Asmpt Ltd

Good morning and good evening, ladies and gentlemen. This is Leonard Li from the ASMPT RR team, and I'll be moderating today's call. On behalf of ASMPT, welcome to our 2025 Second Forward Investor Conference call. Thank you all for your interest and continued support. Please note that all participants will be in listen-only mode while the management is presenting. We will start the Q&A session after the presentation. During the Q&A session, priority will be given to the covering analysts. Before we start, let me go through our disclaimer. Please do note that there may be forward-looking statements about the company's business and finances during this call. Such forward-looking statements could involve known and unknown uncertainties and risks that could cause actual results, performance, and events to differ materially from those expressed or implied during this conference call. For reference, the investor relations presentation for our recent results is available on our website. On today's call, we have our Group CEO, Mr. Robin Eng, and our Group CFO, Ms. Katie Hsu. Robin will cover the Group's highlights, outlook, and next quarter's performance, while Katie will provide details on the financial performance. With this, let me now hand this over to Robin.

Thank you, Leonard. Good morning and good evening to everyone today. It is a pleasure to have you all on our earnings conference call for the second quarter and the first half of 2025. Now let's start with the key highlights of the first half. Let me begin by saying that the strong demand continues to be driven by the AI tailwinds across our AP and increasingly the mainstream as well. For the first half of 2025, we achieved better than expected bookings, and our revenue guidance for Q3 is above market consensus. The group's advanced packaging continued to grow with AP revenue contributing significantly to group revenue in the first half of 2025. This growth was primarily driven by the ongoing demand for thermal compression bonding or TCB tools. In the first half, the group secured repeat orders for TCB tools in both memory logic applications maintaining the largest tcp in stock base by surpassing 500 tools worldwide in the mainstream business the group is beginning to benefit from ai tailwinds ai data center demand has driven bookings growth for new power management capabilities the group also experienced strong booking growth in china driven by electric vehicles and consumer end markets I'm also pleased to say that we have maintained gross margin above 40% despite foreign exchange headwinds in the first half of 2025. With that overview, let me go into more detail about Advanced Packaging, a business that is growing and we remain confident will continue to do so. In the first half, our AP business increased its revenue contribution to around 39% of the group's revenue, or approximately US$326 million, driven by strong AI tier wins. TCB has continued to be the largest AP revenue contributor and remain a key growth driver. Orders in the first half were up 50% year-on-year as it gained further traction with customers, including major AI players. The group's leadership position in TCB across both logic and high bandwidth memory, or HBM, supply chains continued to strengthen, supported by the expansion of our AP customer base. During the first half, the group secured TCB orders from various HBM players, further reinforcing our leadership position in this market. The group successfully installed the bulk order of TCB tools for the leading HBM customer fully meeting their high-volume manufacturing requirements for HBM-3E-12H. These tools have demonstrated outstanding performance, delivering industry-leading production yields and exceptional interconnect quality. Additionally, another key HBM customer began low-volume manufacturing for HBM-4-12H without TCP. In the HBM4 market and beyond, the group continues to maintain its technological advantage due to its Active Oxide Remover or AOR technology. This innovative capabilities enable us to support customer as they transition to next generation HBM and beyond. AOR is a key differentiator, facilitating the demanding requirements of HBM4 and beyond. This includes higher input-output connections, more challenging die-bomb layouts with finer-bomb pitches, thinner dies, and a high number of die stacks. Promisingly, the group is currently engaged in HVM4 AOR sampling builds for multiple customers. Turning now to chip-to-substrate, or C2S-TCB, The group secured additional orders in the first half of 2025 for C2S solutions at the leading foundry's OSAP partner. The group also delivered several high-volume shipments of its TCB tools in the first half of 2025, serving as the sole supplier for chipped substrate. Minua. Our joint development of ultra-fine-pitch chip-to-wafer, or C2W, logic applications for next-generation AOR-TCB with a leading foundry is progressing from pilot production to volume production. Moving on to hybrid bonding, the group expects hybrid bonding to coexist with other packaging technologies, and its adoption will be gradual. We continue to see progress with our both first and second generation hybrid bonding tools with various customers actively engaged at different stages of setup, qualification, and shipment. Notably, our second generation hybrid bonding tools feature competitive capabilities in terms of alignment and bonding accuracy, footprint, and UPH. As previously announced, we expect to ship this second generation tool to an HBM customer in Q3. In addition, there is also continued collaboration with the leading IDM, leading research institution, and the leading foundry on our tool capabilities. Now turning to photonics and core optic package or CPO. Rapid AI growth continues to increase data center bandwidth requirements and boost demand for high bandwidth optical transceivers and co-optic package CPU applications. Our photonic tools are able to package these high bandwidth transceivers, especially 800G and above. Due to our clear market relationship, we expect continued order momentum from global transceivers market, serving all major AI players. While the CPU market is still in an early phase, we are actively working closely with leading CPU players around the world. In the first half of 2025, we had a major win with a leading IDM and a well-positioned to grow our market share. Finally, the system and package of SAP business within AP, SMT won orders in the first half of the year from the leading global high-end smartphone players for radio frequency, modules, and wearables. In addition, SMT has been gaining traction. with its next-generation chip assembly tool in several areas, including AI-related applications, with shipments leading to leading foundry and OSAP players. Next, I will turn to our mainstream business. During the first half of 2025, as I mentioned earlier, AI tailwinds are beginning to benefit the group's mainstream business. Demand for AI data centers has driven increased needs for new power management capabilities among all major AI players. AI growth requires more power-efficient data center racks to meet the shift towards 800-volt high-voltage DC power distribution architecture. This has driven increased demand for SEMI, wire and die bonders, and SMT placement tools. In the first half, the group achieved a strong half-and-half and year-on-year bookings growth in China. For SMT, the growth was primarily supported by AI and EVs, where we continue to be the leading EV player in China. Meanwhile, CEMI saw increased utilization across OSEP providers, serving both consumer and EV end markets. With that, let me now pass the time over to Katie, who will talk about our group and segment financial performance.

Thank you, Robin. Good morning and good evening, everyone. This slide covers the group's key financial metrics for the first half of 2025. The group delivered revenue of 837.6 million U.S. dollars. Semi delivered strong revenue growth, 31.7 percent year-on-year and 6.1 percent half-on-half, while SMT experienced revenue declines year-on-year and half-on-half. Group's booking reached 912.8 million U.S. dollars, which was better than expected, showing 10.5 percent growth half-on-half and 12.4 percent growth year-on-year. The group continues to build backlog with two quarters of book to build above one. In the first half, the group's gross margin was 40.3%, up 121 basis points half on half, but down 65 basis points year on year. The half on half improvement was primarily due to segment mix, while the year on year decline was mainly due to an unfavorable product mix in SMT. The group's operating expenses reduced by 6.3% half on half, but went up 1% year on year. The half-on-half OPEX reduction was due to the group's prudent spending controls and restructuring benefits. Despite strategic R&D and IT infrastructure investments, the group's operating profit reached HK$329.3 million, showing 79.5% half-on-half growth but a 12.2% year-on-year decline. The half-on-half was driven by gross margin improvements and OPEX reduction. As a result, adjusted net profit was HK$218.1 million, up 95.7% half-and-half. Our half-and-half improvements were driven by tax credits from R&T centers in Europe and Asia, but partially offset by unfavorable foreign exchange translation from a weakened US dollar, despite the group's hedging facilities. Similarly, the year-on-year decline was also due to unfavorable foreign exchange translation. partially mitigated by favorable tax credits. We have an existing dividend policy of distributing about 50% of the annual profits as dividends. Therefore, for the first half of 2025, with EPS at 52 cents in Hong Kong dollar, the board has recommended a dividend of 26 cents in Hong Kong dollar per share in line with this policy. Our business remains focused on increasing shareholder value and continually evaluates options to return excess capital to shareholders. Most of the financials on this slide are covered on the previous page. I will not go into the details, but I will touch on revenue by end markets. Computers became the largest contributor to the group's revenue, supported by strong growth driven by AI. Automotive is the second largest contributor, supported by EV demand in China. The next contributor is communications, supported by demand from photonics and high-end smartphones. This is followed by consumer and industrial end markets. Now, let me move on to Group's Q2 financial results. We delivered revenue at approximately the midpoint of the revenue guidance, totaling $436.1 million, an increase of 8.9% quarter-on-quarter and 1.8% year-on-year. The quarter-on-quarter improvement was mainly due to growth in SMT, but semi remained flat. The group's booking reached $481.6 million, which was better than expected for the second quarter in a row, showing 11.9% growth quarter-on-quarter and a 20.2% growth year-on-year. These increases were mainly due to the growth in SMT. Q2 book-to-bill ratio was 1.1, and as I mentioned earlier, has now been above 1 for two quarters. In the second quarter, the group's gross margin was 39.7%, down 119 basis points quarter-on-quarter and 30 basis points year-on-year. The quarter-on-quarter decline was mainly due to a decline of 161 basis points in Semi, while SMT improved by 108 basis points. However, Q2 gross margin would have been above 40% using Q1 2025 foreign exchange rates. The group's operating expenditure was HK$1.18 billion, indicating a 5.7% quote-on-quote increase and a 1.8% year-on-year reduction. This was largely due to strategic R&D and IT infrastructure investments and the foreign exchange impact, although partially mitigated by prudent spending control and restructuring benefits. The group's operating profit reached HK$169.4 million, showing 5.9% growth quarter-on-quarter and a 25.4% year-on-year. Q-on-Q was mainly due to volume effects, while year-on-year improvements were due to OPEX reduction and higher volume effects. As a result, adjusted net profit was HK$134.9 million, up 62.1% quarter-on-quarter, but declined 1.6% year-on-year. The quote-on-quote improvements were mainly driven by better operating profit and tax credits mentioned earlier. Moving on to the semiconductor solution segment performance. For the second quarter of 2025, semi-revenue grew to $257.6 million, up 1% quote-on-quarter and a 20.9% year-on-year. This segment contributed about 59% of the group's revenue. TCB chose for the logic and memory solutions who are our largest revenue drivers in Q2. Wide-bounders and dive-bounders showed quote-on-quote and year-on-year growth. This was supported by shipments to major IDMs focused on AI-related power management applications, as well as to China customers, especially OSETs. Semi-bookings were $212.5 million, down 4.5% quote-on-quote and 4.6% year-on-year. In Q2, both quote-on-quote and year-on-year experienced wide-bound and dive-bound growth. while TCB orders were down due to uneven AP order flow. Semi's gross margin of 44.7% for Q2 2025 was down 161 basis points quarter-on-quarter and up 19 basis points year-on-year. The quarter-on-quarter decline was mainly driven by product mix. Lastly, Semi's profit was HK$174.9 million in Q2 2025, a decline of 25.9 percent quote-on-quarter, but up 99.8 percent year-on-year. The quote-on-quarter decline was mainly due to lower gross margin and high operating expenses arising from strategic R&D investments. Year-on-year improvement was driven largely by volume effects. Next, on to SMT solution segment. SMT delivered revenue of $178.5 million in the second quarter of 2025. an increase of 22.6% quarter-on-quarter, but a decline of 17.2% year-on-year. The growth was mainly due to stronger revenue in China and AP, partially offset by continued softness in overall automotive and industrial end markets. SMT bookings of $269.1 million were up 29.4% quarter-on-quarter, largely driven by a bulk order to meet the supply chain diversification needs of a leading smartphone ad customer. as well as all the wins in the AI server market. Additionally, SMT's gross margin of 32.5% for the quarter improved by 108 basis points quarter-on-quarter, but declined by 311 basis points year-on-year. The quarter-on-quarter improvement was due to higher volume effects, partially offset by product mix and foreign exchange impact. Year-on-year decline was larger due to lower volume and product mix. This slide highlights ASMPT's management's best estimates of revenue breakdown by end markets for the first half of 2025 compared with the first half of 2024. This highlights our exposure to diverse end markets. The computer end market was the highest contributor to group revenue, accounting for 30%. Strong revenue growth was mainly driven by continued demand for AI-related applications in both memory and logic. The automotive end market was the second highest contributor at 15% supported by EV demand in China. The communication end market contributed 13% to group revenue, with demand in photonics and high-end smartphone-related applications continuing to support this end market. The consumer end market contributed 12% of group revenue, driven by semi-mainstream solutions, particularly for China. Lastly, the industrial end market contributed 8% of group revenue, in line with soft market conditions. As you can see from this slide, we're a truly global business, partnering with customers around the world. China registered year-on-year revenue growth, increasing to 36.7% of group revenue. AI demand supported the growth in revenue from Korea to 13.6% and Taiwan to 10.6%. Revenue share from Europe and America declined year-on-year, mainly due to market softness in SMT. with Europe's share down to 11.4% and America's to 12.3%. The group maintained a diversified customer base, with the top five customers accounting for approximately 28% of total revenue in the first half of 2025. I will now pass the time back to Robin.