Asmpt Ltd

Good morning and good evening, ladies and gentlemen. I'm Romil, the Group's Head of Investor Relations, and I will be the moderator for today's call. On behalf of ASMPT Limited, let me welcome all of you to the Group's first quarter 2023 investor conference call, and I would like to thank you for your interest and your continued support in the company. Please note that all participants will be on listen-only mode when the management is presenting. We will start the Q&A only after the management has gone through the entire presentation. We endeavor to answer all questions during the Q&A session, but due to time constraint, priority will be given to the covering analysts. Let me quickly go through the disclaimer. Please do note that during this conference call, there may be forward-looking statements with respect to the company's business and financial conditions. Such forward-looking statements could involve known and unknown uncertainties and risks That would cause actual results, performance and events to differ materially from those expressed or implied during this conference call. For your reference, the investor relations presentation related to our recent results can be downloaded from our website. On today's call, we have Mr. Robin Ng, the group CEO, and Ms. Katie Su, the group CFO. Robin will begin with a brief discussion and group key highlights, and then Katie will provide details on the financial performance. This will be followed by an update on the guidance and outlook, and then we will open the floor for Q&A. Without further ado, let me hand the time over to Robin now. Thank you, Rohan.

Good morning and good evening, everyone. It's a pleasure to have you all on our earnings conference call for the first quarter of 2023. Let me comment on some recent developments in the industry and the overall macro environment before I update about our performance for the first quarter. At the start of 2023, there was some optimism for recovery in the global economy and improvement in consumer confidence. However, escalating trade tensions and a persistent inflationary environment impacted consumer sentiment and resulted in a more cautious tone in the semiconductor industry overall. Navigating through the ongoing industry down cycle, I'm pleased to highlight that our diversified business model enabled ASMPT to deliver revenue above the midpoint of our guidance for the first quarter of 2023. I must emphasize again that our unique broad-based portfolio provides much-needed resilience and competitive advantage. This was apparent during the quarter. While the semi-segment was still impacted by the semiconductor down cycle, the SMT segment delivered its strongest ever first quarterly revenue performance. This first quarter of 2023 was also the third consecutive quarter in which SMT accounted for a higher proportion of our group's revenue.

Looking at the end market applications that we serve, our communication, computers,

and consumer air markets, or what we like to call the triple C markets, continue to be weak. However, the automotive air market remained robust and continued to be the highest contributor to the group's revenue for the first quarter of 2023. Looking closer, as silicon and electronic content per vehicle increased due to automotive electrification, automotive solutions including sintering, laser simulation and molding tools gained traction and our strength in automotive was also powered by a range of solutions servicing more EV players. I will now take you through today's presentation.

Let me begin with our SMT business.

The SMT segment had robust revenue and bookings. SMT bookings were about 58% of the group's booking for the first quarter of 2023. And this was the fourth consecutive quarter where our SMT bookings were higher than our semi-bookings. SMT bookings for the first quarter grew quarter on quarter, even though the overall market our SMT business placed in declined. We strongly believe that SMT has gained market share in the first quarter of 2023 and commands a leading position. S&T's robust segment performance was also buoyed by ongoing strength in the automotive and the industrial and market applications. The latter driven by the need for smarter factories, greener infrastructure, EV charging, and the expansion of power and green grid. This slide highlights the progress of our advanced packaging solutions. I have mentioned this before, but let me iterate that our suite of solutions under advanced packaging are perhaps the most comprehensive in industry and positions us well to meet varied demands across a wide spectrum of application areas.

The bottom of the slide highlights the breadth of our AP solutions and their application areas.

Last quarter, in my interactions with many of you, the trend concerning generative AI applications, such as chat GPT, was a popular topic. As the generative AI market grows, we believe that this trend will benefit the providers of GPU, CPU, FPGA, and high bandwidth memory, or HBM solutions. to support the exponentially growing demands of AI applications for both computing and memory power. In this regard, we are well-placed to receive more orders for thermal compression bonding or TCP tools for HPM applications. Later, I will shed more light on the role TCP and hybrid bonding solutions are playing in the evolution of AI applications. Overall, there was more traction for TCB solution as we expanded our global OSAP customer base and delivered our first generation, our next, sorry, delivered our first next generation TCB tool featuring green ultra-fine pitch chip to wafer capabilities to a leading global foundry customer. In addition, we are on track to deliver hybrid bonding tools to leading customers for use in varied applications. Here, I'm pleased to highlight a breakthrough with a maiden customer order where a hybrid bonding tool will be used for 3D integration and delivery to this customer is scheduled for next year. Let me now describe how the evolution of AR application is expected to create robust demand for our TCP and hybrid bonding tools going forward. The AI requirements for combining GPU, CPU, FPGA, and HPM in a very complex, heterogeneous integration architecture is creating more interconnects between components on an AI package. For majority of these interconnects, TCP is presently the tool of choice as they effectively address the total cost ownership challenges arising for such complex architectures. Let me be very clear that this picture is just one example of a high-end, high-performance computing device. Different packages will enter different proportions of components handled between TCB and hybrid bonding. And this will also depend on the evolving total cost of ownership and performance for each of this process over time. This package consists of six chiplets colored in green, that utilize hybrid bonding to form a 3D integrated IC. On the other hand, there are four HBM stacked dye colored red surrounding the six triplets bonded using TCB. And each of these four HBM is made out of a stack of 12 layers or more of memory dyes also bonded using TCB. The four HBMs and the 3D integrated IC are in turn bonded onto a passive interposer, colored green, using TCB to form a compound dye. Moreover, the resulting compound dye is bonded onto a HDI substrate, colored green at the bottom of the picture, also using TCB. Therefore, other than the six triplets that utilize hybrid bonding, all the other interconnects in this package are handled by TCB. This usage ratio will vary with different AI packages or HPC applications, but I trust you get the general idea. Overall, high-performance computing devices will generate a growing need for both TCB and hybrid bonding. Since ASMPT has both TCB and hybrid bonding solutions, we are confident about the combined growth potential for the group. Let me now hand over the time to Katie, our Group CFO, who will talk about our group and segment performance.

Thank you, Robin. Good morning and good evening, everyone. This slide shows our key financial metrics for the first quarter of 2023. Robin earlier mentioned that the macroeconomic environment and industry conditions are far from rosy. Despite this challenging external environment, the group delivered a creditable performance in Q1. The group delivered some growth in bookings quarter-on-quarter for Q1 2023 from a low base in the previous quarter. Our backlog was US$1.1 billion at the end of March. This reasonably high backlog provides some cushion for the group as we navigate through the ongoing industry down cycle. The group's net profit came in at HK$315.1 million. This was up by 18.2% quarter on quarter, as there was an unfavorable foreign exchange impact in the previous quarter. Earnings per share for Q1 came in at 77 Hong Kong cents, and this was an increase of 18.5% quarter on quarter. Let me take through some detailed financials in the next few slides. For the first quarter of 2023, the group's revenue was 500 million U.S. dollars. higher than the midpoint of guidance of $490 million. This was a decline of 9.5% quarter-on-quarter as revenue for both SEMI and SMT segments declined, with SEMI's revenue decline higher due to the ongoing semiconductor down cycle. As I highlighted earlier, group bookings grew at about $453 million, an increase of 13.8% quarter-on-quarter, Booking scores was mainly supported by robust demand from the automotive end market. The group registered gross margin of 40.4%, a decrease of 98 basis points quarter-on-quarter. The decline was mainly due to segment mix, as SMT delivered more than 60% of group revenues. In line with lower sales volume, the group's operating margin declined by 181 basis points, quarter on quarter, to 11.9%. The semi-segment delivered revenue of about 197 million U.S. dollars, which was a decline of 18.1% quarter on quarter. The IC discrete business unit registered decline in revenue sequentially, as mainstream tools continued to experience weak demand. The highest revenue contributor to this business unit continued to be the automotive end market. The optoelectronics business unit also recorded lower revenue sequentially, as its revenue was mainly driven by high-end automotive, silicon photonics, and advanced displays applications. The CIS business unit registered revenue growth quarter-on-quarter, but the revenue remained at a relatively low level due to ongoing weakness in the global smartphone market. From bookings perspective, SAMI recorded first quarter bookings of about 192 million US dollars, which was a growth of 33.6% from a low base in the previous quarter. Main contributors to the bookings were automotive end market and advanced packaging solutions. SAMI's gross margin was 45.1% in the first quarter, which was an increase of 66 basis points sequentially, mainly due to federal product mix and ongoing cost control measures. Our SMT segment continued strong revenue performance and recorded its highest ever Cuban revenue. SMT contributed 60.7% to group's revenue for Q1 2023. It delivered a revenue of about $303 million, a marginal decline of 2.9% quarter-on-quarter. SMT's revenue performance was mainly powered by industrial and automotive end market applications, with demand coming mostly from Europe. Similar to the revenue drivers, SMT segment bookings were also driven mostly by automotive and industrial end markets for the first quarter. Bookings increased 2.6% quarter-on-quarter to about $261 million U.S. dollars. In the first quarter, SMT contributed about 58% of group bookings. SMT's gross margin was 37.4% in Q1, which was a decline of 168 basis points quarter on quarter due to product mix. Now let me pass the time back to Robin to cover Q2 revenue guidance.

Thank you, Kitty. We have been monitoring the industry and macroeconomic environment closely. Persistently weak consumer sentiments, coupled with the ongoing inflationary pressures, make it more challenging to form a clear picture of the timing and the pace of recovery for the industry. We are therefore cautious in our outlook against the backdrop of this present uncertain external environment. Thus, for the second quarter of 2023, the group expects revenue to be between $455 million to $525 million. At 490 million US dollar midpoint, this represents decline of 26.2% year-on-year and 2% quarter-on-quarter. Let me conclude with a couple of points on a longer-term outlook for the group. Over the longer term, we are optimistic about the group's growth potential. which is supported by the longer-term structural trends of automotive electrification, smart factories, green infrastructure, 5G, IoT, and high-performance computers fueled by generative AI growth. This slide comprehensively sums up our unique broad-based portfolio, which not only provides the group competitive advantage, but also the needed resilience through the industry cycles. This unique broad-based portfolio was in play during the first quarter of 2023 that witnessed our SMT side delivering a stronger performance than SAMI. On that note, I will end the presentation. Thank you. We are now ready for Q&A. Let me pass to Rong to facilitate.

Thank you, Robin. For asking questions, please either use the raise hand function or type your questions in the chat to ASMPT Q&A. Please ask your questions one by one and limit them to two questions at each time. Thank you. With that, can I request Gokul to unmute yourself and ask your questions?

Yeah, hi. Good morning and thanks for taking my question. Maybe my first question, I will focus on the more near-term dynamics. Robin, I think you mentioned things have become a little bit more conservative since the beginning of the year. Could you talk a little bit more in detail what you're hearing from your customers and on different verticals, especially on the automotive and industrial side? There have been some concerns recently that demand has become a little bit weaker. Are you starting to see some of that when you look at the forward-looking bookings or backlogs? And maybe you can also give us a little bit of color on what you're looking at the bookings for semiconductor segment, semiconductor solution segment into Q2. Are we going to continue to see that sequential recovery that we saw in Q1?

Hi, Gokul. Let me break down your questions into a couple of parts. The first part is more on the near-term outlook and especially whether the company is seeing any weakness in automotive and industrial side. Let me request Robin to update on this.

Thank you, Gokul, for your question. Now, Maybe I talk about some kind of Q2 booking, Carla, because as you know, we don't give guidance on booking, but only on revenue. Now, obviously, I think we are cautious for Q2 bookings due to the continued consumer sentiments as a result of the prevailing macro uncertainties um so based on this stance you know we we think group bookings will continue to uh will come down you know q and q um by maybe between 10 to 20 percent q and q um On that note, we also expect SMT demand to decline after a few quarters of strong bookings. As you can recall, if you look back, SMT has been experiencing, I think, about eight, nine quarters of bookings above $250 million. So that's historically on the high side. So they were, you know, S&T bookings were sort of normalized, you know, in the coming Q2. Now on this, a little bit more color on the semi side, semi bookings, as you can see on Q1, already grew quite a fair bit. I believe it's around 34% from a low base in Q4 2022. So for Q2-23, because of the cautious and consumer outlook, Q2-23 for semi-booking may, in our opinion, may remain kind of a flattish level compared to Q1. Now, on to your question about automotive. Yes, we do see on the SMT side automotive demand will start to moderate again because we have really few 8 to 9 quarters of a strong automotive demand for the SMT already. so this we don't think this can continue you know forever so it has to come down and normalize to a level that is comparable to historical so yes we do see automotive or smt kind of normalizing however on the um on the semi side um the picture is slightly different I think one reason we can attribute to the difference between automotive on the semi and automotive on the S&T side is there's still a lot of innovations in terms of packaging devices on the semi side for automotive. As I see materials, for example, this is a new material altogether compared to prior years. So there's a need for the industry to use different packaging solutions for such material. This is just one example. And there's also many other I would call packaging evolution in terms of how we want to make the automotive the power devices more efficient. So that requires a lot of new technology in terms of packaging. And from that perspective, I think it plays in the strength of ASMPT on the semi side because we definitely have the bandwidth, the capabilities to develop new solutions for the semiconductor automotive side. So I think in short, we do still see some leg room in terms of auto demand automotive demand on the semi side for that reason because a lot of this automotive demand on the semi side they are capability buys you know so For automotive, these capability buys will go on for a number of years before they turn into high volume. So from that perspective, we think there's still some leg room to go on the semi side, but on the SMG side, we do see some normalization in terms of automotive demand.

Yes, thank you.

I think that was very clear. Maybe if I move a little bit to the more longer term areas. Thanks for the update on TCB and hybrid bonding progress. Is there any way you could give us some degree of quantification, whether it is from third party data, et cetera, in terms of how big these market sizes are? We have seen from some of the third party research that PCB market is roughly about 1.2, 1.3 billion US dollar. And I think there are some of your competitors who are talking about hybrid bonding itself going to between one to two billion US dollar size in the next five to six years. Just wanted to understand how much of a upside you have seen from your customers, orders, et cetera, for HBM and other products, especially with this push towards hybrid. generative AI and more HPC solutions for both TCB and hybrid bonding. And a small supplement is, are you seeing any of these getting deployed in the smartphone segment or these are mostly in HPC? Thank you.

So, Gokul, I think two parts of your question. For the first one, the exact, say, addressable market or SAM for TCB and hybrid bonding, I'm sorry to say, unfortunately, we don't provide. In last quarter's earnings call, we did provide our APs overall SAM from 2023 to 2027, but giving a sort of an outlook for TCB and hybrid bonding. I will request Robin to provide some more color on this. Then second part of your question is whether some of these solutions are going towards the smartphones. For that also, I will request Robin to answer your question.

Thank you, Goku, for your question. Now, in terms of TCB and HB, I think we Koko, you saw today's presentation. We want to give a little bit of a color on how we see the TCB and the hybrid bonding demand going forward. I think even without the... Generative AI application trend. We have been seeing, I think, going forward, advanced packaging, you know, will continue to grow in the industry for a reason that, you know, there's a lot of cost advantage and time to market, you know, for such a solution. Now, with the advent of the generative AI application, I think this will add on top of the demand that we have already seen in the advanced packaging area that we have articulated before. Now, it's exciting for AI application because, as I mentioned during my opening remark, AI application requires more complex packaging solutions. And for that reason, we are confident that, you know, we have the technology, we have the bandwidth, you know, to cope with all this demanding, evolving technology, both on the TCB side as well as on the HP side. So I think in short, having these tools in our arsenal, you know, positioned us well to take advantage of this growing trend in terms of HPC and then hopefully this AI trend can turn into something big for the industry. I think this is what we are hoping for in the future. I hope I answered the first part of your question. Now, on the smartphone side, I think at this moment we don't, I think most of the, I will say TCV and The TCB application or high-end precision die-bonding kind of application, so far we don't see smartphone application, mostly HPC application. I think because of the total cost of ownership consideration, This device, this solution is an expensive solution, even for TCB. So the cost of ownership must make sense in order to employ such a solution. So for that reason, we see TCB and HP more for HPC rather than smartphone, at least in the present time. Thank you.

Thanks, Robin. Next, can I request Lapping to unmute yourself and ask your questions?

Thank you for taking my question. The first question is about the second quarter booking trend. So if I hear correctly, you expect the second quarter booking for SMT and semi will decline? Is it correct?

No, we expect SMT to decline after a few quarters of high booking. But for SEBI, we expect it to be kind of flattish for Q&Q.

Okay. So just by the application, can you share some color which type of application for the both sides are declining? And why? Because we see the first quarter booking are

recovery is it just because of the seasonal effect or it's it's what's the reason Q1 is recovering but Q2 seems to be a little bit weak yes thank you okay good question now um Q1 uh because of a low base right so if you look back to four uh semi booking was around 140 each million right so in Q1 it went up to about 190 million terabytes. So when you compare QMQ from that perspective, it appeared that there's a 34% increase, but we are coming from a low base. Now, because of the cautious environment, weak consumer sentiment, I think we all know, right, for semi-con, especially for the semi-con segment, the demand dynamics is that it has to be, it sort of corresponds with the general economy, right? So the general economy is not, it's just sluggish, consumers are not opening up a wallet, they're not spending, you know, so semiconductor will still be a constraint in terms of demand. So this is exactly what we are experiencing right now. So that's why we want to be a little bit more cautious for Q2 in terms of colour. for booking on the semi side so we expect it to be a kind of flat dish now in terms of what's driving this i think the the near-term dynamics is the same i think uh for for uh for semi i would say continue to be uh automotive uh continue to be hp ap because However, on AP side, it tends to be lumpy. So quarter to quarter, it may vary. But, you know, momentum-wise, I think automotive, AP will continue on the semi side. For SMT, we also continue to see automotive industrial being the driving force for SMT demand. So I hope I answered your question a little bit.

Yeah, thank you. The second question is, can you share some color about the difference between your order in different geographical regions? I remember last quarter you mentioned that you see quite strong demand in Malaysia, Vietnam, or this Southeast Asia region. Do you see any difference this quarter between the region in terms of order?

Thank you. There is a small difference, I must say. which is somewhat a little bit positive, but don't be too excited. Now, we see when we talk to our Chinese customer or we do channel checking, the utilization of some of our Chinese customers are picking up. it has not picked up to a level that excites us it also is in sporadic interest a little bit more inquiries you know about tools you know if i want this tool when can you deliver i mean those are positive signs arising from the chinese market positive but but sporadic it does not signal a broad-based kind of recovery yet from the China side. So that's what I can share with you. Something a little bit different from the previous quarter. Yeah.

Okay. Thank you very much.

Thanks, Robin. Next, can I request Nicholas to unmute yourself and ask your questions?

Yes. Hi. Good morning, everybody. You mentioned in the presentation an expansion in global OSAP customer base. Could you... clarify or specify what this means.

Okay. So now I think probably you guys probably will follow us for a long time. You know, we have been saying, you know, we have a very dominant logic customer for TCB, but increasingly, you know, we see more interest for TCB coming from the offset, not just from the IDM or the, the founding space, you know, but increasingly we see offset, not just, also in one location, but it's coming from a different region. But having said that, Nicholas, the demand coming from the outside is still small compared to IDM.

Thank you. So this is a TCB specific comment. Yes. Okay. Thank you very much. The bookings of the semi-solution division is increasing a lot Q on Q, right? Sorry? The bookings for semi-solutions is increasing a lot Q on Q, right?

Q1, booking, right? Right, exactly, right? Q1 compared to Q4, yes.

Yes, yes, right, plus 30% Q1Q, right? So does this suggest that the revenue of semi-solution increase in 2Q?

Let me put it that way. Although, as I said earlier, when answering one of the earlier questions, right, so although Q1Q semi-booking has increased by 34%, that means Q4 to Q1, But let's not forget Q4 was a very low level. And looking at the semi-bookings in Q1, we registered about 192 million-ish. So if you look back historically, this is not a high level. It's not a high level at all. So that's why we're trying to say we are coming off from a low base.

uh from q4 i understand the low base what i am wondering is if an increase in semi solutions revenue into q also implies that the operating margin could go up you know so your semi division has a lot of fixed costs and R&D and so forth, right? So in 1Q23, you reach a fairly low segment margin of 2.5%, and I'm wondering if that's the bottom.

Hard call bottom because maybe, Katie, you want to take this?

Yeah, so on the margin, let me take a shot at it, Nicholas.

Yep.

what Robin said, hard to call the bottom. As you probably can tell, right, the group in previous quarters has managed to deliver at margin at a fairly consistent level. It does demonstrate the group's ability to deliver steady performance in both up and down cycle. However, you probably know the group margin really is from quarter over quarter may fluctuate. due to volume, segment mix, or product mix, right? So in this downturn, relatively low volume and the SMT segment mix, and also any potential increase of mainstream product could be a headwind for us.

Could be. Okay. My last question, sorry. The bookings for SMT, so, you know, 260 million, the book to bill is, you know, let's say 0.6, 0.8, 0.9, right? In that range. Is this partially because order visibility or delivery time or lead time is a lot shorter for SMT than for semi-solutions.

Nicholas, not really, because we have a broad range of tools, so cannot generalize, honestly, cannot generalize. But we are talking about mainstream S&T tools. Typically, you know, it's a quarter or certainly above a quarter. Unless it's for a very advanced tool for advanced packaging, then the lead time will be longer. So it's just a general guideline for you.

Okay, thank you. Hi, next, can I ask Gokul? You can unmute yourself and ask your questions.

Yeah, hi. Thanks for taking my follow-ups. So if we look at within semiconductor solutions, could you talk a little bit about how you're seeing both the imaging CIS-related and camera-related solutions? packaging tool. I think last time we did discuss that there's potentially some upgrade possibilities coming through. Could you talk a little bit about how that is progressing since you did call out in the presentation that CIS still remains a little bit weak. Secondly, I think For the slowdown that we are seeing in SMT, is it specific to any segment that we are seeing the slowdown or is it broad-based? Is it mainly auto and industrial that is seeing the slowdown in your SMT business in second half or is it across the board? Thank you.

Thanks, Gokul. Your first question is more on CIS and the camera module side. Let me request Robin to give you a bit more color on that.

Yeah. So on the CIS front, we do see some increase, but again, very small, very low base kind of level. I think for the CIS mobile market, we were engaging key customers. I think we have a good base of key customers for our tools, for sure. uh we are engaging these customers for a lot of capability buys and this capability uh buy would probably turn into some kind of a high volume in time to come maybe a year or two but it all also depends on the market dynamics at a point in time whether the yeah i think that that's uh that's very clear maybe one last question uh

Robin, you have seen many cycles and you guys are in very constant touch with your customers. I think, how do you see this cycle panning out? Are you starting to see, like we discussed earlier, you've seen a bit of improvement in semiconductor solutions, bookings? recently in Q1. Do you feel like we're kind of reaching that bottom in terms of the semiconductor cycle itself and you start to see a little bit improvement in bookings as we look a little bit further out? What are the feedback you're getting in conversation to your OSAT as well as the IDM customers, especially from a semiconductor solutions perspective?

Yeah, good, good. Thanks. I think generally, when we talk to our customers, in general, I think we sense our customer base is feeling a bit more cautious than before. Although some still are hopeful to see some sort of a recovery in the second half of 2023. So we hope this came of a customer basis right. I think for the semiconductor industry, in our opinion, it's closely tied to the general economy. So the economy has to pick up and this will drive consumer spending and expenditure growth. And this will help to boost demand on the consumer end market, the communication end market, and also maybe even the computer end market. Because these three markets, what we call the CCC market, are really weak. We're really weak for the number of quarters. So these three markets are big markets compared to automotive and industrial. So if these three markets don't recover, semiconductor can remain, you know, in a down cycle, you know, from that perspective. Now, to be honest, Goku, we can't see too far. You know, we are back-end equipment makers, we are, you know, SMT. Our visibility, really, we have been saying quarter of a quarter, you know, our visibility is, you know, is one quarter the best. You know, if you ask me beyond that, we can't really give you any good answer. So we also take reference, honestly, from industry experts as well, research experts, research houses, If you look at their forecast, in fact, most of them have revised their 2023 outlook for semiconductors. uh as a whole the market as a whole and even for the pa market or the semiconductor equipment market uh you know they have hope they have also revised downwards so they are also taking a more cautious stance or position for 2023 versus 2022 so we also have to take reference you know from all these research houses so i hope we give you a little bit of color on that google

Yeah, that's very clear. Thanks, Robin. Thank you.

Hi, let me read one question from the chat. This is for our CFO, Katie. Gross margin for the semi-side improved slightly, but the semi-side registered decline in the segment margin and profit. So can Katie comment on that? Thank you.

Thanks. So I think this is referring to the operating, the steadiness of the operating expenses for our business. As we have mentioned before, ASMPT is a technology-driven company, so we're very committed to the investment in R&D in regards of the cycle, especially for semi-business. We've been investing and will continue to do so in the leading-edge technologies like advanced packaging. So that will continue on. At the same time, also, we have some other strategic projects that are probably showing in the operating expenses, like upgrading of our ERP and HR systems. And we believe those investments will position us for a more productive company going forward. Now, having said that, if you look at our quarter over quarter RPAX, it is actually 7% down. So in this kind of environment, the company, just like in previous quarters, have engaged in various corporate initiatives and cost control measures and will continue to do so. So I hope I answered your question.

Thanks, Katie. Next, can I request Nicholas to unmute yourself and ask your questions?

Yes, yes. So to go back to Gokul's question in a way, in 2021-22, you had very large semi-revenues, right? So declined a bit in 2022, but still, you know, 10 billion Hong Kong dollars. So really very, you know, big number for two years, big revenue numbers for 2021 and 2022. At the same time, there was a bottleneck or shortages in wire bonding with OSAT companies during those years. Do you think there is overcapacity of wire bonding now?

Yeah, Nicholas. Yes, if you look back, obviously, if you recall, 2021 was really a semiconductor peak. Ever, right? So at a point, wire-borne sales were very robust. We had the best year in terms of wire-borne sales. Now, I think this is the dynamic of the industry, right? So when we go to a high, you know, you will come down. You know, this is the typical cyclical pattern that we are seeing now. So obviously, in our opinion, there is some truth behind the fact that there is still some overcapacity on the mainstream side, especially on the wire bond side. That's why the wire bond demand over the last few quarters have been relatively low compared to history. so so you you you are right you're right uh but however having said that i i think in answering one of the coco's question earlier or someone else i think little pink right so we do see uh having said that we do see some sporadic interest you know from some of our customers inquiring about why born I think that is a small positive sign. At least they're thinking of ordering some wire-bound tools. We did see some increase, but nothing to shout about. The increase is still coming from a very low base. But at least there's some sporadic interest about a wire-bound in particular. So this is what we are seeing right now. Thank you.

Thank you.

Nicholas, do you have a follow-up question? No, thank you. All right, thanks. If anyone has any question, please use the raise hand function. We'll give it a minute to wait if there's any questions. Let me read one or two questions from the chat box.

This question will be for Robin. Would you be able to comment more on the repeat order

of hbm in tcb and the progress of your next generation tcb tools in terms of qualification thank you yeah in terms of hbms uh i think we highlighted in q1 as well we are pleased that we have won you know orders for our tcp tools for hbm applications Now, we are, in fact, this is, as those who follow us closely, this is a breakthrough for us. We have been openly telling you that, you know, SMPT semi-site has never been as strong on the memory side. So, with the advent of new technologies requiring advanced packaging solution and technique that play into our strength, that's why we are able to win this uh order for hbm application we we see the trend will continue uh but don't ask me you know how how big is going to be is anybody's guess but with the recent with the recent uh interest in generative ai applications we believe that hbm will be a key component You know, for AI or for HPC packages, they are more tuned to AI application because AI application, you need a lot of memory power. So I think HBM will be a key to that kind of packages. So we are pleased that, you know, we are already in HBM. So hopefully that demand will give us, will continue well into the future.

other question uh there's one more question on the chat this is more on hybrid bonding can robin give a bit more color on the recent order and is that a volume order which one is it for hybrid bonding no i we i think we clearly state that uh you know it's our first uh order for uh hybrid bonding

I think in the last quarter, we also did mention that we are developing the next generation of hybrid bonding tools that are more attuned to the evolving needs of our customer base in terms of accuracy, in terms of yield, in terms of cost consideration for hybrid bonding going forward. So hybrid bonding, as I have represented just now, It is together with TCB, you know, we believe the combined potential of TCB and HP or hybrid bonding to going forward will be interesting, you know, not just for the semiconductor industry, but for, you know, a key player like ASMPT in this area.

Thanks, Robin. Next, can I request Frank to unmute yourself and ask your questions?

Hi. Thank you, guys. So just to follow up, I think, on some of the previous questions people have about where you guys see this semi-cycle going, it seems like, you know, earlier the expectation was that, you know, we would see content growth and that would help offset the downside risk of any kind of slowdown. That doesn't seem to be materializing now. I guess the question is, you know, we've talked a lot on this call about autos seeing some slowdown. Where do you guys see, I guess, the implication from this beyond, I think, just what we're seeing in the near term? Because it feels as though, you know, we're not seeing a real meaningful recovery in areas such as smartphones and things like that. And we may have to deal with the fact that smartphones are going to start to go into a more of an ex-growth phase. While there's enthusiasm around AI, the actual contribution still seems to be not going to be as significant as we're seeing on Semi. So I guess just to put it in context, though, how should we think about this cyclical downturn period? I think two quarters ago, everybody thought this would be a normal cycle. It would be over by the first quarter this year. That doesn't seem to be the case, or by the first half this year. So how do you guys see or as you talk to your clients and how are people starting to come around in terms of this downturn period? So any of you guys can share any thoughts on this?

So I think, Frank, maybe let me request Robin to comment that how we are seeing this down cycle. And, you know, if he can comment anything on the bottom and the potential recovery from a perspective, maybe of, you know, what we are seeing on the ground and indications from the customers.

So, Fran, I think let's talk about automotive a little bit. I did mention after two years of high demand for S&T automotive tools, it's kind of normal cycle. Don't take it as abnormal. It's normal that after two years of high growth, you know, it has to normalize. I use the word normalize. I'm not saying it's going to be a steep decline for SMT Automotive. Don't get me wrong. Normalize to a level that is, you know, before the peak. This is, in fact, this is healthy for the industry, right? So what goes up has to come down, you know, before it goes up even higher again. So I think I just want to make clear that you guys are clear about the SMT side. Now on the semi side, I mentioned also, I just want to touch a little bit on Automotive. I said there's still a lot of leg room for the semisite in terms of automotive because of the continued innovation in terms of packaging requirement at the semisite. So semisite, we still see leg room in terms of automotive. Now, overall, you talk about how do we see where is the bottom? Now, this is really a million-dollar question, right? So I don't think we can give you a very clear answer on that. we, as I mentioned in the earlier answers to some of the questions, we take guidance, you know, from industry holders, how they look at things, from channel checking of customers. I will say some pockets of feedback that they're still hopeful for second half recovery. Now, I mentioned many times before, it all depends really on the economy. The consumer's expenditure or spending has to come back you know for a meaningful recovery in the semiconductor cycle yeah i think that's still we this is how we see it you know in in the short term okay uh and maybe you can just as a follow-up though um

Peter, do you think there's going to be a likelihood then, it seems like everyone's hopeful for a recovery and it keeps getting pushed back. Do you ultimately see a scenario where the capex spend has to start to decelerate more? Just like, not quite the same extent we've seen in memory, but to a certain extent, I think that ultimately can help if the market gets bad enough or there's no recovery. Do you see a risk of capex spending slowing overall for the industry?

yeah even more than we are yeah if you i i i just want to look at things from another perspective if you look at our bookings for the semi at 192 million q1 2023 looking back historical uh is already at a low level right so so the question is how low can it go All right. So it's really at a low level. So I hope I give you some perspective. As I say, nobody can predict, you know, when it's going to be bottom. But looking at semi bookings already at a low level.

Okay. Thank you.

If there are no more questions, then we will end this earnings call. Let me thank all of you again for attending today's conference call. And we hope to see you during the next quarter's call. Thank you. Take care. Thank you.