Good morning and good evening, ladies and gentlemen, no matter where you are. Welcome to WIN Semi's Results Webcast Conference for the fourth quarter of 2021. My name is Joe Tsen, the Spokesman and Associate Vice President of Finance in WIN Semi. Joining me today on today's call are our CEO, Kyle Chen, and our 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 and provide brief guidance for the first quarter of 2022. Secondly, I will go through the financials in detail, 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 one of the presentation slides. 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, and the company undertakes no obligation to update these forward-looking statements going forward. Now, let me hand over the call to Mr. Kyle Chen, the CEO of WIN Semi.
Okay. Thank you, Joe, and welcome everyone. In the fourth quarter of 2021, customer demand continued to grow, reflecting a sustained momentum from the third quarter. Our revenue reached TWD 7.2 billion in the quarter. It's an increase of 7% QoQ and 5% year-over-year. This marks another record high for a single quarter during the past two years, surpassed the previous one set in the fourth quarter of 2019. Driven by full capacity and better product mix, our gross margin in this quarter was 40.5%, which was better than our previous expectation. Earnings per share was TWD 4.19.
For the full year of 2021, our revenue set another historical record high to TWD 26.2 billion with an annual growth rate of 2%. Earnings per share reached TWD 12.9. Looking at the growth in the fourth quarter, we saw strong demand for the smartphone PAs, which not only driven by the continuous momentum from the just newly released U.S.-based smartphone in the third quarter, but also the strong demand from China smartphone customers. In addition, our infrastructure revenue, which included, 5G and low-Earth orbit, so-called LEO, has delivered growth for two consecutive quarters. This was, another important key contributor to the revenue growth and the better product mix in the fourth quarter.
For the full year of 2021, we seized the opportunity to be a key beneficiary amidst the reshuffling of the China smartphone market by leveraging our strength of the advanced technology, excellent product yield, and industry-leading production capacity. This was our most outstanding growth drivers last year. In addition, when the die size shrink of the new generation of 3D sensing chip for U.S.-based smartphone caused the market to be cautious about the overall shipments for wafers. Our 3D sensing revenue actually increased year-over-year, given the increased difficulty of the wafer production technology, making another key growth driver for us last year. This demonstrated that our strategy of the focusing on technology leadership and customer diversification has served us well, allowing WIN to continue to outperform despite the volatility and uncertainties in the market.
Looking ahead to the upcoming new year, while the COVID-19 pandemic continues to impact the world. We believe the global 5G network infrastructure is still incomplete, and the penetration rate of the 5G smartphone is still lower than that of the 4G. However, the long-term development of the IoT, AI, and the big data, and the evolution from the AR and VR even to XR, and the recent very hot topic, metaverse, all require the characteristic of the broadband, high-speed transmission, and low latency for the 5G networks. Thus, we continue to be optimistic about the growth trend of the 5G in the next few years, as well as the construction of the satellite communication infrastructure. In addition, our technologies in optical communication and optical sensing are becoming more mature as we continue to accumulate more experience, which also helps us to attract more potential customers.
As a result, we continue to invest in R&D resources and cooperate with key customers closely, aiming to become a pioneer of the next new application. In terms of the capacity expansion, the cleanroom expansion, our Fab C, that's our third fab, will be completed in the first half of this year, and then we will install equipment immediately after that. The new capacity is expected to come online in the second half of the year to meet the demand for the strong seasons. For the new Luzhu fab in the Southern Taiwan Science Park in Kaohsiung at its groundbreaking in the middle of the last year, the construction of the new fab is a key focus for this year, and the goal is to enter mass production before the end of 2024. In addition to achieving operational excellence, we also prioritize corporate sustainability and corporate governance.
For the 2021 corporate governance evaluation survey by TWSE, this is the Taiwan Stock Exchange, we not only have been ranked top five among the Taipei-listed companies for several years but also ranked the top 10 among all TWSE and Taipei Exchange-listed companies in the electronic industry with a market value over TWD 10 billion . In addition, we were also the winner of the 14th TCSA Sustainability Report President Award internationally. We have been selected to join the Dow Jones Sustainability Index World for the second year since 2020. As ESG continues to grow the importance globally, it is encouraging for us to be included in the Dow Jones Sustainability Index World again, along with the global leading semiconductor companies, and again, recognition for our effort in the corporate governance and the sustainability.
Looking ahead to the first quarter of 2022, because and due to the annual maintenance of our three fabs and the traditional slower season, our revenue is expected to decline 20s from the previous quarter, and the gross margin will be about mid-30s. I will turn the call back to Joe.
Okay. It's our pleasure to present our financial results for the fourth quarter of 2021. You also can refer our presentation slides. We're starting from page four. Before that, before I start, please still have to read over for the safe harbor notice in page two. Okay, in page four, we talk about revenue and the margin. Q4 2021, the revenue was TWD 7.2 billion, and QoQ was up 7%, and YoY was up 5%. With Q2 2021, the gross margin improved about 1.7 percentage points to about 40.5%.
That was driven by the full capacity in our fab and also the better product mix, which we can discuss later. The gross margin was better than our expectation earlier, and therefore the operating margin was improved about 1 percentage point to around 27.8%. The next page, in page five, is the part talking about earnings. The Q4 2021 net profit was TWD 1.7 billion. QoQ was up 13% and YoY up around 32%. Therefore, the EPS come in at TWD 4.19, compared to TWD 3.67 in Q3.
The whole year of 2021, EPS was TWD 12.09. We talk about the product mix in page six. In Q4, the product mix, we can compare one by one. The cellular was between 50% and 55%, and the infrastructure was between 20% and 25%. Wi-Fi was between 5% and 10%, and others, including optical, is around 16%. You can find out that the cellular was up one stage, and the infrastructure also up around one stage.
The cellular continued momentum was from the U.S. tier one smartphone supply chain, which the momentum still continues in the Q4. Other than that, also the China market still strong. In the infrastructure, another contributor for the revenue growth and also the margin growth due to the sequential growth in the infrastructure business from the bottom in Q2 last year, and then the sequential growth in Q3 and the Q4. I think our CEO Kyle Chen has mentioned a lot about several factors in the infrastructure momentum, and then they can give us more color later in this presentation.
Q1's guidance in page seven. I think Kyle already mentioned that, so I'll just read it over again. Due to the annual maintenance of the fab and the traditional slower season, we expect the Q1 2022 revenue to decline low 20s QoQ. We also expect the Q1 2022 gross margin to be around the level of mid-30s. Okay, we can quickly go through the income statement and the balance sheet starting from page nine. I have to remind everybody that all the figures are based on the unaudited basis. The actual results will be based on the final CPA's audited report.
The Q4 net revenue was TWD 7,217 million, and QoQ was up 7%, YoY up 5%. The gross profit around TWD 2,923 million, and QoQ up 11% and YoY up 22%. The gross margin are better than our expectations earlier. It was 40.1%, which is improved about 1.7 percentage points. The operating expense about TWD 914 million, and the OpEx ratio is around 13%. Therefore, the operating income was TWD 2,009 million, and which is QoQ was up 11% and YoY up 21%. The operating margin become 27.8%, which is improved about one percentage point.
The non-operating item was a net income around TWD 41 million. The details will be on page 11 for your reference. Income before income tax was TWD 2,049 million and income tax expense was TWD 360 million . Therefore, the net income was TWD 1,690 million , which is the QoQ was up 13% and YoY up 32%. That the net margin was 23.4% , which is improved about 1.3 percentage point.
Therefore, the EPS for this quarter was TWD 4.19, which is the last quarter it was TWD 3.67. The equivalent quarter ROE was 21%, and the approximate utilization in Q4 was fully loaded at 100%. The depreciation expense for Q4 was TWD 1,018 million, and the CapEx for this quarter was TWD 2,256 million. Okay, that's Q4 for 2021. For the whole year of 2021, the net revenue was TWD 26,182 million. The YoY was up 2%.
The gross profit was TWD 997 million, and the gross margin for whole year was 37.3%. The operating expense was TWD 3,347 million, and the OpEx ratio is what? 13%. Operating income become TWD 6,423 million, and operating margin was 24.5%. The non-op item, the net expense, was TWD -23 million. Again, the detail was in page 11 for your own reference. The income before income tax was TWD 6,400 million and the income tax expense was TWD 1,189 million. Therefore, the net income was TWD 5,210 million. The net margin become 19.9% for the whole year. The EPS was TWD 12.90 for the whole year.
The ROE for 2021 become 16%, and the whole year's utilization rate was 90%. The depreciation expense become TWD 4,035 million. The whole year's CapEx for 2021 was TWD 8,081 million. This is the whole year's income statement, and page 11 is a non-op item for your own reference. My last page will be the page 12 for balance sheet. The dated 2021 December 31st, the total assets was TWD 74, 894 million. The total liability was TWD 37, 732 million . The combined start remained the same as last quarter, TWD 4,240 million.
Therefore, the total equity was TWD 37,122 million. The book value per share was improved from TWD 77.33 to TWD 82.41. The current ratio, the key index about current ratio, which is in terms of a current asset over current liability, was 367%. The debt ratio, which is in terms of a total liability over total assets, was 15%. Okay, this is financial report and that's my report. Yeah. Okay, then I will turn the call back to our CEO, Kyle.
Thanks, Joe. I will explain more about the market outlook this year and beyond. Please see my files. The second page is 2021, the operation highlights. There are four highlights. First is annual revenue, we hit a new record high. For the application, we achieved more than 30% revenue growth on the server and the satellite, and more than 10% revenue growth on optics. For production capacity expansion, southern Taiwan, Southern Taiwan Science Park, STSP construction is on schedule. It will be completed next year, Q2, and we hope we can launch the production after qualification starting from 2024. The other, you can see we have a lot of cooperation with the key university at Taiwan.
As you know, the talent pool is a very important key success factor of the semiconductor. We have a nurturing compound semiconductor talent. We have a joint technology innovation center together with National Yang- Ming Chiao Tung University. Also together with fifteen companies, we established the Academy of Innovative Semiconductor and Sustainable Manufacturing at the National Cheng Kung University at Tainan. This can support our future southern Taiwan production site in southern Taiwan. Okay. Next page. This page shows the revenue trend of the semiconductor. The upper right is the growth rate. Worldwide semiconductor, this is forecasted from Strategy Analytics and Gartner. Last year forecast is 25% growth. Gallium arsenide forecast is 5%, but we achieved 8% in terms of the U.S. dollar.
We achieved from $845 million in 2020 to $913 million in 2021, is 8% growth in U.S. dollar. We saw the future. We are pretty optimistic for the future growth engine as below. First is 5G and Wi-Fi. Second, the satellite. The other is not [for eye], it's about optical application, could be sensing and data communication. We see the 5G penetration rate is still lower than 4G, but we expect the 5G will become mainstream in the future for the next year. We have a new technology to deliver more high performance PA. The other is Wi-Fi. Wi-Fi since last year migrate from Wi-Fi 5 to Wi-Fi 6. In the future, more high frequency band increase to E.
The other we also develop in the Wi-Fi 7. Second is satellite. The satellite will become more mature in the future, the more and more company will launch the more satellite in next year and the following. We provide a state-of-the-art technology for the receiving and transmission, it could be. We have a certain market share. Also the VCSEL. We are the key manufacturer in the world. 3D sensing and proximity sensing are right now more and more application are expanded. We actually already delivered the vertical sensor in the automobile surface body. Later I will explain more detail. The other is for another wavelength for the indium phosphide, also have a receiving and laser device.
We expect the indium phosphide sensing proximity sensor will contribute revenue this year. First is communication connectivity. This from the Strategy Analytics in the page six. We see the 5G compound annual growth rate is about 20%. The 4G will become small, lower and lower. 5G phone will become over the 4G phones from this year. The revenue is growth. We have no doubt about this smartphone PAs market. Next page seven is Wi-Fi 6 and Wi-Fi 6E. Wi-Fi 6E cover a new frequency band from 6 GHz-7 GHz, and the modulation will become more difficult. The gallium arsenide substrate it have a outstanding characteristic to fulfill this critical requirement.
For the next page, we saw the Wi-Fi 6 is a mainstream, and the Wi-Fi 6E will be launched maybe second half of this year. It occupy 20% of the market. By 2024, Wi-Fi 6E will cover about 40%. We can see this margin is also growth. Wi-Fi 7. Wi-Fi 7, the same frequency of the Wi-Fi 6E, but it's a more complex modulation on the wider bandwidth and the high frequency. The QAM from starting from 1K to 4K. So the other is a good thing for the gallium arsenide the MIMO, from 8x8 to 16x16. So following the Broadcom, MTK announced their SoC chip on the Wi-Fi 7, we already developing the advanced HBT to meet the performance of the SoC. Okay, next page is about satellite communication.
As well as the satellite installed in the sky. You can see a lot of the in my chart, you can see the dot line, no matter from the sky to the ground, and either to the aircraft, the boat, and the vehicle, even the cellular phone. You can see the market, and the market forecast. Satellite communication have an annual growth rate about 20% from 2021 to 2026. Also the data rate, that means the data traffic is increasing 14x from 2020 to 2030. This high data rate and the more satellite, we can expect this market is keep growing for the next few years. For page 11, this is what we got from the Taiwan IEK.
They have surveyed this satellite, the launch plan. I think SpaceX Starlink, you know very well. U.K. have OneWeb. Also, Amazon have Kuiper, is about to start the plan. Canada, the Telesat. You can see this satellite number is huge. Not only the satellite can bring the business to WIN for the receiving and the transmission, but also, as I mentioned, the user terminal, the aircraft, the boat, the vehicle, the phone. As long as the cost is beneficial to the customer, I believe the market will come in. Next page is optical devices. 3D sensing application at WIN is a major driving force for the revenue growth. The structured light since U.S.-based smartphone adopt this 3D sensing.
Since 2017 or 2018, WIN still is the key supplier for this application. Also, since iPhone 12, we see the LiDAR was adopted on the rear side of the smartphone. More and more applications on the AR, VR, metaverse. We believe that another many projects ongoing, no matter what kinds of phone, the proximity sensor can install on the lens camera to help the focus. This news says that some notebooks already might start to use the 3D sensing. That's another growth momentum for 3D sensing business. Next page, in 2014, you see the Yole have forecast the growth rate about 13.6% from 2021 to 2026.
You see the majority is growth from the mobile, consumable, and telecom infrastructure. This market is growing. LiDAR. We also have, actually we already deliver our wafers chips to automotive application. This in-vehicle sensing device, so-called DMS, driver monitoring system, and OMS, occupant monitoring system. This is inside the car. For outside of the car, we also cooperate with a customer. It is about 150 m and 200 m long range LiDAr for robo-taxi and the passenger car. It's ongoing. Right now it's under the pilot stage. The other application is for the AGV. As you know, the factory will reduce the manpower. AGV is the key. This is also another application together with customer in the pilot stage.
We believe the LiDAR, no matter inside the vehicle, outside the vehicle, and other application, we believe that this growth will come. This is the market about the LiDAR. The upper chart shows the right now the majority in-vehicle is by the infrared LED. But the VCSEL have a more good capability and the performance. By year 2025, I think this VCSEL, the in-vehicle will take over the majority of the application. The lower chart shows the market, LiDAR market, no matter for the autonomous vehicle, industrial and delivery or even smart city, this market is growing. To achieve the innovation for the RF and also the optical, WIN have provided the best technology development for the future market. On page 18, this is a little bit complicated.
I have shown you the periodic table in the upper right side. We focus on the gallium arsenide, as you know very well, and also the others for gallium nitride, and also the indium phosphide. In the next slide chart, you see there is a frequencies versus power. The gallium arsenide have a superior characteristic performance better than the silicon. In frequencies over maybe 5 GHz, and the power if over like 100 W, gallium arsenide definitely will be the major technology to fit this application. As long as the frequency increase, we also have indium phosphide, HEMT, HBT is ongoing for developing. The frequency up to 1 THz. You can see the LiDAR, short wavelength infrared, and the data comm application.
These are using gallium arsenide and indium phosphide, and WIN have all this technology ready for this market. The other technology is the GaN. WIN's GaN is for RF mainly, not for the power device. We have more than 20 years experience and skill and technology on the gallium arsenide. We can leverage this kind of the experience to help WIN's gallium nitride for RF. We have 0.15, 0.25, 0.35, 0.45 technology. This can be covered the gallium nitride major solution under the DC 40 GHz. We believe this gallium nitride market, we can gain some share for this under 40 GHz. Okay. The other is another technology, indium phosphide for optic.
As I mentioned, the sensing and the data communication will become more and more application in the world, like a proximity sensor, short-wavelength infrared and the LiDAR, no matter on the sensing or the communication. We are ready to enter this market and become the pioneer production site for this application. That's why I'll tell you more in detail, okay? Now I turn back to the next topic. Okay.
Okay. Thank you, Kyle. We now begin the Q&A. Please submit your question in the Q&A box on the webcast window now.
Okay, I think there's a question want to know about our gallium nitride and indium phosphide status and the future plan. I think first, as you know, WIN Semi right now for the RF purpose, we're still more focusing our resources to GaN on silicon carbide.
The investor, I think right now want to know if we have some study on GaN on silicon for RF purpose. Yes. I think certainly, as we mentioned before, recently as a foundry and focusing on the RF purpose. All the material, if that can have the technology used for the RF application, I think we will put some resources for that. I think, as I mentioned before, I think GaN on silicon carbide is still the mainstream. For GaN on silicon, for RF purpose, yeah, we have put some resources, but I think it's just in the R&D stage. Yeah.
For the indium phosphide, I think, right now, most of our indium phosphide capacity is that for the optical devices, which is the laser-related technology. For the indium phosphide RF purpose, I think, it's a little like the GaN on silicon. We just put some resources for R&D purpose. Yeah. Thank you.
Okay. There is several question asking about this year, the year 2022, the capacity expansion, CapEx depreciation, such question. We plan to expand the capacity in around 3,000 to 5,000 increase for this year. The total CapEx will be around TWD 12 billion ±. I think the majority and a major focus will be for the Southern Taiwan Science Park, the Kaohsiung Luzhu fab. It's still on construction for the first building of the fab. This will be the focus for this year.
The depreciation expense, because of that, the depreciation, I think, the new fab in Kaohsiung still on construction and also the building, I think, the last amortization for the depreciation. We still are opened up the new capacity in our Fab C, which is in Guishan, for 3,000 to 5,000 this year. They also have the equipment procurement, which is coming later after year. They still have the depreciation. The expense, we expect, will be, compared to last year, around 10%-20% more in this kind of range. That's for the CapEx.
Thank you.
I think I need to state I think there's some question want to know about some picture about Q1 segment status. I think as Joe just mentioned before, I think Q1 our guidance is the revenue was down low 20s. For those four segments, I think our device revenue is the segment that the drop percentage is biggest. I think it's mainly because for our optical segment, actually it's mainly focusing on the 3D sensing. As we know, that devices is only for one end application devices. The seasonality is very clear most of the demand will more concentrate on the second half.
In the first half, that will be the low season usual. That's the reason why they dropped the most percentage in Q1 compared to the four segments. The best segment that performed in Q1, that would be the infrastructure. Although it's still declined, but I think the percentage for our infrastructure segment, the decline compared to the other three segments, the decline percentage is pretty low compared to the others. The other two cellular and Wi-Fi, which take maybe most of the revenue of the WIN Semi, their decline percentage is very close to our guidance. That's the situation and status, the picture about the four segments in Q1. Thank you. Okay.
I think this is the other information right now we want to share with you is, as you know, before, we will mention the 5G cellular PA percentage in our conference. I think right now we already see most of the cellular unit is more. The 5G smartphones become the mainstream. And also at the same time, the band of the 5G is increasing more. It's not only the same n77, n78, n79, and also a lot of new 5G band was installed in the smartphone. Those frequencies is also the same as the 4G. Actually, for our customer design, it's hard for us to really tell it's for the 4G or the 5G.
It's hard for us to really give the investor the very clear information how the percentage will be. I think start from this quarter, we will start to calculate and figure out those percentage because right now it's become a little hard for us to do. Afraid to misleading the percentage to the investor, I think we will no longer to provide a 5G PA percentage about our in our revenue. Thank you.
Well, we're still waiting for more question coming, but so far, we were waiting for two more minutes. Thank you.
Okay.I think there's one question right now, is want to know about our future capacity expansion, I think. I think as Joe just mentioned, this year we still have one full cleanroom expanded. For this year in our Fab C, we were increasing around like 3,000 to 5,000 capacity at the end of this year. Yeah. That's the plan right now. About the Luzhu, the Luzhu new fab, I think it's not so quick. The year the fab can have some contribution, I think maybe still wait until 2024. Yeah. I think that's about our future expansion plan for WIN Semi. Yeah. Thank you.
Thank you. There are two questions about the indium phosphide sensor. One question is, will indium phosphide replace the VCSEL? It's definitely not. It's a different application. Indium phosphide has a different wavelength, so they have a different application.
Okay. We're gonna answer the final question asking about the OpEx and depreciation. The OpEx, most of the time, our OpEx ratio is surrounding around 12%, up and down. For the year 2021 was up to 13%. Probably, we'll be in the range of between 11%-13%. That will depends on the different situation, including the high season, low season, any kind of the scenario.
About the depreciation, it's still hard to predict the schedule, but because this year we have, as Kyle mentioned that, our major focus is on the construction for our new fab, and it's step-by-step. At the same time, our old fab, Fab C, still also the cleanroom construction ongoing, and then later on, the equipment will be installed. So yeah, probably the later, the higher of the depreciation expense that maybe happen. So but let's see what happen further and further later. Okay? Thank you. Okay. Now, right now it's exactly the time 4:30.
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