Kulicke and Soffa Industries, Inc.

Greetings and welcome to the CULIC and SOFA 2022 third fiscal quarter results call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires 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, Joseph Alcindy. Senior Vice President and Senior Director, Investor Relations for Kuehl & Salfa. Joseph, you may begin.

Thank you. Welcome, everyone, to Kuehl & Salfa's fiscal third quarter 2022 conference call. Fu Xinchen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are both also joining on today's call. 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 Kuehl-Gonzalfa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended October 2nd, 2021, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fuzan Chen for the business overview. Please go ahead, Fuzan.

Thank you, Joe. Today, I would like to provide an update on the progress and the status of our key growth initiatives. along advanced packaging, advanced display, electronic assembly, and automotive. These initiatives are progressing well and provide upside potential to our long-term financial targets. Before discussing these growth-specific opportunities, I wanted to step back and discuss the broader medical and the industry environment. As we have discussed last quarter, the industry continues to be constrained by supply chain challenges, largely around wafer capacity, which soften the near-term rate of semiconductor assembly expansion. In addition to these known industry challenges, which we have explained on previous quote, we also face an increasingly dynamic medical environment. Regional COVID lockdowns and the logistical challenge are continuing. Brother inflation, consumer confidence trend, and the wafer fabrication equipment forecast are now also impacting our near-term outlook. Although not unique to KNS, consumption of consumer goods such as smartphones, PCs, and general electronics play a significant role in impacting semiconductor growth rate in the near term. While we do not yet have clear visibility into fiscal 2023, we intend on providing additional detail and a longer-term outlook during our upcoming November earning call. However, during today's call, Dexter will provide additional commentary that highlights our cash flow and the profitability improvement over the past few years and the expectation over the coming quarters. At this point, I would like to provide an update to our strategic execution and progress supporting the broader trend in advanced packaging, advanced display, electronic assembly, and automotive. At the high level, our global research, development, procurement, and the business team continue to be very engaged supporting several exciting opportunities with top customers. We have developed several enabling systems, and our growing base of customer engagement serves as a testament to our competitiveness, which implies upside to our long-term financial expectations. Within Advanced Packaging, our dedicated solutions are currently running 35% higher for FY 2022 than expectations during our investor day. Specifically, our thermal completion systems are very unique and future-rich relative to alternatives. I am pleased to announce we have secured purchase orders totaling approximately $80 million with delivery dates over the coming 18 months. And it is important to note that our leading thermal completion solutions are being adopted by a broad set of customers, including integrated device manufacturers, OSETs, and also OEMs. As explained in detail last quarter, market opportunities go beyond next-generation heterogeneous applications. Thermal compilation is also being adopted in key markets such as mobile sensing, mobile application processor, and silicon photonics. We remain very focused and continue to aggressively take shares and increase our presence within this growing opportunity set. Additionally, a material portion of our high-volume assembly solutions are also benefiting from broadening adoption of multi-chain modules and system-in-package applications. These applications, which provide greater transistor density at the package level, are increasing the capital intensity of assembly positively impacting long-term growth rate of the board, wedge, and the APS businesses. As a reminder, board and wedge bonding continue to represent nearly 80% of total semiconductor packages and offer compelling production benefits that support an increasing value of the assembly process. We have clear leadership position across these sizable growing market, especially within the most complex applications. Ultimately, this growing capital intensity has added a new layer of technology-driven growth and also increased the need for new product features and capabilities, which will continue to enhance profitability. Our progress, strategy, and ability to enhance growth margin highlight our value contribution within this evolving semiconductor market. Next, I wanted to also provide an update to our growing opportunity within the emerging advanced display market. Since 2017, we have developed enabling innovation which extends the power efficiency, performance, and the manufacturing cost of these key emerging display technologies. Advanced display is a meaningful high-growth market opportunity where we continue to be very engaged with several key customers and continue to pursue a multi-pronged approach supporting new applications within big lighting, but also within the direct view and the micro-LED opportunity. We continue to expand our advanced display install base, pursue multiple Luminex engagements, while making ongoing progress across several customer development initiatives. We have already demonstrated a clear leadership and the first mobile pollution in advanced display. I engage with approximately 10 high potential customers and look forward to outperforming our long-term target. Ongoing customer engagement, qualification, and acceptance remain our key priority area over the next couple of 12 months. In addition to intimate involvement in this long-term technology transition, which expand our semiconductor and the display opportunity. We are also extending our presence in both electronic assembly and the automotive market. Turning to electronic assembly, our largest total addressable market opportunity. Our competitive solution currently support high readability automotive. System in package and the memory application wear alone represent only a small portion of our total addressable market. This creates a fairly significant prospective market opportunity, which we have been pursuing through development of a disruptive SMT system, which is expected to ramp toward the end of fiscal 2023 and will accelerate share gain over the coming years. Finally, Boeing Automotive, we continue to expand our solution supporting the electric and autonomous vehicle transition. across our growing base of OEM customers. KNF has a long established position within several automotive markets, and we remain very involved in this exciting long-term market evolution. The auto-transition driving electric and autonomous adoption are demanding more power control, power distribution, and power storage applications, which directly benefit our competitive wage, electronic assembly, and the battery assembly solution. Turning to GIN Quarters business results, we generate a revenue of $372.1 million and a non-GAAP earning per share of $2.09. Capital equipment remains flat at 87% of total revenue. We experienced strong demand across the market during the GIN Quarters. General semiconductor increased roughly 12% sequentially due to strengths in both and which applications. Also, demand strengthened sequentially for our dedicated advanced packaging solution, including thermal completion, wafer-label bonding, and the discography system. Within LED, similar to last quarter, over 80% of LED sales supported our growing advanced display opportunity. At this point, we are comfortably within our four years' expectation on advanced display contribution and look forward to growing this business over the coming years. Auto and industrial remain very strong across our product line and has sequentially strengthened within our growing power semiconductor application. As mentioned earlier, we remain very focused on the pollution well to support the long-term growth opportunity of the automotive market. Finally, memory comes in strong for our core name-based solution, which we support across all major memory customers. We are also very focused on delivering new theorem assembly solution over the coming years. In summary, our progress on new growth initiatives and customer engagement remain on track and provide upside to our long-term financial target. Efforts to expand our self-market while directly participating in fundamental technology change remain a high priority throughout the organization. As stated earlier, there are additional macro and industry risks we did not previously anticipate. and expect to provide greater detail to our outlook over the coming quarters. Our ability to succeed in development and customer engagement near-term will enhance our visibility into fiscal 2023 while providing upside potential to our existing long-term financial target. We look forward to demonstrating this progress over the coming quarters. With that said, I will now turn the call over to Lester, who will discuss our financial performance. Lester?

Thank you, Fusen. My remarks today will refer to GAAP results unless noted. As Fusen mentioned, we continue to remain very focused on mid- and long-term growth prospects by executing on our internal development goals, maintaining our pace of customer development engagement, while actively returning value directly to shareholders through our growing dividend and aggressive repurchase programs. It's also very important to remind callers today that our financial performance has already improved dramatically due to several technology changes which reduce our reliance on annual capacity expansion. In parallel, we have continued to strategically expand our served market. During the June quarter, we generated revenues of $372.1 million and very strong gross margins of 51.2% up by over 500 basis points year on year. The strong gross margin performance highlights our consistent operational efficiency and improving product mix, and also highlights our incremental value add to the industry. Non-GAAP operating expenses during the quarter came in better than expectations due to a $4.5 million foreign exchange gain. Tax expense for the quarter came in at $5.2 million, significantly better than expectations. This favorable benefit was driven by a partial release of a valuation allowance previously recorded against a net deferred tax asset. This favorable benefit is directly related to the success and outlook of our advanced display solutions. Non-GAAP net income for the June quarter was $125.1 million, representing a very strong non-GAAP net margin of 33.6% and non-GAAP EPS of $2.09. Turning to the balance sheet. days of accounts receivable decreased slightly from 86 to 85 days, days of inventory increased from 104 to 107 days, and days of accounts payable remained flat at 49 days. Over the past four quarters, we have generated $380 million of free cash flow, highlighting our longer-term potential. During the June quarter alone, we generated free cash flow of $99.7 million over and closed the quarter with a net cash balance of $471.7 million. During the recent March quarter, we announced the accelerated repurchase program and deployed $146.2 million in repurchases. During the June quarter, we completed the accelerated repurchase program and reinitiated our open market program. We deployed a total of $61.1 million to both programs in the June quarter. At the end of the June quarter, we had just over $300 million remaining under our repurchase authorization and continued to manage an active, price-dependent, open market approach. This remaining repurchase authorization, combined with our growing dividend yield, provide consistency and value creation opportunities at the share level. For the September quarter, in line with Fusen's comments regarding softening macro and industry environments, we anticipate revenue of approximately $280 million plus or minus $20 million. Gross margins are expected to reduce to 47% plus or minus 50 basis points due to additional expediting fees, near-term facility resizing effects, and also higher than expected inflation. Non-GAAP operating expenses is anticipated to be approximately $70 million plus or minus 2%, and non-GAAP EPS to be $0.93 plus or minus 10%. While we do not yet have comprehensive visibility into fiscal year 2023, we expect the September quarter guide should be comparable to our average quarterly run rate through fiscal 2023. At this level, non-GAAP EPS of over $3.50 is achievable. As a comparison, this will represent approximately 7.5 times the non-GAAP EPS generated during fiscal year 2019. As the industry recovers and we expand our served available markets beyond Cisco 2023, we expect to exceed our recent Cisco 2021 and 2022 performance. It remains a very exciting time for the company as we have significantly broadened our market access and remain intimately involved with fundamental technology changes across the semiconductor, advanced display, electronic assembly, and automotive markets. Our core business evolved in a very positive way over the prior two years, increasing our resilience to industry cyclicality significantly. Near term, the entire organization remains extremely focused on executing our multifaceted growth strategy and maintaining our emerging leadership position within these high-growth technology-driven opportunities. Over the near term, expanding customer engagement, winning qualifications, and recognizing revenue are top priorities for the team. Our ability to execute on these priorities over the coming quarters is critical to enhancing our longer-term visibility and financial outlook. While there are some near-term challenges due to macro and economic environment, we strongly believe we are well-positioned to take advantage of major technology changes, which will start to pay dividends in the second half of fiscal 2023 and beyond. This concludes our prepared comment. Operator, please open the call for questions.

Certainly. We will now be conducting a question-and-answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions. Our first question is coming from Chris Sankar from Cal, and your line is now live.

Yeah, hi. Thanks for taking my question. I actually had a few of them. First one, Lester, I just want to clarify. Did you say FY23 quarter should be similar to September quarter revenue run rate?

No, I didn't say that. What I said was, as Fusen indicated, Krish, given the volatility uncertainty into the market right now, we are not in a position to call FY23. We'll provide more details on November call. What I did say is that if FY23 was at the same run rate as Q4, we would generate EPS of 350, which shows the company is actually very profitable, even at a lower revenue level, much more profitable than the last down cycle.

Got it, got it. That's very helpful. A couple other questions. I just wanted to check. You guys highlighted the decreases due to macro concerns. You know, BE Semiconductor highlighted that some of the Chinese OSAPs are also slowing. So I'm kind of curious, have you seen any weakness in China? And what person you're saying is China for you?

So, Chris, are you asking if OSAPs in China are also slowing down?

Yeah. And what person you're saying is from China?

Okay, so I think it's well known that OSAPs medical related factor impacting the consumer demand. And that cause a show period of capacity digestion for some of our customers. And of course, all set is a big part of that. On top of that, I think the China LED also slowing. So this is two area we are seeing a slowing down. And maybe last area is we still see spotty supply chain challenge that cause a bottleneck for our customer. The weakness, I think, in this area and the capacity digestion period time for us, we are seeing maybe about two quarters. Beyond that, we are quite optimistic about the strength coming back second half of 23. And in the meantime, we also anticipate a generally strong cash flow, even together with this very short period of sovereign periods.

Got it. And Chris, did you ask what the percentage of revenue in China was?

Yeah, yeah.

It's 52%, same as the previous quarter.

Got it. And then just two quick housekeeping questions, Lester. You guys didn't mention a backlog. Can you just tell us what the backlog is and what is the lead time for wirebonders today?

Well, Krish, we actually don't think backlog is a very good indicator for our investors in terms of looking forward, particularly now that we give long-term guidance. The reason is that backlog can be a little bit confusing because different people use different definitions of backlogs. For example, a lot of people use backlog in terms of just the POs they have. Our definition of backlog is actually the POs we have with a specific determined delivery date. We also have POs obviously that do not have a specific delivery date, which we don't put into backlog. So we don't think backlog is actually a very good metric for us. And in any event, for the backlog, the backlog has been pretty consistent in terms of the variation. Over the last four quarters or so, each quarter, quarter on quarter, has probably reduced about 10%. So, again, we don't think backlog is a great indicator, and that's why we didn't include any more. I think also the final point is that, as you know, Krish, a lot of our U.S.-listed peers don't provide backlog information, or they only do it during the annual report on the K level. To answer your question, lead times now is a little bit over three months.

Got it.

Thank you very much, Lester and Fusen. Thank you. The next question is coming from Craig Ellis from B. Reilly Securities. Your line is now live.

Yeah, thanks for taking the question. And Fusen, really appreciate the deep dive on the market expansion initiatives to kick things off. So I wanted to follow up just on some of the order dynamics and the implications for the business, given what you're seeing today. So it looks like the business is returning to more typical seasonality with revenues being down meaningfully in fiscal fourth quarter. The question is this, as you look beyond that to the fiscal first quarter one, what is the historic range for seasonal performance of the business? And related to that, how would investors reasonably expect the business to perform versus historic seasonality this year?

So, actually, I don't think it's a seasonality issue. I think what we are facing is the whole industry. The customer demand actually is impacted by global medical issue, right? You can see from cell phone and from a lot of customer products, actually, this slowdown looks like it's quite dramatic. in recent months. So it might not be seasonality. I think it's softness, capacity digestion to actually affect on this demand issue. And we do believe this probably will last about two quarters and a maximum three quarters. And second half, we expect I think the market should pick up globally for the whole industry.

Got it. And then, excuse me, just a clarification. With regard to the very strong gross margin performance in the quarter, another above guidance result. Lester, what were the specific factors that caused gross margin to exceed initial guidance? And what was their relative contributions?

Well, I think, Greg, what caused gross margin to be very strong in the quarter is, I think, as usual, is our product mix, right? We had higher contribution from our advanced packaging business unit as well as our wedge-bonded business unit, which did very well during that quarter. We also had that for Leetech. We had the machine that the one failed, which came in a very high margin because it's been expensed before. So I think it's mainly product mix that... cause the margin to be higher than anticipated.

Got it. And nice work on that. Thanks, guys. Appreciate it.

Thank you. Next question is coming from Charles Shi from the Edelman Company. Your line is now live.

Hi, Fusheng and Lester. Thank you for taking my questions. Fusheng, I want to go back to your comment on capacity digestion. Did I hear you think it's going to last about two quarters and the second half of your fiscal or calendar 23, you think the demand is going to pick up? And also tying to this same question, I think in September last year, you were expecting 1.5 billion average revenue through 2024, 2025, I kind of forgot. But what is 2023 shaping up relative to that 1.5 average revenue guide? Thank you. Okay.

Charlie, I think I remember in the investor day, that's what we say. I think our 2020 revenue was 632, if I remember correct. 21, I think, is in the middle of investor day. We didn't finish that yet. But I say it's 1.52%. And we did say 2022, we feel like will be as good. As good, that means it's also toward $1.5 billion. And we also say average over next few years will be $1.5 billion. So at this moment, I think we see actually medical slowdown and cause inventory correction and the capacity digestion. And so this will last maybe two to three quarters. So with this unexpected phenomena, we do expect right now first half maybe will be lower and pick up in the second half. And so to reach 1.5 probably will not be quite possible. But we do believe with 24, we are looking for very, very strong 24 with a lot of new products. And even at this moment, even if a correction happens, I think 24 will push even higher for the corporate business. So we still have a chance to stick with what we say. The next few years, 21 is 1.5, 22, 1.5. In the next couple of years, I think average, we can be still higher than 1.5. I hope I answered your questions.

Yes, thank you for the color. So maybe a second question. I understand that for your wire-bounded business, maybe the visibility is a little bit not as great as, let's say, three to six months ago because of macro. The advanced display side, I would assume is that things are more under your control because you have a lead in that market and your customers are probably engaging with you over longer term. Any thoughts on what your advanced display outlook for fiscal 23? Are you going to exceed the level of fiscal 22? And adding on top of that, I want to see if you have any comment on recent market chatters that your Pixalux customer seems to be moving to OLED for their premium product lines around 2024, which could mean the mini-LED may be displaced. And are you hearing anything like that? Thank you.

Okay, so let me talk about our advanced display. So we entered this market in FY19. So up to date, I think, cumulatively, we generate over $200 million in advanced display. and this is including FY22, we expect revenue for advanced display is going to be higher than $19 million. So for the 23, it's a year, we call our qualification an adoption year for the Luminex. And because of qualification, we will add not high volume business, but we do expect in 23, over $100 million of sales as we continue to drive Luminex qualification for advanced display revenue through 2023. And we do expect significant growth in FY24. So I don't know if I answered your question. Okay, the second question is already compared to MicroMiniOD. I can tell you, I think... You know, a lot of people try to make a micro-LG and mini-LG work, and with a lot of effort from throughout the whole industry chain. The reason is that there are a lot of ROCD capacity is there, and people really want to reuse it. So effort is there, the commitment is there, focus, I think, is there, and the growth rate, I think, year by year, by analysts, I think, is really still showing significant growth. Customer can, at a certain point, you know, actually have a dual strategy. But I can tell you, you know, all the customers we are working on have very, very strong commitment. All the customers have a strong commitment in this mini-ID and a micro-ID.

Thank you very much. I'll go back to the queue. Thanks.

Thank you. As a reminder, that's star 1 to be placed in the question queue. Our next question is coming from Christian Schwab from Craig Callum Capital Group. Your line is now live.

Hey, good morning, guys. Just for a little bit further clarity, you know, on the commentary of two to three quarters about digestion, do you believe the baseline of the business during this digestion period, you know, falls below the kind of 21, you know, baseline of 900 million, you know, over the course of, you know, the next year, or do you see it greater than that?

So, Christian, I think we are really confident on the long-term growth prospect for the whole industry. And since this capacity digestion and the medical demand inflation or this medical factor is really recently started to impact the whole industry. That's why I think Leicester is not an assumption. Actually, it's an example. I think it's not an unreasonable assumption since we are going to see first half is going to be lower because of it compared to our previous few quarters. This quarter is lower and we actually expect this will not bounce back right away. So we hope two quarters And the maximum, we think, is 3 quarters. And compared to 1.5 average, we think you pick up a very long rate. Of course, it's not going to be flat. And if you use the number we just got, and the long 4 quarters is, of course, will be between 1 to 1.5. So that's why we see and try to be realistic, I think 1.5 probably will be difficult. But we do believe our second half will pick up and we will see a generally very healthy cash flow for the company and the investor.

Great. And then what do you think utilization is that you're leading OSATs today? And what would it have to return to for more aggressive capacity additions?

So, Christian, utilization right now is running pretty flat around 80%, but then you do have pockets both in terms of end market, obviously automotive's strong end market, and also in terms of regionally, I think China, because of the rolling COVID issues, are a little bit lower. As far as what we need it to be, I think, you know, Historically, if it's above 80 and the mid-80s, I think that was when basically there's capacity expansion. But again, these are, as you know, very dynamic and volatile environments. So right now, I think everyone's trying to figure out exactly how the next couple quarters are going to play out. But we do believe, as Susan said, the second half of FY22 will be much stronger. Great.

Thank you. No other questions?

Thank you. Next question is coming from David Dooley from Steelhead Securities. Your line is now live. Yep. Thanks for taking my questions.

Could you just update us on, you gave some pretty good detail about what's left in the buyback. Going forward, could you just detail what the plan is for the buyback in the September quarter and going forward, will you be adding to it? That's the first question.

Okay, so Dave, I think we indicated we have about $309 million left at the end of the quarter in our authorization. As you know, we did the ASR, we finished that, and we reinitiated our OMR program. I think we will continue to aggressively utilize our OMR program to... support the stock as we believe it is undervalued. So again, we don't provide specific guidance, but I think going forward, we will continue to utilize our ORMA program.

And the guidance you gave for the September quarter, what would you guess would be the cash flow from operations based on that guidance?

I would say cash flow from that would be probably similar to the EPS. Okay.

And then, Houston, you gave us a lot of detail about, I think, the ramp-up and the thermal compression bond business. Could you just review again? You mentioned, I think, three or four applications. It sounds like it's a pretty broad-based ramp. If you could just review some of the bigger applications for the thermal compression bond going forward, and then if you could just remind us what your revenue targets are, perhaps, in this fiscal year and next fiscal year. Sure, sure, sure.

So, actually, we are quite proud and also show a lot of confidence on this product. I think in the next few years, we will see a significant growth. Our product actually addresses a variety of customers and applications. This includes 3D sensing and silicon photonics and also mobile, you know, cell phone mobile logic and also chip-dead heterogeneous applications. So we cover a lot of customers, and more and more people actually come to us. And we do believe heterogeneity integration is going to grow significantly. And the $80 million we mentioned, and it's not only PO, it's a PO with the delivery date, and it will continue to grow. This $80 million largely will be shipped within FY23. And the solution we have, I think the fluxless PCB, we believe, will be the mainstream interconnect for future heterogeneity integration, down to a 20 micron pitch. Of course, smaller than 20 micron pitch, there will be some niche product architectures and also other technology. But we are quite bullish. I think for the heterogeneity integration for the next many, many years. I think our fluxless PCBs sure have a high volume, and we are working with more and more customers. So I think I can probably give you a little bit, you know, update about the total advance packaging revenue. So like this quarter alone, we're talking about dedicated I think, you know, different companies have different definitions of advanced packaging. But our dedicated advanced packaging, we're talking about our TCB, like thermal compression. And we also have a high-accuracy free chip. This time we didn't talk about it, but it's picking up momentum. Maybe we'll update for the next couple of quarters. And also including advanced display and SIP and also AT-Premiere. I think I mentioned in my script, we're talking about the vertical wire to replace a TSV for the next couple of years. And this is like an AT Premier frame. All this together, I think this quarter, we are $64.9 million. This did not include, you know, I call it advanceable boundary. Including advanceable boundary, I think it's about $130 million for this quarter. And I see this area is our growth area. We are quite confident it will continue to grow. Okay.

And just as a clarification, the weakness you're seeing in the September quarter, what in markets or product lines are you seeing weakness in September versus June?

Okay. Mainly, I think it's really bull bound. If you hear the script I mentioned, I think every year right now it's about 1 trillion finished die, finished wafer, and you cut it, you have about 1 trillion die. And need to have a package. Actually, 80% of a total of this 1 trillion die, the packaging measure, I think majority actually is a bull bounder. So this explains why I think when the industry slowed down, the bull bounder was impacted first. So actually, which bounder actually is very, very strong? Because what continues to be strong, I think, is auto-related. And also, power semiconductors also play a very important role. So to answer your question, I think it's very easy. During the capacity digestion period, I think a bull bounder is impacted. And again, when the industry pick up, the bull bounder will be the first one. So that's really the nature of the bull bounder. But we still see bull bounder, every cycle will continue to grow because it's the easiest way to do an interconnect. And this will represent the most high market shares for the whole semiconductor packaging measure. And we see a bull bounder, if you look at average, every cycle, We do believe that every cycle of broadband will continue to grow. And we are seeing a new use of broadband. For example, in memory, we are working with a DRAM leading company to replace the TSV. And we see the early adoption, low volume production maybe in 2023. And in the previous few scripts, I talked about multi-chip and multi-chip. So every package, you know, the number of wires go from 1,000 to 2,000. So this is market expansion and capacity extension. And also, I think 5G, there's a lot of multiple bandwidths. You need to have a broadband to create the quality cache and isolation to prevent, you know, interference next time, right? So I think next week, next quarter, maybe a two, three quarter will be lower. But when it's picked up, it will also pick up very, very fast.

Okay, and then final question from me. Just curious, you talk about a two-quarter inventory correction or two-quarters of weakness. What gives you confidence? Is that your customers telling you that, or are you picking up on what TSMC has said on their conference call? Just kind of curious why, you know, can you monitor the customer's level of inventory? Why do you think it's just two quarters?

Well, they are from two ways. One is, of course, I talked to you. We actually, our sales team, and, of course, we also reach out to our customers. And that was an indication, you know, to give us a higher confidence that the second half will pick up. And that's the first reason. The second reason, you know, they are multiple, multiple, multiple, you know, mature node technology capacity is going to finish construction and they will start to need to put, you know, the capacity to do in a package, right? I think just China alone, they are many. I actually don't have the number. I think they are like a or close to a 30 material note, you know, our capacity will come up. And the first one they need is going to be a bow-wounder. And also, historically, we see the weakness of a bow-wounder is no more than four high quarters. And you will see, I think, our actually reached our peak probably two quarters ago, when we reached $480 million. Actually, it was really not average real demand. And I mentioned it was a lot of customer need, you know, hurry to put a capacity. So actually, we quickly just put it in. So there was one quarter, we reached 480. One quarter, we reached about 420. And actually, you know, after that, bull bound started to, you know, drop a little bit. So, but at this moment, we never see Bo Wangde lower than five quarter for us. So with these two, we feel some confidence in our second half will be better.

Okay, thank you. Thank you. Next question is coming from Hans Chung from DA Davidson. Your line is now live.

Hi, thank you for taking my question. So first, I was wondering what's the semiconductor UNIGORF for this year based on your September quarter guidance and also what is your view on 2023?

Sorry, Han, can you repeat that? You broke up a little bit.

Oh, sorry. Can you hear back right now? Yes. My first question is, what's the underlying assumption for semiconductor unit growth based on our September quarter guidance? Also, what's your view on next year?

For FY22, we think it's about 10% unit growth for the year. I think for FY23, Based on what we see and based on industry experts, I think it will be close to the normalized level. Normalized level is about 6.5% unit growth.

Okay. And then for the automotive segment, so during the quarter, why the revenue coming down a little bit? Because I think across the industry, automotive has been pretty strong. And then, I mean, it's very strong across the supply chain, either it's a semi-company or equipment guy. So I'm just curious, what's the dynamic during the quarter for the automotive segment?

Well, I think we came down just a little bit in the automotive segment, Hans, and I think a lot of it is just customer schedules. I think we had a very strong automotive business from our wedge-bonded business, as Pusan said, and still continues to be strong. I think for the ball-bonded part of the automotive business, there's been a little bit of shifting maybe into the next quarter. So I don't think the automotive business is soft. I think it's just maybe it came down a little bit.

Got it, and then last one, just do you have any update on the Luminex regarding any customer feedback or any new qualification going on, just any update on the Luminex?

So we are actually engaging, you know, close to more than 10 high potential customers and we ship our fuel system and doing the qualification. So our goal, actually in the next nine months, two or three months, we want to make sure we have a few, three to four, we hope to finish our qualification. But from all we know, this is probably the most productive system is going to hit the market. And if you know to move the display, big display, from one place to the other place, you need to move about 25 million dyes. And our speed actually is much, much faster than any competitor can claim and can do. So we are quite optimistic about progress, and we'd like to finish uh the three for qualification in next nine to two months and uh we have a goal the whole uh uh advanced display to have a goal uh more than 100 million dollars and we believe it's achievable in 2023 right so if we do a 2023 the whole uh advanced display business since we introduced this segment of business uh after 23 will be more than 300 million dollars and we believe that 2024 will be even bigger than that.

So, can I paraphrase what you say, $300 million after fiscal 2023? Okay, so 2022, okay, 2022 actually is about $19 million, but up to this, up to this is about $200 million, right?

So up to today, it's $200 million, including the 22. And 22, we target greater than $19 million. We still have one quarter to go. And so that's $200 million, two days. And accumulative, including the 23, we should be above $300 million. And 24, we believe our advanced display even grow with a higher rate.

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 Joe for any further closing comments.

Thanks, Kevin, and thank you all for joining today's call. Over the coming months, we will be presenting at several virtual and in-person investor conferences with DA Davidson, Needham, and Credit Suisse. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.