Greetings, and welcome to the Kulicke & Soffa third quarter results conference call. At this time all participants are in listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference please press star zero on your telephone keypad. As a reminder this conference is being recorded. It's now my pleasure to introduce your host, Joe Elgindy, Senior Director of Investor Relations for Kulicke & Soffa. Thank you, Mr. Elgindy. You may begin.
Thank you. Welcome, everyone, to Kulicke and Soffa's fourth quarter fiscal 2020 conference call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer. For those of you who have not received a copy of today's results, the release, as well as the supplemental earnings presentation, are both available in the investor relations section of our website at investor.kns.com. This new supplemental earnings presentation provides additional details regarding end market trends and our outlook. In addition to historical statements, today's remarks will contain statements relating to future events and/or future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.
For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended September 28, 2019, the 10-Q for the period ending March 28, 2020, the 10-Q for the period ending June 27, 2020, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.
Thank you, Joe. We are pleased to report that despite global COVID-19 related challenges, our operations, paths of development, and the supply chain remain healthy as they were through the June quarter end. Our focus on employee welfare, collaboration, and safety has allowed our global workforce to operate efficiently through this unique period. We are proud of the resilience, flexibility, and the dedication of our employees. We are also pleased with our paths of development, new product traction, and the improving state of our core business. Our global development team continue to make significant and meaningful progress on several fronts, increasing our long-term alignment with the significant technology transitions impacting the semiconductor assembly market, the automotive market, and the display market.
Within our core semiconductor assembly space, memory, logic, and image sensor applications are adopting more complex heterogeneous integration, which is increasing interest in the adoption of higher density packaging options, such as high execution feature and thermal compression. Fundamental challenge with two-dimensional node shrink are well reported, and the new packaging approach provide an alternative path to deliver both cost saving and performance. This fundamental change is essentially extending the value of back-end assembly, which benefit our core high volume businesses as well as our dedicated Advanced Packaging Solutions. Customers are seeking solution and the technology partner for emerging 2D and 3D multi-chip assembly techniques. Here we see heterogeneous integrations for complex logic system, memory, mobile application processor, and the image sensor, driving a need for our Catalyst and APAMA dedicated advanced packaging system.
In parallel, we are seeing general System in Package applications for high volume, cost-sensitive devices, which continue to benefit our core wire bonder business. We are actively engaged and well-positioned to support this ongoing transition and anticipate adoption to accelerate over the coming years. Next major trends, such as autonomous, plug-in hybrid, and fully electric vehicle are increasing semiconductor demand for the broad automotive market. Our multiple products and the broad base of automotive customers provide insight to this progression of transition. We anticipate demand for our high reliability and performance-focused automotive system to grow along with the demand for plug-in hybrid and fully electric vehicles. Our initial success in automotive power storage and distribution solution has been beneficial even with electric vehicle representing only a tiny fraction of today's global production.
We have recently experienced increased demand for power semiconductor applications supporting electrical vehicle as well as charging station infrastructures. Although traditional automotive demand has been below our long-term average, we expect a gradual recovery to continue and remain well-positioned to support this broader technology transition. Finally, within display, we continue to ramp production of our PIXALUX system, which is a critical solution to enable new form of backlighting. This transition is a logical evolution that can deliver performance and power efficiency for the higher volume display market. Advanced LED unit growth forecasts are significant. Mini LED and Micro LED annual unit production is expected to approach 500 billion units, roughly half of current annual semiconductor production by calendar year 2022. Will continue growing aggressively for several years. This represents a significant capital equipment opportunity for sorting, mixing, and final placement.
We are pleased with the performance, market acceptance, and the rapid development of PIXALUX and are committed to developing additional technology solutions that support this broad advanced LED transition. As we execute toward this long-term trend, supporting advanced packaging, automotive, and display, we also anticipate a more fundamental recovery in our core businesses, driven by an improving semiconductor unit growth rate. As a reminder, semiconductor unit production declined steeply in early fiscal year 2019, which dramatically reduced the industry's need for incremental equipment capacity. This extended decline in production is historically uncommon and seems to be behind us. Based on our September result, near-term outlook, and recent customer feedback, we continue to anticipate an ongoing unit-driven recovery throughout fiscal 2021, and expect unit growth, excluding advanced LED, to return to a more normal growth rate over the coming years.
After an extended period of low capacity addition, unit growth recovery is being driven by 5G, work from home, consumer products, and smartphone recovery. This end market dynamic and our advanced LED ramping are anticipated to shift our seasonal demand patterns through fiscal year 2021. Historically, demand for our product is stronger during the second fis cal half, although we are anticipating demand to be first half weighted in fiscal 2021. While demand is currently strong, the broad macro environment remains dynamic. Considering the uncertain environment and our limited visibility, we are anticipating revenue within fiscal year 2021 to increase approximately 20%-25% over fiscal year 2020. This estimate assumes annual semiconductor unit growth, excluding advanced LED, will return to a historic average of 6%-7% during the fiscal year 2021.
Hanging back to the September quarter's performance, capital equipment increased by 21% and the APS increased by 9% sequentially. Capital equipment represents 76% of overall revenue, the sequential growth was largely due to a steep recovery within the general semiconductor market. General semiconductor is our largest end market, the most often best customer fall into this category. In prior calls, we have consistently discussed how the install base of wire bonders has been running near full utilization rate. At this point, incremental semiconductor output is triggering the need for broader capacity addition in the general semiconductor space. We see strength in 5G, smartphone, gaming, IoT, and an increasing demand for multi-die wire bonder packages. While our general semiconductor end market shows the steepest sequential change, we also experienced sequential improvement within the advanced LED market.
LED overall was sequentially down due to a sizable set of general lighting orders in the June quarter. Our advanced LED sales for the display market increased sequentially. We expect healthy demand for both general lighting and advanced LED applications over the coming quarters. The auto and the industrial end market, as well as our memory end market, improved sequentially, although remain well below their long-term average. Within auto and industrial, we are seeing a gradual recovery in the traditional automotive market. In memory, we are beginning to see a few customers adding overall capacity. We expect this market to recover as general semiconductor also recovers. The advanced packaging end market also grew sequentially and represents our dedicated advanced packaging system that support high 8 in wafer chip, stud bumping, mass reflow System in Package, and thermal compression, and include our Catalyst, APAMA and AT Premium systems.
While this dedicated advanced packaging end market represents just 9% of capital equipment sales. It is important to note that multi-die advanced packages and advanced LED assembly are becoming material components of our higher general semiconductor memory and now LED end markets. Collectively, we estimate that over 30% of our capital equipment sales during the September quarter support advanced packages. Looking into December quarter, we anticipate general semiconductor and LED to be the primary driver of the near-term demand. We anticipate strong demand through the December quarter, which again suggests fiscal 2021 will not follow a historical seasonal pattern.
Operationally, we are focused on ramping production level to satisfy the strong demand level anticipated for December. Over the past few years, the broader industry and the macro environment was challenging. A lot of strength of our balance sheet and the market positions allow us to execute our market expansion strategy, create new long-term growth vector, and return capital to investors. I'm confident in the company's direction and expect new opportunities in automotive display and advanced packaging, combined with a broader general semiconductor recovery to fundamentally enhance our business model over the coming years. I would now like to turn the call over to Lester Wong, who will cover this quarter's financial overview in greater detail. Lester?
Thank you, Fusen. My remarks today will refer to GAAP results unless noted. While fiscal 2020 clearly came with challenges, we were able to generate full year revenue of $623.2 million, representing a 15% year-over-year increase. Income from operations during fiscal 2020 came in at $58.5 million and represented a 171% sequential increase, highlighting our business model's operating leverage and potential as we execute on our strategic goals. For the September quarter, net revenue was $177.7 million, up 18.1% sequentially. Gross margins came in at 50% and generated net income of $15.8 million and $0.25 of EPS. On a non-GAAP basis, we generated net income of $18 million or $0.29 per diluted share. Gross margin came in much better than expectations. This is partially due to favorable product mix and also a favorable end-of-year adjustment related to our warranty accrual.
Without this favorable adjustment, gross margins would have been approximately 47%. However, we're anticipating gross margins to be around 45% over the coming quarters. Operating expenses for the quarter came in on the higher end of our long-term target range due to end-of-year incentive compensation accruals associated with the stronger September financial performance. As Fusen mentioned, our global development and operational teams continue to aggressively work towards several long-term initiatives while we also ramp near-term production capacity. We also have several SG&A-related products that have been delayed to the softer demand environment over the past years. We anticipate our GAAP operating expense model to remain consistent at $53 million of fixed expenses plus 5%-7% of variable expenses tied to revenue. We're anticipating the variable component to approach the higher side over the coming quarters.
Tax expense for the quarter came in at $8 million due to increased profitability and jurisdictional adjustment. Our total effective tax rate for the year came in just above our long-term tax target of 18%. Turning to the balance sheet. We ended the September quarter with a total net cash and investment position of $530.1 million, which was up sequentially by $14.3 million, and represented $8.49 per diluted share. On a book value per share basis, we closed the September quarter with $12.30, representing a slight sequential improvement. We generated $25.8 million of free cash flow in the September quarter, driven by higher operating income and strong working capital performance. From a days standpoint, we improved working capital efficiently during the September quarter. Days of accounts receivable was down from 117- 101 days. Days of inventory improved from 127- 113 days.
Days of accounts payable increased from 55- 58 days. For the December quarter, we are guiding revenues to be approximately $240 million ±$10 million. We're guiding gross margins to be approximately 45% ±50 basis points, due largely to product mix and higher freight charges. This margin forecast also support a near-term market share strategy for a recently introduced product in our wedge bonding business. GAAP operating expenses is expected to be approximately $70 million ±2%, and non-GAAP EPS to be $0.53 ±10%. This guidance suggests operating income should increase by over 60% sequentially and highlights the business model's leverage. This also highlights our potential to create meaningful long-term shareholder value as we support the significant transitions within the semiconductor, automotive, and display market. This concludes our prepared comments. Operator, please open the call for questions.
Thank you. We will now begin conducting a question and answer session. If you would like to be placed in the question queue please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment it will be necessary to pick up your handset before pressing star one. One moment please while we pull for questions. Our first question today is coming from Craig Ellis from B. Riley. Your line is now live.
Thanks for taking the question and congratulations on the strong recovery in the business, guys. The first question I wanted to follow up on was some of the elements related to guidance. I believe that one of the things you mentioned, Lester, was that OpEx will be on the high side of the typical model. Can you just help us understand how long that will play out and give us some further insight into the specific expenses that are keeping OpEx towards the high end of the models range?
Sure, Craig. As we've indicated before, over the last couple of quarters, we've had a lower level of spending over the past six quarters due to lower travel, initially, cost reduction reasons during the semi downturn in 2019, and obviously because of COVID now. We also have lower variable expenses, and also, as I said, during 2019, we had a very focused corporate-wide reduction on less critical and discretionary related expenses. Basically, we pushed out certain projects that were not critical at the time. Some of these projects are now being more critical, and we're also actually increasing our technology engagement with new customers. I think for the rest of FY 2021, again, I don't guide beyond the quarter, but I would say that it would probably be on the high side of the 5%-7% variable.
That's helpful. Then, I'll turn to a couple product questions if I could. First, Fusen, can you just give us a better sense of what you're seeing for PIXALUX, APAMA, and Catalyst as we go through fiscal 2021? It sounds like end market demand is coming back fairly broadly, and it seems like you've got good traction with those products. Any color and an update on PIXALUX's fiscal 2021 prospects specifically would be helpful.
Sure. For the PIXALUX, we previously in our call, we have a target to achieve a $40 million revenue for FY 2020, so I'm very happy to report that we achieved the goal. For the FY 2021, actually, first quarter of FY 2021, we see a sequential growth compared to Q4 of FY 2020. We are guiding maybe a runway for next couple quarters, FY 2021, from Q1 to Q4. I think roughly it's going to be between $15 million-$20 million. We actually will expect conservatively, we will achieve $60 million-$80 million for PIXALUX for FY 2021. I think by 2022, we have a goal to be a $100 million business. Somewhere around 2021, 2022, we intend to introduce a new product to the market. Beyond 2022, we believe this business should grow faster and 2023 should be above $100 million and will grow positively.
Our goal is around 2024- 2025. Hopefully, I think 20% of our K&S revenue, product revenue, probably will be display related. That's PIXALUX. In advanced packaging, particularly TCB, I think heterogeneous integration is very important in my script. We believe we make a very good traction, and we believe we will in terms of a few design win in 2021. For the advanced packaging, we expect to be much bigger, I think, in 2022. Any other questions?
That was helpful. Yeah. One more question, I'll hop back in the queue. I appreciate the color on fiscal 2021's revenue potential. It looks like, if I'm doing the math right, that the company expects around $760 million in revenue, and that assumes 6%-7% semi unit growth. I think in the past, you've noted that it's possible that semi growth would be as high as 10% in 2021 and 2022, following two years of below seasonal growth. If we see semi unit growth more in the double digit range versus 6%-7%, how would we think about the model's potential for upside versus the 20%-25% or $760 million-ish in revenue?
Maybe, Craig, I can answer this. We feel good about the current business recovery, and we feel this is sustainable. At this moment, what we plan is for the 20%- 25%. You mentioned, this close to maybe $760 region to maybe $790 translate. At this moment, that's our plan. We plan for revenue more weighted in the first half. I think we will have a better outlook about the strength of second half. That's what we're planning, but looks like this recovery is sustainable, and we'll give you more update maybe in next quarters.
That's great. Thanks so much, guys, and I'll hop back in the queue.
Thank you. Next question today is coming from Tom Diffely from D.A. Davidson. Your line is now live.
Yeah. Thank you. Maybe just a follow-up on the last line of questioning. What is driving the unusual seasonality or the lack of seasonality this year versus previous years? Is it truly just a recovery in the general semiconductor ahead of expectations?
Okay. Tom, let me give you a little bit color, the area of strength we are seeing. Currently, we are seeing strength in 5G consumer products, IoT, smartphone, and the increase in SiP, also multiply wire bonded package. We also see ongoing strength in both traditional LED and advanced LED for display, the product we just introduced. I can summarize, I think there are three reasons behind the strength. The number one, in 2019, 2020, I mentioned a few times, our customer under-invest, right? When you direction there over a certain number, are triggering a lot of rush to actually increase our business. It's because of our under-investment in our core product from customers. Number two, I think this recovery, is also related to consumer pattern change, such as the work from home and also stay home.
That drive more need in PC, gaming, and the other home application. Number three reason I think is significant for us. Actually, we see 5G investment. 5G actually is a key end market. That's why a lot of increasing demand for SiP and the very complex multi-die wire bonding module and the packages. The increasing complexity in these devices actually drive incremental capacity requirement for our advanced wire bonding. That's what we are seeing. In simple language, I think, wire bond is actually also important part of the 5G investment. Yeah. The last reason, I think I mentioned already, in this up cycle, we also see ongoing strengths for both the traditional LED and the advanced LED new product we are introduce. These are a few reasons behind the current strengths we are seeing.
No, I appreciate the color. That's pretty impressive. Just to follow up on the PIXALUX 2, when we look at growth from $40 million this year to $80 million or so next year, does that require an expansion to multiple customers, or does it require a new tool from you? What are the individual growth drivers, or is it just the market itself is going to be a little stronger?
Okay. I think actually, it's both. Actually more probably, it's our intention in the next two years or so, or one year or so, we intend to introduce multiple products to broaden our Advanced LED portfolio. We do expect ongoing development activities. The effort we put in will sustain our competitive advantage as we broaden our Advanced LED portfolio. I mentioned $2,040 million, 2021, about $80 million. Beyond that, I think that we will need multiple products to drive this business, and we are preparing for that.
Great. Okay. Finally, maybe just a quick overview of what your expectations are for the APAMA, Catalyst in 2021 as well? Thank you.
2021, I think we still working on few design win. A lot we already had a few, but we actually will try to complete all our target. We feel confident, 2021, to win a few more design win. I think the 2022 will be a more significant one, right? In 2022, I mentioned our PIXALUX, and the display business, is around $100 million. That's our goal. We also expect maybe Alatar, our dedicated advanced packaging. We talk about the flip chip, TCB and also AT Premium, all these together can also reach about $100 million. That is really our current goal.
Great. Okay. Thank you.
Thank you. Our next question is coming from Krish Sankar from Cowen and Company. Your line is now live.
Yeah. Thanks for taking my question, and congrats on the very impressive guidance. I had a couple of them. First one, Fusen, if I try to take your comments on FY 2021 revenues growing 20%-25% and more first half fiscal year weighted, it looks like the December quarter midpoint of $240 million is probably going to be the highest revenue quarter in FY 2021. I just want to double-check on that math, if that's true. Secondly, is that mainly because the PIXALUX is really front-loaded, with the new products for Mini LED coming out in Q1 of next year, calendar Q1, and therefore it'll slow down after that?
Krish, let me answer that. I don't think we said that December quarter will be the highest quarter for fiscal 2021. We did say that seasonality has switched to the front end, sorry, the front part of the year. As Fusen said, for now this is what we see. We see 20%-25%. In response to an earlier question, as we go head further into our fiscal year, we will get better visibility in the second half, and at that time, we revise guidance if we believe that's necessary. Again, to your second question is, the ramp is not because PIXALUX is front-loaded.
I think the ramp, as Fusen already indicated, is across the board, both in advanced display as well as traditional LED, as well as general semi, driven by, again, 5G, as IoT, and we're seeing a little bit of recovery in automotive, and memory as well.
Got it. Yeah, go ahead.
If you remember, our trough actually is Q1 of 2019, right? It's almost two years. Since we reach a trough. Every quarter from that point, either we guide up or we guide flat. Until this moment, we even changed seasonality to guide up in the next quarter, Q1 2021. We didn't say it's going to be a high this one. At a certain point, it will not be every quarter for many years. That's what we are planning. Because of the business coming back is so strong, we just cannot plan every quarter going up. That's why we have current business is at 20%-25% growth. The situation can be stronger than that, and we already mentioned, next quarter, we will take a look. We will have a better outlook for second half over 2021, and we probably will provide update at that time.
Got it. That's very helpful. I do remember you guys definitely called the bottom beginning of last year. Couple of other questions. Second one is, Lester, it does look like in the December quarter, there's going to be more mini PIXALUX shipments relative to the September quarter. I understand you gave some reasons why the margins might still be around, gross margin is around 45%. I'm just trying to figure out, is there drop-through happening? My understanding was the PIXALUX are super high margin for you, and there should be pretty nice drop-through all the way to the bottom line.
Yeah, there is drop-through, Krish. As you know, the drop-through is at $175 million. We get very good operation flow-through, and if you look at what we're guiding in terms of non-GAAP EPS, it's growing by 60%. Meanwhile, revenue is only going up by 35%. That does show that the operating leverage is happening. As far as why the gross margin went down, I think as I indicated, for us, it's product mix. There's more traditional LED ball bonders, as well as just ball bonders in general, and also capital equipment is a larger piece of the quarter rather than APS, and our APS business has higher margins. Plus, I just call some unique items like the freight charges. Because of the great demand by customers, we're doing more things by air freight than sea freight, and that increases our cost.
As well as we are introducing a new product in our wedge bonded business unit. As part of the market penetration strategy, the margins are down a little bit.
Yeah. This is a one-time, will not be forever.
Got it. That's very helpful. The final question, for Fusen. Once there are more Mini LED products in the marketplace, should we assume PIXALUX will have your typical consumer seasonality embedded in it, or do you think because it's still in a growth mode, we should not think a whole lot about seasonality on a quarterly basis?
Actually, Krish, we did not say the PIXALUX will have seasonality. I think what I just mentioned to you, close the question, is $40 million actually for last year. We are very happy to report we achieved the goal. For the 2021, we actually see quite even our shipment. That's our business plan. Every quarter is between 15- 20. We'd like to stay, hopefully it will be in the high side. Even our high side will be $18 million business. We didn't see seasonality for PIXALUX. At a certain point, I think this is the initial products, and the customer base is not many. Hopefully, by introducing more product, maybe a year from now on, and after penetration, we will see more repeatable and more flexible business outcomes.
Got it. Thank you very much, Fusen. Thanks, Lester.
Thanks, Krish.
Thanks. Our next question today is coming from David Duley from Steelhead Securities. Your line is now live.
Yeah, thanks for taking my question. I guess the first question I have is about your core wire bonder business. The large OSAT in Taiwan was talking about a huge difference between supply and demand, somewhere between 30%-40% of needing more capacity. Also talked about how the wire bonders now are, I guess, I want to say, are slowing down a bit because they're having to do more stacking and having to connect more wires per device. I'm just wondering what sort of intensity increases you're seeing as you move into calendar 2021 on the wire bonder front. Are these stacked packages and more wires, like 15%-20% more wire bonder intensive than previous packages, or could you comment on that? Also just comment on what the utilization rates are for your equipment.
I will answer first part, and then Lester is the expert of utilization rates, so he will answer the second part. David, I like to say this. Many people comment about the ball bonder is a sunset business and also technology. I think we already proved it's wrong and will continue to be wrong. We believe the ball bonder is a very important part of our packaging solution. So far, I think our yearly production of semiconductor devices before the packaging is about 1 trillion devices waiting to be packaged, to be interconnected. 70% that actually use our ball bonder. When we come to the 5G rollout, and we are seeing a more dedicated, more complex requirement for the ball bonder. Because the 5G is not only smartphone-only and not only a station, it actually is the whole infrastructures.
Bring, actually, a lot of devices. They really need to have a very complex ball bonder process to put a multi-die together in SiP and also multi-die module. Because of this requirement, because of this increasing capacity or this complexity type, that will drive our ball bonder continue to grow. I don't know if I answered your question or not, but let me give you a color. We believe part of advanced ball bonder is a very, very special technology. You can do a 3D packaging, for example, like stacking memory. Actually, if I could, every company have a different definition of advanced packaging. I think, Ken, advanced packaging should be defined as following. We mentioned our dedicated advanced packaging, flip chip, Catalyst, TCB, interposer, stud bumping is AT Premier.
This part actually represent in our September quarter, 9% of our total capital equipment sales. I do believe advanced packaging, because of our special requirement, because of very, very complex looping capability, you can connect a 2D and 3D die to die and within a die. I think this capability, we know that this multi-die, I think, packaging would not be possible. We have a 2D and a 3D multi-die packaging. I think by using advanced bonder, that should be categorized as advanced packaging. For a 2D SiP multi-die package is about 8%. 3D stacked die memory is about 5% of our September capital equipment sales for September. Right now, I think our AP should also include advanced LED assembly. We know our system, I think, will not be able to achieve a very, very high final placement.
Advanced LED assembly is about 10% of our September quarter sales. All these adding together, we believe our products, 32% of our product is supporting advanced packaging. I don't know if I answered your question.
Well, I guess my question was more about just wire bonder intensity. It seems one of your large customers in Taiwan was talking about on their conference call that the wire bonders are literally slowing down because they're having to connect more leads per device and having to do more loops. You need more wire bonders per device?
That's correct.
The intensity of the wire bonding is increasing, so I'm just wondering if you have some sort of metric. Is it increasing by 25%? 20%? 10%?
Well, I can only tell you, we only seen the beginning of a huge demand at this moment. We believe because of 5G bringing very, very complex multi-die packaging, that require ball bonder, and right now we have a capacity constraint. We'll give you a more precise number, maybe on next couple call, we will give you the demand, percentage increase for the ball bonder.
Fusen, let me answer the utilization question. For the September quarter, utilization was above 80%, Taiwan and China both. Significantly above 80%. China's almost at full capacity, over 90%. Southeast Asia also has improved significantly, they're now up to around 75% or so. Obviously, Europe and North America have improved, they're actually lagging the other markets.
Dave, I think, similar answer. This upside, we feel like is sustainable, and the ball bonder will also be part of that. Along with the new product introduction, we talk about PIXALUX, in the future will be a new product portfolio in display, and Advanced Packaging, as we mentioned it. The ball bonder, I think is also participate in a big ramp, I think, for this current cycle.
Thank you.
Thank you. As a reminder, it's star one to be placed into question queue. Our next question is coming from Christian Schwab from Craig-Hallum Capital Group. Your line is now live.
Great. Thank you. Congrats on the nice recovery starting here. Can you follow up to the previous question?
Right. Fusen, when you look at your general semiconductor business and we see more silicon content in next generation 5G applications than we saw in 4G, as well as the continued movement to electrical vehicles and the continued electrification of automobiles with silicon content going forward. In addition, potential increased capital needs due to the complexity of some of these chips. Can you give us an idea if the general semiconductor unit growth is, just to keep the math easy, say 10% a year for the next few years, would you expect to outgrow unit growth? If you do, over time, what percentage would you expect?
Well, Christian, I'm sorry, I think your voice did not come very clear to us. I hear your question asked about the unit growth rate, right? At this moment, I think, the industry actually have a different forecast. And now is a little bit more positive. For our business plan, I think we planned 2021 and 2022 is going to be around 6%-8%. If the market, I think, dynamic change, we are going to update you, maybe in one or two quarters. At this moment, I think that's what we are planning. We don't want to forecast very long, right? Next two years, I think we are seeing about 6%-8%. That's what our plan. But it can be faster, but we are going to revise it should change.
Okay, great. No other questions. Thank you.
Thank you. Our next question today is coming from Craig Ellis from B. Riley. Your line is now live.
Yeah, thanks for taking the follow-up questions. I'll just start with one that goes back to the utilization color that you provided, Lester. Thanks for the granularity there. Would it be fair to say that the strength in the business that you're seeing in the fiscal first quarter is really led by China and Southeast Asia? If that's so, given the utilization levels in Europe and North America, would it be fair to think that as we look ahead to fiscal 2Q, that more of the incremental strength would be coming from those geographies? Is in fact the order dynamic different than what we see if we just did a one-to-one correlation with utilization levels?
I would say, Craig, that for Q1 actually is China and Taiwan, more than Southeast Asia. Southeast Asia utilization is as improving, but not to the levels where Taiwan and China is. I think going forward, I think the continued growth will also come from Taiwan. Taiwan is lagging a little bit behind the China in terms of utilization, but they are already very high. We can see continued strength from Taiwan and Southeast Asia over the next two quarters or so. As North America and Europe, they will catch up, hopefully, assuming they solve the COVID issue. I would say it's probably in that sequence. We see continued strength in the next two, three quarters coming from Taiwan and Southeast Asia.
Great. The next one's really just a housekeeping question on the color you've provided around fiscal 1Q gross margin. Clearly there's increased shipping costs because of order intensity with customers. You talked about the new wedge product impacting gross margin. Can you quantify what the combined impact of those two are for us?
I would say probably around maybe 150 basis points or so.
Great.
Hundred.
That's very helpful. Yep. Then tax rate for the quarter and year, should that be 18%?
Yes, I think we're still forecasting 18%.
Lastly, long-term question, Fusen. It's clear that you're gaining some visibility into new product ramps on a multi-year basis. Very encouraging to see that. We clearly have a rebound in the general semi business that, as you've articulated multiple times, is led by numerous secular dynamics plus some cyclical things like a SAR recovery and a smartphone recovery. The question is this, as you look at how the business is unfolding on a multi-year basis, are you starting to gain visibility into the low end of the target model, which was $1.15 billion and $4 in earnings per share, or do you not yet have visibility to revenues of that level as you look out to 2022 and 2023?
Okay. Craig, let's look at this. In my script, I mentioned the negative unit growth actually is very uncommon, right? Especially happened in this industry, 2019 and 2020. This is really uncommon, right? In a conservative way, let me answer the question like this. If we add three years, 2018 is a very strong year, right? Revenue is close to $900 million. Then we have 2019, like $540 million, and we have this year just finished, 2020, is about $630 million also.Right? If you add these three together, we have one very strong year and two very uncommon year, right? You divide by three, roughly, it's about $700 million. This, I believe, can represent the very, very solid ABC runway of our core business. Right? Because of one strong year and very, very two low years. I mentioned already, this is very uncommon.
How can we, in this war, high tech war, we have a negative unit growth. What I'm trying to say is we feel like $700 million runway should be sustainable as a base for the core business. By in two years, maybe we don't talk about one year, in two years, 2022, we mentioned already, I think, display, we already guide 2021, maybe we'll reach $60 million-$80 million, right? On the higher end, $80 million is already very close to $100 million. We believe 2022 display, we just set as $100 million goal. I think we can feel it, we can touch it. I think we feel good about the goal. Advanced Packaging, I think we can add another $100 million. Right. We intend to have a few significant design wins in 2021, and 2022, I think, hopefully, our Advanced Packaging dedicated will be $100 million.
I think APS, we can also grow another $50 million-$80 million. You're adding all this together. I think $1 billion looks like is achievable from our view at this moment, right? If we are very lucky with the current business, really go wild. Right now, we almost reach $250 million runway. If the business go crazy, I think we probably will be also higher than $700 million. Even higher than $800 million, or can be a little bit even higher, right? We really don't want to see our core business overrun. We believe this should be sustainable above $700 million. Overall, we feel quite good. The general semi, I think, will be recovering. We also believe our product roadmap is sound, and that we are making traction. Hopefully, by 2022 and not 2021. 2021 got to be luck.
2022, and hopefully, we have a good possibility to achieve $1 billion.
That's very helpful. Thanks, everybody, and good luck.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.
Thanks, Kevin. Thank you all for the time today. We'll be presenting at Needham, Sidoti, D.A. Davidson conferences, and also the CEO Summit over the coming months. As always, please feel free to follow up directly with any additional questions. Have a great day, everyone. Kevin, this concludes our call. Thanks.
Thank you. That does conclude today's teleconference and webinar. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.