Q4 2020 ASE Technology Holding Co Ltd Earnings Call
Hello.
On the head of Investor Relations for ASE technology holding.
Welcome to our fourth quarter and full year 2000.
<unk> earnings release, Thank you for attending our conference call today.
Please refer to for our Safe Harbor notice on page two.
All participants consent to having their voices and questions Bob.
The participation of those for that I would like to remind everyone on this call at the present day.
Hello, I am touched on the.
The head of Investor Relations for OSB.
On technology hold.
Welcome to our fourth quarter and full year 2020 earnings release. Thank you.
For attending our conference call today.
Please refer to our safe Harbor notice on page two.
All participants consent to having their voices with platform's broad shop.
The participation of those for that.
I'll also remind everyone on this call, but the price.
On page from the <unk> may contain forward looking statements.
These forward looking statements are subject to a high degree of risk and our actual results may differ materially.
Purposes on this presentation. Our dollar figures are generally stable.
Taiwan dollars unless otherwise indicated.
On the Taiwan based company, our financials are presented in accordance with Taiwan IR for us.
Yes.
Results presented using Taiwan IR for us may differ materially from results, even other accounting standards, including those presented by our subsidiary <unk> timing GAAP.
Im joined today by a Doctor channel, our CLO and Joseph Tung our CFO.
For today's call I will be going over our financial results.
We'll be providing a business recap and Joseph will provide financial highlights on our guidance.
We'll have a Q&A session following the prepared remarks.
Please turn to phase III for Youll find our fourth quarter consolidated results on.
As a company transactions between our ATM and interest.
Businesses have been eliminated during consolidation.
For the fourth quarter reported fully diluted EPS of $2 35.
Adjusted EPS of $2 35.
Consolidated net revenue increased 21% quarter over quarter, and 28% year over year.
Gross profit of $23 2 billion net.
Gross margin of 16, 7% our gross margin declined.
0.3 percentage points sequentially, and one four percentage points year over year. Those margin declines are principally the result of higher business mix on operating expenses increased by $1 five.
$1 billion during the fourth quarter to $12 1 billion on.
As a result of higher profit sharing expenses issues during the strong quarter.
Despite the absolute dollar increase our operating expense percentage declined 0.5 percentage points sequentially.
One five percentage points per year over year to $8 one per site.
Operating profit was up $2 $1 billion sequentially and $2 $5 billion year over year.
Sequentially operating margin increased two percentage points to seven 6% on increased <unk>.
One percentage points year over year.
During the quarter, we had a net nonoperating gain of $1 4 billion.
This amount primarily consists of gains related to the sale of our <unk> plant of zero point $8 billion from them.
And on the sale of operating assets from the earthquake.
$5 billion and net foreign exchange on investment income from there.
So the.
This amount was offset in part by net interest expense.
$6 billion.
<unk> expense for the quarter was one one for them.
The effective tax rate for the fourth quarter was 15%.
The decline in the effective tax rate. This quarter was the result of research and development tax credits that are able to be recognized during the quarter.
Net income for the quarter was $10 billion, representing an improvement of $3 $3 billion sequentially.
On improvement of $3 $6 billion year over year.
Holding company level, we estimate that the strengthening $18 a day.
<unk> nine percentage point negative impact gross margin sequentially.
3.3 percentage point negative impact year over year.
Rule of thumb for every percentage of NT dollar appreciates we see.
We are correspondingly 0.4 percentage point impact to our holding company gross margin.
On the bottom of the page we put on.
Five key P&L line items without the inclusion of PPA related expenses.
Consolidated gross profit excluding PPA expense it would be $24 2 billion with a 16, 2% gross margin on.
Operating profit would be $12 4 billion with an operating margin of eight 3% net.
Net profit would be 11.2 billion with a net margin of seven five per cent basic EPS, excluding PPA expenses would be <unk> dollars 63.
Please refer to page for here, you'll find that 'twenty 'twenty consolidated full year results.
Diluted EPS for the year was $6 31 sucks.
Basic EPS of $6 47 songs for.
For 2020 consolidated net revenues grew by 15 per site as compared with 2019.
<unk> revenues grew 10% while international revenues grew 23% annually.
And 2020, our gross margin improved <unk> seven percentage points to 16, 3% principally as a result of stronger loaded.
This margin improvement was achieved despite higher EMS product mix and negative impact from the strong NT dollar.
Operating expenses increased $2 3 billion for the year came in at $43 $1 billion for.
We're able to lower our operating expense percentage by 0.9 percentage points to nine per site.
Operating profit for the year was $34 9 billion.
Moving by 48% to $11 4 billion on.
Operating margin improved by one six percentage points.
As a bolt on increased gross profit margin with a lower operating expense percentage.
Total tax expense for $6 $5 billion.
The adjusted tax rate for the year was $18 one per cent.
During the year, we confirmed the deductibility of certain holding company level expenses for tax purposes.
This resulted in a cash on those tax assets during the year, leading to a lower effective tax rate for ongoing purposes. We believe our current effective tax rate to be about 22%.
Net income increased by $10 7 billion for $27 $6 billion.
Full year basis, we estimate that the strengthening NT dollar.
One eight percentage point impact to gross margin removing the impact of PPA depreciation.
Gross margin would be $17 one per shop, our operating margin would be eight 3% on EPS would be $7 60 Bucks.
On page five is on ATM P&L.
Worth, noting here that the ATM revenue reported here contains revenue eliminated at the holding company level related to intercompany transactions between our ATM and b on the businesses.
During the quarter, we did see three major challenges first the most important challenge was the strengthening NT dollar appreciated 2.3 per side from Q3 to Q4.
Our strengthening interchange dollar environment generally negative for us as a rule of thumb for every per cent for NT dollar appreciates, we see a corresponding 0.5 percentage point impact on our TTM gross margin.
The strength in the current market house created tightness across large parts of the semiconductor manufacturing.
They're seeing longer delivery times for many products, including lead frames sub space components capital equipment as well as upstream wafer supply from our.
On a sound business.
As a result.
On higher manufacturing costs, but for the most part with a positive cash environment, which has been better able to pass along these cost increases for.
Finally, the current Covid environment continues to make operations and logistics difficult.
However, being mostly Asia based we have been less impacted than many.
Net operations elsewhere in the world.
And to a certain expense because of our ability to provide supply chain stability during COVID-19 on <unk>.
As Mrs have been performing relatively well.
From the business perspective.
On the entirety of the fourth quarter, most business lines within our ATM business ran pretty much at full capacity stretch.
Strength was across the board in all product categories wire bond in advanced packaging consumer communications and computing, even our test business recover more rapidly than expected.
Heading into the first quarter things are loaded and running fairly smoothly.
We continue to see a strong pattern with a positive ASP environment.
More on this from Doctor with a bit later.
For the fourth quarter 2020 revenues for our ATM business for $17 $8 billion.
$1 billion from the previous quarter and up $3 $5 billion from the same period last year.
This represents a 1% increase sequentially and a 5% increase year over year. Our ATM revenues came in ahead of our expectations due to higher than expected.
On a more positive ASP environment offset in part by a stronger NT dollar.
On a U S dollar basis on ATM revenues grew by three seven percentage sequentially.
Gross profit for our ATM business was $16 5 billion up $2 billion sequentially and zero point $8 billion year over year share.
<unk> $9 billion of this increase was due to a one time inventory related write offs during the third quarter.
The remaining sequential and year over year improvement from gross profit are primarily the result of higher loading levels.
Gross profit margin for our ATM business was 22, 6% up two four percentage points sequentially and down <unk>, one percentage points year over year.
The inventory write down in the third quarter accounted for 1.2 percentage points of gross margin improvement in the fourth quarter.
The remaining improvement was the result of stronger loading and a positive ESP environment offset in part by the strengthening from $2.
In the fourth quarter operating expenses were $8 $5 million up 0.7 billion sequentially and zero point $2 billion year over year.
The sequential and year over year increases were primarily driven by higher employee bonuses tied to corporate performance.
Operating margin was 11% improving 1.5 percentage points sequentially and on <unk> four percentage points year over year.
Estimate that the strengthening NT dollar had a 1.2 percentage point negative impact to our ATM gross margin sequentially.
Eight to nine percentage point impact year over year.
Without the impact of PPA related depreciation and amortization ATM gross profit margin would be 23, 9% and operating profit margin would be 12, 6%.
On page six we have our ATM full year P&L, we're fairly proud of our 22000 full year ATM results on this page you can see that we saw significant improvement in all aspects of our business.
And bear in mind all of those cheap debt was done despite the loss of a 20% run rate customer in September.
Revenues for our ATM business increased by 12% with our packaging business and cash businesses up 12, and 11% respectively.
On the outside of the year, we did expect to see our test business to significantly outgrow our assembly business. However, the E. R impact was much more harshly felt by our test business.
As a result, we did have to rebalance our tester capacity.
Gross profit for the year improved 19% to $59 $4 billion gross.
Arjun was up one three percentage points, primarily as a result of higher margin offset in part by NT dollar appreciation on.
Operating expenses were up for the year by zero point $9 billion. The increases in operating expenses are related to bonuses tied to HCA on business performance. Meanwhile, our operating expense percentage declined <unk> nine percentage points.
Operating income improved 45 per cent to 27.6 billion.
With operating margin improving to two percentage points to nine 8%.
On a full year basis, we estimate that the strengthening NT dollar at a 3.3 percentage point impact to gross margin without the impact of PPA expenses gross profit margin would be 22, five per cent and operating margin would be the margin 0.5%.
On page seven you will find a graphical representation of our 8-K on P&L and despite the significant impact of.
U S. P. A R. We took a hit on our third quarter margins and have recovered.
However, we do believe the appreciating NT dollar has flattened out our recent year margin performance without such NT dollar appreciation gross margin would have otherwise made a more pronounced move up into the right on this chart.
On page eight is our ATM revenue by market segment, we understand that this may run contrary to recent interpretations of the overall market environment, but we would like to point out here that our communication segment has actually been trending down as a percentage of our overall business.
For our communications demand is healthy.
We are actually seeing is our automotive consumer and other business rebounded.
On page nine you'll find our ATM revenue by service type as mentioned previously we rebalanced our test capacity after the U S. Maybe on a went into effect here you can see the negative impact of the U S. E. R had on our test business with its revs.
New share declining two percentage points.
Expected our wire bond business has picked up.
Meanwhile, our advanced service type declined two percentage points.
On page 10, you can see the fourth quarter and full year results with our E&S business.
The information.
<unk>, we provide in regards to U S spine may differ materially from the information directly provided by our subsidiary <unk>.
They report independently using Chinese GAAP.
For our Ams business demand was stronger than anticipated driven by strong demand during the quarter, we completed our acquisition on the steel flat trip or AFG.
Their results are being fully consolidated as of December 2020, currently represents about 10% on the ongoing Ams revenues, we do not expect to report ASP details in future earnings.
During the fourth quarter Ams revenues increased 49% sequentially, primarily because of our seasonal business for out and strong demand for <unk> products.
Ams revenues increased 62% year over year as a result of stronger demand for S High Tech products.
Gross profit margin for the EMS business unit came in at eight eight per site, which is a decline of 0.9 percentage points sequentially and 0.1 percentage points year over year. The declines are primarily the result of product mix changes.
Our EMS business unit's fourth quarter operating expenses were $3 $5 billion, increasing zero point $7 billion sequentially.
And <unk> $8 billion year over year operating expenses increased primarily as a result of increased employee profit sharing.
Our operating expense percentage was 4.5% down <unk> eight percentage points sequentially and 1.2 percentage points year over year on.
And on operating profit improved 1.2 billion sequentially and 1.9 billion year over year.
These improvements were primarily due to increase the flow demand for S IP products.
For Ams.
Operating margin was four point for personnel, which is flat sequentially and up 1.2 percentage points year over year.
On a full year perspective, our MFS business delivered a banner year driven by strong sales.
Sales on a full year perspective, our Ams business revenues increased 23% gross profit increased 29% gross profit margin also improved <unk> four percentage points to nine 2% operating margin increase.
<unk> nine percentage points to three eight per cent.
On page 11, you will find a graphical representation of our EMS revenue by application.
Sales, increasing 49% sequentially interpreting this chart gets a bit tricky.
It's fairly straightforward to see is that our communications segment increased by five percentage points as a result of product seasonality.
Other categories generally grew in absolute dollars. However, their growth was not as pronounced as that of the communications segment on page 12, you will find key line items from our balance sheet.
At the end of the quarter, we had cash cash equivalents from current financial assets up for.
$56 $4 billion on interest bearing debt decreased $15 $5 billion to.
$209 1 billion.
Total unused credit lines amounted to 275.2 billion on.
EBIT for the quarter was $26 1 billion EBITDA for the year for 99 billion on net debt to equity ratio for the quarter dropped to 65 per cent for higher end of our targeted range.
It'll be the end of 2020, our ownership of USPI.
On the Shanghai stock exchange under the ticker number.
Zero to three one is $73 four per cent.
On page 13, you will find our equipment capital expenditures.
The scenery and equipment capital expenditures for the fourth quarter totaled $379 million.
Which 296 million were used for packaging $16 million for testing $19 million for EMS and 4 million for interconnect materials.
For the full year machinery.
On equipment capital expenditures were one $7 billion.
One 1 billion was spent on packaging.
For 1 billion on cash.
0.2 billion on him.
We continue to provide our EBITDA in U S dollar share as a reference we believed that the company's EBITDA relative to our equipment Capex serves as a key financial performance metrics for the company.
I would like to turn the floor over to Dr.
Hello.
Iron ore.
To begin with I would like to wish all of you a happy Chinese new year.
If youre on life to provide to update the first part of the business recap.
Addressing some of the comments I made at our Q3, earning call us back to October 30 of last year.
Yeah.
For two items.
You are a factor.
Business has been recovered by Q4 of last year.
Versus our previous commentary on it.
Speculation to be for me copper Phy end of Q1 of this year.
It's a good news.
So for items go after reman.
Right.
Last time I made a comment that the wired on shortage will be at least two.
Q2.
Sure.
Right now we're slightly adjusted our view, we believe the wire about shortage.
B throughout the whole year on 2021.
Commercial delivery schedule last time, we talked about between.
Two a month right now and we're slightly elongated.
Machine delivery lead time, now, it's more like a fixed commodity market.
Yeah.
The whole called chronic climbing on machinery Capex was $1 seven non U S dollar.
Honors.
For our previous estimate of one point you'd be on here.
The current 1 billion was mainly due to the machine delivery schedule price.
I'm sure on economy.
For this year, we believe our machinery capex will not be lower than $1 7 billion.
The actual number depending on the business landscape.
How do we collaborate with our customers as well as the machine delivery schedule.
2020 the growth.
By free 50% year on year to U S on our $3 5 billion.
We made a comment on target.
Incremental.
Revenue from new customers for new project should exceed our target of 100 million.
In Q3 timeframe, we made a comment to that.
It will be three times, a 100 day on a card.
Actual came in at 386 million.
That is on your 2000 from U S IP customers and projects.
We have accrued $386 million of revenue.
Our net can make a comment on <unk> momentum.
For 'twenty 'twenty one this year.
We do believe from momentum would continue.
And we will have.
U S IP customers and numerous.
Projects.
In the north of 400 million that would be the on a.
Very very nice momentum on that.
With that note I would like to turn to the next page.
I would like to give you.
Highlight for the 2021% outlook.
For this year, we expect quarter to quarter growth.
At a local level.
In other words after Q1.
We expect sequential growth in Q2, followed by Q3 and Q4.
The second message here is for.
This week.
We expect at a group level operating margin.
Further expand by one five to two percentage points.
Yeah.
Nick on that makes all content on the ATM and also the year on that separately.
The semi logic market growth.
We estimate between five to 10 per cent.
We're seeing a very strong eight P M profit.
As a matter of fact.
We just closed on January.
And our Q1 run rate actually is the same as Q4 of last year.
Just for your information we have never seen this kind of a run rate.
In the last 30 years for semiconductor industry.
The ATM 'twenty 'twenty, one all your growth.
We worked hard for you at two times assignment on logic market growth.
U S dollar terms.
This is the current ex.
Spectation.
The credit quality ATM operating margin accounts, just went through with you.
For 2.2 to three percentage points.
For 2021.
We expect this margin expansion will continue.
That's a matter of fact, our margin expansion for <unk> 'twenty 'twenty, one will be better than for two three percentage points.
Mainly profit no synergy.
Current have scale efficiency improvement as what technology leadership.
Spy the foreign exchange impact.
For NT against U S dollar.
EMS business should have a higher year on year growth rate than our APM business.
With operating margin target at 4% another slight improvement.
Future growth engines to drive the rising strength into the next five years.
I put five years here.
With some optimism.
From where we stand right now I think for 2021 loading is very strong.
We're quite confident enough that right now our optimism has extended into 2022.
Like to make a comment on our next five years with our growth strength and growth strategy.
I think in 2020 as well as in 2021.
Demonstrate.
See you on ramping up.
And the overall supply chain management.
So all of our key customers and to our shareholder and non fasteners.
In 2020, we have pandemic.
That's why supply chain constraints at all levels.
For ramping up such a dramatic rate.
Well, it's not a simple challenge.
Okay.
Also we have replaced one of our higher water due to the fact.
For the retooling Recalibration.
Adjusted for our manufacturing portfolio average.
For us reclassification for many of the product ASP on our customers.
Well, it's not an easy task.
So in 2020.
Clearly demonstrate our capability for grandpa.
As for as procure necessary materials in a very adverse and challenging environment.
We're confident we will repeat the same thing from 2021.
And that will give a boost of confidence to our key customers.
And securing the future business based on debt performance.
Following that comment we do see very strong noting agreement.
Mostly two years.
As well as very strong NPI pipeline, which covers a wide variety of application, namely five G ship share.
Answers and very strong ramp on automotive asked why smart devices and edge devices.
Well I made a comment previously talk about all of our <unk>.
Right all factory or the fully automated line.
At the end of 2020, we had total 18 light all factories.
And this year, we have more.
<unk> quantified.
The comment I would like to make here. He is known for light on factories proven to be very efficient for you.
Paul you ramping up new volume.
Particularly with customers will have to do this with milk.
On the auto might be on.
Right on factory on the automated lines are in very very high demand for.
For our two type of customers.
Either high reliability seeking on.
For the industry for.
For a variety of reasons are light on factory can provide real time information in a very detail.
Banner.
To our customers.
Neither in medical on them.
Noted for our high reliability.
Applications.
We're seeing more volume demanding multiple gods.
And sensors.
And we believe this will fall into ASE sweet spot and other war.
Yes.
Net 13, we have been building a portfolio covering multiple die as well as different packaging algorithm versus processed material effect.
For all kinds of sensors.
And we're seeing huge demand due to the Iot edge device and smart device enable by five G.
Net.
He is trying to do.
Is to build a pervasive foundation and to be the preferred choice for high volume applications.
Do see that the pandemic.
Narrow for a hall tried for all worked for a home.
Create a slight uptick on overall semiconductor demand.
Whereas the high performance computing the cloud.
Commerce.
Well at the five G low latency and high data rate.
We're seeing more application relief entered a smart device electrical vehicle order for Iot application.
With that the traditional packages.
We will be expanding to multiple guy and sensors.
We believe on cat market, where it came from the clear leadership.
Also because of our performance income and scales, we have better traction with all of our key customer and Dennis described why we're.
We're having such a demand curve.
In 2020 as well as 2021.
With that I would like to pass the floor to our CFO Joseph.
Yeah.
Okay happy new year for everybody.
Before I coming to moving to our financial highlights let me give you the guidance for first quarter.
Like Oh can I just mentioned.
Fourth quarter last year with a very exceptionally strong quarter for us and we were able to recuperate whatever price.
So we have.
From D. A R impact.
On the strong momentum will continue into our first quarter.
So we're gonna have a unprecedented first quarter performance.
From the ATM perspective.
In U S. Dollar terms first quarter 'twenty, one business should be similar with fourth quarter.
'twenty 'twenty level.
Consequently, the gross margin should also be kept at a similar level.
With fourth quarter of 2020 as well.
In terms of E M S. In U S dollar terms <unk> will follow.
Uh huh.
Seasonality.
First quarter 2021 business should be similar with third quarter 'twenty for the level.
Yes.
First quarter operating margin should be fairly low for her.
Full year 2020 level.
That is the guidance that we're providing.
Now, let me moving to some of the financial highlights we had.
Going through 2020.
At the beginning of the year in 2020, we set out to say that we have set a operating expense ratio.
We want to lowered it to 2000, eighteen's level, which is $9 four per cent and we have actually achieved ahead of debt targets twenty-four. He hold your operating expense ratio was managed to be held at nine per se.
And we can't we will continue to put a very tight control overall opex ratio.
We're expecting to maintain.
At the same same opex ratio for 2021 as well.
Also in 'twenty and 'twenty, one we also set a target to say are.
We want operating.
Margin to improve by two 2%.
From the reported operating margin, we stood at seven 3%, which was one 6% higher than previous year.
But still if it is in all fairness, we have to look at the FX impact.
In 2020 operating.
We net out the currency impact.
Our operating margin would it be not for 2%, which is three five percentage points higher than 90 day level. Therefore.
Therefore, we believe that we have out there.
We have actually achieved our goal to have for the.
The operating margin improvement.
For 'twenty and 'twenty one.
With the with the strong business momentum.
We're targeting another one five to two percentage points operating margin improvement for the year.
And I also want to support the day.
Strong business momentum from 2021.
Indeed.
Last quarter, we were thinking that we were expecting the capex for the year to be lower somewhere from 40 20 level.
With the strong business momentum, we are actually raising debt expectation.
And on Capex to be similar to.
For the parties level, which is was that $1 7 billion.
Having said that I think we want to.
Dive a little bit more.
For into the Capex number.
<unk>.
As we mentioned in the 2020 because of the E R.
Nutrition, we actually disposed.
Some of our capacity up to the amount of wrong do we have to go on.
And for this year, we need to recuperate debt capacity.
So part of the cap.
Capex as we've done our spending for 'twenty 'twenty one.
B to recuperate that.
The capacity that we sold.
Reconfigure the capacity.
The current demand.
Also and in 'twenty plenty, we said we want to we set a goal to.
Half on net debt.
Debt to equity ratio.
Down to <unk>.
65, $60 65 per cent.
Yeah.
Level and I think we have.
Reached that goal ahead of time.
In fact at the end of 'twenty.
I believe we could have we already reached the 65 per cent in order to high end of the target.
And this we will continue to monitor very closely and hopefully we can.
Tried to refer to the dollar in 2021.
In terms of dividend.
We are raising actually raising our dividend.
Dividend payout, we expect to raise debt from non left at $3 a share that's activities mentioned two nevertheless for.
All of this year.
So to give our shareholders have all of our shareholders for share.
Well more of the benefit that we are coming out on this strong performance that we have for 2020.
With that were on the floor for questions.
Okay.
Right.
Yeah.
Okay.
Okay.
Yeah.
Yeah.
Shall we say.
Yeah.
Ladies and gentlemen.
We're about to begin our Q&A session.
If you wish to ask questions. Please press star one on your keypad and you ran for the Q&A queue.
Please ask for questions. After your names is announced.
Should you wish to cancel your question. Please press star zero two thank you.
Now please quit zero on one if he would like to ask a question. Thank you.
The first to ask questions.
Randy Abrams credit Suisse.
Okay, you have from different thank you and congratulations on the results for notebook.
I wanted to ask for the first question on the wire bonding.
The change in view from.
Mid year for full year, just how much you mentioned the equipment lead time pushed out.
How much for factor of demand and maybe what would command change if you saw on it.
And if your if you could talk about how much wire bonder capacity, you'll be adding to keep up to that demand.
Yeah.
So the first question is too young.
Demand has not slowed down on and off.
And the maturity time is getting longer.
That's why we're confident that the wire bond capacity.
To be tied to be.
And this year on beef.
Not longer.
In terms of the.
The number of wire Bonder, we're adding.
I think last year, we had 1800.
And on this year, we believe we will add to a similar on.
Number of units.
Right now we have confirmed delivery on 1200.
And we're working on the other.
But in terms of the market tightness.
It's a combination.
Demand has not slowed down.
Last day machine lead time, and its not just wire bonder hold.
On balance.
Okay, and if I can.
Could follow up on the demand for wire Bonder just the application is it more.
PC consumer related.
Russia. The other side of automotive I think since you last reported got even more tight if you could remind us just how big the automotive sector.
Is that how you see that coming in and whether you.
Maybe you can prioritize from catastrophe.
With that market it seems like it picked up quite a bit into year end.
Yeah.
Right now we have very high demand in automotive mainly from D. A.
On the automated line as well from high quality.
Did the wire bonding on process.
The.
Demand is actually on.
To be very strong.
In terms of the on the person.
Percentage.
It's actually very difficult to estimate.
We do have a.
Specific.
Customer for her.
Entrepreneurs trying to gauge you know automotive automotive business.
We're seeing today is because of the admin electrical vehicle, we have more customers getting into the deep dive with the automotive guys.
And therefore it would be.
It takes a while to really comprehend exactly what can happen for patient dose.
Okay, Okay fair enough, if I could ask on the pricing.
You talked last quarter about raising price how should we see.
Pricing in terms of magnitude.
How much and then how it's taking effect because it looks like your expectation would be.
Through the year, so would it be like sequentially you for your ability to.
Pricing for we'd see it come in throughout the year.
I think you've talked a bit about even two year from true you're on track.
Could talk more about.
What would that involve like how much of your business, where with what your contracting and for pricing on those.
The comment that I made the last for a cost a lot of confusion on complain.
From coming from that anymore.
And on the only thing I can tell you, yes, we do have a very friendly price environment.
And the price adjustment.
It's not from science in this current you have to really look at the business dynamics, how do you really collaborate with your customers. How do you read the support them in their total business portfolio I think we have struggled.
The second half of last year, and on which you know trying to accomplish on worth asking math.
So the.
To comment that I made last time cause a lot of confusion for it I give them a very quantitative number on the wired on shortage I'm not going to do that again, and then I'll talk about the price environment I wanted to do that again.
Apologize.
Okay. The.
For the last question on attachment on Opex I just wanted to clarify.
I think I'm curious if you made a comment about manage the opex to keep at 9%.
The net.
Sales, you're guiding up double digit provision expectation.
The opex would be growing in line with the revenue run rate.
I would say that.
Still room for the for.
Further improvement Budd.
But you know with the with a growing possibility I think before I notice the salary adjustments.
We will start to kick in a little bit more for us at this point.
I want to stay a bit conservative although.
Not precluding any possibility of further.
Thanks Rachel.
Okay. It's the bonus expense tied to a percentage of net income or is there a way to think how that how we should model that structure.
Uh huh.
Okay.
Like the bonus expense like back when bonus expensing for started it was a percent of net is it a percent of pretax income where is your where does it come out or as that goes up.
For profit sharing if you get more profitable.
It goes on with the with the profit that we're making in terms of the profit margin.
Okay, alright, great. Thanks, a lot.
Yeah.
Next one to ask question Gogo Honeywell on J P. Morgan.
Yes, hi, congrats.
Congrats on the good result, thanks for taking my question I was looking for could you talk a little bit about advanced packaging and testing our.
Kind of backfill and recovery from.
In fact, I think we did have some impact in Q4 for both of these areas have been kicked off.
More than Q3.
On a how should we think about booth area, you could think about double digit growth for IC ATM. The P. R.
Frank My bond.
I couldn't even looking betting on how should we think about the growth ranking for these three components.
Okay.
Okay, 2020, especially Q4, where it's kind of painful process for us.
Mainly because of the all day you are affected customer.
Happens to be very high run rate on.
On the R&D on fan out and some of the advanced packaging facility.
The advanced asking for somebody.
We have fully recovered that we have disclosed some of the asset that's yours have already talk about it the remaining asset we have to retool recalibrate reconfigure.
To to.
To accommodate the other customer.
Not have exactly the same kind of free gration requirement comparing two idea our affected customers.
That has been largely done.
In terms of the now.
Now after that Recalibration.
2021.
We do expect the advanced packaging asthma tasking to resume the growth curve.
Do you feel better and growth faster than over on average are probably still going to be in line with deals on average for us.
It will be in line with our overall growth.
And with that I'd like to thank.
Question Uh Huh.
You mentioned a book from.
On stay at home and come up with them.
New demand drivers that have emerged.
The pandemic.
When you think about your increased confidence.
In demand not just for this year, but also for next few debt and that is kind of reflected in your capex and fleet as well.
Do you feel on do you kind of baked in some kind of lean provision here in terms on them on going back once we get into some kind of a recovery or you think debt because of new normal and your customer base, you're expecting the demand to meet these stay at these levels or even go from here rather than need to look back.
Correct.
Of course debt that is C on it.
<unk> cash.
Assuming.
The vaccination and also would be on the pandemic situation.
On the largely on the control the caution now yes, we would.
Do you see the current demand curve to continue.
My belief is the interest yes.
Mainly from the following reason.
Once you are adjusted to once you are accustomed to using a Wi.
Wi Fi using the smart device using multiple computer.
There is no turning back.
They're also deal I think for you myself as with many of the on.
The other semiconductor veteran.
Where it used to travel flying around.
I think 18 months 24 months of time.
Is it enough to change on how did the human behavior for it.
Example, the all of our customers.
Who have not been travel since the last 12 months from future.
There will be increasing percentage.
People working from home having conference at home.
To replace some of the travel face to face meeting.
I recall I think the I T equipment, the bandwidth and the cash.
Solid fee.
Also the number of units people are willing to spend back on.
Last one for age group, which Congress per quarter. Each grew accurate for younger age group I think that the fact is there of course, we actually do not know how.
How much cash flow that is going to change, but I believe the slope will be better than pre pandemic.
Understood.
That's really helpful. Maybe you can say for one more question.
I'm going to talk about margin expansion on the it looks like a lot of the margin expansion is going to still come from gross margin given you're expecting opex items, you may not be flattish I think the starting point.
<unk>.
He said given the except for maybe one quarter would be bad recently for me you'd like on through last year.
Mainly on pricing.
That's moving into gross margin expansion because of our capacity tightness and a different kind of pricing.
Are there any on the variable is it more of the.
These are starting to kind of come in when you think about the profit margin.
Uh huh.
It's a combination though for many different factors for the of course, a friendly pricing environment certainly helps.
Thank God, we will continue to improve.
Our efficiency through further automation suite.
Also the synergy that we tend to be providing.
With the with the cooperation with spill.
We continue to benefit us in terms of margin improvement.
And there are others.
I'm not sure it's that we're taking at this point too.
Like like.
Tim just mentioned there are a lot of the ways that we do business.
It will be different and it would be more efficient so all these and plus the continuing.
Technology investment that we're putting in that factory.
In terms of making our products.
Operating new projects, particularly on the Sip area.
Those all put together.
That's definitely positive debt on our margin.
Got it.
Maybe one last one.
Talk a little bit about how much it's all on E&S I mean, you were last year.
Could you talk a little bit of Borgwarner for new projects.
Like what kind of product, but it would be too easy.
It could be on looking at in terms of the new 400 million revenue coming in because you have two things on bandwidth it keeps him up.
Thank you.
What we're seeing.
Whole wide variety.
U S IP projects.
Congress the optical on the audio and Silicon Photonics.
I will ask them on the.
Smartphone edge devices.
So that's what kind of pleased you've got the.
Finally, the S IP project start to gain momentum.
One of the thing I always like to tell people he is.
When I talk about heterogeneous integration.
I'm really not addressing the.
Come on for Ricky.
Type of integration.
I think the ASE sweet spot for the S. IP.
We will be the traditional suddenly come out for the current multiple die.
As well as optical sensor.
Integrate it.
Even very packaging manner.
I think that you know we are looking at.
Huge growth ran ahead of us and I can't really give you a number.
Over the last few years.
<unk> is closely collaborating with a lot of you are a key customer and trying to come up with a design applications.
Improved efficiency.
<unk> for success off the HTC bigger brain and also the success of very powerful network and cloud.
With the <unk> data rate and low latency.
We're seeing more application.
In all areas.
Ordered a little devices for the mass market that is really the sweet spot for Aes.
He has been designing for.
With our key customers.
Our early success.
Think ASE today almost become the.
The first choice.
For example in five G.
In most of the unique S T.
He has always been the on the first one.
On to engage with our key customers and I think that trend hopefully we will repeat in 2021 that will have on either higher confidence and maybe we'll be able to give you a projected.
Martin fast based on beyond the effort.
But in the last two years, we Couldnt give you that number because we're primarily working with.
SKU customers, but now we're seeing a broader more diversified portfolio.
Gradually understand the design rule.
The physical electrical cost performance. So we're just building the database to that on a fully automated factory really what part of the overall architecture to accommodate that because if you don't understand how the sensor interact physically and electrical.
We would find another it's very very difficult to build high multiple die high level of integration with override for sensor using different mature on different configuration.
And I think that is something you'd become more obvious to us.
Through the effort of the last few years, there's a moment answer of I think it's the key answer.
The key message on when I can deliver it to our partner investors.
Got it. Thank you very much that's very helpful. Thanks.
Now the line is open to rolling free from Citigroup.
Uh huh.
I think that's the first question still for the growth margin. So I look at your.
Our IC ATM gross margin in the fourth quarter.
It improved.
Improved by two four percentage points.
Oh I see okay on revenue Oh, no later than Q1 last year.
Oh, Hi, though I look at the beta testing revenue atrophy.
Invoking so but bill you know your.
Gross margin improved a lot. So Joseph just said you have lot of these are fishing for improvement and.
Also with this updates our price environment.
Christian anything on it.
Our improvement on gross margin write off on.
Are we expecting.
The growth margin improvement for the for IC ATM will continue even though our testing business that you know be kind on both Q.
Oh, well with a higher loading.
<unk> was a very strong business momentum and the continuous.
Effort that we're putting in in terms of improving our overall efficiency.
And also with the closer collaboration with.
Spill to create further synergy.
Do believe that in 'twenty and this year, we will continue to see margin improvement as a growth level.
Okay.
There are some headwinds in front of us including the drawn.
NT dollar and also as you mentioned.
<unk>.
Where we're still trying to win.
We're in the process of free recuperating some of the lost touch business, which.
You tend to have a higher gross margin.
But I'll put it on all these together I think there are some plus and minuses, but we still feel fairly confident that we will continue to see margin improvement going forward.
Understood Yeah and.
For your testing business.
The past couple of years.
A big amount of the testers and then you also would like to increase this pipkin business. However, I think in <unk> on the revenue.
The tech team was the lowest.
Quarter in Lafayette EBIT.
Lola for Q2.
2019.
We think.
I'll probably be how what's the reason for this on military revenue because that's all he said yeah. You know is there any other issue of course would be for testing revenue decline from 40 last year.
I think that is really the main reason why because of this this customer does or impacted by the yard.
Unfortunately it has.
A very high turnkey ratio with us.
And we have no debt.
This part of the business it.
It will take some time for us to bring back.
And for them.
I think Fortunately I think the current market environment does allow us to have more cash.
Capability in terms of raising overall turnkey ratio with our customers. So.
So I think by the second half of the year, we should be seeing a full recovery of our tests momentum.
Second half.
Right.
It does take some time not only to be.
Bringing new business will also.
To re equip ourselves with the with a suitable testers does.
It does take some time for us to.
To fully recovery.
So what is the utilization for the tech in this moment.
For fourth cornerstone for fourth quarter, I think the overall test utilization.
Cut down on it a little bit to below 80%.
Around 80% before.
Okay, Yeah pop out the for our IC.
I see a P M.
For packaging packaging.
For pathogen.
It was well we know we're running a full capacity.
Uh huh.
Typically we'll say, it's 80% plus.
Okay. That's all I have is that in first quarter on these utilization for packaging and testing from first quarter, probably be similar in size for Q.
Okay.
Like I mentioned the run rate of our business remains the same.
In the fourth quarter, so the utilization should be the very similar okay.
Okay. So on previously are you you have the target for tech team revenue to be to reach a one.
One for one third of the total IC ATM revenue so now.
Still keeping I think go for beta testing revenue.
Do you.
Richard Yes.
Yes, I think the test is still a very very lucrative business for us to for to build further yeah.
We're setting a high goal for us and.
We will continue to work very hard on it.
Okay. So you don't have the time to.
Pay for it and for.
Went to Richard Lisa one for a Wednesday of the total activity originally.
Gonna stay one step at a time yeah. Okay. Okay. Lastly on for you said you have little to E on loading agreement with customer Todd just would like to know if these are for all customers.
Oh this is not just for some specific customers proper and Oh is this on your.
Agreement on a fixed price on fixed.
Lynn on for two years.
On the we have.
90% of the customers cover.
Two year 90 per se.
90.
90 per se, all IC ATM customer right pharma.
Mhm.
I'm sorry about that.
Oh I.
I thought you were referring to ARPA.
90% off for the wire bond cost goodness right that Congress MPI.
Volume as well as pricing.
Mhm.
So this is a free pricing and volume for two years.
Yeah.
Okay.
The next one to ask question Ritchie from Taiwan.
Yeah, Hi.
Good evening, guys and thank you so much for taking my question I just have one simple question.
You.
A round for a detailed again about your Q4 non operating gains because I kind of missed part of the beginning.
[noise] right.
Alright, let's get to that.
Okay sure.
The majority of them.
On the game for late to the position of a food can plant.
800.
$8 million.
We also thought.
Asset disposition.
And so you know when we didn't have to reshuffle tester from such so we didn't sell testers.
But we did get gains on so.
How much is gained.
But that they're on.
On <unk>.
Fine.
Okay.
And then we have on that interest expense.
Right.
Fair point thanks.
We also have some for Florida, we have for.
Or ask then about that.
Related.
Well its income this time around so its about.
200 mill that would point to.
Okay.
Alright. Thank you very much yeah, that's all I have thank you.
Thank you.
Now, we're having Charlie Chan from Morgan Stanley for questions go ahead. Please.
Alright, thanks, and congratulation for the greater yourselves and a happy Chinese new year.
My first question, it's really about your way up on.
Capacity expansion so first of all.
Kim Drapkin can go to you know your debt.
So does your thinking behind it because if you ask.
Cathy maybe that kind of debt.
Jeopardize your.
Pricing power.
And if you don't expand maybe you cannot capture debt business opportunity that is there.
Question.
Number one and secondly, I am a little bit curious about.
Your.
Machine behind right Matthew.
Last year, you add the 18 hundreds of units and it's very it's insane.
Why.
Nasty out there what the maturities and now you have such an.
Our legacy day time for those are.
And.
I know you are probably more dependent on them.
Cornigan Zafar.
Major web on the Avenger.
And is that kind of a long lead time only apply to the kidneys and you can see there too.
So by more wire bonded from synthetic.
Can you took it on that topic. Thank you.
Okay. We have reported we added 800 wire bonder.
Last year.
And some of the appeal on them placed in.
In the second half of last year has not been delivered yet.
And some of the P. O that we issue last year will be delivered throughout this year.
We are also issuing new P O us based on the loading agreement on.
So the requirement.
As well as many of the operating equipment.
Our proposed to the full manufacturing line.
Not just wire Bonder you also have ordered the other equipment that go with the wire bond requirement on a different configuration based on beyond that for.
Got it.
When I talk about the longer lead time, you'll have to go back to the machinery capex of clean industry.
If you go back to 2018, and 2019 and 2020 number for the whole set you will see that PSC was one of the company that spend more money in 2019, and 2020 compared to for the auto or was that for.
Some of the orders that we placed in 19 and 20 in the capacity build out.
And that what the leverage we have versus not on our customer in a delivery in a capacity crunch.
We do have a better negotiation position based on our spending power as well as our strategic on liners to order customers.
However.
Given the 2020 capacity crunch.
I believe.
One of our competitors are placing order for ordered equipment that are required to meet customer demand.
So in 2021.
We do believe that delivery will not be a smooth comparing from 19 and 20.
And this explains why we don't believe.
The.
But the I would not be able to comment on the particular vendor that we use and also the number because this will cover a lot of the use for many equipment that we need.
We also need to pool operate.
With your substrate the lead frame.
The other mature supplier just not viable.
And I appreciate you know how tight everything's Har.
Yeah.
Okay.
Yes ex U.
Very helpful.
The debt.
Debt, you know kind of long lead time with diabetes.
Across both maybe not just the thing really clean that no single vendor.
On the buckets.
<unk>.
Do you think this kind of.
Our growth expanding not just for you.
But on so.
As you mentioned your competitors with buoyed are displayed on the what we're.
We're bumping.
Market and next year.
Probably see a kind.
From the appraiser from passengers on on the web on being a price.
There is something we learned in 2000 commodity that's slightly different than before.
Before talking about capacity and the customer will come in the leveraged.
Capacity based on pricing.
But in year 2000, I believe a few things have changed right.
First.
People cannot travel.
Therefore, the customer needs to a range of capacity.
Quantification.
Via remote somehow honor to be speaking.
So for the company that have a track record of consistent delivery.
As well as plenty of data.
To demonstrate the integrity of the process.
We will get higher confidence.
So the key customer and their own customer to use our capacity.
Now in 2020, I do not have a detailed number of all of our competitor for <unk>.
Do not believe our competitor.
For assay.
M a C.
Having said that we still have a lot of customer.
Hi reliability for consistency.
In delivery or more so in the speed of ramping up or the so called <unk> market.
So in 2020, even though we are very very tight.
But we have more customers coming to ASE demanding on longer term service agreement such that we can provide the data for service Richie the fast ramp up.
<unk> will add a quality expectation or the liability and going with the high quality requirement.
So you have to understand that we were running for.
In 2000.
And they're running full.
And another 10%, 20% ramp up it's a huge challenge.
Without a fully automated line without a cure for landscape planning for the last few years is simply cannot achieve this kind of a time to market.
I think 2020 is very good confidence boost to my sales team to my manufacturing team and based on our order to dial up the hunt for my key customers. They really appreciate how Taiwan with managed throughout the pandemic, how the Taiwan semiconductor companies.
We're managing the delivery in a very adverse supply chain environment.
Throughout the whole 2020, and I believe that with current as far for the partners that we support they're gaining market share.
And I think this is another reason that I believe not only will grow we will capture.
On a huge chunk.
Semiconductor growth in logic space, We've also force enable more outsourcing for Ibs.
That I believe that in the next few years, we will enjoy a higher growth rate as a result of all of these factors.
Hey, thanks for the insight on the inside that that became I think there's a break here.
Okay I'll follow up.
Robin for closing up all your.
Gross margin sorry, I am not sure if you did.
The gross margin guidance for this year.
Can you kind of break it out by your ATM business and yes, that's it.
Gross margin during 2021 day.
And also I know you have.
None of them go from.
Come on about the uprising right, but.
On May I know for flip chip and testing units that price to go up.
For Ya.
Joseph you will comment on the gross profit.
As I mentioned earlier on I think the for.
<unk> 'twenty 'twenty, one I think we will continue to see.
Margin improvement at a growth level.
With the steady or improving opex ratio of it being also on the.
Operating margin and we will continue to see improvement.
That comes from you know.
A lot of the effort that we've put it in your time in terms of improving on efficiency, creating synergy with spill.
Also the higher loadings specific of course it helps.
On a failure.
Pricing environment also help I think all of these put together a deal.
That's a very high confidence that we will be improving our margin going forward.
T M.
As far as E M S.
I think the.
I think the more red on the margin is at the operating level.
Because of the different product mix it will happen.
Ah create quite a bit of fluctuation on the growth level, so it would be more relevant or more meaningful.
Benchmark is really on the operating level.
For that well.
We are targeting a 4% operating margin for EMS business.
Yes.
That's slightly up from Oh, well, we achieved an <unk>.
Previous year, which was that three 8%.
Okay for the odd.
For the other lines of business flip chip.
Hum.
Out of all.
For the others.
Overseeing a more friendly environment, but not as friendly as wire bonding.
Sure.
Okay, I will not comment anymore on [laughter], okay. Thanks, gentlemen.
Very helpful. Thank you.
Okay.
Yeah.
Next one to ask question Sebastian how see on I think.
Thanks for taking my questions. So just follow on.
For the price and the margin that part does it if I look on your Q4 2020 margin debt.
Has improved I think there is a combination of good utilization rate improve.
Synergies and pricing.
But looking now into your <unk> guidance revenue and margin will be similar to last quarter.
So can.
Can we say that the pricing is not a factor anymore in this quarter to two two to drive to drive the margin for improvement.
I think.
It's Neil.
Or a similar margin for first quarter.
Last quarter, it's quite a bit of a challenge itself already.
Because we are facing.
Further empty appreciation, which will have on overlooked with debt and put it on the margin.
We are going through a Chinese new year.
And some of the sub.
All factories artwork.
Moving through.
Annual maintenance.
Therefore, we will have less working days.
But and also throughout the Theres a lot of Humboldt it needs to be cash out.
For your overall.
Compensation expense is going to be higher for the for the quarter. So all those things put together I think we are I think we're doing a pretty good job in.
Maintaining our margin at similar margin from Oh.
The fourth quarter.
Just for our for clarification.
Okay.
On the so called seasonality through the year.
In other words some of the key customer.
Running very high volume device for.
For for consumer or on wireless application.
And just to go through seasonality in Q1.
As you can see in our EMS business.
Go through some sort of a seasonality pattern.
So to offset.
The vacuum created by this seasonality on loading.
We have to go figure out how do we add capacity, how do we enable other customer and ramp up that volume.
Yeah.
In Q3 of last year, when I made comment that the on.
Our higher run rate.
Yeah on a customer who got affected.
We expect the end of Q1.
To fully recover that back.
So in fact, we had our vacuum.
We also have the normal seasonality back in <unk>.
In Q1.
So while we're making a statement is.
We actually Planish.
Two vaccines.
Create a die.
The the unavoidable forces.
How much debt through efficiency.
The product mix and also price environment for me I I cannot get into the detail.
But what we're telling you is at a macro level.
Given that we have three to four days shorter working days.
Because february as well as the annual maintenance on.
We have from foreign exchange.
Hopefully.
We can deliver a very strong Q1.
Which would be a new record in my career time.
And revenue level in Q1, as well as the margin level I hope that clarifies.
Our current view about how unique Q1 is.
Okay. Thanks.
Second question is on the the the two year contract you have with.
For wire bonding customers so.
If I may just wanted to understand the pricing schemes you have it is that the customers really agree with them.
You have to elevate the price one time and from now on in the next 24 months the customer will be fit on debt fixed price already or schemes also cover some price increase this year. Another another part of the price increase will happen next year within the next 24 months.
I will not comment on that I can only tell you that we have elevated the baseline and then there'll be other calibration based on business dynamics.
But I, we're not going on anymore details on that because everyone is different.
Okay.
So it's fair for us to assume that actually can be every customers have different scheme, and so which means that the price adjustment may not and yet.
I won't comment on debt you know what I want.
Okay.
And then another product question is debt I can be.
Doctor, who you have information about it.
Sorry for wire bonding the other business the pricing environment also getting more of a friendly right now.
So do you see the possibility that customers will also get on board with with maybe some long term agreements.
On for bumping.
Bumping flip chip.
This is.
I won't comment on that right now.
Okay.
No one ever.
The next question that I have in terms of the wire bonding equipment availability.
I know that it did lead times get extended because everybody wanted to buy those equipment right now, but do you see if there's any intrinsic bottlenecks where interest the limitation of the wire bonding equipment for the industrial for you to buy.
I don't think there's any on Earth.
Did you all of our delivery you need to have a line balance.
You don't you don't.
Buy one type of equipment and excessive way.
Currently with the line balance optimization as well as a substrate.
<unk> policy and all of the other material supply.
And I mean the.
Mind, you the floor space on the tree.
<unk> it.
System.
I can just go on and on about what do you need to do on top of that.
On the wastewater fees.
Eric.
So a lot of things that you cannot react.
And just in time, the manufacturing floor takes years of planning.
To do.
And we're just giving you at a macro level on what the estimated number in terms of the increment that we will be able to achieve.
Okay.
That's fair last question from me is the for the U M emphasis.
I think the company can come in the items. This year that you had missed visits growth will be hired in IC ATM.
This years so.
What is the could you give us some examples of them on.
Or can you give more colors about what's driving that thank you.
You have been on the steel.
Still flash acquisition.
Oh.
You bet.
Well then you will have a combination of growth in <unk>.
All sectors in a highly constrained environment.
For traditional EMS business will grow.
Because everyone is moving for parts.
Okay. Thanks, Thanks for mentioning that if we exclude the acquisition.
We would still be growing above for IC ATM, we're below I think the the overall.
Organic growth of.
The overall EMS growth come from both for organic growth as well as the a D. A.
Of our steel for that which represents about 10 per cent of the overall year on this going forward.
So we did mention that we are expecting to ATM to growth two types of dealogic.
So the market growth.
So you can do the math from there.
Okay.
Alright, Thats all for me thanks.
Next I wanted to ask a question.
Chris <unk> from Goldman Sachs.
Good afternoon and.
Thank you for taking my question I think my question for Us for the overall growth in 2021 would you expect two times higher than the semi growth.
Would it be points about 15%.
Which is very good very good.
Can you give us a little bit breakdown in terms of language.
Foster or what are the growth driver is coming from how much is coming from this year again, how much is coming from IP or you know how big it's wire bound would be to kind of seeing what kind of rank.
On the gross April 2021.
Alright, five G is at the onset.
So we're seeing a lot of the <unk> audio.
And then you probably know the number better than we do so.
So our key customer in the <unk> space.
That covers the.
The whole slew of application for.
Crime module power amplifier.
And the <unk> chipset that can make that go with it.
Well as the because for five G and the a lot of the customer need to upgrade their infrastructure Wi Fi.
So the so the Wi Fi piece there.
The where having the a lot of demand from the automotive.
Electrical vehicle and I talked about the smart devices for the edge device. So we're seeing more peace and I just comment.
For 2000.
We have.
$386 million of new business.
We believe in 2021 on.
Top up that we get another 400 million.
Hi Tech business and they are mostly audio optical oriented.
All of these are new.
And.
Honestly I think the worthy.
For the first mover.
In the I think for all of its applications.
So I don't think it's a market share gain.
It's a brand new market.
In April.
By the pandemic.
For more specifically.
Enabled by the <unk>.
The brainpower.
H P C and D I b.
The cloud.
Data center and the E Commerce.
And B are you seeing a lot of our smart devices behind Iot being enabled.
I will not comment any more detail and I think overtime.
You will see a higher stomach and capture growth rate.
<unk> by many of the semiconductor companies.
And I think he's got the right infrastructure and the Knowhow and the reputation.
Philippines on high volume ramp up and time to market.
In a very very timely manner.
Particularly in a challenging environment.
I think 2021.
At this point of time.
We're very very optimistic.
Above the baseline that covers all of the loan agreement.
As with MPI, and we looked at the pipeline and their end market application.
So our internal judgment is that.
On the those volumes are very real and they will have longer.
Life and stronger net for the next few years.
Oh I see.
Okay, Oh can I dig a little bit more into the Nike business I mean.
You just mentioned that in fact, the total group revenue was about $3 5 billion.
Well unless we have difficulty right now to break down you know how much is coming from E. On minutes, how much credit is coming from Adrienne. This is because some of the projects.
It's a bit confusing from Barbara for perfect.
So can you give us a breakdown between the <unk> business between yeah. That's it thank you.
And also for the growth rate.
Uh huh.
Yeah.
Besides this as the new projects for How'd you needed.
And then the bump this year most likely it's felt like 10 plus percent.
While our growth for 2021, so which is somehow slower than the overall corporate growth rate.
Does that sound right.
Well, if I can give you the breakdown, which I'm on.
Andre.
I don't think I would give you the breakdown at this time.
No the growth rate is much higher than our corporate growth rate.
For us.
A lot of the growth rate on our in the HCM range.
Alright.
My apology I don't have that breakdown right now.
We would think about it how do we give you a better <unk>.
Breakdown for better clarity, but not not not in Israel.
Okay. Okay. One last question for me is that if the whole year revenue growth is two ex then maybe growth which is about like <unk>.
Per se for the midpoint, but your first quarter ATM business.
Growth in somewhere around 6% or high single digits.
Slide that you have a very strong second half seasonality.
We are already comment that.
We will we are expecting quarter to quarter growth for the whole year of 2021. So yes, there's one Q2 Q3 Q for Q each quarter as comparison to previous losses.
Okay. Thank you.
Thank you.
Now we're taking the last question.
<unk> from China Renaissance go ahead. Please.
Hi.
Congratulations.
Quick question from my side first one regarding the net gearing target is pretty cheap or ahead of schedule. So I just housekeeping for their current 62 50 Fox channel are tracking Kennedy younger people on more aggressive talking right now.
Short answer is yes, I'm happy with it 65 per cent is a it's a reasonable number.
We already achieved it.
Particularly when we achieve it.
Schedule.
In terms of whether we want to further improve.
<unk> I think so really it depends on policy on market shapes up.
Going forward I think there are plenty of.
Different opportunities in front of us.
It could be some somebody organic from could be.
Something that's next external so.
I would rather leave it though but at this point, we're leaving some flexibility for myself.
If if by the way if we.
If we look at on the fee.
On the current forecast that we have for the year I think there. So I'm just gonna be further improvement in terms of debt net debt to equity ratio.
Okay.
And for question and on day eight P. M. G. P S gross margin ex U.
The company value standard.
For the next few years, if you assume that the ATM gross margin can.
Can be back to Vanessa.
Mid to high quantities per cent from that okay.
You still got back in 2000 and for Qunar.
But on the country you bought back on.
And I think they're comparable I for one day bucket.
Ah well that's early.
<unk>.
Ideal level that we want to.
We want to go after I think but you know we're gonna be patient, we're going to take one step at a time.
Just checking.
From all angles, so for operations see how how much improvement we can continue to have.
So, yes, I think that's a longer term from a longer term.
If that is something we want to we want to pursue.
Okay that sounds great. Okay. Thank you very much I congratulate you for me.
Thank you.
Okay. Thank you everyone for attending our call for next.
Next quarter, hopefully at a earlier time spot.
Okay.
Thank you and happy new year.
Yeah.