Q1 2021 ASE Technology Holding Co Ltd Earnings Call
One three percentage points year over year.
Our gross margin improvement was due to improved the loading and a higher percentage of low raw material product.
ATM gross margin improvement was accomplished despite NT dollar appreciation, having a negative the zero eight percentage point impact quarter over quarter, and a two seven percentage point impact year over year.
Looking forward, we do expect this beneficial product mix to reverse itself in the second quarter and even switching to a high on material product mix in the third and fourth quarters. However, even with this product mix shift looming.
Back to be able to deliver gradually improving gross margins throughout 2021, we are well on our way to achieving full year gross margin in the.
Mid twenties.
During the first quarter operating expenses were $8 $1 billion down zero of <unk> $4 billion sequentially and up the zero point $3 billion year over year. The sequential operating expense decline was primarily driven by a decline in employee bonuses. Meanwhile.
The year over year operating expense increase was the result of higher employee salaries due to higher head count and higher bonus accrual.
Our operating expense percentage was 11% down 0.6 percentage points sequentially and down <unk> seven percentage points year over year.
During the first quarter operating profit was $9 $9 billion.
Representing an improvement of 1.9 billion quarter over quarter, and an improvement of $4 $3 billion year over year operating margin was 13, 4% improving two four percentage points sequentially and five percentage points year over year without.
The impact of PPA related depreciation and amortization ATM gross profit margin would be 25, 6% and operating profit margin would be 15%.
On page five you'll find a graphical representation of our ATM P&L.
On page six is our ATM revenue by market segment, you can see here the typical seasonal decline in the communications market segment, However, our automotive consumer and other products picked up to fill the typical seasonal decline GAAP.
On page seven you will find our ATM revenue by service type.
The quarterly movements tend to be too small, but the chart taken as a whole tells a more complete story you can see here on the gradual improvement in the underlying strength of our wire bond related business.
Meanwhile, our advanced and testing service types have seen at the time much of which having to do with the impact of the U S. P. A R.
On page eight you can see the results of our and as the business and a graphical representation of our EMS revenue by application. The information, we provide and regards to our EMS business may differ materially.
From the information directly provided by our subsidiary as they report independently using China as GAAP.
During the quarter, our China based factories were subject to of special government policy for lowering the risk of COVID-19.
By means of reducing travel across China during the lunar new year holiday.
China highly encourage factories, such as ours to maintain staffing levels throughout the lunar new year holiday.
This resulted in extra unexpected labor expense.
This along with softer than expected business contributed to the lower than expected profitability.
During the first quarter EMS revenues declined 40% sequentially, primarily due to product seasonality.
EMS revenues increased 46% year over year as a result of having a expanded revenue base of products.
Our EMS gross profit was $4 $2 billion declining $2 8 billion sequentially, and increasing $1 $1 billion year over year.
The lower sequential in the gross profit was the result of lower loading due to seasonality and the higher year over year of gross profit was the result of higher sales from the wider product base gross profit margin for the EMS business came in at eight 7%.
What's the decline of 0.1 percentage points sequentially, and 0.6 percentage points year over year in.
In addition to the aforementioned bubble staffing rule. The gross margin sequential decline was primarily the result of lower scale during the seasonally down quarter year over year. This decline is principally the result of the level of staffing rule and product mix.
Alright, Tms business units first quarter operating expenses were $2 $8 billion declining zero point of $7 billion sequentially, while increasing zero point of $5 billion year over year. The operating expense sequential decline is the result of lower bonus expense.
While the annual increase is the result of China's level of stopping rule.
Our operating expense percentage increased one four percentage points sequentially to 5.9%, while declining 1.1 percentage points year over year. The operating expense percentage movements are driven by lower bonuses in the first quarter and sales seasons.
Ali.
Our EMS operating profit declined $2 $2 billion sequentially, while improving the zero point $6 billion year over year, our EMS operating margin was two 8% declining one six percentage points sequentially and up <unk> four percentage points.
The year over year for.
From a full year perspective, we continue to target a 4% operating margin for our E&S business.
On the bottom half of the page you will find a graphical representation of our EMS revenue by application.
You can see here of that seasonally driven products in consumer and communication segments, each declined by six percentage points.
Other segments were generally seasonally soft but were not as strong with pronounced.
On page nine you will find key line items from our balance sheet. The only of things that we would like to add here are that total unused credit lines of amounted to $255 $2 billion ex.
And our net debt to equity ratio dropped to 61% the lower end of our targeted range.
Page 10, you will find our equipment capital expenditures amounts on this are denoted in the U S dollars machinery and equipment capital expenditures for the first quarter totaled $471 million.
Of which $337 million for used in packaging $118 million in the testing.
$7 million in EMS operations, and $5 million and interconnect materials and others.
From the full year perspective, we currently expect to increase our wire bond capacity by about 10% to 15% during the year. We ended 2020 with slightly more than 26000 wire Bonder. We also currently expect of 2021 equipment capital expenditures.
Spend the chairs to increase of 10% to 15% as compared to last year.
We expect to invest roughly 65% of our capex on packaging equipment and 20% on testing equipment.
The current environment is a challenging line it is incredibly difficult to manage capacity allocations, we continue to see tight wafer substrate component and capital equipment deliveries throughout the remainder of this year.
It's even coming full circle for us some of our capital equipment vendors are telling us that their equipment delivery schedules are slipping because of.
Lack of semiconductors.
We are well aware that perceived capacity scarcity potentially perpetuate.
No ball effect with customers scrambling for even more incremental supply chain security.
There are rumblings that capacity has been systemically under billed for years.
But we have only been capacity constrained outside of typical seasonality for just this quarter.
At the very most.
Under ordering and early times of COVID-19 create an artificial lull in demand and capacity Bill.
We don't believe the current situation is simply explained away by saying the semiconductor industry.
Underinvested.
Perfect for the tool.
The us and back end capacity.
The worldwide capacity was in balance two quarters ago for us and others. There is a resurgence of the trailing edge underway.
We see longer term shifts and product complexity.
The expanded use of trailing edge technologies, and geopolitical disruption as having a hand in the supply and demand imbalance.
Regardless of the cause we believe we stand to extend our competitive advantage during the coming year.
Not only do you look at who has the largest capacity at this time, what you have to ask is who gets the allocation of capital equipment. In these times, who has the advantage in getting allocation of components and substrates at this time.
Who invested during the last three years, while everyone else held back.
Who can supply chain managers trust with their jobs to deliver on long term voting agreements.
Industry leaders like us stretch their leads in times like these.
With that we would like to provide our second quarter business outlook as follows for our ATM business, Alright, ATM second quarter sequential business growth rate should be similar with our second quarter 2020 sequential business growth rate.
Our ATM second quarter 2021, gross margin should slightly improve from the first quarter.
For our EMS business in the U S. Dollar terms EMS second quarter business should be similar with third quarter 2020 business levels.
Our EMS operating profit margin should be slightly below full year 2020 levels.
No we opened up for Q&A.
If you have the question please raise your hand.
On the web.
Net.
Uh huh.
First question is coming from Randy Abrams Credit Suisse.
Okay.
Yes. Thank you.
Actually if I could ask for the first question I tried to get that in the guidance real quick.
But one of just to make sure I have it the right understanding for ICD 10, So we should imply 5% sequentially of about 5% if I look back to last year.
On the U S. Dollar terms were slightly up gross margin.
And then for E M S.
I think I saw compared to the third quarter.
20th for traders.
Sequential or a year on year.
For that growth.
And then for operating margin I assume it.
Right.
Good sequential improvement, but if you could just recap the story of the rate assumption on notice.
The guidance metrics.
[noise], Okay here.
I didn't write it down.
Oh, yeah the.
The guidance that we provided for it.
Youre correct.
In terms of it yet.
Top line, we're expecting the same level of growth.
We saw in the.
Our previous second quarter.
In terms of the.
In terms of the gross profit margin, we're looking at that site.
Slight improvement in the quarter.
For.
Yes.
We are looking at the <unk> second.
The second quarter.
The top line will be similar to.
Our third quarter of 2020 level.
The operating margin should the savvy.
The lower full year 'twenty for any level.
Yeah.
Okay.
If I could follow up the.
Two things on the constraints.
It's sort of a way to think about tech the.
How much it is limiting your how much behind the U R.
And I see it Jim.
Is it strictly of wire bond.
Still the bottleneck.
Or do you now have the constraint on your like the more advanced packaging.
Flip chip and wafer level packaging as well.
Yes.
The constraint we were referring to apply.
Applies to capture the equipment, including the wire bonder.
Also related to our substrates leap.
The frames.
And other.
There are components that are required to do the final assembly. So every part of the different Anthony I cannot tell you the.
But definitely it's not just the wire bonder thing.
In terms of the of how do we manage the line balance.
I think that's the operations job the.
Whenever we're missing some components from materials.
We're trying to do the line conversion, we switched back to <unk>.
The other.
Secondly, where we have on materials.
The in reserve.
In terms of of how much that limit of potential growth.
It's very difficult to quantify that because the the process right now is very dynamic I won't be able to give you a comment of quantitative number.
Okay.
And the second part of the guidance outlook of M. S.
Actually picking up.
The second quarter.
Last year did but some years, it's it's still down if you could talk about the <unk>.
Drivers for the pick up if there is.
Some.
The ship projects or just the existing of your mesh bracelets recovering a bit earlier.
And if you could give an update on the overall ship outlook.
How that's now looking whether on a year over year or for if any change versus the.
The incremental growth Youre expecting.
Okay, I think from a from the second quarter as far as.
As far as for the full year of in terms of E. M S.
We will continue to see growth.
Yeah.
For this year I think in this.
The coal.
Kind of a first in the second half distribution of revenue.
It will be similar to roughly 44 56 of $43 47 type of allocation of.
Distribution.
And I think the overall growth of both from the traditional Oems as well as Sip.
In terms of Sip.
The last year, we went through a phenomenal growth.
In terms of the.
In terms of of Sip revenue.
We have been entertaining many more projects and many more customers as well and some of the <unk>.
In terms of the new projects revenues.
We will hit.
We had about close to $400 million.
Revenue coming from new projects and we are the same kind of momentum this year.
And overall I think the.
In terms of the composition of the Sip revenue.
There are some.
Mature products going through sort of.
Gradually tapering off.
Because of the Fisher transition.
The there is some projects that we are seeing a second sourcing coming in.
But the bulk of.
The other from new projects and.
The of the newer projects that we entertain I was starting to entertain from last year, we're seeing of Bob started to Oh, So it's kind of.
And for this year. So it was all going to seize the.
Recent growth in the Sip overall, and particularly of just in terms of new projects. Obviously is still a very strong momentum going forward.
Okay.
I could try to do the math on the 47 53 is it the implication of the IC ATM you had mentioned high end of the two ex which seems to imply the U S dollar up kind of high to mid to high teens.
If he M S.
Similar type of growth profile factoring you if you consolidate I think the.
The AUM.
Overall annual growth in the E M S.
This will be a slightly better than the idea of on overall growth for the year.
Okay.
Okay great.
Okay.
I could ask a follow up just on the.
Two questions on that the Capex one is the.
On the upgrade I pick up of habit right. There was originally of maintain at the high level of SKU investor of last year, but now increasing.
The one I guess the area of it relative to the prior of the area, you're increasing and then the second one on the wire bond net 10% to 15% year over year is that.
More of what you see of kind of a need like based on real demand or is it a constrain number for you would add even more if if the capacity and if I could fit a third of them I'm curious.
The foundries I, usually don't talk it takes a couple of years to bring up the fab. So we might have a shortage for two years.
Do you have kind of of our view on the sustainability.
<unk> of the tightness for.
Traditionally lead times for their stretch but.
The shorter than building a fab how long it looks like if I can push it looks like it may extend into next year at the stage.
The the wire Bonder delivery right now of one year.
It's anywhere between 40 weeks to 52 weeks.
And that's the wire bond of delivering in the other ward.
Ever wire bonder at the other ordered now.
It won't be deliver on to next year.
So the wire bonder lead time as well as the other equipment that go with the wire bonding line.
Also got elongated.
The wire Bonder demand right now.
It is clearly above.
The efficiency improvement.
As well as the new capture of equipment.
That we can receive this year.
So right now of the wire Bonder is under allocation of highly constrained.
Previously I've made the comment that.
For the whole year of 2021, we.
We will see wire bond constrained.
My view remains the same.
Except that the wire bonder constrained by lost a little bit longer.
The back of equipment.
Has the shorter lead time comparing to the Fabs I would not draw comparison between one to the other.
But right now.
Applied demand imbalance.
It's obvious for.
For the whole industry.
Which is why many of our customers.
Who already signed long term agreements.
We are talking about how do we collectively.
For the design optimization.
<unk> standardization.
We have collectively improved the efficiency.
To support them for 2021 as well as 2022.
Yeah.
Okay, Great that's helpful and I guess first of all.
If you could clarify like the increase from Capex.
It sounds like that might be an area you could quite shorter to get additional of tools or was there kind of versus the prior framework.
Where the new the new spend is corrected.
The the Capex right now is literally across the board for.
We're seeing the test equipment, and we're seeing the fan out of equipment.
We're seeing the bumping equipment, we're seeing the wire bonding equipment.
Almost all kinds of equipment, where we're issuing on capex.
Right now we are we're working with our suppliers.
Trying to prioritize delivery schedule.
The terms of the total equipment that we plan to order.
We will stay at the op level the high level, if not exceeding last year.
In terms of the after the delivery that is what we need to do from the operation perspective.
Now why are we placed the order knowing that we have such a long lead time.
Because of customer development and product cycle as well as the long term service agreement dictates that we're working closely with our customer to understand the demand profile.
Long term.
All of the capital equipment expansion will take that into consideration.
Okay, Great I appreciate the color. Thank you.
Yes.
The next caller, we have the.
Okay.
Taking a longer.
Okay.
The banks.
My first question, Yes can you hear me.
Yeah, we can hear you.
Alright, Thank you our first line.
Could you talk a little bit more.
In detail about what are you seeing one of the nature of the the longer term commitment or the.
Thinking about the fixed price contract the contract I think volume kind of auto.
Does that mean for <unk>.
APM Bryan the same bond in the etc, and all of these primarily for the wire bond of RV also being the.
The two other areas and then one second day as well.
Can we talk a little bit more detail about what one of the nature of these kind of longer term commitment on that you're getting.
Okay.
The the long term.
Service agreement.
<unk> saw customer on each one is different I will not comment detail on that.
The the comment that I can make is the the service green the right now covers more than just the wire bonder.
It was wire bonder the second half of 2020, and now were spreading into flip chip and the other areas.
Because we do see of general constrain of the assembly capacity.
In terms of the pricing environment the.
Pricing environment remains friendly.
But as you know, we do not do tactical pricing.
We're doing right now is we're working closely with the customer.
To reflect the raw material and the other component pricing increase we took that into account.
And we're also working close with customer a launch of our service agreement in terms of the total demand the capacity we need to build.
On behalf of their demand.
The only area that we like the coming years, the our specific sectors.
Have a super hot wrong.
As well as the expedited.
Product requirement.
Normally we will have the the expedite fee to apply for for those particular cases.
But in general of the pricing environment remains friendly and I believe that condition.
At least applies to the whole year of 2021, if not longer.
Thank you I get up the <unk>.
So if I if I may also ask about kids.
<unk> net and the two points by a need for any packaging clearly a lot of the R.
Compute customers essentially seem to be talking about the in a very aggressive fashion.
It could be the fresh water.
Our view on this area than.
When we think about on the Capex increase.
Of the Capex.
The panel.
The amount has been the.
The continuing efforts as well on.
Most of that is still going to come a little bit later.
Well as you can see from the general the.
On the macro trend you're on.
I understand that for the two five D. The three D or the chip lift.
Whichever architecture, you're referring to there has been growing acceptance.
As well as growing demand.
From all regions of our application sectors.
So ASE has been developing with our key customer for the dose architecture.
So the day.
That has the in place for for quite some time.
Now the 2020 end of 2021.
Scenario as we're in right now.
Has modified the situation a little bit.
In the sense that the.
Plus we have long term service agreement.
With all of our key customers.
The chip led the two five D.
The fan out.
Also becomes a strategic develop the requirement.
As part of that overall long term service agreement.
So in other words.
We're going through.
Yeah.
Set of delivery cycle with our key customers.
We are expected to do more development with them trying to further improve the efficiency.
And the the performance for the architectural standpoint, as well as for all of process point.
The best sure the exact question that you're asking but the.
I believe those are the answers that I can offer you on today.
Thank you.
Got it thank you.
Okay.
Are we all sat there gogo.
Yes, well I'll go back into the queue.
Okay.
The next question will be coming from Bruce Lu.
Goldman Sachs.
Chris are you on the line yes.
Yes, yes.
For taking my question a very very good result can you can you give us a little bit more color in terms of sorry 2021.
The team overall.
Look at the first quarter revenue was very very strong do you expect the same yeah. Yeah, a couple of months for the whole year and also for the profit the bigger T. The.
The gross margin seem to improve more than two five percentage point of already but the company was kind of only by two five percentage operating margin improvement.
I will be greedy to ask for a little bit more because of the operating line. Thank you.
Well I think the.
The overall growth momentum in terms of each year.
So the strong.
Yeah.
In the previous earnings call, we were saying that we will be.
Our overall growth will be two times of the logic market world.
And that I think that.
The principal Rebase and.
Although we are seeing the the overall industry.
Kind of growth is kind of stepping up.
We were because of the some of the capacity constraint.
We are now saying that the overall growth should be approaching the high end.
Which we are we actually said.
In the last call, we said, we're expecting growth to be anywhere from 10% to 20%.
We're seeing the the growth likely to be.
Reaching the high end of the of the.
Of the range.
In terms of profitability.
I think for the whole at the gross level will continue to see a sequential.
The sequential growth in the gross margin as we continue to enlarge our overall operation and also.
The improving the efficiency that we have.
And for the whole year, we are very confident that we will be reaching the.
The midpoint of 30% level.
The the operating margin improvement that you mentioned is really on the consolidate basis on the holdco level that we're projecting 252 of 3%.
The improvement now.
So a.
Where the translates to it of.
Of course the.
The improvement will be higher because we're setting the.
With all of the only setting the EMS operating margin target to be 4% for the year.
Thank you. Thank you cannot take down a little bit for the AGM of gross margin improvement of in the first quarter.
On the gross margin was the improved by a 180.
The fifth.
A comparison of the previous quarter, but the early on guidance for the first quarter of GPM for ADM is flat, so where are the possibly of surprise coming from.
And can you also give us a rank in terms of the gross margin among the different.
The business as the ATM such as Bob on the testing.
Each of its IP what was the rent for the gross margin now.
We don't give out of.
Separate gross margin moving out different business.
But as the whole I think the.
The improvement.
That we see that we saw in the gross profit margin in this quarter.
Largely coming from.
First of all of.
The higher than the expected revenue that we could generate in the quarter.
The other is really we have a higher tests.
Revenue as well in terms of the percentage of.
Our overall revenue.
The test percentages.
As higher than expected so that leads to.
Better than.
Expected gross margin performance in the quarter.
Just one additional comment the.
When we offered the day the.
Does the guidance last year.
We were planning for the seasonality in other words.
The communications sector will go through the typical Q1 and Q2 seasonality.
At the time.
We were planning on some of the equipment.
Dealing with the communications sector.
Mine not be fully utilized as well as the test equipment as well the assembly of the S IP equipment.
What has transpired in.
In the first quarter was.
Because of the low the situation of strong demand.
We were able to.
Collectively cooperate with our customers.
Trying to utilize some of the idle equipment.
That would of been underutilized otherwise.
And that as a result.
The improved the revenue stream ash.
As well as the gross profit.
That is just another comment.
We believe the similar thing.
We're permeate into Q2.
In other words.
What is unique about 2021 years.
We sort of are removed.
From the typical communications sector.
Seasonality in Q1 and Q2.
Now having said that.
In Q3 and Q4.
We will go through the reverse part of the seasonality.
So right now from the operation execution wise.
We have to work very hard to secure all of the supply all of the equipment and all of the necessary resources to make sure. The after clear Q1 of execution, we exit Q2 well.
And we can deal with the second half on.
Including the the ATM as well as the S. I P as well as the traditional seasonality of the communication with the SEC.
So overall I think 2021.
We'll be a very exciting year now.
Now in terms of the supply situation the covered for Congress' lead frame ABF substrate capital equipment that you're all very familiar with.
We will try to give the quarter to quarter update.
As of today, we have done a decent Q1, because all of the factor that can Joseph and I have just outlined.
We are optimistic about Q2.
And we're quite excited about the second half of 2021.
I mean, there are some.
Headwind the NT dollar that we have not discuss much about it the other.
Other type of constraints and of course, not there the the general global political situation as was the pandemic.
So with all of this considered we have giving you the best guide.
Guidance that we believe is pertinent to the current scene downs.
Downturn teams scenario I hope that clarifies that the a lot of the questions about Q1. The also the outlook for Q2 and the second half.
Oh. Thank you cannot can I ask a question on the part of it you Miss I mean, the the guidance for the second quarter for you on the score with all of our 10% despite.
Despite the typical of low seasonality and how much is due to the steel flash.
Because vision and also the consumer settlement and E. M is in the first quarter since the since the go down when the law do you see a rebound in the second quarter as well for the consumer segment.
Yes.
Okay.
Yeah.
Yeah.
Second quarter compared to a.
The first quarter, we're seeing a.
We're seeing that.
Both of the Oh.
I think the.
The really is the organic growth that we're going to see.
Largely because of the special growth is mainly from the supply chain security continuity thing of lots of the customers are.
Because of the whole value chain yourself.
<unk> constrains in terms of from them.
A component of some of the material supply and I think some of the customers are really bumping up the inventory hoping to get the get the.
The safety stock go up so we're seeing a uptick.
Uptick in the second quarter, which as you know the.
Lot of the.
Now the typical second quarter performance.
But that's what we're seeing now for 44 of your emphasis the second quarter.
So the whole year, how good how do we see the whole year revenue growth for the U S.
Because the now this isn't out of it doesn't really seem to be of good referenced anymore.
[laughter] the like I said the.
In terms of the overall EMS business, we're expecting kind of of 44 of our 50.
<unk> 56 kind of a split between the first and second half.
So I think the.
Going into the second half will receive new products coming on.
And we're seeing.
More prada.
Product launching and then we'll go back to the typical seasonality seeing a.
The stronger uptick in the second half.
Okay, Let me try to squeeze one more question I mean, we do see or somehow different production of mutation rate.
Especially on the wire bond the between AAC and a lot of the Chinese all of that makes us.
Most of the county.
Of all companies in all of of that.
Having like extremely high utilization rate, but China is high but not.
Like a step down comparing to most of the Taiwanese guys can you kind of let us know what and what happened on the why is that.
Well I think the.
The supply security.
Applies.
Somehow.
Into.
That scenario in other words.
If a supplier that has a longer working relationship.
Who can cooperate not only the assembly complexity for you the <unk>.
Quality.
Who can also secure better component.
Molding compound as with the asked the leaf range of subsidy of supply.
I believe that placed the.
Into the.
The fact why.
People tend to place more order.
Even though is on the allocation mode. There's two preferred to to work with the the.
The A&P or our peers and in Taiwan, I can't really comment on the China Osaka ex Im sure you know the scenario of better than I do.
But I think the product complexity.
The product security.
And the geopolitical.
Gentlemen, my play might not play into their decision that day, you have to talk to the customers.
But Ken don't don't get me wrong, I I fully agreed that ASE should be should have a much stronger customer demand, but the customer actually dying or in line.
Serious shortage I mean, they they need the graph the dining people they grab whatever they have right.
So the gap seems to be a bit larger than than I expected. So that's why I tried to get.
Get some kind of let's say that.
Precisely the point I think when the things are tight I think.
Most of the customer will look for the safest bet and.
Given the scale and given the leverage that we have.
In terms of sourcing.
The capital equipment as well as materials I think we are much safer bet to our customers. That's the one front and the I think the other one is that.
Given the children of political situation I think there is a growing concern on the longer term of mid to longer term.
Sustainability of some of the Chinese players I think it does play into the current situation of it.
The other thing. Thank you I'll go back of the queue. Thank you.
Alright, thank you.
Next question is coming from.
Roland <unk> of Citi.
First of all taking my question I think that just like any other quick question on the Capex.
So I think the.
For today I don't hear you.
The total Capex spending plan the CSO, how does the Capex spending plan this year.
Ah I think can briefly mentioned that this year.
We are expecting to spend.
Roughly 10% to 15% more than we spent last year in terms of our equipment.
Equipment Capex.
This is really to support the.
Certainly the demand that we're seeing now.
Although we are we.
We are.
What kind of brought up the overall capex spending amount this year, but in terms of actual spending I really depends on the delivery that we are.
That we will have but nonetheless, I think that's the that's the current.
The situation.
We are upping our of our.
Capex in terms of distribution I think all of the total spending of.
Roughly 65 for sale for the for Assembly.
The rub 21 per cent for tests.
The 12% for the year medicine the reservoir for.
For our material I think that will be the distribution for this year.
Understood. So.
So it sounds like at the end of the total number should be somewhere around $1 92 2 billion are you are planning.
Yes, the last year, we spent close to one 7 billion, yes, yes less than 10%.
Hi, Yeah, Okay cool.
Alright, thank you and that probably no.
The type of sand for assembly and testing so of Christian is that you know when you look at TSMC is the capex spending on the bench and the math.
Banking is going to be around the 3 billion Lithia. So this actually is a much higher than your total spending.
About 2 billion this year.
At the mean that you have to raise capex spending significantly going forward. If you are also doing trying to do more.
The packaging business.
Well the comment about the the TSMC capex for the backend.
I think the first clarification I would like to make is you really cannot make a on them.
Not a direct comparison.
The capex that they are referring to for their backend.
Versus the Capex, we are referring to for the the assembly equipment are very very different in nature and if you really go back to the Capex. The equipment list and you will understand that so there is no direct comparison that I can draw.
Between that level now the second comment is the <unk>.
Our customer demand on us.
To engage.
In the type of configuration or the architecture of design, where our customer designing with foundry suppliers.
Then.
We are obligated.
To work with our customer to come up with our proposal.
Our proposal could be in the form of.
For the foundries using.
It might not be in the four and.
And it's up to the customers.
How to design.
Their packaging.
The the architecture of Wedbush.
The so that is of hypothetical questions.
Now we are engaged with several customer trying to explore.
And of the proposal.
Now in some form there'll be overlap.
But in the majority of the form it will be quite different.
Right. So I don't believe.
Capex will be at the foundry level because of the nature. It is extremely different.
Also in terms of the the variety is also quite different.
We're not dealing with the large high volume capacity for.
For a few customers the.
Process and the architectural design, we need to come up with.
Has to be able to fit into the application segment for a basket or a number of customer.
The change belief and that is the key difference between the business model versus the Capex.
Okay, So a tech correctly.
Correct me if I'm wrong. So you are pretty much of many TSMC is building it's a tech.
<unk>.
<unk> proprietary technology for the customers and this technology probably.
The different from the play from a technology you ought to info.
Customers.
The product across the bulk of that might be.
Reading you right on line.
Yeah that the I believe but again, it's not what the ASE wants.
One of the customer response.
Understood Okay. Thank.
Thank you and I think the funnel up could change is the.
For in the past you said Neil for everyone on the Capex that you invest on assembly at the probably would be generate about what other new revenue in the first year and the more than one barrel of new revenue generation for testing for the.
First of all year so for.
For the Capex you are spending now and because of this of capacity tightness.
You're.
Going to generate the similar return for the Capex investment that you invest in view of new capacity now.
Well I think that's the at the rule of thumb a dollar of investment in packaging, we can generate all of them.
The dollar 20 of revenue Okay. This if for tests.
Dollar of investment and generate about 50 cents of revenue.
So from the.
The blended pointed.
Prospective I think on a dollar of what we're saying is in terms of the assembly and test of thought.
All of the investment should generate a dollar of revenue for us a bend the revenue for us to make it economically viable.
The investments.
I think the yield.
From a different angle to look at TSMC for adverse investment into the back in the.
That's totally different than the scenario.
Yeah, I know is a very big friends. So so in general you said for.
On the backend you probably will have on your for every one dollar investment you probably will generate a dollar return. So this is the still the final rule of steel value right.
That's that's the of the rule yes.
Okay. Okay cool okay. Thank you thanks for taking my questions. Thank you.
Yeah.
The next caller on we have is the.
Uh Huh, Inc.
Yes.
Hi.
Hi.
Hong Kong, yes, thanks for that.
<unk>.
Yeah I have two questions for you guys anyway.
Average salary.
First one regarding the wiper on day to day for me I will go to Matthew on Q1, you got roughly a thousand hundred viable on the us right.
We want to note the wife I wanted to be very sketchy on for the rest of this year.
I think currently we're looking at the.
35, hundreds of $4000 for this year of dishes.
We're expecting the full delivery by the hour.
October November timeframe.
It will be deliver progressive fleet and I'd say for delivery were expected.
Bye.
October November timeframe.
Okay got you, Okay, Alright, and then the Ottawa, Ontario housekeeping what is the.
Thank you for your wife of under business Attesting to the fact that Q1 very rough numbers would be fine.
I'm thinking in terms of attitude, we're around 85% and for tech around 80.
Okay.
That's the kind of theoretical utilization rate I believe.
Yes, that's pretty much for pretty much maxed out.
Okay, Great and last one on the.
Dividend policy.
And the comparator as Ricky.
On cycle.
No I think we've announced the study is.
$74 27.
This year and the payout ratio is roughly 65%.
Okay, and then that would be the rule of thumb for the future of at least for it in the near future.
Yes, yes.
Okay, great, Okay, and congratulation on good result.
Thank you.
We don't have any additional.
And right here on the tier if you want to ask any questions. Please raise your hand.
For a second.
Okay. Thank you for attending our first quarter earnings release really for you next time. Thank you.
Yes.
Yeah.