premium smartphone will adopt the gallium arsenide solution for the in of the Wi-Fi 6E. For middle-end smartphone, it still depends on the pricing.
It's hard to tell, but we hope that the gallium arsenide could be a mainstream for the Wi-Fi 6E and Wi-Fi 7 as well.
Okay. Answer maybe probably is the last question. It's about competition from China. As I mentioned, in the Wi-Fi series, we facing different kind of substrate, silicon, germanium, but also the newcomer or latecomer of the competitor in China. Yes, they have some capacity and some capability. As we observe and from the market, right now, their main focus is the low-end application. There's some gap, no matter on the technology, which means the performance on different categories like gain, like ruggedness, like linearity and efficiency. We are really proud about new HBT technology, which have enlarged the gap to our competitor. We definitely will not be, you know, just relaxed, but we will keep moving forward to enlarge the gap compared with our competitor.
Since we have no further question, we're going to wait for another 3 minutes. We will close the meeting. Thank you. Okay. I think there's still some question want to discuss about how's the market situation in the future. As we discussed in this conference and the last conference, what we think is Q1 should be the bottom of the year. The situation, I think, until right now is still not still what we see. Yeah. After Q1, it should be, have some recovery quarter. How the ran up situation, I think, we need to watch carefully quarter by quarter to see how the ran up big or not. Yeah. Thank you. Okay.
I'm gonna answer one question asking about, one of our factors, impact, our Q3's gross margin. Does that still impact or what happened about that? Uh, I think, the Q's in the , Q3's, gross margin was impacted by, one of our, holdings, which is, our, China's largest customer who are, who are l isted, in the public market, equity market, and because of that, it have to , their market price, stock price have to evaluate it, quarter by quarter. A t that time, because of Q3, was, their price was, significant went down about more than 30% .
It looks like this time, the end of the Q4, their stock price come back to the original position. The impact has no longer exists. That's why I'm talking about that. That's therefore, there's no impact for Q4. For Q1, because it's only the beginning of February, it has to wait until the end of the Q1. So far, it looks like the stock price, it went up. It's still going up a little bit, I'm still hard to say. Thank you. One more question about the optical 3D sensing on smartphone. For the last, maybe 4, 5 years, we only see 3D sensing adopt on the American phone, on the high premium phones. Others Android phone, some very small volume, but not well applied on the other Android phones.
It's really a great question, hard to predict. Actually we have co-work with our customer who have designed low-cost VCSEL. Is to try to, you know, low down the entry barrier for the other middle, low-end phone. We'll see. I hope they can penetrate this market, the VCSEL will be, you know, more widely adopted for all phones. This is what we know right now. Okay. I think the time is already gone, done, let the next question we will answer. If an investor wants to know did our Q1 guidance have some including the factor of the share change of the investment in China custom.
I think the answer is no, because I think the stock price is hard to foresee. Usually when we have some focus, we will exclude this kind of factor. Thank you.
Okay. It's about time. There are no further question, and thank you for your participation in WIN Semi's conference. There will be a webcast replay within hours. Please just visit www.winfoundry.com under the investor relations section. You may now disconnect. Thank you and goodbye.