Hello, and welcome to the Kulicke and Soffa's 2022 first fiscal quarter results conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please Press Star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Joseph Elgindy, Senior Director, Investor Relations. Please go ahead.
Welcome everyone to Kulicke and Soffa's fiscal first quarter 2022 conference call. Joining us on today's call is 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 our supplemental earnings presentation are both available in the investor relations section of our website at investor.kns.com. In addition to historical statements, today's remarks will contain statements relating to future events and our 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 and 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 2nd October 2021 and the 8-K filed this morning. 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. It's continued to be a very exciting and a transformative time for the company. Our core business is being fundamentally enhanced as the importance of semiconductor assembly increases in both high volume and the leading-edge semiconductors. Additionally, we continue to make significant progress expanding our market reach as the interest and adoption of our advanced packaging, automotive, and advanced display offerings are accelerating. Our confidence in these high potential new initiatives is improving as our market engagements are tracking better than expected during our Investor Day in September. I will spend a few minutes to cover each. Within our dedicated advanced packaging business, we continue to gain access into the logic, networking, and the mobility market.
This portfolio, including our lithography, thermal compression, high accuracy flip chip, and the system in package flip chip solution, are extremely competitive and address the broad and the growing semiconductor assembly market. We continue to drive adoption across this growing portfolio. At APAMA, our thermal compression platform is making significant progress. Heterogeneous integration or chiplet integration is one of the long-term opportunities that we are pursuing aggressively. Although this is not the only market. In addition to heterogeneous integration, we are also extending access within mobility for both high volume logic and the next generation 3D sensing applications, and also for co-packaged optics necessary for ultra-high-speed network communications, such as high bandwidth transceivers.
The key benefit for the thermal compression or TCB process include an efficient solution for higher bandwidth interconnect assembly down to 10-micron pitches, which is way beyond the current interconnect pitch for most leading logic application. Additionally, TCB enables stacking for emerging 2.5 and 3D architectures. This shift to emerging multi-chip structures is increasing the value add of packaging technology and is increasingly necessary to support here at the leading edge. In addition to this fundamental benefit within leading-edge logic, TCB also enable assembly for components which are heat sensitive, including thin substrate and optical components used for communication and sensing. We recently received acceptance and recognized revenue for a high potential silicon photonics application supporting the optical transceiver market.
With increasing serial bandwidth need, network-to-network communication is expected to grow dramatically, with high bandwidth optical transceiver expected to grow at a 50% CAGR through calendar 2025. We are very early in this transition, and we are positioned to help enable this growth. The next update is related to our automotive opportunities. The transition to electrification and autonomous are accelerating semiconductor growth in the automotive market at a rate of over twice the industry average. Over the coming year, our high-performance, high-reliability system mesh well with this end market. In addition to our historic leadership position within the automotive semiconductor applications, we have also been developing new battery assembly systems. Over the past several years, we had one core battery solution that was adopted and globally deployed by one customer.
While this solution was very successful, the market was limited. Today, many more customers are entering this space, and we are working to bring new innovative solutions, supporting both cylindrical and the prismatic battery opportunities to market. Recently, our engagement and the market interest with our current and the new battery offering have expanded dramatically. At this pace, we are tracking better than the expectations set during the recent Investor Day. We are currently engaged with over five high potential customers eager to ramp battery production for the commercial and the consumer vehicle market. We are also experiencing growing interest within emerging industrial applications, such as battery backup and agriculture. Finally, the third key growth focus area is advanced display. We continue to deliver our market-leading PIXALUX system and are ramping production of several LUMINEX qualification tools.
Over the coming quarters, we anticipate winning several new LUMINEX qualifications and gaining more visibility on a broader industry ramp. Turning to our results this quarter. We achieved $460.9 million of revenue and a non-GAAP EPS of $2.19. We generated $408.6 million within capital equipment, and the demand remains strong across all end markets. General Semiconductor remained very strong, softening by 16% sequentially as anticipated. Within General Semiconductor, the more capacity-driven ball bonding business declined by 8%. The larger sequential reduction stemmed from very strong September quarters demand for our wafer-level logic and power assembly solution. Utilization rate remains strong across this broad install base. As a reminder, General Semiconductor revenue in the recent December quarter is currently over 50% higher than the same period last year.
Within the LED market, we continue to support rapid growth within advanced display. Advanced display increased by 28% in the December quarter, representing 56% of our total LED revenue, up from 40% in the September quarters. We continue to aggressively work toward expanding our presence in this new exciting area and anticipate advanced display will grow dramatically over the long term. Next, automotive and industrial remains a long-term growth opportunity for us. In September, automotive demand increased by 92% sequentially and was driven by improvement in our battery assembly, power distribution, and sensing solutions. We are very eager to continue participating in the long-term transformation of the automotive space. Finally, demand for our memory solution increased by 17% sequentially from the very strong September quarter.
Overall, current market conditions and our long-term outlook are tracking better than expected, and we remain very positive over the coming years. Near term, we are very focused to drive new customer engagement and win new qualifications across advanced packaging, automotive, and advanced display portfolio. Over the prior years, our focused development effort have better aligned our business with long-term technology-driven market opportunities, which we are executing on. While broader industry supply chain and the global logistic challenges are part of the current operating environment, we believe they are very short term and anticipate greater improvements through fiscal 2022. Over the coming years, the future is very bright, and we look forward to sharing our progress over the coming quarters. With that said, I will now turn the call to Lester, who will discuss our financial performance. Lester.
Thank you, Fusen. My remarks today will refer to GAAP results unless noted. During the December quarter, we continued to perform in a very dynamic supply chain environment and were able to recognize revenue of $460.9 million. Considering our above-average LED-related revenue during the September quarter, underlying demand in other end markets remained robust. Gross margins came in strong at 48.4%, which stemmed from sequential improvements in both capital equipment and aftermarket products and services, and particularly related to a lower amount of expediting and logistic expenses in the December quarter. non-GAAP operating expenses came in below our expectation at $65.4 million during the December quarter. This was primarily due to a delayed start in a few internal projects, which favorably benefited SG&A and R&D related expenses.
Tax expense for the quarter came in at $17.9 million, and we anticipate an effective tax rate of approximately 15% for the full fiscal year. Non-GAAP net income came in at $138.8 million, generating $2.19 of non-GAAP EPS during the December quarter. Turning to the balance sheet. Working capital has remained efficient. Days of accounts receivable increased from 78- 84 days. Days of inventory increased from 59- 75 days. Days of accounts payable increased from 55- 56 days. During the December quarter, we generated free cash flow of $92.7 million. Our net cash balance totaled $464.7 million at the end of December. From a capital allocation standpoint, we continue to deliver value in several areas.
For the dividend, which was just increased by 21% for the January payout, we intend to continue increasing in a consistent and long-term manner while maintaining a competitive yield relative to our peer group. Separately, we have and are continuing to accelerate the cadence of our open market transactions under the existing repurchase program. During this December quarter, we repurchased over 4x as many shares relative to the September quarter. Our total share repurchases in the December quarter were 50% higher than our entire fiscal 2021 repurchase activity. We continue to take a long-term view on the repurchase program and expect to gradually increase our repurchase cadence throughout the current fiscal year. As outlined last quarter, we continue to expect the industry will expand aggressively through fiscal 2022, although at a slightly lower rate than fiscal 2021.
Aligned with our Investor Day assumptions, we continue to anticipate above average semiconductor growth will continue through fiscal 2023. We have assumed global logistic challenges improve and industry supply chain constraints begin to ease as wafer production improves in the second calendar half. Under these general assumptions, we currently anticipate revenue to be approximately $1.58 billion in fiscal 2022. For the March quarter, we expect demand to remain strong, and we anticipate approximately $380 million of revenue ±$20 million. We anticipate gross margins to be 48% in the March quarter, ±50 basis points. Non-GAAP operating expense to be approximately $75 million, ±2%. Non-GAAP EPS to be $1.45, ±10%.
We are very focused on supporting this period of aggressive industry expansion and are also extremely focused on driving new engagements, qualifications, and ramping production within the advanced packaging, automotive, and advanced display portfolios. Our engagement and new qualification execution throughout fiscal 2022 can potentially drive meaningful upside to the fiscal 2024 targets we shared during our Analyst Day. This continues to be a very exciting period in the company history, and we see a direct path to dramatically and sustainably extending our business as we continue to execute on this multifaceted growth strategy. We look forward to sharing additional information regarding these new opportunities over the coming quarters. This concludes our prepared comments. Operator, please open the call for questions.
Certainly. We'll now be conducting a question-and-answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. Once again, that's star one to be placed into question queue. One moment please, while we poll for questions. Our first question today is coming from Charles Shi from Needham & Company. Your line is now live.
Thank you for taking my question. I just wanna go back to some of the comments on OpEx. This is a multi-part question. First off, I wanna ask you, given your guidance for fiscal 2022, which seems to imply a flat to slightly up in terms of revenue growth, is the non-GAAP OpEx going to follow the same trend? Second, you commented something about that OpEx upside in the fiscal first quarter. Some of that you attributed to a delayed start of some of the R&D activity, some projects, if I listened correctly. Why was that? Can you please provide some color on that? Thank you.
Sure, Charles. As far as OpEx for FY 2022, I think, as we are guiding $75 million non-GAAP, I think that will continue through the rest of the fiscal year. As to why Q1 was a little bit lower, there was some push out of some R&D projects as well as some SG&A spend. Part of it was because, you know, December is the holiday season for a lot of our R&D sites. I think people actually took time off this year as well as, you know, certain recruitment that we budgeted for in terms of our projects that got delayed a little bit. It'll be kicking in this quarter as well as in the following quarter. The reduction in OpEx had basically no effect on our schedule in terms of our R&D projects.
It's still, basically tracking where we want it to be.
Thank you, Lester. The second question I want to ask you more on the details of your fiscal 2022 guidance. I want to run some quick math here, if you can follow me. Say your fiscal 2022 revenue is $1.58 billion. Your fiscal first quarter revenue was $460 million, and that means you will need to deliver roughly about $1.1 billion over the next three quarters for the fiscal year. I noticed your fiscal first quarter backlog was already close to $700 million. Basically you only need to book another $400 million orders and deliver them over the next three quarters to really just meet the $1.58 billion revenue target.
It kind of feels a little bit light in terms of the assumption of your booking over the next three quarters because you've been running roughly like over $400 million a quarter in fiscal 2021 on average. That assumption is kinda like you're assuming a booking kinda less than $200 million per quarter. Seems a little bit low to me. Are you kinda thinking that the $1.58 billion revenue guidance is just a worst case scenario rather than really a base case scenario here? What's your thought here? Is there any more upside to $1.58 billion guidance? Thank you.
Well, I think 1.58 is what we consider the base case, right? As you went through the math, right, between 460 and then the guidance today, it's about 840 for the first half. To get to 1.58, I think it's just, again, revenue now is a little bit more linear than we originally anticipated. There has been, you know, because of supply chain issues in the first half, especially wafer shortages, we think that, you know, revenue will be a little bit linear, as I said. As far as, is there upside to the 1.58? Well, I mean, I think right now that's our view.
There's always possibility for upside, but there's also a lot of supply chain constraints out there right now. I think we feel comfortable with the $1.58.
Got it. Maybe my last question, I know this may come in your SEC filings as in a Qs. Can you provide some color on the puts and takes of the China and non-China part of the revenue for the fiscal first quarter, as China is like over 50% of your overall revenue in the past few quarters? Thank you.
Yeah. China actually is much higher than 50%. I think this quarter is about Let me take a look. It's about 70% of revenue. And I think it will continue to be, you know, a strong contributor. Taiwan and China always our two strongest markets. Taiwan went down a little bit in Q1, but we expect to rebound in the second half. I think again, China and Taiwan will always be our two biggest market and has been for a while.
Thank you, Lester. That's all from me. Thank you.
Thank you.
Thanks. Our next question today is coming from Krish Sankar from TD Cowen. Your line is now live.
Yeah. Hi, thanks for taking my question. I have three of them too. First one, Fusen or Lester, last quarter, you kinda specifically called out supply constraints, especially wafer and substrate shortages at your OSAT customers. This time you did not. Is it fair to assume at the margin it's constraints are easing relative to three months ago? Or how to think about it?
Well, so Krish, let me answer this way. You're talking about OSAT customer, right? Actually we have a very diversified customer in both OSAT and IDM. Each customer, they can have a very different and unique investment schedule. For OSAT, yes, we did see OSAT very strong much stronger in 2021. At this moment, I think we are seeing, you know, strength more in IDM in the first half of 2022. You know, helped by at this moment additional revenue from dedicated AP, advanced display and auto. We mentioned last time about the shortage of the wafer not enough coming out from a fab. We also expect stronger OSAT investment, you know, will help by improvement of the wafer shortage in the second half 2022. Right.
I don't know if this help or not.
Got it. All right. Then I just had a couple of quick follow-ups. One is, you know, on the thermal compression bonders, how should we think about the revenue opportunity? Is it roughly $40 million this year, $80 million next year, the way to think about it? Any color there would be helpful.
Okay. Krish, I think our view on TCB, we are quite positive. We feel like TCB is in a stage to grow rapidly. We see the driver from a few areas. One is networking. You know, I mentioned about silicon photonics, optical transceiver. You know, optical transceiver is high end of high-bandwidth transceiver. One driver is the networking. Second one is the sensing, CMOS image sensor, and the heterogeneous integration or chiplet integration. Everybody talking about it. We also see mobility logic will use TCB more and more. We are very bullish on our approach we call fluxless. The pitch down to 30 micron, any flux will cause a contamination, will cause a short. Right?
We have a very proprietary process, and we believe will make a big impact in this TCB market. If you remember, you know, in our earnings call four months ago, we mentioned FY 2024 revenue compared to 2021, there will be some upside in three area, right? One is a dedicated AP, one is a battery EV, one is a display. You ask about dedicated AP. We actually give like guidance. We might have put additional $80 million. We indicate maybe 2024, we will reach $100 million. Majority will be TCB. At this moment, I think we would check much better than that. We probably give you some color in the next one or two quarters.
Got it. Super helpful, Fusen. Maybe, you know, I just wanted to follow up on that. You know, one of the things it seems like, you know, if you look at hybrid bonding, which some of-
Yeah.
How your peers in Europe are doing, one of the current issues seems to be lack of a good metrology, like the scanning acoustic microscopy. Do you think that is what is limiting hybrid bonding upside in the near term, and that's kinda helping TCB? Or do you think they're like two separate, you know, mutually exclusive issues? Just out of curiosity, if you think you can hit TCB revenues of $100 million in FY 2024, what do you think the hybrid bonding market could be then?
Okay. Hybrid bonding, you know, people are talking about it, maybe for a pitch below 10 micron. At this moment, I think, 10 micron actually is really very stretched. Part of that, maybe people have a contamination issue for TCB. We believe our approach is right. The hybrid bonding, in our opinion, is very niche, right? It's really a niche market. I do believe the future for TCB for next couple years will be much bigger than what people predict for the hybrid bonding. Hybrid bonding, their view approach, I think, at this moment is little bit complicated process, right? We have actually both program.
One is a fluxless, one is a hybrid bonding, but we put much more effort in this fluxless TCB bonding.
I mean, just to clarify, Fusen, do you think the metrology issue is what is making?
Uh-
Is hybrid bonding a niche market?
Metrology is one, but the hybrid bonding, you really got to have a very complicated process. There are two approach. One is really a sequential one. If you look at it, this is a really front-end process, right? It's a little bit more complicated. I agree there's metrology and also it's inherent. It's not very easy process.
Got it. Thank you, Fusen. Really appreciate it. Thank you.
Yeah. Thank you.
Thank you. As a reminder, that's star one to be placed into question queue. Our next question is coming from David Duley from Steelhead Securities. Your line is now live.
Yeah. Thanks so much for taking my question. As far as your annual revenue target, you bumped it up like $80 million from $1.5 billion- $1.58 billion. Could you help me understand where that upside is coming from? Is it coming from the core wire bonder business not going down as much as you thought, or is it coming from a lot of these new opportunities growing faster than you initially anticipated?
Could you quickly repeat again? I'm sorry, I just missed a couple seconds, you know.
I was just curious, as you've bumped your annual revenue target up from $1.5 billion to $1.58 billion.
Oh. Okay.
$80 million increase there. Is that from
Okay.
The wire bonder business going down less or the new stuff growing faster?
Actually, Dave, when we have a new forecast, it's based on new information come out. You know, we allow, you know, we always make sure we can deliver it, right? Let me give you overall of the full year outlook. I think, if you look at it in the past two quarters, really in order to relieve customers' capacity shortage, right? There's a desperate need for a lot of bonders. We really purposely stretch our capacity. Our targeted maximum capacity was 450, but we purposely actually stretch our capacity. You know, deliver one quarter is 490, one quarter is 460. Together, you know, with Q2, Chinese New Year, typically is a soft year, right?
As a result, I think we guide, you know, the midpoint for Q2 is $380. Let's face it, $380 is still very, very strong compared to historical result, right? What I try to say is I think the past two quarter really is a purposely we try to reduce a backlog and reduce shortage for the whole industry. The remaining, I think, you know, two quarter, if you look at it, the end demand for the market still very, very strong. We feel maybe we will have additional upside if the wafer stock get more capacity, you know, come online. We might have a little bit more upside, I think, in the second quarter. That's what we see right now.
When we have a more clearer picture about wafer shortage improving, I think we will discuss maybe next quarter.
Okay. Excuse me. Could you just talk about, you've had really strong gross margins, I think they were 48% recently. Through the balance of this calendar year, how should the gross margins trend up or down?
Well, Dave, I think gross margin for now is trending between, you know, 47%-48%, right? I think that is a realistic target. I mean, obviously, margin moves from quarter to quarter, depending on, you know, product mix, as well as customer mix. I think one thing that has an effect on the margin last year as well as this year is the fact that there's still real supply chain constraints and that we do actually have to spend additional dollars in terms of expediting components as well as the, as you well know, the shipping and freight is very, very tight right now. So that cost is also a little bit higher.
I think 47%-48%, a little, maybe a little bit higher than that is probably a realistic target for the rest of the fiscal year.
Okay. Final question from me is, I guess it's a two-parter, is could you just talk about what the utilization rates of the wire bonders are? I think you mentioned they're still high, but I didn't hear a number. Then, just highlight for us again what your targets are for revenue in the LED business, in this fiscal year and next fiscal year or calendar, however you're characterizing it. Thank you.
I'll answer utilization rate. The utilization rate are in the high eighties. It came off a little bit, but it's still very, very robust from a historical basis. We think that will continue to drive demand throughout the fiscal 2022. As Fusen mentioned, as the wafer shortages hopefully eases, we believe the utilization rate will go up again. As far as LED targets, we actually didn't provide LED targets going forward into 2023. I think, again, we don't specifically break out what we have targets in terms of revenue for the different product lines per se. LED, we do believe is gonna recover a little bit in the second half.
Now we're seeing a little bit that and Fusen discussed in his remarks, you know, we have a still very, very strong advanced display, which is a part of our LED revenue.
Thank you.
Thank you. Our next question is coming from Tom Diffely from D.A. Davidson. Your line is now live.
Yes. Thank you for the questions. Lester, just to follow up on the utilization question, is there normal seasonality in utilization rates? Do they dip off, you know, in the holiday season post China or pre-Chinese New Year?
Yeah, Tom, there is a little bit of that. I mean, usually, the March quarter, which Chinese New Year is in, the utilization does come down a little bit. I mean, China, and also Taiwan to certain extent, shuts down for a period of time. I think, yes, there is some seasonality into the utilization rate.
Okay. Fusen, when you look at the wafer shortages that we've had across the industry now for the past year, how much do you think that's impacted your business? Or how much upside do you think was taken away by those wafer shortages that should recover or should come back over the next year or two as we ramp up?
Well, actually, I think first of all, I think people need to invest in the front end. Roughly will take about a year to two years come out. What we are seeing right now is there are some legacy products. A lot of investment is about 18 months to two years ago, mainly I think in China areas. We expect you know this you know front-end finish probably will start to build up again and then start to increase the wafer capacity. We feel like the issue go up, but you know, there's a lot of industry supply chain issue, right? But go up will be a gradual case.
We feel like maybe it's hard to pull a number, but maybe $ tens of millions. You know, it's the current year, right? If it's the current year, it's only hit us in the fiscal year for three months. Tens of millions, maybe we'll expect that, but we depend on many factors for the industry.
Okay. No, that's fair. And then finally, you know, obviously, Lester, you talked about how, you know, 70% of the business or so is in China 'cause that's just where the chips are packaged. Are you hearing more from your customers about plans to bring the back end, the packaging, to the U.S. and Europe to diversify geographically a bit?
Well, I think, you know, diversification of the supply chain, I mean, is definitely a hot topic, right? Both from a geopolitical basis as well as, you know, COVID has shown that, you know, you do need a more robust supply chain. We are seeing, you know, some initial discussions about investments in Europe, again, nascent in the U.S. U.S. hasn't really had, you know, investment on the back end for a while, but we're seeing some interest and then also in Southeast Asia as well as Taiwan.
Okay. Thank you for your time today.
Thank you.
Thank you. Our next question today is coming from Dylan Patel from SemiAnalysis. Your line is now live.
Thanks. Fusen, I wanted to ask about the timing of orders. Big automotive and trailing edge semiconductor firms like STMicroelectronics and Texas Instruments are doubling their CapEx year over year, and TSMC and UMC and SMIC, they're spending more on trailing edge than ever before. Has this new front end capacity translated to back end? Fabs take years to build, so what's the timing for these back end assembly investments into wire bonders versus the front end investment that's been flooding in this year?
Yeah. Dylan, I think your question is similar to Tom just asked. Let me answer this way. Semi-unit growth was around 20% in CY calendar year 2021. Front end investment continue to flow to the back end. Yeah, that's true. Normally I think it will take a year, sometimes two years, depending on what kind of a technology and investment scale, you know, to reach. For example, investment from two years ago in China are expected to support wafer capacity growth in a second half calendar year, right? I don't know if I answer your question. Normally I think it take probably. It can take up to two years.
Okay, thank you. For a follow-up, I wanted to ask a bit more about the battery business.
Okay.
At the Investor Day, you talked about a laser-based cylindrical bonder system, but we didn't really get much information about that. You know, there's a lot of competition in the heavy wire bonder space for automotive, but what is this laser system? You know, what is the advantage here? What's that do for competition?
Okay. K&S historically, I think we lead in the heavy wire wedge space within automotive, right? Right now, actually we have a three battery solution, two for cylindrical and one for prismatic. Let me get into, you know, right point, you know, why people think about laser compared to wedge. I think laser has a much faster process. The throughput is high, the cost of ownership is low, but it haven't demonstrate, you know, a high volume production capability yet. One of the biggest issue, I think the process window tend to be narrow and, if a process window shift a little bit, it can lead to some reliability concern, right? Some people actually, I don't even know the term, you know, pack assembly.
Normally, I think this is laser people use for tend to try to use in a pack assembly, and it does provide an alternative process, you know, for some customer. But I think at this moment, if you look at, you know, the best reliable products still come out from the wire bonder. But actually we have both solutions. You know, we have a three battery solution, two for cylindrical and 1 for prismatic.
Thank you.
Thank you. Our next question is coming from Craig Ellis from B. Riley Securities. Your line is now live.
Yeah, thanks for taking the question and congratulations on the strong performance, guys. I wanted to start with a follow-up on some of the comments around the potential for fiscal second half wafer improvement or hopes for that to occur. Can you just talk about what you're hearing from your customers on what they see as their potential wafer output improvement that would then flow through to your volumes? You know, is it single digits half-on-half, double digits half-on-half, high double digits? What is it that you're hearing that lends confidence that we've got wafer improvement and volume improvement coming in the second half of the year?
Craig, I think the reason we put a 1.58 is the reason. You know, I think the signals still a little bit mixed. Some people feel like this. Supply chain shortage, to us, I think our supply chain shortage is less problem for us. I think the industry-wide problem is really chip shortage and this is a wafer shortage. If you ask different people, I think different people have a different degree of still suffering on this. This is our best judgment. We feel like 1.58 is right for us, but as the time go on, I think we will get more information.
You know, if you remember last year, you know, at the beginning of the year 2021, we gradually got up. It's because when we have more confidence, I think we are able to change our view. At this moment, I think the supply chain shortage, a lot of people feel like it's getting worse. Some people feel like it's getting easier. We are talking about the whole integration of industrial shortage. That's why I think we still need a little bit time, but our best judgment really at this moment is 1.58. We need to provide you a little bit more color, you know, maybe next time.
That's helpful, Fusen. Maybe to follow up on that, the 1.58, assuming we have something that's relatively seasonal in the fiscal third quarter, which would be up quarter-on-quarter, would imply something that would be seasonal by the time we look out to the fiscal first quarter of 2023. With the order dynamics that you're seeing, the backlog dynamics that you're seeing, is the business strong but increasingly taking on a seasonal tone? Or does it seem to be so strong that it could overpower late calendar year seasonality as it seemed to do in fiscal 2020 and a little bit in early fiscal 2022?
If a wafer shortage get better, we feel like you know at the beginning the first sign we only have three months to catch it, right? You know everybody we deal with at this moment will be a calendar year second half, and our fiscal year end in September. I think we probably need to have one quarter to feel it. If it really come in, I don't think that will be you know like Tom asked, probably means tens of millions of dollars for us. We got to see you know the magnitude you know then we probably can make a better judgment.
Sure. That's helpful, Fusen. To follow up on the comments on the automotive business and the engagement expansion, I think it was to 5 OEMs. The question is-
Right.
When will those engagements start to become more material to revenues and visible to investors? Is that sometime in fiscal 2022, or is the work with that wider array of OEMs really something that becomes more material to the business that investors would see in fiscal 2023 or sometime thereafter?
Craig, I think it's a nuanced answer, right? I think some of the five engagements will bear fruit in fiscal 2022. Some are further along, and some, you know, their specifications are more similar to what we've already done. Some we would have to do more work with them, and there'll be a longer qual period, so they will come into fiscal 2023. I would say it would start in fiscal 2022 and maybe, you know, gain more traction in 2023. Again, as we get more visibility, we will update the investors on our, you know, automotive. We are tracking above, as Fusen said, what we indicated during Investor Day 4 months ago.
That's real helpful. Thanks, Lester. Just to follow up with a question for you, but in a different part of the income statement on operating expense. Very strong performance in the just reported quarter, and you were clear that, you know, some of that may have been hiring that wasn't able to be realized, and maybe it happens in fiscal 2Q or beyond. Can you just give us some color for how you're thinking about OpEx as we go through fiscal 2022?
Well, I think OpEx through fiscal 2022 is I mean, again, based on the guide for Q2, I think it's gonna be non-GAAP, about $75 million-$77 million. I think that's a number that will probably be consistent through Q3, Q4 for the remainder of fiscal 2022.
Got it. And then lastly for me, before I hop back in the queue. Extremely robust cash generation in the quarter, so congratulations to the team on converting those strong revenues to cash flow. The question is, you know, following the very nice dividend increase that we saw, how is the company prioritizing dividends versus buybacks versus potential inorganic growth as we look through fiscal 2022 and into 2023?
I think for fiscal 2022, I mean, as I said in my remarks, I think for the dividend, we will, our position is that our philosophy is that we want, you know, to be consistent, we want the dividend to continue to grow and be competitive, among our peers. I think for the share repurchase program, we have increased the cadence. We have purchased more shares and spent more money in first quarter than we did for all of FY 2021. I think the cadence will continue, as we go forward. I think we will be deploying more capital on the share repurchase program. As far as inorganic opportunities, I think we've said a few times, you know, we're always open to it, but needs to be, you know, accretive.
It needs to be, you know, provided for either new technologies or new products, in an adjacency. I think that maybe more of an FY 2023 initiative. Again, there may be some in FY 2022, but there'll be more in terms of, similar to what we did with Uniqarta, which is very successful. It helped us accelerate our LUMINEX tool. I think we will look for, somewhat similar things, perhaps in FY 2022.
Makes sense. Fusen and Lester, thanks very much for the help.
Thank you.
Thank you. Our next question today is a follow-up from Krish Sankar from TD Cowen. Your line is now live.
Yeah. Thanks for taking my follow-up. Fusen, I just wanted to pick your brain on something. You know, when you look at the last six months, you know, your backlog has been coming down, lead times are beginning to moderate. I'm just kinda curious, and investors are worried about double ordering. How do you handicap that given, I understand, full year $1.58 billion for FY 2022 makes sense, but how do you look at beyond that and say, you know, as these supply constraints ease at some point, where do you think is a steady-state lead time for the wire bonding business? And what gives you comfort that there's not a lot of double ordering or last-minute cancellation of push off that could happen six months down the road or nine months or 12 months down the road when these things ease?
Krish, actually, we probably don't feel like double booking is a big issue for us. You know, I mentioned, I think 21, OSAT actually is quite strong, right? Actually at this moment, I think the real strong is really IDM. A lot of capacity, actually OSAT investment is for the whole industry, right? I think we believe the OSAT probably will come back a little bit stronger in our second half. At this moment, we really don't feel a big double booking. You know, we tend to talk to customer a lot. Of course, double booking happen anywhere, any period of time, right? At this moment, we really don't think it's a biggest issue for the industry.
Got it. Fair enough. Then, just curious on China, you said 70% of total revenue is China. I understand a lot of LED is also China related, like commodity LED. Curious on the general semi side, what is the China split between OSAT and non-OSAT?
I think for China side, I think, it's both non-OSAT and OSAT, but there's quite a lot of OSAT business for us in China. China OSAT.
Got it. Thanks, Lester Wong. Thanks, Fusen Chen.
Okay, thank you.
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 closing comments.
Thank you, Kevin, and thank you all for joining today's call. As always, please feel free to follow up directly with any additional questions. Have a great day, everyone.
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.