ASE Technology Holding Co., Ltd. American Depositary Shares (each representing Two Common Shares)

Hello, I am Ken Hsiang, the Head of Investor Relations for ASA Technology Holdings. Welcome to our first quarter 2024 earnings release. Thank you for attending today. Please refer to our Safe Harbor Notice on page 2. All participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please disconnect at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk and our actual results may differ materially. For the purposes of this presentation, dollar figures are generally stated in New Taiwan Dollars unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP. I am joined today by Joseph Tung, our CFO. For today's presentation, I will first go over the financial results and give the company guidance. Joseph will then be available to take your questions during the Q&A session that follows. During the Q&A session, each caller will be limited to two questions at a time, but may return to the queue for further questions. With that, let's get started. As per our expectations, the overall demand environment for our services during the first quarter fell on a sequential quarterly basis, primarily due to seasonality of electronics products. And as was the case at the end of 2023, higher end leading edge services generally fared better than legacy services. For our ATM business, revenues were on the higher end of our expectations. During the quarter, key equipment utilization rates were still relatively low, averaging out around 60%. Certain devices initiated a short but unsustained inventory refresh, easing off initially more optimistic outlooks. For our EMS business in the first quarter, demand for our services was slightly ahead of our initial expectations as a result of improving customer inventory levels. Please turn to page 3 where you will find our first quarter consolidated results. For the first quarter, we recorded fully diluted EPS of $1.28 and basic EPS of $1.32. Consolidated net revenues declined 17% sequentially. but increased 1% year over year. We had a gross profit of $20.9 billion with a gross margin of 15.7%. Our gross margin declined by 0.3 percentage points sequentially, but increased by 0.9 percentage points year over year. The sequential decline in margin is principally due to lower revenues due to seasonality of both our ATM and EMS businesses. The annual improvement in gross margin is principally the result of foreign exchange. Our operating expenses declined by $0.6 billion sequentially, but increased by $1.7 billion annually. The sequential decrease in operating expenses are primarily due to lower compensation expenses. The year-over-year increase in operating expenses is primarily attributable to R&D staff up, overseas expansion, startup costs, and higher incentive stock option expenses. Our operating expense percentage increased 1.3 percentage points sequentially and 1.1 percentage points year over year to 10%. The sequential operating expense percentage increase was primarily related to lower operating leverage during our seasonally down quarter. The annual increase was related to higher R&D staff up, overseas expansion, and higher incentive stock option and bonus expenses. Operating profit was $7.5 billion, down $4.3 billion sequentially, and down $0.2 billion year over year. operating margin decline 1.7 percentage points sequentially and declined 0.2 percentage points year over year. During the quarter, we had a net non-operating gain of $0.4 billion. Our non operating gain for the quarter primarily consists of net foreign exchange hedging activities profits from associates and other non operating income offset and part by net interest expense of 1.1 billion tax expense for the quarter was $1.9 billion. Our effective tax rate for the quarter was 24%. Income tax expense was higher than anticipated, mainly from a tax basis gain realized due to the US dollar's appreciation against the Korean won. Such tax expense may reverse itself when the US dollar depreciates against the Korean won. Net income for the quarter was $5.7 billion representing a decline of $3.7 billion sequentially and a decline of $0.1 billion year-over-year. The NT dollar appreciated 2% against the US dollar sequentially during the first quarter, while depreciating 2.96% annually. From a sequential perspective, we estimate the NT dollar appreciation had a 0.55 percentage point negative impact to the company's gross and operating margins. While from an annual perspective, we estimate the NT dollar depreciation had a 0.86 percentage point positive impact to the company's gross and operating margins. On the bottom of the page, we provide key P&L line items without the inclusion of PPA-related expenses. Consolidated gross profit excluding PPA expenses would be $21.8 billion with a 16.4% gross margin. Operating profit would be $8.7 billion with an operating margin of 6.5%. Net profit would be 6.8 billion with a net margin of 5.1%. Basic EPS excluding PPA expenses would be $1.58. On page four is a graphical representation of our consolidated financial performance. On page five is our ATM P&L. The ATM revenue reported here contains revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses. For the first quarter of 2024, revenues for our ATM businesses were $73.9 billion, down $8.1 billion from the previous quarter and up $0.6 billion from the same period last year. This represents a 10% decline sequentially and a 1% increase annually. Gross profit for our ATM business was $15.6 billion, down $3.7 billion sequentially and up $0.8 billion year-over-year. Gross profit margin for our ATM business was 21%, down 2.4 percentage points sequentially and up 0.9 percentage points year-over-year. The sequential margin decline was primarily the result of lower revenues due to typical seasonality. The annual margin improvement is primarily the result of foreign exchange offset in part by higher utility costs. During the first quarter, operating expenses were $9.5 billion, down $0.5 billion sequentially while up $1.2 billion year-over-year. The sequential decline in operating expenses was primarily driven by lower compensation expenses. The annual operating expense increase was driven primarily by scale-up of R&D labor related to leading-edge advanced packaging and, to a lesser extent, the impact of our incentive stock option and bonus programs. Our operating expense percentage for the quarter was 12.8%. Up 0.6 percentage points sequentially and up 1.4 percentage points annually. The sequential operating expense percentage increased as a result of lower operating leverage during the seasonal soft quarter. And noted earlier, the annual increase was due to higher compensation expenses primarily at the R&D level. From an ongoing basis, we believe that as leading edge advanced packaging becomes more part of our overall business, a higher concentration of R&D workforce will be required. This will lead to higher compensation expenses within our operating expenses on an absolute basis. However, from a current operating expense percentage perspective, these R&D expenses are ramping ahead of the leading edge advanced packaging revenues they are to generate in future quarters. During the first quarter, operating profit was $6.1 billion, representing a decline of $3.1 billion quarter over quarter and a decline of $0.3 billion year over year. Operating margin was 8.2%, declining three percentage points sequentially and declining 0.5 percentage points year over year. For foreign exchange, we estimate that the NT to US dollar exchange rate had a negative 0.97 percentage point impact on our ATM sequential margins and a positive 1.49 percentage point impact on a year-over-year basis. Without the impact of PPA-related depreciation and amortization, ATM gross profit margin would be 22.2%, and operating profit margin would be 9.7%. On page 6, you'll find a graphical representation of our ATM P&L. On page seven is our ATM revenue by the three C market segments. Our communications application shifted one percentage point to our computing segment. This shows that applications generally decline together during the seasonally down quarter. On page eight, you will find our ATM revenue by service type. On a quarter over quarter perspective our revenues didn't change significantly with a slight shift in percentage share between others and traditional advanced packaging. However, from a year over year perspective, there has been a more pronounced shift towards higher end packaging for both traditional and leading edge. It is worth noting that our stated goal of doubling leading edge advanced packaging revenues in the current year is tracking somewhat ahead of target. On page nine, you can see the first quarter results of our EMS business. Our EMS revenues came in a bit ahead of where we expected, mainly as a result of higher than expected customer restocking in an improving customer inventory environment. During the quarter, EMS revenues were $59.4 billion, declining $19.8 billion, or 25% sequentially, and improving $1.6 billion, or 3% year-over-year. The sequential revenue decline is primarily attributable to typical seasonality for EMS business, while the year-over-year revenue improvement is due to higher customer restocking. Sequentially, our EMS business's gross margin improved 0.9 percentage points to 9.3%. This change was principally the result of product mix. Operating expenses within our EMS business stayed roughly flat with the first quarter at $3.8 billion, declining 0.1 billion sequentially. Our first quarter operating expense percentage increased 1.6 percentage points sequentially and 0.9 percentage points to 6.5%. The higher operating expense percentage was primarily driven by lower operating leverage while incurring higher global expansion costs. Operating margin for the first quarter declined 0.7 percentage points to 2.8%, which is ahead of our initial expectations due again to product mix. Our EMS first quarter operating profit was $1.7 billion, down $1.1 billion sequentially, while up $0.3 billion annually. On the bottom of the page, we will find a graphical representation of our EMS revenue by application. The moves here are generally in line with the seasonality of underlying customer products. Automotive was a larger portion of segment share driven in part by inorganic growth. On page 10, you will find key line items from our balance sheet. At the end of the first quarter, we had cash, cash equivalents and current financial assets of $83.5 billion, increasing $11.5 billion. Our total interest-bearing debt increased slightly by $3.6 billion to $195.3 billion. This increase was primarily related to the impact of the Taiwan dollar depreciating against the US dollar. on our us dollar denominated debt total unused credit lines amounted to 393.9 billion dollars our ebitda for the quarter was 24 billion our net debt to equity this quarter was down to 0.36 On page 11, you will find our equipment capital expenditures relative to our EBITDA. Machinery and equipment capital expenditures for the first quarter in US dollars total 228 million, of which 109 million were used in packaging operations, 97 million in testing operations, 21 million in EMS operations, and 1 million in interconnect material operations and others. We continue to be excited by the prospects of AI and the incremental volumes and package requirements from these increasingly robust devices. We are continuing to see increasing adoptions across our leading edge advanced packaging services. However, we currently are only at the beginning. We see that the foundations that are being built now will lead to new generations of low, mid and high end devices alike. And while AI will bring massive semiconductor volumes, step ups and package level requirements and corresponding increases in ATM revenues, the vast majority of these devices are just starting to be developed. Going forward, we believe many products may take a fresh AI angle and may create a shorter than normal refresh cycle and thus kickstart overall demand. As such, although the market recovery appears to be playing out a bit slower than previous customer forecasts, we are not looking to adjust our full year outlook. For the quarter upcoming, we still see a slightly improved demand environment for our services. On the expense side of things, we are seeing some impact to our electricity rate. Tai Power, the provider of electricity to Taiwan, has increased electricity rates by 15% for us. The increase goes into effect at the beginning of the second quarter. Further, summer rates are starting in the middle of May. The combined effect we believe will have a negative 0.8 percentage point impact to our ATM gross margin in the second quarter. Despite this, we are looking to improve our gross margin in the second quarter given an improving favorable product mix. From an operating expense perspective, we still continue to staff up for R&D and incur site expansion costs. However, with revenue improvement, we will look to keep our OPEX percentage flattish or close to the current range. We would like to summarize our outlook for the second quarter 2024 as follows. For our ATM business in NT dollar terms, our ATM second quarter 2024 revenue should grow by mid single digits quarter over quarter. Our ATM second quarter gross margin should be slightly above first quarter 2024 levels. For our EMS business in NT dollar terms, our EMS second quarter 2024 revenues should be similar with the first quarter 2024. Our EMS second quarter 2024 operating margin should be slightly below first quarter 2024 levels. That is the conclusion of our prepared remarks. I would like to open the floor to questions.

Now we will start the Q&A session. If you have any questions, please raise your hand. When you ask questions, please hold two questions at a time. Thank you. We have a question from Mr. Goku Hariharan of JP Morgan.

Hi, good afternoon. Thanks for taking my question. First of all, on the overall end demand outlook, again, you mentioned you're not really changing your outlook, which I think was 6% to 10% growth for logic semis. Could you talk within that, what are you seeing in different verticals? Last time, I remember Joseph talked about auto potentially growing this year. Since then, we have seen some download reductions in automotive demand. Is that still your view? And secondly, could you also comment about smartphone and communication demand, given some of the concerns there? That's my first question.

Yes, I think most of the sectors we're seeing are bottoming out in the second quarter. But with automotive and maybe industrial, still with some lingering softness. But I think overall, I think things might digest itself. And we're not changing our outlook for the whole year at this point.

So you still think, Joseph, that automotive will be growing this year for you?

Yes, we're still gaining market share on automotive. In fact, we're making quite a bit of progress in moving that part of the business up.

Understood. Okay. My second question is on your advanced packaging, the advanced advanced packaging related to AI that Ken mentioned is tracking ahead of plans to double this year. Could you talk a little bit about some kind of longer term view? Like how do you see this business evolve? Is it going to get to 15, 20% of revenues in the next three, four years? Your key partner TSMC also raised their expectations on AI related growth. So just wanted to pick your brains on that. And also related to that, now that you're doing some of the packaging for this lead GPU customer, do you stand a chance to start winning some test business also for them? I think previously you didn't have much testing, whether it is final test or system level test. Is there a chance that you could start winning some test business with them as well in the upcoming product migration?

Yes, I think we still see very, very good growth momentum in the AI-related or the leading edge, both for packaging and tests. And we are ahead of our schedule for this year. And we're expecting continuous strong growth over next year as well. In terms of tests, I think... Uh, I think the overall speaking, uh, we are increasing our full year capex by another 10%. And the bulk of the increase is in test. And, uh, we are, uh, We are making further investments to win not only to raise not only our turnkey ratio, but also to penetrate more into the test only kind of business. And that, of course, includes the advanced testing.

The next to ask questions, Charlie Chen of Morgan Stanley.

Hi, Joseph, Ken, Iris, good afternoon. So I have a few questions. First of all, it's also related to your advanced packaging. May I know your progress in the AI GPU testing business opportunity of especially burning, this is to be a very important process. Do you think a company will gain much market share this year?

We are investing in tests, and that also includes burning. And we're hopeful that we will be seeing some volume by the later part of the year.

Okay. Okay. Thanks, Joseph. And another one is more on the end-demand and the cycle recovery issue. So we continue to hear that China's smartphone-related semiconductor is seeing some forecast cuts. Does the company see similar trend? And do you think it's a kind of short-lived or you think third quarter from a smartphone segment, you are also seeing very mooted growth into third quarter?

I think overall we are still looking at the whole market and most of the sectors will be bottoming out. And we're seeing steady but kind of moderate growth in the cell phone area. And the strongest is still... high-performance computing. But, you know, the other areas we're seeing, you know, gradual recovery. And coming into second half, we will see much more substantial growth momentum.

The next to ask questions, Brett Lin of BFA. Okay.

Thank you for taking my question. So I have two questions. One is on the advanced packaging. So as we learned that, well, the OSAT, including probably ASE, prefers non-silicon-based interposer solution for this leading-edge advanced packaging. So when or what time does the management see a faster adoption in this type of solution and contribute to ASE? Thank you.

Well, we are in mass production at this point, and we are having a lot of engagement with some other customers as well. And I can't predict the pace of it, but we certainly see very good growth potential in this area as well.

Got it. So for the strong growth that we just mentioned into 2025, currently it's still based on the well silicon-based solution. Can I assume that?

Well, it can be both. I think with our own solution, we'll see some pickup in next year as well. Got it.

Thank you very much.

It's very good with the existing packaging.

Got it. Thank you. And then my second question will be about the on-device AI. So what will be the increasing value addition from AAC in the on-device AI? And when do we think the growth to be meaningfully pick up in the future?

Yeah, I think, you know, this year we are ahead of schedule in doubling that part of the business. You know, the next year we still see very strong momentum going on. And we are Not just from the business, from the foundry, but also we're having engagement with multiple customers, including design houses, system houses. So I think there's a momentum building at this point. And we do have fairly good confidence in growing that part of business quite substantially in next year as well.

The next to ask questions, Randy Abrams of UBS.

Hi, thank you. Yeah, when a test follow up on your CapEx, the 10% higher CapEx. So could you go through this? Is some of that also tied to advanced packaging? I think you mentioned the test. And could you remind us, you're now, because equipment CapEx was still fairly low in first quarter, which the CapEx guidance full year now for the equipment or for overall? And the follow-up view is with the optimism into next year, are we starting another CapEx cycle? Like we're at a low base, but do you think directionally there could be a good increase with you noting more AI opportunities to go after?

Yeah, I think for this year, we are upping our CapEx by another 10%. We mentioned last time that this year will be 40% to 50% growth in our CapEx, and we're upping that. I think in terms of overall CapEx, roughly 61% for packaging and 24% for tests. And for test portion of it, the percentage has increased from last quarter's, we were budgeting about 18% now to 24%. So we're making quite a bit of investment or expending quite a bit of our investment in test CapEx. aiming to leverage on our turnkey services as well as trying to get more of the test-only business as well. So I think in terms of the overall CapEx, roughly I would say 50% of it will be for advanced and the other half of it will be for the maintenance and also some of the upgrades.

Hey, great. Thanks for the call, Joseph. I'll ask a quick follow up on that. And then the second question for the test, could you clarify, is that application more HPC, like high performance compute driven? And then the second question I wanted to ask on, it looks like a few things happening on margins. So on the gross margin, could you talk about the mix change, which you're getting some product mix change, both ATM and sounds like EMS as well. And on the OpEx side, with some more of this investment in R&D, the view for OpEx, I guess I should say OpEx growth, how much you think the OpEx has to grow?

Well, I think testing CapEx is both for the HPC as well as other applications. And as I mentioned, we do have a lot of opportunities in raising overall turnkey ratio. And that includes all products. And of course, in terms of the most more advanced or AI-related tests, we are also investing into that area. And we expect to have some, making some inroads in that area as well. What's the other part of the... Okay, gross profit margin, I think the improvement is of course coming from revenue increase as well as our more favorable product mix as we grow our more leading-edge packaging and test. In terms of operating expenses, I think The increase mostly coming from our beefed up R&D investments. And we're staffing up in R&D, putting more resources into more advanced packaging and tests. And of course, we are in the process of expanding our overseas sites as well. So there will be some more initial investment put into it. And also in terms of compensation, we've granted our new round of employee stock options. So we will be including that part of the expense increase as well for this year. All in all, I think for the whole year, operating expense percentage will have about 1% increase from last year, or less than 1%.

The next to ask questions, Rick Xu of Daiwa Securities.

Can you guys hear me? Yeah. Okay. Hi. Thank you for taking my question. So the first question is a housekeeping one. Can you share with us your utilization rates across ATM for the coming second quarter?

We have about slightly below 60% in quarter one and quarter two with the revenue growth. I think the overall... utilization rate could be slightly above 60%.

All right. The second question also about your second half. I remember last quarter, Joseph, you said your ATM gross margin will go back to your structural target, which is mid-20 to 30. Is that still viable for your second half this year?

Yeah, I think from the forecast we have, we're still pretty confident that we will be reaching a structural margin in the second half of the year. And I think we have a fairly good chance that for the whole year, we can also reach that level.

If you have any questions, please raise your hand. The next to ask questions, Bruce of Goldman Sachs.

Thank you for taking my question. I want to ask about your U.S. expansion plan. The advanced packaging business, a major chunk of it is coming from the foundry outsourcing part. On the other hand, you're probably the most important outsourcing partner for TSMC. But as TSMC mentioned during the call that they are very happy to see Emco is going to have another advanced packaging facility in the US, which AAC doesn't really have a sizeable facility there. Do you have any plan to do that? Do you see any change in terms of landscape, how you do the business with TSMC in the future?

We're not precluding any possibility, but then any investment that we make needs to make economic sense. And right now, we're not sure that a greenfield operation set up in the US fits into that category. So we are monitoring the situation at this point. And I think both of the advanced packaging or tests can still be serviced out of Taiwan and other locations as well.

So even with government subsidy, you still don't think that's a profitable business or a good returns business?

No, I don't think it's wise to make any commercial decision based on subsidy.

Okay, I would tell Emco that.

I think they know that too.

Okay. The next question is for the SIP business. What do we see the SIP business growth in this year and the coming years? It has been muted for quite some time already. When can we see another growth momentum for the SIP business?

I think the SIP business for this year, we could see a flattish or a little bit down for the whole quarter because for the whole year. given the fact that there are less products being introduced and there are seasonalities and we are seeing market conditions are a little bit different from previous years. But We are still quite actively engaging with customers and some of the products are going to be mass produced and some are in earlier stage. But we do feel that come next year, the growth in our SAP business will resume.

The next to ask questions, Laura Chen of Citi Group.

Hello, hi, good afternoon. Thank you for taking my question. Just quick follow up on the growth margin. Just you mentioned that for the structure growth margin target of 25 to 30% is achievable or not just for the second half, but also for the full year, is that correct?

Yes, I think for the second half, we will certainly reach that level. And we are trying very hard and working very hard for the whole year. We're working hard to reach that level as well.

Thank you. I appreciate it.

Bear in mind that that's with the increase of our utility costs. The recent rate increase for us is about 15% in electricity in Taiwan. And that will have roughly about a 0.8% impact on us. So that needs to be offset as well. So even with that kind of increasing cost, we are still confident that in second half we'll reach that. And we're feeling confident at this point, quite comfortable that for the whole year, we should be able to reach that as well.

Thank you. May I understand that aside from the iteration rate improvement, do we also assuming that more makes change toward to the advanced packaging or AI related or the increasing like a testing revenue, which would lead to higher growth margin?

Yes, that's correct. We believe the higher advanced packaging as well as our test business will definitely help our margin.

Okay, thank you. That's very helpful.

Thank you.

The next to ask questions, Jason Chang from Seals SA.

Questions. You previously mentioned that it makes sense for ASE to enter the new AP business when it is mainstream enough to reach the mass production stage for ASE. So is that the case for leading-edge service that you talk about? How should we expect the volumes or contribution for this kind of advanced packaging or your new business? Thank you.

are you talking about percentage of revenue?

Yeah. Yeah. Or, or can you give us more colors on maybe, uh, the, the, the contributions or, uh, your outlook in the future?

Uh, well, well, last year we have about, uh, low single digit, uh, percentage of revenue, uh, coming from the, uh, what we call the leading edge. And we are, as, as we, uh, pointed out last time, uh, we expect to double that, uh, to mid, uh, single digit. And, uh, you know, as I pointed out that, uh, next year we still continue to see, uh, strong momentum and, um, but in terms of exact percentage, um, I don't have that number yet because we're expecting not only the advanced packaging will grow, the other so-called traditional advanced packaging or tests and all the other areas will grow as AI development continues to expand.

Okay, got it. So my second question is in So you're all looking second half this year. So can we expect, you know, seasonality or hot season for end demands to sustain our gross momentum for maybe traditional packagings or fleet ship or even mature testing or any kind of service or products in Q3 or Q4?

I think Q3, Q4 or second half, we will see, you know, all kinds of, all products to start to grow. But I think leading edge may be above the corporate average.

And next to ask questions, Goku Hariharan of JP Morgan.

Hi, thanks for the opportunity. First one I wanted to explore a little bit is the partnership with the leading foundry for the advanced packaging. Could you help us understand a little bit the nature of this agreement and arrangement? Is that something that you have visibility into the long term and is it kind of like a strategic partnership that ASA has entered into? Or is it something that doesn't have that kind of visibility, given they're also expanding their own in-house capacity as well? So I just want to understand how this partnership works over the next, let's say, three, four years.

Well, obviously, we work very closely with the foundries, and we do have continuous dialogue with them to set up an expansion plan for our own capacity. But this is something that between us and the foundry, I don't think it's... I don't think it's proper for us to discuss what exactly the arrangement will be.

Okay, but do you think it's something that will continue to drive the growth for the next three, four years?

We do have good visibility, but I don't want to get into the detail for it.

Okay, no worries. Thanks, Joseph. A couple of quick follow ups. One is on pricing. Any changes you're seeing on pricing and for the electricity tariff increase? Is there any chance you're able to pass through some of these cost increases to customers? And also, secondly, on the traditional packaging side, utilization in the early 60s definitely seems quite low. Based on your current customer forecast, any new one when we get back to like 70-75%, will it happen this year or will I have to wait for next year to kind of get back to 70-75% utilization? Thank you.

I think going into second half, we will start to see our utilization to grow. And I think it's safe to say that we will be above 70% for the second half. And in terms of pricing, I think we're still, I think the pricing, overall pricing for us is still resilient. And there are a bit of a price pressure on the legacy products. But overall, I think on average, I think our pricing still remains to be resilient. And I think overall pricing structure will be much better than past cycles.

Okay, any chance you can pass on some of this electricity tariff because it seems like it's not a one-year thing. It's essentially happening every year now.

Yes, I think all costs are being considered when we try to set up the proper pricing that we have. So whether it's 100% passed out or it's shared with our customers, I think we will just come up with the suitable pricing considering all the costs that we need to bear.

Got it. Yeah. Thanks, Joseph. Thank you.

Thank you.

There are no more questions.

Okay, to sum up.

Sorry, there is a follow-up question from Jason Chang of CLSA.

Sorry, I have a follow-up question. I wonder if you can provide more details on your comments regarding the leading-age service. That means, can you provide some of the type for cutting-edge packagings like 2.5D or 3D or chip-on-wafer or substrate? What kind of the type of the advanced packaging or testing can you currently enter into the mass production stage or have the contribution right now?

Thank you. We have Fanout. We have 2.5D. We have OS. I think those are the focus. Those are the one, the type of packages we call leading edge.

Okay. And all of them account for right now low single digit of ATN business, right?

Like I said, for this year, we're expecting mid-secondary. Okay, got it. Thank you.

There are no more questions.

Okay, to sum up, I think we had a better than expected first quarter. And going into second, we are on track of things. And for the whole year, we're also expecting the same kind of outlook that we presented last time. I think overall, all sectors are bottoming out, maybe with different tech sectors with different pace or time schedule. But all in all, we are comfortable with the current situation and we will continue to make the necessary investments to service whatever customer needs, including the leading edge. And also on the test side, we are increasing our capex as well to try to win more test pieces. Thank you very much. I'll see you next quarter.