Q2 2024 ASE Technology Holding Co Ltd Earnings Call

Kenneth Hsiang: This meeting is being recorded and transcribed by https://otter.ai. Hello, I am Ken Hsiang, the Head of Investor Relations of ASE Technology Holdings. Welcome to our second quarter 2024 earnings. Thank you for attending today.

Operator: This meeting is being recorded.

This meeting is being recorded.

[laughter].

Thank you.

Thank you.

Okay.

Okay.

Okay.

[laughter].

Ken Shang: Hello, I am Ken Shang, the Head of Investor Relations of ASE Technology Holdings. Welcome to our second quarter 2024 earnings release. Thank you for attending today.

I am Ken Hsiang, the head of Investor Relations assay Technology Holdings welcome to our second quarter 2024 earnings release. Thank you for attending today.

Ken Shang: Please refer to our Save Harbor Notice on page two. All participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please disconnect at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially. For the purposes of this presentation, dollar figures are generally stated in New Taiwan dollars unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS.

Kenneth Hsiang: Please refer to our Safe Harbor Notice on page two. All participants consent to having their voices and questions broadcast via participation in this. If participants do not consent, please disconnect at this time.

Speaker Change: Please refer to our safe Harbor notice on page two all participants consent to having their voices and questions broadcast via participation in this event.

Kenneth Hsiang: I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially. For the purposes of this presentation, dollar figures are generally stated in NTD unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP.

Speaker Change: If participants do not consent. Please disconnect at this time I would like to remind everyone that the presentation that follows may contain forward looking statements. These forward looking statements are subject to a high degree of risk and our actual results may differ materially.

Speaker Change: For the purposes of this presentation dollar figures are generally stated in new Taiwan dollars unless otherwise indicated.

Speaker Change: As a Taiwan based company, our financial information as presented in accordance with Taiwan Ifr S results presented using Taiwan, I FRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese gap I.

Ken Shang: Results presented using Taiwan IFRS made differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP. I am joined today by Dr. Tan Wu, RCOO, and Joseph Tong, RCFO. For today's presentation, I will be going over the financial results, and Joseph will give the company's outlook. Dr. Wu and Joseph will then be available to take your questions during the Q&A session that follows. During the Q&A session, each caller will be limited to two questions at a time, but may return to the Q for further questions.

Kenneth Hsiang: I am joined today by Dr. Tien Wu, our COO, and Joseph Tung, our CFO. For today's presentation, I will be going over the financial results, and Joseph will give the company's outlook. Dr. Wu and Joseph will then be available to take your questions during the Q&A session that follows. During the Q&A session, each caller will be limited to two questions at a time, but may return to the queue for further questions.

Speaker Change: Im joined today by Dr. Tien <unk>, our COO and Joseph Tung, our CFO for today's presentation I'll be going over the financial results and Joseph will give the company's outlook Doctor Wuhan. Joseph will then be available to take your questions. During the Q&A session that follows.

Speaker Change: During the Q&A session. Each caller will be limited to two questions at a time, but may return to the queue for further questions.

Ken Shang: With that, let's get started. The second quarter can be summed up as the tail of two businesses. One business representing the leading-edge products and the other the more traditional products. For the traditional business, the second quarter had selective products with signs of reemergence. But, by and large, general product demand lacked the strength and durability necessary to be considered to sustain healthy pickup in the immediate term. While leading-edge business saw increasing demand with the development of increasing product pipelines, equipment utilization for traditional products looked to be near 60 percent, while utilization for the leading-edge products is effectively full.

Kenneth Hsiang: With that, let's get started. The second quarter can be summed up as the tale of two businesses. One business representing the leading-edge products, and the other, the more traditional products for the traditional. The second quarter had selective products with signs of re-emergence. But, by and large, general product demand lacked the strength and durability necessary to be considered a sustained healthy pickup in the immediate term.

Speaker Change: With that let's get started the second quarter can be summed up as the tale of two businesses, one business, representing the leading edge products and the other the more traditional products for the traditional business. The second quarter had selective products with signs of re emergence.

Speaker Change: But by and large general product demand locked the strength and durability necessary to be considered a sustained healthy pickup in the immediate term.

Kenneth Hsiang: While the leading-edge business saw increasing demand with the development of an increasing product pipeline, equipment utilization for traditional products looks to be near 60%, while utilization for the leading-edge products is effectively full. To support the bifurcated market, we will need to continue to increase our investment in the leading-edge space, in particular labor and equipment. From the labor perspective, we will need to hire more engineers as the level of product complexities increases with the leading edge.

While the leading edge business saw increasing demand with the development of increasing product pipelines.

Speaker Change: Equipment utilization for traditional products look to be near 60% while utilization for the leading edge products are effectively full.

Ken Shang: To support the bifurcated market, we will need to continue to increase our investment in the leading-edge space, in particular, labor and equipment. From the labor perspective, we will need to hire more engineers as the level of product complexities is increasing with the leading edge. Edge. We will also need to invest in incremental capital equipment to provide for incremental demand. For our EMS business in the second quarter, demand for our services was slightly ahead of our initial expectations. We believe this was principally the result of a slightly faster start to the manufacturing season. Please turn to page 3, where you will find our second quarter consolidated results.

Speaker Change: To support the bifurcated market, we will need to continue to increase our investment in the leading edge space in particular labor and equipment.

Speaker Change: From the labor perspective, we will need to hire more engineers as the level of product complexities are increasing with the leading edge. We will also need to invest in incremental capital equipment to provide for incremental demand.

Kenneth Hsiang: We will also need to invest in incremental capital equipment to provide for incremental demand. For our EMS business in the second quarter, demand for our services was slightly ahead of our initial expectations. We believe this was principally the result of a slightly faster start to the manufacturing season. Please turn to page 3, where you will find our second quarter consolidated results. For the second quarter, we recorded fully diluted EPS of $1.75 and Basic EPS of $1.80.

Speaker Change: For our EMS business in the second quarter demand for our services was slightly ahead of our initial expectations. We believe this was principally the result of a slightly faster start to the manufacturing season.

Speaker Change: Please turn to page three where you will find our second quarter consolidated results.

Ken Shang: For the second quarter, we recorded fully diluted EPS of $1.75 and basic EPS of $1.80. Consolidated net revenues increased 6% sequentially and 3% year over year. We had a gross profit of $23.1 billion with a gross margin of 16.4%. Our gross margin improved by 0.7% sequentially and 0.4% year over year. The sequential improvement in margin is principally due to NT dollar depreciation and product mix changes at both our ATM and EMS businesses. Our operating expenses increased by 0.7 billion dollars sequentially and by 1.7 billion dollars annually. The sequential increase in operating expenses are primarily due to higher R&D labor-related expenses.

Speaker Change: For the second quarter, we recorded fully diluted EPS of $1.75.

Speaker Change: And basic EPS of $1.80.

Kenneth Hsiang: Consolidated net revenues increased 6% sequentially and 3% year-over-year. We had a gross profit of $23.1 billion with a gross margin of 16.4%. Our gross margin improved by 0.7 percentage points sequentially and 0.4 percentage points year-over-year. The sequential improvement in margin is principally due to NT dollar depreciation and product mix changes at both our ATM and EMS. Operating expenses increased by $0.7 billion sequentially and by $1.7 billion annually. The sequential increase in operating expenses is primarily due to higher R&D labor-related expenses.

Speaker Change: <unk> net revenues increased 6% sequentially and 3% year over year.

Speaker Change: We had a gross profit of $23.1 billion with a gross margin of 16, 4%. Our gross margin improved by 0.7 percentage points sequentially and 0.4 percentage points year over year, the sequential improvement in margin as Prince.

Speaker Change: Split due to NT dollar depreciation and product mix changes at both our ATM and EMS businesses.

Speaker Change: Our operating expenses increased by 0.7 billion sequentially and by $1 $7 billion annually. The sequential increase in operating expenses are primarily due to higher R&D labor related expenses the year over year increase in operating expenses is primarily.

Ken Shang: The year-over-year increase in operating expenses is primarily attributable to continued R&D staff up and other labor-related costs. Our operating expense percentage remained flat at 10% sequentially and increased by 1 percentage point year over year. The annual increase was also related to higher R&D staff up for both ATM and EMS. Overseas expansion and higher incentive stock option in bonus expenses. Operating profit was $9 billion, up 1.5 billion sequentially and down 0.4 billion year over year. The year-over-year decline and operating profit is primarily related to higher operating expenses related to the ramp up of our leading edge advance packaging and overseas expansion.

Kenneth Hsiang: The year-over-year increase in operating expenses was primarily attributable to continued R&D staffing and other labor related costs. Our operating expense percentage remained flat at 10% sequentially and increased by one percentage point year over year. The annual increase was also related to higher R&D staff for both ATM and EMS, as well as overseas expansion and higher Incentive Stock Option and Bonus. Operating profit was $9 billion, up 1.5 billion sequentially, and down 0.4 billion year-over-year. The year-over-year decline in operating profit is primarily related to higher operating expenses.

Speaker Change: Beautiful to continued R&D staff up and other labor related costs.

Speaker Change: Our operating expense percentage remained flat at 10% sequentially and increased by one percentage point year over year. The annual increase was also related to higher R&D staff up for both ATM and E M S overseas expansion and high.

Speaker Change: <unk> incentive stock option and bonus expenses.

Speaker Change: Operating profit was $9 billion up 1.5 billion sequentially and down 0.4 billion year over year.

Speaker Change: The year over year decline in operating profit is primarily related to higher operating expenses related to the ramp up of our leading edge advanced packaging and overseas expansion.

Kenneth Hsiang: Related to the ramp-up of our Leading Edge Advanced Packaging and Overseas Expansion, operating margin increased 0.7 percentage points sequentially and declined 0.5 percentage points year-over-year. During the quarter, we had a net non-operating gain of $1.1 billion. Our non-operating gain for the quarter primarily consists of net foreign exchange hedging activity. Profits from associates and other non-operating income were offset in part by net interest expense of $1.2 billion. Tax expense for the quarter was $2 billion.

Ken Shang: Operating margin increased 0.7% sequentially and declined 0.5% percentage points year over year. During the quarter, we had a net non-operating gain of 1.1 billion dollars. Our non-operating gain for the quarter primarily consists of net foreign exchange hedging activities, profits from associates, and other non-operating income, offset in part by net interest expense of 1.2 billion dollars. Tax expense for the quarter was 2 billion dollars. Our effective tax rate for the quarter was 19%. Net income for the quarter was 7.8 billion, representing an increase of 2.1 billion sequentially and flat year over year. The NT dollar depreciated 3% against the US dollar sequentially during the second quarter, while depreciating 4.2%. From a sequential perspective, we estimate the NT dollar depreciation had a 0.85 percentage point positive impact to the company's gross and operating margins.

Speaker Change: Operating margin increased 0.7 percentage points sequentially and declined 0.5 percentage points year over year during the quarter, we had a net nonoperating gain of $1.1 billion, our nonoperating gain for the quarter primarily consists of net foreign exchange.

Speaker Change: Hedging activities profits from associates and other nonoperating income offset in part by net interest expense of $1 $2 billion.

Speaker Change: Tax expense for the quarter was $2 billion, our effective tax rate for the quarter was 19% net income for the quarter was $7 8 billion, representing an increase of $2 1 billion sequentially and flat year over year. The NT dollar depreciated, 3% again.

Kenneth Hsiang: Our effective tax rate for the quarter was 19%. Net income for the quarter was $7.8 billion, representing an increase of $2.1 billion sequentially and flat year-over-year. The NT dollar depreciated 3% against the U.S. dollar sequentially during the second quarter, while depreciating 4.2%. From a sequential perspective, we estimate the NT dollar depreciation had a 0.85 percentage point positive impact on the company's gross and operating margin. While from an annual perspective, we estimate the NT dollar depreciation had a 1.21 percentage point positive impact on the company's growth and operating

The U S dollar sequentially during the second quarter, while depreciating four 2% annually from a sequential perspective, we estimate the NT dollar depreciation.

Speaker Change: Had a 0.85 percentage point positive impact to the company's gross and operating margins while from an annual perspective, we estimate the NT dollar depreciation had a one point to one percentage point positive impact to the company's gross and operating margins.

Kenneth Hsiang: At the bottom of the page, we provide key P&L line items without the inclusion of PPA-related expenses. Consolidated gross profit excluding PPA expenses would be $24 billion with a 17.1% gross margin. Operating profit would be $10.2 billion, with an operating margin of 7.3%. Net profit would be $9 billion, with a net margin of 6.4%. Basic EPS excluding PPA expenses would be $2.80.

Speaker Change: On the bottom of the page, we provide key P&L line items without the inclusion of PPA related expenses consolidated gross profit, excluding PPA expenses would be $24 billion with a 17, 1% gross margin operating profit would be 10.2 billion.

Ken Shang: The amount of inclusion of PPA-related expenses consolidated gross profit excluding PPA expenses would be $24 billion with a 17.1% gross margin. Operating profit would be $10.2 billion with an operating margin of 7.3%. Net profit would be $9 billion with a net margin of 6.4%. Basic EPS excluding PPA expenses would be $2.8. On page 4 is a graphical representation of our consolidated financial performance. You will see a trotfish but gradually improving environment for both our ATM and EMS businesses. Gross margins are gradually improving also. On the operating margin front, as was stated earlier, operating expenses are increasing for expected ramps in leading-edge advanced packaging products.

Speaker Change: With an operating margin of seven 3% net profit would be $9 billion with a net margin of six 4%.

Speaker Change: Basic EPS, excluding PPA expenses would be $2.08.

Kenneth Hsiang: On page four, you will see a graphical representation of our consolidated financial performance. You will see a challenging but gradually improving environment for both our ATM and EMS. Gross margins are gradually improving also. On the operating margin front, as was stated earlier, operating expenses are increasing for expected ramps in leading-edge advanced packaging products. We expect these leading-edge advanced packaging products to be accretive to the market. On page 5, you will find our ATM P&L. The ATM revenue reported here includes revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS business.

Speaker Change: On page four is a graphical representation of our consolidated financial performance, you will see a trough ish, but gradually improving environment for both our ATM and EMS businesses gross margins are gradually improving also.

Speaker Change: On the operating margin front as was stated earlier operating expenses are increasing for expected ramps in leading edge advanced packaging products. We expect these leading edge advanced packaging products to be accretive to margins.

Ken Shang: We expect these leading edge advanced packaging products to be accretive to margins.

Ken Shang: On page 5 is our ATM TNL. The ATM revenue reported here contains revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses. For the second quarter of 2024, revenues for our ATM business were $77.8 billion, up $4 billion from the previous quarter and up $1.7 billion from the same period last year. This represents a 5% increase sequentially and a 2% increase annually. Gross profit for our ATM business was $17.2 billion, up $1.6 billion sequentially and up $1 billion year over year. Gross profit margin for our ATM business was 22.1%, up 1.1% sequentially and up 0.9% year over year.

Speaker Change: On page five is our ATM P&L.

Speaker Change: The ATM revenue reported here contains revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses.

Speaker Change: For the second quarter of 2024 revenues for our ATM business were 77 8 billion up 4 billion from the previous quarter and up $1 7 billion from the same period last year. This represents a 5% increase sequentially and a 2%.

Kenneth Hsiang: For the second quarter of 2024, revenues for our ATM were $77.8 billion, up $4 billion from the previous quarter and up $1.7 billion from the same period last year. This represents a 5% increase sequentially and a 2% increase annually. Gross profit for our ATM business was $17.2 billion, up $1.6 billion sequentially, and up $1 billion year over year. Gross profit margin for our ATM business was 22.1%, up 1.1 percentage points sequentially, and up 0.9 percentage points year-over-year.

Speaker Change: Increase annually.

Speaker Change: Gross profit for our ATM business was 17.2 billion up $1 6 billion sequentially and up $1 billion year over year.

Speaker Change: Gross profit margin for our ATM business was 22.1% up 1.1 percentage point sequentially and up 0.9 percentage points year over year.

Ken Shang: The sequential margin improvement was primarily related to foreign currency and higher loading efficiency, offset by higher utility costs. The annual margin improvement is primarily the result of foreign exchange, product mix offset, and part by higher utility costs. During the second quarter, operating expenses were $9.9 billion, up $0.5 billion sequentially and $1.2 billion year over year. The sequential increase in operating expenses was primarily driven by higher compensation expenses from ramp up of leading edge advanced packaging. The annual operating expense increase was driven primarily by the continued scale-up of R&D labor and other labor-related expenses. Our operating expense percentage for the quarter was 12.8%, flat sequentially and up 1.3 percentage points annually.

Speaker Change: The sequential margin improvement was primarily related to foreign currency and higher loading efficiency offset by higher utility costs.

Kenneth Hsiang: A sequential margin improvement was primarily related to foreign currency and higher loading efficiency, offset by higher utility costs. The annual margin improvement is primarily the result of foreign exchange, product mix, and higher utility costs. During the second quarter, operating expenses were $9.9 billion, up $0.5 billion sequentially and $1.2 billion year-over-year. The sequential increase in operating expenses was primarily driven by a higher compensation expense from the ramp-up of Leading-Edge Advanced Path. The annual operating expense increase was driven primarily by the continued scale-up of R&D labor and other labor-related expenses.

Speaker Change: The annual margin improvement is primarily the result of foreign exchange product mix offset impart by higher utility costs.

Speaker Change: During the second quarter operating expenses were $9 $9 billion up 0.5 billion sequentially and $1.2 billion year over year. The sequential increase in operating expenses was primarily driven by higher compensation expenses from ramp up of leading edge advanced.

Speaker Change: Packaging.

Speaker Change: The annual operating expense increase was driven primarily by the continued scale up of R&D labor and other labor related expenses.

Speaker Change: Our operating expense percentage for the quarter was 12, 8% flat sequentially and up 1.3 percentage points annually sequentially operating expenses kept pace with revenue expansion.

Kenneth Hsiang: Our operating expense percentage for the quarter was 12.8%, flat sequentially, and up 1.3 percentage points. Historically, operating expenses kept pace with revenue expansion. The annual increase was due to higher compensation expenses, primarily for R&D. During the second quarter, operating profit was $7.3 billion, representing an increase of $1.2 billion quarter-over-quarter and a decline of $0.2 billion year-over-year. Operating margin was 9.3%, increasing 1.1 percentage points sequentially and declining 0.4 percentage points year-over-year.

Ken Shang: Sequentially, operating expenses kept pace with revenue expansion. The annual increase was due to higher compensation expenses, primarily at the R&D level. During the second quarter, operating profit was 7.3 billion, representing an increase of 1.2 billion quarter over quarter, and a decline of 0.2 billion year over year. Operating margin was 9.3%, increasing 1.1 percentage points sequentially and declining 0.4 percentage points year over year. For foreign exchange, we estimate the NT to US dollar exchange rate had a positive 1.47 percentage point impact. On our ATM sequential margins and a positive 2.1 percentage point impact on a year-over-year basis.

Speaker Change: The annual increase was due to higher compensation expenses, primarily at the R&D level.

Speaker Change: During the second quarter operating profit was 7.3 billion, representing an increase of $1 2 billion quarter over quarter, and a decline of zero point $2 billion year over year.

Speaker Change: Operating margin was nine 3%, increasing 1.1 percentage points sequentially and declining 0.4 percentage points year over year for foreign exchange, we estimate the N T to U S. Dollar exchange rate had a positive 1.47 percentage points.

Kenneth Hsiang: For foreign exchange, we estimate the NT to U.S. dollar exchange rate had a positive 1.47 percentage point impact on our ATM sequential margins and a positive 2.1 percentage point impact on a year over year basis. Without the impact of PPA-related depreciation and amortization, ATM gross profit margin would be 23.3%, and operating profit margin would be 10.8%. On page 6, you'll find a graphical representation of our ATM P

Speaker Change: Impact on our ATM sequential margins and a positive 2.1 percentage point impact on a year over year basis.

Ken Shang: Without the impact of PPA-related depreciation and amortization, ATM gross profit margin would be 23.3%, and operating profit margin would be 10.8%.

Speaker Change: Without the impact of PPA related depreciation and amortization ATM gross profit margin would be 23, 3% and operating profit margin would be 10, 8% on page six you'll find a graphical representation of our ATM P&L as you can see here the first half.

Ken Shang: On page 6, you'll find a graphical representation of our ATM P&L. As you can see here, the first half of 2024 is shaping up very similarly with the first half of 2023.

Kenneth Hsiang: As you can see here, the first half of 2024 is shaping up very similarly with the first half of 2020. On page 7, you can see our ATM revenue by 3C market segment. Our communications application dropped 3 percentage points, while our computing and consumer segments. During the quarter, we experienced some spotty pickups in our consumer space, however, and demand was insufficient to sustain more robust growth.

Speaker Change: 2024 is shaping up very similarly, with the first half of 2023.

Ken Shang: On page 7 is our ATM revenue by 3C market segments. Our communications application dropped 3 percentage points, while our computing and consumer segments increased. During the quarter, we experienced some spotty pickups in our consumer space; however, demand was insufficient to sustain a more robust growth rate. As a note here, our leading edge advanced packaging services are recorded within computing and communications, accordingly in line with their underlying usage.

Speaker Change: On page seven is our ATM revenue by three C market segments.

Speaker Change: Our communications application dropped three percentage points, while our computing and consumer segments increased during the quarter, we experienced some spotty pickups in our consumer space, However, and demand was insufficient to sustain a more robust growth rate.

Kenneth Hsiang: As a note here, our leading-edge advanced packaging services are recorded within computing and communications accordingly in line with their underlying use. On page 8, you will find our ATM revenue by service type. There are only some small movements here, with other services declining two percentage points and wire bonding in advance for their service. Increasing 1% On page 9, you can see the second quarter results of our EMS. Our EMS revenues came in a bit ahead of where we expected, mainly as a result of a slightly earlier than expected start to the manufacturing process.

Speaker Change: As a note here are leading edge advanced packaging services are recorded within computing and communications Accordingly in line with their underlying usage.

Ken Shang: On page 8, you will find our ATM revenue by service type. There are only some small movements here, with other services declining 2 percentage points and wire bonding and advanced services increasing 1 percentage point each.

Speaker Change: On page eight you will find our ATM revenue by service type.

Speaker Change: There are only some small movements here with other services declining two percentage points and wire bonding and advance their services, increasing one percentage point each.

Ken Shang: On page 9, you can see the second quarter results of our EMS business. Our EMS revenues came in a bit ahead of where we expected, mainly as a result of slightly earlier than expected start to the manufacturing season. During the quarter, EMS revenues were 62.9 billion, improving 3.5 billion or 6% sequentially, and improving 2.5 billion or 4% year over year. The sequential and annual revenue improvements are primarily attributable to our customers' timing of this year's product manufacturing start. Sequentially, our EMS business's gross margin improved 0.3 percentage points to 9.6%. This change was principally the result of better loading.

Speaker Change: On page nine you can see the second quarter results of our EMS business. Our EMS revenues came in a bit ahead of where we expected mainly as a result of slightly earlier than expected start to the manufacturing season.

Kenneth Hsiang: During the quarter, EMS revenues were $62.9 billion, improving $3.5 billion, or 6% sequentially, and improving $2.5 billion, or 4% year over year. These sequential and annual revenue improvements are primarily attributable to our customers' timing of this year's product manufacturing. Additionally, sequentially, our EMS business's gross margin improved 0.3 percentage points to 9.6%. This change was principally the result of better loading.

Speaker Change: During the quarter EMS revenues were 62.9 billion, improving 3.5 billion or 6% sequentially and improving $2 5 billion or 4% year over year.

Speaker Change: The sequential and annual revenue improvements are primarily attributable to our customers' timing of this year's product manufacturing start.

Speaker Change: Sequentially, our EMS businesses gross margin improved 0.3 percentage points to nine 6%. This change was principally the result of better loading.

Ken Shang: Operating expenses within our EMS business was $4.1 billion, increasing $0.2 billion sequentially and $0.5 billion annually. Our second quarter operating expense percentage was 6.5% flat sequentially and up 0.6% points annually. The higher annual operating expense percentage was primarily related to higher expenses related to MPI development. Operating margin for the second quarter was 3.1%, improving 0.3% percentage points sequentially and declining 0.4% percentage points year-over-year, primarily due to increase in compensation expenses on higher headcount, mainly due to the consolidation of an acquired entity. Our EMS second quarter operating profit was $2 billion, up $0.3 billion sequentially, while down $0.1 billion annually.

Kenneth Hsiang: Operating expenses within our EMS business were $4.1 billion, increasing $0.2 billion sequentially and $0.5 billion annually. Our second quarter operating expense percentage was 6.5%, flat sequentially and up 0.6 percentage points annually. The Higher Annual Operating Expense Percentage was primarily related to higher expenses related to NPI development. Operating margin for the second quarter was 3.1%, improving 0.3 percentage points sequentially and declining 0.4 percentage points year over year, primarily due to an increase in compensation expenses on higher headcount, mainly due to the consolidation of an acquired business.

Speaker Change: Operating expenses within our EMS business was $4 $1 billion, increasing 0.2 billion sequentially and 0.5 billion annually, our second quarter operating expense percentage was six 5%.

Flat sequentially and up <unk> six percentage points annually the higher annual operating expense percentage was primarily related to higher expenses related to NPI development.

Speaker Change: Operating margin for the second quarter was three 1% improving 0.3 percentage point sequentially and declining 0.4 percentage points year over year, primarily due to an increase in compensation expenses on higher headcount, mainly due to the consolidation.

Speaker Change: Of an acquired entity.

Kenneth Hsiang: Our EMS second quarter operating profit was $2 billion, up $0.3 billion sequentially, while down $0.1 billion annually. At the bottom of the page, you will find a graphical representation of our EMS revenue by application. As is typical in the second quarter, there isn't much movement here on a sequential basis. However, on an annual basis, we are experiencing decent growth within our automotive product. On page 10, you will find key line items from our balance sheet. At the end of the second quarter, we had cash, cash equivalents, and current financial assets of $75.3 billion. Our total interest-bearing debt declined by $11.4 billion to $183.9 billion.

Speaker Change: Our EMS second quarter operating profit was $2 billion up 0.3 billion sequentially, while down 0.1 billion annually.

Ken Shang: On the bottom of the page, you will find a graphical representation of our EMS revenue by application. As this is typical in the second quarter, there isn't much movement here on a sequential basis. However, on an annual basis, we are experiencing decent growth within our automotive products.

Speaker Change: On the bottom of the page you will find a graphical representation of our EMS revenue by application.

Speaker Change: As is typical in the second quarter, there isn't much movement here on a sequential basis. However on an annual basis, we are experiencing decent growth within our automotive products.

Ken Shang: On page 10, you will find key line items from our balance sheet. At the end of the second quarter, we had cash equivalence in current financial assets of $0.75 billion. Our total interest-bearing debt declined by $11.4 billion to $183.9 billion. Total unused credit lines amounted to $417 billion. Our EBITDAF for the quarter was $26.1 billion. Our net debt equity, this quarter, was $0.34.

Speaker Change: On page 10, you will find key line items from our balance sheet at the end of the second quarter, we had cash cash equivalents and current financial assets of $75 3 billion. Our total interest bearing debt declined by 11.4 billion to $183 9 billion.

Total unused credit lines amounted to 417 billion.

Kenneth Hsiang: Total unused credit lines amounted to 417. Our EBITDA for the quarter was $26.1 billion. Our net debt to equity for this quarter was $0.34. On page 11, you will find our equipment capital expenditures relative to our EBITDA. Machinery and Equipment Capital Expenditures for the 2nd Quarter in U.S. dollars totaled $406 million, of which $215 million were used in packaging operations, $154 million in testing operations, $31 million in EMS Operations, and $6 million in interconnect material operations.

Speaker Change: Our EBITDA for the quarter was $26 1 billion, our net debt to equity this quarter was 0.34.

Ken Shang: On page 11, you will find our equipment capital expenditures relative to our EBITDAF. Machinery and equipment capital expenditures for the second quarter, and US dollars totaled $406 million. Of which, $215 million were used in packaging operations, $154 million in testing operations, $31 million in EMS operations, and $6 million in interconnect material operations and others. We continue to be excited by the expanding portfolio of products that are leading-edge advanced packaging addresses. As we look further out, we continue to see signs that businesses are shaping up for the next supercycle. However, if we look into the more immediate future, we believe we will continue to have a tail of two businesses: the leading edge and the more traditional business.

Speaker Change: On page 11, you will find our equipment capital expenditures relative to our EBITDA.

Speaker Change: Machinery and equipment capital expenditures for the second quarter in U S dollars totaled $406 million.

Speaker Change: Of which 215 million were used in packaging operations $154 million in testing operations $31 million in EMS operations and $6 million.

Speaker Change: In interconnect material operations and others.

Kenneth Hsiang: We continue to be excited by the expanding portfolio of products that our leading-edge advanced packaging addresses. As we look further out, we continue to see signs that business is shaping up for the next super cycle. However, if we look into the more immediate future, we believe we will continue to have a tale of two businesses. The Leading Edge and the more traditional.

Speaker Change: We continue to be excited by the expanding portfolio of products that are leading edge advanced packaging addresses.

As we look further out we continue to see signs that business is shaping up for the next Super cycle. However, if we look into the more immediate future. We believe we will continue to have a tale of two businesses.

Speaker Change: The leading edge and the more traditional business.

Ken Shang: When we look at the leading edge business, including AI and high-end networking, business is continuing to boom. We cannot seem to get the capacity installed fast. Enough. For us, this is also not a single customer phenomenon either. And the interesting part is that it appears to be accelerating. On the more traditional business side, there is some excitement regarding potentially shortened refresh cycles on a number of products due to AI features. But by and large, our customers are still proceeding cautiously. For us, that means our customers generally are in a trial-and-error mode. They start with a conservative forecast.

Speaker Change: When we look at the leading edge business, including AI and high end networking business is continuing to boom.

Kenneth Hsiang: When we look at the leading-edge business, including AI and high-end networks, business is continuing to boom. For us, this is also not a single customer phenomenon either. And the interesting part is that it appears to be accelerating.

Speaker Change: We cannot seem to get the capacity installed fast enough.

Speaker Change: For US. This is also not a single customer phenomenon either.

Speaker Change: And the interesting part is that it appears to be accelerating.

Kenneth Hsiang: On the more traditional business side, there is some excitement regarding potentially shortened refresh cycles on a number of products due to new AI. But, by and large, our customers are still proceeding cautiously. For us, that means our customers generally are in a trial and error mode. They start with a conservative forecast.

Speaker Change: On the more traditional business side, there are some excitement regarding potentially shorten refresh cycles on a number of products due to new AI features.

Speaker Change: But by and large our customers are still proceeding cautiously for us that means our customers generally are in a trial and error mode. They start with a conservative forecast if their products hit.

Ken Shang: If their products hit, they will quickly adjust their outlooks. There is an increasing optimistic sentiment in the market, and we are looking forward to when such optimism manifests into increasing forecasts. If we look at our overall cost environment heading into the third quarter, we will need to continue to manage our costs of production, with higher utility costs and ramping labor needs. On the operating expense front, we also see continued spending on R&D labor, tools, and equipment related to leading-edge advanced packaging and testing. And as I stated earlier, we will continue to bear higher operating expenses before the majority of revenues come into place towards the latter part of this year and next year.

Kenneth Hsiang: If the products hit, they will quickly adjust their out. There is an increasing optimistic sentiment in the market, and we are looking forward to when such optimism manifests into increased forecasts. If we look at our overall cost environment heading into the third quarter, we will need to continue to manage our costs of production, higher utility costs, and ramping labor needs on Operating Expenses. We also.

Speaker Change: They will quickly adjust their outlooks there is an increasing optimistic sentiment in the market and we are looking forward to win such optimism manifests into increasing forecast.

Speaker Change: If we look at our overall cost environment heading into the third quarter, we will need to continue to manage our costs of production with higher utility costs and ramping labor needs.

Speaker Change: On the operating expense front, we also.

Speaker Change: See continued spending on R&D labor tools and equipment related to leading edge advanced packaging and testing.

Kenneth Hsiang: And, as I stated earlier, we will continue to bear higher operating expenses before the majority of revenues come into place towards the latter part of this year and next year. We are looking to hold our full year operating expense percentage in, to within 75 basis points of that. With that, I would like to hand the floor over to Joseph Tung to speak about our corporate outlook. Joseph. Thank you, Ken. Let me give you one.

Speaker Change: And as I stated earlier, we will continue to bear higher operating expenses before the majority of revenues come into place towards the latter part of this year and next year.

Ken Shang: We are looking to hold our full year operating expense percentage increase to within 75 basis points of that of 2023.

Speaker Change: We are looking to hold our full year operating expense percentage increase to within 75 basis points of that of 2023.

Joseph Tong: With that, I would like to hand the floor over to Joseph Tongue to speak to our corporate outlook. Joseph? Thank you, Ken. Let me give you a guidance for the quarter. In terms of ATM and NT dollar terms, our ATM third quarter 2024 revenue should grow by high single digits quarter over quarter. And our ATM third quarter growth margin should be between 23 to 23.5%. In terms of EMS, in NT dollar terms, our EMS third quarter 2024 revenue should grow missed to high-team quarter on quarter. Our EMS third quarter 2024 operating margin should be slightly above fourth quarter 2023 level of 3.5%.

Speaker Change: With that I would like to hand, the floor over to Joseph Tung to speak to our corporate outlook Joseph.

Joseph Tung: Thank you Ken let me give you a.

Speaker Change: Yeah.

Joseph Tung: In terms of ATM, and in anti-dollar terms, our ATM Q3 2024 revenue should grow by a high single digit, quarter over quarter, and our ATM third quarter growth margin should be between 23 to 23.5 percent. In terms of EMS, in empty dollar terms, our EMS third quarter 2024 revenue should grow mid to high clean quarter on quarter. Our EMS 3rd quarter 2024 operating margin should be slightly above the 4th quarter 2023 level of 3.5%.

Speaker Change: Our guidance for third quarter in terms of ATM.

NT dollar terms.

Speaker Change: Third quarter 2020 for revenue should grow by high single digits quarter over quarter.

Speaker Change: ACS third quarter gross margin should be between 23 to 23, 5%.

Speaker Change: In terms of yes.

Speaker Change: NT dollar terms.

Speaker Change: Yes.

Speaker Change: Quarter, four revenue should grow mid to high teens.

Speaker Change: Quarter over quarter.

Speaker Change: <unk> third quarter 2024, operating margin should be slightly above fourth quarter 2020 through level three 5%.

Joseph Tong: And in addition to the revenue and margin guidance, I would like to also provide an update on our CAPEX. In anticipation of the booming demand for leading edge ATM capacity and further technology investment, we believe we will need to step up our CAPEX investment and start in from raising full year 2044 consolidated machinery CAPEX to double from last year's US 914 million level. And as these investments carry a higher value contribution and are becoming more critical to the overall semi-conducting manufacturing. We believe such investment will be both return and margin-acredif.

Speaker Change: And in addition to the revenue and margin guidance I would like to also provide an update on our capex.

Joseph Tung: And in addition to the revenue and market guidance, I would also like to provide an update on our CapEx. In anticipation of the booming demand for leading-edge ATM capacity and further technological advancement, we believe we will need to step up our CapEx investment, starting from raising full year 2024 consolidated machinery capex to double from last year's U.S. 914 million level. And as these investments carry a higher value contribution and are becoming more critical to overall semiconductor manufacturing, we believe such investments will be both return and margin accretive.

Speaker Change: In anticipation of the booming demand for leading edge ATM capacity further technology investments, we believe we will need to step up our capex investment.

Speaker Change: Having from raising full year 2044, consolidated and the sooner we get to double from last year's U S.

14 million level.

Speaker Change: And as these investments carry a higher value contribution.

Speaker Change: Coming more critical to the overall semiconductor manufacturing.

Speaker Change: We believe such investment will be both return and margin accretive.

Joseph Tong: On geographical expansion, we started on Malaysia expansion two years ago, and our phase one has been completed, and we will start voting production in quarter-one-twenty-five. Also, we're soon to close the acquisition of two infinal operations, one in the Philippines and one in Korea, and expect revenue contributions of the two sides starting from the third quarter this year. We have also acquired land in Mexico and with a tensed five potential locations in Japan. The land will be developed and buildings be constructed in anticipation of future customers' demand, and all these efforts are made to shorten the lead time for capacity ramp-up.

Joseph Tung: On geographical expansion, we started the Malaysian expansion two years ago, and now phase one has been completed, and we will start volume production in quarter 125. Also, we're soon to close the acquisition of two Infineon operations, one in the Philippines and one in Korea, and expect revenue contributions from these two sites starting from the third quarter this year. We have also acquired land in Mexico, and we've identified potential locations in Japan.

Speaker Change: Geographical expansion, we started a militia expensive two years ago.

Speaker Change: Phase one has been completed and we will start volume production quarter of $1 45.

Speaker Change: Also we're soon to close the acquisition of two senior operations one in the Philippines.

Speaker Change: Maria.

Speaker Change: Expect revenue contribution of these two sides starting from third quarter of this year.

Speaker Change: Yeah.

Speaker Change: We have also acquired land in Mexico.

Speaker Change: If a potential locations in Japan.

Joseph Tung: The land will be developed and buildings constructed in anticipation of future customers' demand, and all these efforts are made to shorten the lead time for capacity ramp-up. With that, we will open the floor for questions. If you have any questions, please raise your hand. When you ask questions, please hold two questions at a time.

Speaker Change: The land will be developed and buildings because brokers in the us.

Speaker Change: Anticipation of future customer demand and all of these efforts are made to shorten the lead time with capacity to ramp up.

Operator: With that, we will open the flow for questions. If you have any questions, please raise your hand. When you ask questions, please hold two questions at a time. Thank you.

Speaker Change: With that we will open the floor for question.

Speaker Change: Okay.

Speaker Change: If you have any question please raise your hand.

Speaker Change: When you ask questions. Please hold two questions at a time.

Speaker Change: Hi.

Speaker Change: Yeah.

Gokul Hariharan: Our first question is from Mr. Goku Haruharan of J.P. Morgan. Yeah, hi. Good afternoon, Joseph and Ken. Thanks for your comments. My first question is about the guidance. When you talk about ATM, I think it will be legit. Could you also help us to understand the full-year growth prospects for ATM? Because I think back in February or January, I think Tian had talked about 6-10% for industry and similar growth for ATM. Any updates there, given year-to-date, it looks like you'll be tracking at about flatish year-on-year on U.S. and also Grossmargin. I think previously we were expecting 25-30% range in the second half of the year.

Our first question is from Mr. So cool how do you how long of J P. Morgan.

Gokul Hariharan: Thank you. Our first question is from Mr. Gokul Hariharan of JP Morgan. Yeah, hi. Good afternoon, Joseph and Ken.

Speaker Change: Yeah, Hi, good afternoon.

Gokul Hariharan: Thanks for your comments. My first question is about the guidance. So when you talk about high single digits for ATM, could you also help us to understand the full year growth prospects for ATM? Because I think back in February or January, Tien had talked about six to ten percent for the industry and similar growth for ATM. Any updates there given year to date?

Speaker Change: Ken Thanks, Nick My first question is about the guidance.

Speaker Change: So when you talk about.

Speaker Change: <unk> high single digit could you also help us to understand the growth.

Speaker Change: Growth prospects for ADM.

Speaker Change: Uh huh.

Speaker Change: Back in February or January I think Dan had talked about 6% to 10%.

Speaker Change: Our industry and similar to ATM.

Speaker Change: Given year to date, it looks like it would be tracking at about flattish year on year in USD terms and.

Gokul Hariharan: Looks like you'll be tracking at about flat-ish year on year in USD terms. And also gross margin, I think previously we were expecting a 25 to 30% range in the second half of the year. Any reason, Joseph, why it's a little bit lower?

Speaker Change: And also gross margin.

Joseph Tung: I think previously we've been expecting 25% to 30% range in the second half of the year any reason Joseph biased a little bit Norwood and then any startup costs are there additional costs that have come in or is it just that utilization is tracking lower and last year's capex doubled from FY 'twenty, three obviously, a bigger number than BVA if any.

Gokul Hariharan: Are there any startup costs or any other additional costs that have come in? Or is it just that utilization is tracking lower? And lastly, on CAPEX, this doubled from FY23, obviously a bigger number than before. Any breakdown in terms of test versus advanced packaging versus traditional packaging in terms of where you are putting in incremental CAPEX? That's my first question.

Gokul Hariharan: Any recent Joseph Y is a little bit Dover. Are there any startup costs or any other additional costs that have come in? Or is it just that utilization is tracking lower? And last year in CAPEX, this doubled from FI-23. Obviously, a bigger number than previous. Any breakdown in terms of test was the advance packaging, was the traditional packaging in terms of where you are putting in incremental CAPEX. That's my first question. Thank you.

Speaker Change:

Speaker Change: A breakdown in terms of.

Speaker Change: But.

Speaker Change: I'd go into packaging food packaging in terms of value are putting in incremental capex.

Speaker Change: Thank you.

Joseph Tong: I guess the full-year in terms of full-year prospects, I think the, in the general market, the recovery seems to be a bit slower than we were expecting. So, in the, although in second half, we will start to see the, in general market, start to bottom up and we'll start to have some recovery, more recovery there. But the pace of it seems to be slower than expected. But on the leading edge, the steel is booming, but we are aggressively trying to catch up with the capacity to meet the growing demand. But all in all, with everything in consideration, I think for the full year, we're now looking at a more moderate kind of growth in terms of our more muted recovery of the general market.

Speaker Change: I guess the full year in terms of on a full year perspective, I think the.

Joseph Tung: Thank you. I guess the full year, in terms of a full year perspective, I think in the general market, the recovery seems to be a bit slower than we were expecting, so in the second half, we will start to see the, in the general market, start to bottom out, and we'll start to have some recovery, more recovery there, but the pace of it seems to be slower than originally expected.

Speaker Change: In the general market.

Speaker Change: Yes.

Speaker Change: The recovery seems to be a bit slower than we were.

Speaker Change: Expecting.

Speaker Change: So in the second half we will start to see.

Speaker Change: A general market start to.

Speaker Change: Bottom up yes, it will start to have some recovery more recovery there but.

Speaker Change: The pace of it seems to be a slower.

Speaker Change: Or is it expected.

Joseph Tung: But on the leading edge, it is still booming, but we are aggressively trying to catch up with the capacity to meet the growing demand. But all in all, with everything into consideration, I think for the full year, we're now looking at a more moderate kind of growth in terms of our top line. And in terms of margin, I think, again, because of the more muted recovery of the general market, I think in the third quarter, we will come in a little bit short of reaching the structural margin of 24%.

Speaker Change: But all of the or the leading edge.

Speaker Change: Bill.

Speaker Change: Is booming, but we are.

Speaker Change: We are.

Speaker Change: We're aggressively trying to catch up with the capacity.

Speaker Change: To meet the growing demand well all in all with everything.

Speaker Change: Consideration I think for the full year, we're now looking at a more moderate or kind of a growth.

Speaker Change: Well our top line.

Speaker Change: In terms of margin I think again because of the more muted.

Speaker Change: The general market.

Joseph Tong: I think the third quarter, we will be we will come in a little bit short on which the structural margin of 24%, but on the full year basis, we're still remain hopeful that going into a second half we will have a better pickup and we're still, I think the coming back to the structural margin is still inflated at this point.

Speaker Change: I think the third quarter.

Speaker Change: We will be.

We will come in a little bit short.

Speaker Change: We should be.

Speaker Change: Spoke to a margin of 24%.

Joseph Tung: But on the full year basis, we still remain hopeful that going into the second half, we will have a better pickup, and we're still, I think coming back to the structural margin is still in play at this point. What's the question?

Speaker Change: The full year basis, we're still remain hopeful that going into second half we will have.

Better pick up and we're still I think coming back to the flow through margin is still in place at this point.

Speaker Change:

Operator: What's their question?

Speaker Change: Third question.

Rick Hsu: CapEx, Rick Hsu. The CapEx breakdown with the new CapEx that I just mentioned, I think the breakdown will be roughly 53% for assembly and 38% for tests. We have another 1% for material and about 8% for EMS. Okay, that's very clear. Thank you.

Speaker Change: Okay.

Joseph Tung: The capex breakdown, with the new capex that I just mentioned, I think the breakdown will be roughly 53% for assembly and 38% for test. We have another 1% for material and about 8% for EMS. Okay, that's very clear. Thank you.

Speaker Change: The capex breakdown with the new Capex that I just mentioned.

Speaker Change: I think the breakdown will be roughly 53% for assembly, yes, 38% for test.

Speaker Change: We have another 1% for material and.

Speaker Change: About 8% for MFS.

Speaker Change: Okay, that's fair.

Gokul Hariharan: My second question, Joseph, is on the 2.5D advanced packaging barrier. Obviously, they're spending a lot of capex, and the prospects are good. I think last time, Tien had mentioned 250 million additional revenues from this segment. And I think recently, I think in your AGM, you had indicated there's probably some upside to that number. Could you talk a little bit about, A, what is the scale of this kind of business?

Speaker Change: Thank you My second question is on the.

Gokul Hariharan: My second question, Joseph, is on the 2.5D advanced packaging barrier; obviously, spending a lot of CapEx and the prospects are good. I think last time I think Tien had mentioned 250 million additional revenues from this segment. And I think recently, I think in your AGM, you had indicated that's probably some upside to that number. Could you talk a little bit about what is the scale of this kind of business? Is it, do you think that this could be 10% of your ATM revenues next year? And secondly, could you talk a little bit about your partnership with the leading foundry, given they also called out increased usage of OSAT partners to fulfill customer demand?

Speaker Change: The <unk> advanced packaging, better obviously spending a lot of capex and the prospects are good I think last time I think Ian had mentioned $250 million of niche no revenues from this segment and I think recently I think <unk> you had indicated there's probably some upside to that number.

Speaker Change: Can you talk a little bit about what are the scale of this kind of business is it do you think that theres going to be 10% of your ATM revenues next year.

Joseph Tung: Is it, do you think that this could be 10% of your AGM revenues next year? And secondly, could you talk a little bit about your partnership with the leading foundry, given they also called out increased usage of OSAT partners to fulfill customer demand? How widespread is your kind of customer base?

And secondly.

Speaker Change: Could you talk a little bit about your partnership with the leading foundry given they also called out.

Speaker Change: Increased usage of that partner to fulfill customer demand.

Joseph Tong: How widespread is your kind of customer base? Is it mostly coming from this leading AI accelerator customer? Or is it kind of more broad-based? You're having multiple projects from many different customers for 2.5D packaging? Well, I think in terms of leading AI, I think mostly it's still coming from an AI or high performance computing. And I think it's a broader base. It's not just one customer phenomena, as I can mention earlier on. And we are having reactive engagements with the both of our Foundry partner as well as customers directly. And I think the raising of our campus is toward building the needed capacity for these type of, including packaging as well as tests.

Speaker Change: Oh, how widespread yard.

Joseph Tung: Is it mostly coming from this leading AI accelerator customer, or is it kind of more broad-based? You're having multiple projects from many different customers for 2.5D packaging? Well, I think in terms of the leading edge, I think mostly it's still coming from AI or High Performance Computing. And I think it's a broader base.

Speaker Change: Beef is it mostly coming from the leading AI accelerator.

Speaker Change: Customer orders it kind of more of a broad based you are having multiple projects from many different customer or.

Speaker Change: Dupont packaging.

Speaker Change: I think in terms of leading edge I think mostly it's still coming forward.

Speaker Change: Oh.

Speaker Change: High performance computing.

Speaker Change: And I think it's a broader basis not just one customer phenomena.

Sunny Lin: It's not just one customer phenomenon, as Ken mentioned earlier. And we are actively engaging with both of our foundry partners as well as customers directly. And I think the raising of our capex is toward building the needed capacity for this type of, including packaging as well as tests. Next question is from Ms. Sunny Lin of UBS. Hello. Can you hear me?

Speaker Change: Tim mentioned earlier on and we are heavy.

Tim: Reactive engagements with.

Tim: Both of our foundry partner as well as our customers directly.

Speaker Change: And I think the.

Speaker Change: The raising of our Capex is toward building the needed capacity for this type of including packaging as well as test.

Sunny Lin: Next question is from Ms. Sunny Lynn of UBS. Hello, could you hear me? Yes. Thank you very much. So my first question is to follow up on the testing of particularities that you just mentioned regarding the advanced packaging purposes. And so could you share a bit more details regarding the customer engagement? And for some of the key projects, how do you compete with the existing suppliers? for testing for these HPC projects. Oh, okay. I think the, you know, there's this plenty to go around as we see the demand for leading edge, both for packaging and test, are booming.

Speaker Change: Next question is from MS Sunny Lin of UBS.

Hello could you hear me yes.

Sunny Lin: Yes. Thank you very much. So my first question is to follow up on the testing opportunities that you just mentioned regarding the advanced packaging business. And so could you share a bit more details regarding the customer engagement? And for some of the key projects, how do you compete with the existing suppliers? Existing suppliers, for testing for this HPC project.

Sunny Lin: Thank you very much. So my first question just to follow up on the testing up but do you want anything you can just mentioned regarding the advanced packaging process and so could you share a bit more details regarding the customer engagement.

And for some of the key projects are how it will compete with existing suppliers.

Speaker Change: <unk> suppliers.

Cathy: For Cathy for these <unk> projects.

Speaker Change: Oh, Okay, I think the bill there.

Joseph Tung: Oh, OK. I think there's plenty to go around as we see the demand for leading edge, both for packaging and testing, is booming. And we are currently still a little bit capacity constrained, and we are beefing up our capacity in this area to build capacity as well as to further our technological investment. I think the demand is coming from different customers and also part of it from the foundry as well, so we will entertain whatever business that is needed from our customers. And, you know, in terms of meeting competition, there's always competition, and we will do whatever we can to further penetrate whatever business that's in front of us. Got it. Thank you.

Speaker Change: So there's plenty to go around with US we see the.

Speaker Change: Demand for our leading edge both for packaging and test are booming.

Joseph Tong: And we are currently still a little bit capacity constraints, and we are beefing up our capacity in this area to build a capacity as well as to further our technology investment. I think the, as I mentioned, the demand is coming from different customers and also a part of it from the factory as well. So we will entertain whatever business that is needed from our customers. And, you know, in terms of meeting competition, there's always competition, and we will do whatever we can to penetrate whatever business that is in front of us. Got it.

Speaker Change: And we are we are.

Speaker Change: Currently still a little bit capacity constrained and we are.

Speaker Change: Beefing up our Capex in this area to build the capacity as well as to further our technology investment.

Speaker Change: I think the B as I mentioned.

Speaker Change: The demand is coming from different customers.

Speaker Change: Also a part of it from the foundry as well so we will entertain whatever business that's needed for more customers.

Speaker Change: And.

Speaker Change: In terms of meeting.

Speaker Change: Competition, there's always competition.

Speaker Change: We will do whatever we can to patents.

Speaker Change: Other penetrate whatever business.

Speaker Change: That's in front of us.

Speaker Change: Got it. Thank you I'll, maybe let me try to ask from a different angle. So.

Joseph Tong: Thank you. Maybe, let me try to ask from a different angle. And so for some of the, for some of the, yeah, accelerator products, there are some pretty solid existing suppliers that have very close relationships with the customers. They are willing to customize the bringing tools and also the boards. And therefore, just wonder what your competitive strategies are, and if you manage to get some of these products, should we expect the revenue to start to come through? Well, we are giving up, giving up on our leading-ass testing capacity and capability, including Burnin. We are basically leveraging on our turnkey services.

Sunny Lin: Maybe let me try to ask from a different angle. For some of the accelerator products, there are some pretty solid existing suppliers that have very close relationships with the customers. They are willing to customize the burning tools and also the boards. And therefore, I just wonder what your competitive strategies are.

Speaker Change: So from some money for some.

Speaker Change: Some of the accelerated type products.

Speaker Change: Yeah.

Speaker Change: For the follow up existing supply.

Speaker Change: Our close relationship with our customers they are willing to customize the buying tools and also the board.

Speaker Change: And therefore I just wanted to what's your competitive strategy.

Joseph Tung: And if you manage to get some of these products, when should we expect the revenue to start coming through? We are gearing up on our leading-edge testing capacity and capability, including burn-in. We are basically leveraging on our turnkey services, and we do expect to have good progress starting next year. Our next question is from Mr. Chow. Hello, good afternoon, Joseph, Ken, and Iris.

Speaker Change: If you manage to get some of these products.

Speaker Change: Should we expect the revenue to start to come through.

Speaker Change: We are giving a gearing up on our leading edge testing capacity.

Speaker Change: And capability, including burn in.

Speaker Change: We are we are basically leveraging on our turnkey services and we have we do.

Joseph Tong: And we have; we do expect to have the progress starting from next year.

Speaker Change: Do expect to have good progress starting from next year.

Tommy Chan: Our next question is from Mr. Tommy Chan. Hello. Good afternoon, Joseph. Can and Iris. Thanks for taking my question.

Our next question is from Mr. Charlie Chan.

Charlie Chan: Hello, Good afternoon.

Joseph Tung: Joseph can and Irish same sort of thing.

Charlie Chan: My question so.

Operator: Thanks for taking my question. So maybe to begin with, I'm wondering, Joseph, your view on KSNC talking about Foundry 2.0. They include the big-end Foundry also in their 10. Do you think going forward there will be more competition from Foundry, or do you believe there should be more collaborations? Thank you.

Joseph Tong: So maybe to begin with, I'm wondering, Joseph, your view about case in case he's talking about the foundry 2.0. They include the big and foundry also to their 10. Do you think going forward, there would be more competition from foundry, or you believe that there should be more collaborations? Thank you. You know, that is really a testament that the back end, tight end test is becoming more and more a critical part of the overall value chain. And we are excited about the opportunity in front of us. And we will be closely working with our partners, those on the upstream and those downstream, to make this thing happen, you know.

Charlie Chan: Maybe to begin with I'm wondering Joseph your view about kitchens took it at the foundry to point do they include the big.

Speaker Change: <unk> found Jos though to their 10 do you think going forward.

Charlie Chan: It would be more.

Speaker Change: Competition from foundry or you believe that there should be more calm.

Speaker Change: Collaborations thank you.

Joseph Tung: Um, you know, that is really a testament that the, uh, the, uh, back-end, packaging, and testing is becoming a more and more critical part of the overall value chain. And, uh, we are excited about the, uh, opportunity in front of us. And we will be closely working with our partners, uh, both upstream and also downstream to, uh, make this thing, happen. Uh, you know. Bye. Bye. Bye.

Speaker Change: That is really a testament that the.

Speaker Change: B.

Speaker Change: Back in February and test is becoming a more and more critical.

Speaker Change: The overall value chain.

Speaker Change: We are excited about the <unk>.

Speaker Change: The opportunity in front of us and we will be closely working with our partners.

Speaker Change: Both on the upstream or downstream to make this thing happen.

Speaker Change: No.

Joseph Tong: So I think the overall relationship with both our customers, as well as upstream boundaries, we are working very closely with both of them and trying to come up with the capacity and the technology needed to suit their needs.

Speaker Change: <unk>.

Joseph Tung: So I think the overall relationship with both our customers as well as upstream foundries. We are new, working very closely with both of them and trying to come up with the capacity and the technology needed to suit their needs. Gotcha. Thanks, Joseph.

Speaker Change: So I think the.

Speaker Change: The overall relationship with the with both the customer as well as upstream foundries.

Neil: We are Neil.

Neil: Working very closely with both of them and we'll try to come up with the capacity and the technology needed to suit their needs.

Operator: Thank you, Joseph.

Joseph Tung: Got you thanks Joseph.

Operator: So my follow-up question is also to clarify your potential expansion of the advanced packaging. So a couple of speculations, maybe it's a good chance for you to clarify here. So first of all, my understanding is that you only do the wavefront substrate, WOS.

Operator: My follow-up question is also to clarify your potential expansion of the advanced packaging business. So a couple of speculation, maybe the good chance for you to clarify here. So, first of all, my understanding is that you only do the web-on software, right? That will always ask. But the Chia Chen suggests that you want to expand to chip-on-ware first. That's the first part. And secondly, there's a rumor talking about you probably will do a new, fast, very close to Taizong-Wu Changhua area. And there's an awful lot in Tia Chen's burden. And number three is really the capacity number.

Speaker Change: So my follow up question is also to clarify your.

Joseph Tung: A potential expansion of the advanced packaging.

Joseph Tung: Pieces.

Speaker Change: So a couple of Cabo speculation maybe that could change for Youtube.

Speaker Change: Clarify here. So first of all my understanding is that you only do the work.

Speaker Change: David O S.

Operator: But the charter suggests that you want to expand to chip-on-wave first; that's the first part. And secondly, there's a rumor that you probably will do a new fab very close to the Taichung or Changhua areas. And there's a kind of offloading TSMC's burden, and number three is really the capacity number. As far as I know, probably in terms of WOS capacity, you have 60,000 WFM.

Speaker Change: <unk> suggests that you want to spend too.

Speaker Change: Chip on wafers, that's the first part.

Speaker Change: Secondly.

Speaker Change: There's a gentleman was talking about.

Speaker Change: Probably well to our new SaaS.

Speaker Change: SaaS right so to title it somehow area and those are kind of Offloading tsmc's burden and number three is really the capacity number.

Operator: As far as I know, probably in terms of a 10,000 OS capacity, you have 60,000 wither per month. But rumors talking about you are going to more than double the capacity for a developed OS. So on those kind of a rumor that OS speculation can you clarify a little bit. Thank you. We're not going to clarify the speculation, by the way.

Speaker Change: Alright, as I know probably in terms of the.

Speaker Change: Okay.

Speaker Change: <unk>.

Speaker Change: Past that you have 60000 wafer per month.

Joseph Tung: But rumors talking about you are going to more than double the capacity for WOS. So on those kinds of rumors or speculation, can you clarify a little bit? Thank you.

Speaker Change: Talking about <unk>.

Speaker Change: Going to a more than double.

Speaker Change: The capacity for <unk>.

Speaker Change: Those are.

Speaker Change: Kind of the rumor that the.

Speaker Change: Or speculation can you clarify a little bit thank you.

Joseph Tung: We're not going to clarify the speculation, by the way, but I will give you a qualitative description of the current engagement model. The technology... takes years to develop. So whether the OS or the COW or the equivalent of OS or the equivalent of COW has been developed together with the Foundry partners as well as key customers for years. So in the current landscape, because of the capacity constraints, there has been active engagement with our partners, as well as with our customers, to see which route will give you the most efficient alternative to fulfill customer demand in the shortest amount of time.

Speaker Change: We're not going to clarify the speculation by the way.

Joseph Tong: But I will give you a qualitative description about the current engagement model. The technology takes years to develop. So whether the OS or the COW or the equivalent of OS or the equivalent of COW has been developed together with the founder partners as well as key customers for years. So in the current landscape, because of the capacity constraint, there has been active engagement with our partner as well as with our customer to see which route will give you the most efficient alternative to fulfill the customer demand in the shortest amount of time. So this is kind of the partnership that we have developed with the leading founder suppliers.

Speaker Change: I will give you a qualitative description about the current engagement model.

Speaker Change: Technology.

Speaker Change: It takes years to develop.

Speaker Change: Whether the Oss or the C O W or the equivalent of OAS or the equivalent of C O W.

Speaker Change: It's been developed together with the foundry partners as well as key customer for years.

Speaker Change: So in the current landscape because of the capacity constraint.

Speaker Change: There has been active engagement with our partner.

Speaker Change: As well with our customer to see which route we'll give you the most efficient alternative to fulfill the customer demand in the shortest amount of time.

Joseph Tung: So this is kind of the partnership that we have developed with the leading foundry suppliers. We have also gained confidence from multiple customers over years of product development. Try and Error, Process, Materials, or Different Equipment Set, and Reliability.

Speaker Change: So this is kind of the partnership that we have developed.

Speaker Change: With the leading foundry suppliers.

Joseph Tong: We have also gained confidence from multiple customers over years of product development. Try and error process materials or different equipment set and the reliability. So, in this round, as we can see, the OS ramp has been pretty successful. And we will continue to measure a monitor, the progress of ramp up to make sure that the yield, the quality, and the cost model are all in check. We cannot give you the specific comment based on the number that you have outlined. However, if you go back to the CAPEX number we have provided, I think you can clearly understand that we're trying to ramp up rapidly on the OS.

Speaker Change: We have also gained confidence from multiple customers over years of product development.

Speaker Change: Try and error process materials with different equipment and the reliability.

Joseph Tung: So in this round, as we can see, the OS ramp has been pretty successful, and we will continue to measure and monitor the progress of Ramp Up to make sure the yield, the quality, and the cost model are all in check. We cannot give you specific comments based on the number you have online.

Speaker Change: So in this round as we can see the Oh as Rand has been pretty successful.

Speaker Change: And we will continue to measure and monitor.

Speaker Change: The progress of ramp up to.

Speaker Change: To make sure the yield the.

Speaker Change: The quality and the cost model.

Speaker Change: Check.

Speaker Change: We cannot give you the specific comment based on the number that you have online. However, if you go back to the Capex number we have provided.

Joseph Tung: However, if you go back to the capex number we have provided, I think you can clearly understand that we're trying to ramp up rapidly on the OS. The COW has been engaged with multiple customers, as well as with our foundry partner. So we have active conversations, together with partners and customers, again, just to seek the best alternative way to fulfill customer demand. I think we're not in the position to comment on the details of the engagement model as was the quantity. But over time... Just to give you a rough number, at the beginning of the year, we estimated we would have about $250 million in incremental advanced technology revenue. I also commented, "We're slightly ahead of that curve."

Speaker Change: The I think you can clearly understand that we're trying to ramp up rapidly under less the.

Joseph Tong: The COW has been engaged with multiple customers, as well as with our foundry partner. So we have active conversation together with partner and customers, again, just to seek the best alternative way to fulfill the customer demand. I think we're not in the position to comment detail of the engagement model as well as the quantity. But over time, just to give you a Roth number, at the beginning of the year, we estimate it, we will have about 250 million incremental advanced technology revenue. I also comment it; we are slightly ahead of that curve. So right now, the status is we are ahead of the original number; the momentum most likely will accelerate into next year, also as indicated by Joseph and Kent's comment that we're adding the, we're doubling the CAPEX.

Speaker Change: <unk> has been engaged with multiple customers.

Speaker Change: As well as with our foundry partner.

Speaker Change: So we have active conversation.

Speaker Change: Together with partner and customers again, just to seek the best alternative way to fulfill the customer demand.

Speaker Change: I think the.

Speaker Change: We're not in a position to comment detail of the engagement model as opposed to quantity.

Speaker Change: But over time.

Speaker Change: Just to give you a rough number.

Speaker Change: The beginning of the year, we estimate that we will have about $250 million incremental advanced technology revenue.

Speaker Change: I also commented we.

Speaker Change: We're slightly ahead of that curve.

Rick Hsu: So right now, the status is that we are ahead of the original number, and the momentum will most likely accelerate into next year. Also, as indicated by Joseph and Ken's comment that we're adding the, we're doubling the capacity. In 2025, we will continue to monitor the situation and, based on the business landscape, we will decide what would be the right way to do it. OK. The next question is from Mr. Rick Hsu of Daiwa Securities. Hello. Can you guys hear me?

Speaker Change: So right now the desktop is is we are ahead of the.

Speaker Change: The original number the momentum most likely accelerated into next year.

Speaker Change: Also as indicated by Joseph Ken's comment.

Speaker Change: Adding the.

Joseph Tung: We're doubling the capex.

Joseph Tong: In 2025, we will continue to monitor the situation, and based on the business landscape, we will decide what will be the right way to do it. Okay.

Joseph Tung: In 2025, we will continue to monitor the situation and based on the business landscape.

Joseph Tung: We will decide what will be the right way to do it.

Joseph Tung: Okay.

Operator: Next question is from Mr. Rikshu of Dawa Securities. Hello. Can you guys share me? Yeah. Okay, sorry, sorry for this technical issue.

Speaker Change: Next question is from Mr. Rick shoes.

Rick Hsu: <unk> Securities.

Speaker Change: Uh huh.

Speaker Change: Hello can you guys hear me now.

Rick Hsu: Yeah. Okay, sorry. Sorry for this technical issue.

Speaker Change: Oh, Okay, sorry, sorry for this technical issue again.

Rick Hsu: The first question is my usual housekeeping question about your utilization rate for wire binding and the testing for Q2 and Q3, and also a little follow-up. When Ken said something about your advanced utilization rate being already four, what's your quantitative definition of the four? Thank you.

Rikshu: Just my, the first question is my usual housekeeping question about your utilisation rate for wire bounding and the test team for Q2 and Q3. And also a little, a little follow up. When Kent says something about how you at the band's second utilisation rate was already 4, what's your quantitative definition of the 4? Thank you. In terms, in terms of utilization in 4 to 2, we have both our capacity and testing running at slightly above 60%. And that ratio will go above 65 for both in quarter three. When we talk about full, we mean, you know, everything is being used up or capacity.

Speaker Change: Just my first question is my usual housekeeping question about your utilization rate for wire bonding and the testing.

Speaker Change: Gainful Q2, Q3, and those a little a little follow up when can say something about your advanced ticket.

Speaker Change: Utilization rates with them.

Speaker Change: Before what's your quantitative with definition of default.

Speaker Change: Thank you.

Oh [laughter].

Tien Yu Wu: In terms of utilization, in quarter two, we have both our packaging and testing running at slightly above 60%, and that ratio will go above 65 for both in quarter three. When we talk about full, we mean, you know, everything is being used up. All capacity, are you? All right.

Speaker Change: In terms of in terms of utilization in order to we have both are hesitant testing running slightly above 60%.

Speaker Change: And that ratio will go above 65 per Boe.

Speaker Change: Three.

Speaker Change: When we talk about who we mean everything is being yourself.

Speaker Change: Or capacity.

Joseph Tong: All right. Thank you. Let's clear. I'm adding to what Ken just mentioned. I think when we talk about extending our capacity, we are talking about expanding capacity for all kinds of demand coming from our customer weather, as well as COW always or testing. Also, and not just on the machinery itself, we are also adding spaces, factory spaces, and new factory buildings that are being built or being put in our stream online. We are also investing heavily, like we're beefing up our R&D as well, making a lot of the investing R&D and also in terms of hiring talents.

Tien Yu Wu: Thank you. That's clear. Adding to what Tien just mentioned, I think when we talk about expanding our capacity, we are talking about expanding capacity for all kinds of demand coming from our customers, whether it's COW or OS or testing. Also, not just on the machinery itself, but we are also adding space, factory spaces, new factory buildings that are being built or being put in our stream online. And we are also investing heavily, like beefing up our R&D as well, making a lot of investments in R&D, and also in terms of hiring talent. It's an all-around effort for us to meet the customer. All right, thank you.

Speaker Change: Alright, Thank you that's clear.

Speaker Change: Adding to what.

Speaker Change: Dan just mentioned are favorable we talk about extending our capacity we.

Speaker Change: We are talking about expanding capacity for okay.

Speaker Change: And they're coming from our customer whether they sell cotwo with or testing Oh, so not just on the machinery itself. We're also adding spaces that we spaces.

Speaker Change: Battery buildings that'll be built there will be a.

Speaker Change: What do you all see online.

Speaker Change: We are also investing heavily we are.

Speaker Change: We're beefing up our R&D as well, making it a lovely if that's maybe the RMB and also in terms of hiring.

Speaker Change: Hello.

Joseph Tong: It's an all-around effort for us to meet the customer demand.

As it.

Speaker Change: Is it overwhelm efforts for us to meet the customer demand.

Operator: All right, thank you.

Speaker Change: Alright, thank you.

Operator: The second question is about your KX. We see a very strong commitment in building the advanced packaging testing capacity, such as the unsubstructed and also the COAS equivalent. Would you worry about any potential risk of overflow business model? IE that when the founders resolved their COAS bottleneck issue, where they can sell the outsourcing, I mean, that's what I said about overflow risk. Well, I think the business model, of course, anything is possible, but the collaboration has been in place for many, many years. We're also very used to the up-and-down cycle. So, in this round, really depends on the across the whole platform.

Rick Hsu: The second question is about your CAPEX. We see your very strong commitment to building the advanced packaging testing capacity, such as on substrate and also the core equivalent. Would you worry about any potential risk of the overflow business model, i.e., that when the founders resolve their co-op bottleneck issue, would they cancel the outsourcing? I mean, that's what I said about the overflow rate.

Speaker Change: Second question Oh, you were.

Speaker Change: Okay. Thanks.

Speaker Change: We see there is strong you're very strong commitment in.

Speaker Change: In building the demand.

Packaging testing capacity, so just on subsidiary and also the cost equivalent.

Speaker Change: Would you.

Speaker Change: Would you worry.

Speaker Change: Worry about any potential risks of overflow business model I E that when the foundries.

Speaker Change: Resolved there.

Speaker Change: Bottleneck issue.

Speaker Change: Would they canceled the outsourcing.

Speaker Change: I mean does this what is what I said about the older fluids.

Joseph Tung: I think the business model, the Of course, anything is possible. But the collaboration has been in place for many, many years. We're also very used to the up-and-down cycle.

Speaker Change: Well I think the business model.

Speaker Change: Of course anything is possible.

Speaker Change: But the collab.

Speaker Change: Collaboration has been in place for many many years.

Speaker Change: We're also very used to the op and downcycle so in this round.

Joseph Tung: So in this round, it really depends on the whole platform. We're looking at multiple customer product development. Then we look at their utilization and their volume roadmap. When we look at our investment, of course, we will examine the flexibility of the investment we put in place. So the nature of the OSIDE business is we will build a flexible and fungible capacity that can be easily moved around to accommodate the different product mix as well as volume.

Speaker Change: Really depends on the.

Speaker Change: Across the whole platform.

Speaker Change: We're looking at the multiple customer Park development.

Joseph Tong: We're looking at their utilization and their volume roadmap. We look at our investment. Of course, we will examine the flexibility of the investment we put in place. So the nature of the OSAP businesses, we will build a flexible and fungible capacity, and that can be easily moved around to accommodate the different the product mix as one's volume. So right now, we're quite confident the capacity we're putting in place will be here and will be very useful for our customers and our partners for quite a few years, at least. So the short answer is no; we don't worry about it.

Speaker Change: So we look at their utilization and their the volume roadmap.

Speaker Change: So we look our investment.

Speaker Change: Of course, we will examine the flexibility of the investment we put in place.

Speaker Change: So the nature of the <unk> businesses, we will build a flexible and fungible capacity.

Speaker Change: And that can be.

Speaker Change: Easily move around to accommodate different D. R.

Speaker Change: A lot of mix as once volume.

Joseph Tung: So right now, we're quite confident. The capacity we're putting in place will be here and will be very useful for our customers and our partners for quite a few years at least. So the short answer is no, we don't worry about it. Next question is from Mr. Brad Lin of BOA. Hi, good afternoon.

Speaker Change: So right now we are quite confident.

Speaker Change: That's the capacity, we're putting in place will be here and would be very useful for our customers and our partners floor for quite a few years at least.

Speaker Change: So the short answer is no we don't worry about it.

Brad Lin: Next question is from Mr. Bradlin of BoA. Hi, good afternoon. Thank you for taking my questions. I have two questions. The first one is on the overseas expansion. So the firm has any new sort on the US expansion. I know that we come about overseas, but that seems to, well, we did not mention much about the US side. So I'm on the new subsidy program by the US government and also the well-increasing political dynamics there. So does the SES have any new thoughts on the US expansion? And also, we also see the extension of the ISE labs there in California.

Speaker Change: Next question is from Mr. Brent Lang.

Speaker Change: Hey.

Brad Lin: Thank you for taking my questions. I have two questions. The first one is about overseas expansion. So does the firm have any new thoughts on the U.S. expansion? I know that we comment about overseas, but that seems too, well, we did not mention much about the U.S. side.

Brad Lin: Hi, Good afternoon. Thank you for taking my questions I have two questions. The first one is on the overseas expansion. So that's the first half and the knee with solid U S expansion.

Speaker Change: No doubt that we come about by states by Dod seems too well.

Speaker Change: You did not mention much about the U S side, so on the new subsidy program by the way U S government and also the well increasing political dynamics. There. So it does ask do you have any new thoughts on the U S expansion and also we also see the expansion of <unk>.

Brad Lin: So on the new subsidy program by the U.S. government and also the, well, increasing political dynamics there. So does ASE have any new thoughts on the U.S. expansion? And also, we also see the expansion of the ISE labs there in California. Does that qualify for, apply to the new subsidy programs?

Speaker Change: The labs there.

Speaker Change: In California.

Joseph Tong: The staff qualify for apply to the new subsidy programs. Thank you. Just to give an answer, let me comment on the ISE facility. The ISE facility only has one purpose. that is to support the innovation at a chip level or at a system level in Silicon Valley for either AI or the future edge device or any advanced technology, a high-profile computing or silicon photonics or power management. So the lab is put in place to provide system-level testing, system-level development, as with system-level reliability. The lab is in California's Silicon Valley. The main mission is to bridge whatever technology are available domestically in US and whatever technology that are needed that are available globally.

Speaker Change: Yeah.

Speaker Change: Qualify for apply to the new subsidy programs. Thank you.

Joseph Tung: Thank you. Just to give you an answer, well, let me comment on the ISE facility. The ISE facility only has one purpose, that is to support innovation at a chip level or at a system level in Silicon Valley for either AI or the future edge devices, or any advanced technology, high-performance computing, or silicon photonics for power management. So the lab is put in place to provide system-level testing.

Speaker Change: Just to give you an answer.

Speaker Change: Well, let me comment on the ISC facilities ice facility.

Speaker Change: Only has one purpose.

Speaker Change: That is to support the innovation.

Speaker Change: At the chip level or at a system level in Silicon Valley.

Speaker Change: For either AI or the future edge device or Amy advanced technology, our high performance computing or silicon Photonics for power management.

Speaker Change: So the lab is put in place to provide system level testing.

Joseph Tung: System-Level Development as well as System-Level Reliability. The lab is in California, in Silicon Valley. The main mission is to bridge whatever technology is available domestically in the U.S. and whatever technology that is needed that is available globally. So the Chibok office just announced the R&D funding, as well as the manufacturing funding; we will consider how to apply. And for ISE, and ISE is similar, or for Phase 3 or Phase 4, we will consider the ChIP Act R&D as well as manufacturing. The U.S.

Speaker Change: System level development as with system level of reliability.

Speaker Change: The lab is in California's Silicon Valley.

Speaker Change: Main missions to bridge.

Speaker Change: For technology available domestically in the U S.

Speaker Change: And wherever technology.

Speaker Change: Needed that are available globally.

Joseph Tong: So the CHIPS App office just announced the R&D funding as well as the manufacturing funding. We will consider how to apply and for ISC and ISC similar or the Phase 3 or Phase 4, we will consider the chip app R&D as well as the manufacturing. The US high-volume manufacturing establishment are to be considered; we do not have a tangible plan yet, mainly because the customer requests on the volume are still being investigated. So can we say that, well, with the recent development, there is a higher possibility that we will do the so-called volume production slide there.

Speaker Change: So the.

Speaker Change: The chip off the.

Speaker Change #100: The Chabad offers just announced the R&D funding as well as the manufacturing funding.

Speaker Change: We will consider how to apply.

Speaker Change: And for ISC, and EIS is similar where the phase III or phase four.

Speaker Change: We will consider the chip back R&D as well as the manufacturer.

Speaker Change: The U S. The U S.

Brad Lin: High-Volume Manufacturing Establishment is still being considered. We do not have a tangible plan yet, mainly because the customer request for the volume is still being investigated. Got it.

Speaker Change: High volume manufacturing establishment.

Speaker Change: To be consider we do not have a tangible plant yet mainly because the customer request on the volume the are still being investigated.

Speaker Change #102: Got it so can we say that Dol well with the recent bond lengths. There is a higher probability that that we will do the so called high volume production slide there.

Brad Lin: So can we say that, well, with the recent developments, there is a higher possibility that we will do the so-called online production slide there? We do have a Mexico facility. And that is also available for North America. Just a clarification. We have a question from Ms. Laura Chen of Citigroup. Hello, hi, good afternoon, can you hear me?

Joseph Tong: We do have a Mexico facility, and that is also available for North America.

Speaker Change #102: We do have Mexico facility.

Speaker Change #102: And that is also available for North America.

Operator: Just to clarification.

Speaker Change #102: Cheers.

Clarification.

Laura Chan: We have a question from Ms. Laura Chan of CD Group.

We have a question from me is slower on Chan of Citigroup.

Laura Chan: Hello, Hi, President. Can you hear me? Yes, thank you. I have a question about the growth monitoring trends. On one hand, we are seeing that we are accelerating our investment in the advanced packaging, but the broad-based recovery on the traditional application seems to be remote. So my question is that how would we expect this advanced packaging investment to bear food? If it reached the state's five-year rate and also the loading, how would you see that will be the normalized growth monitoring? That's my first question. Thank you. As I mentioned earlier on, the collect that we're making for the leading-edge packing end-tests, those investment are of higher margin, or these investment are also Marching as well as return.

Weimin Chan: Hello, Hi weapon I can't hear me, yes.

Liyen Chen: Yes. Thank you. I have a question about gross margin trends. On the one hand, we are seeing that we are accelerating our investment in advanced packaging, but the broad-based recovery on traditional applications seems to remain muted. So, my question is, how would we expect this advanced packaging investment to bear fruit? If it reached a satisfactory year rate and also the loading, how would you see that would be the normalized gross margin? That's my first question. Thank you.

Mehdi Hosseini: Thank you I have a question about the gross margin trends on one hand, we are seeing that we are accelerating our investment in the advanced packaging by the broad based recovery on the traditional applications is to be a man mutate. So my question is that.

Speaker Change #105: How would we expect these advanced packaging investment to bear fruit.

Speaker Change #106: If it's reached our stated five D array and now also the the loadings how would you see that will be the normalized gross margin.

Speaker Change #105: Hum.

Speaker Change #107: That's my first question. Thank you.

Speaker Change #107: Okay.

Joseph Tung: As I mentioned earlier, the cutbacks that we're making for the leading edge, [inaudible] Those investments are off. These investments are also, you know, included in margin as well as return. So as we continue to grow that part of the business, Also on tests, I think the...

Speaker Change #108: As I mentioned earlier one.

Speaker Change #109: Capex that we're making for the leading edge.

Speaker Change #109: Okay and tests.

Speaker Change #109: Those investments are.

Speaker Change #109: They are higher margin.

Speaker Change #109: Oh.

Speaker Change #110: These investments are of you.

Speaker Change #110: Creatives.

Speaker Change #110: Margin as well as return so as we continue to grow that part of the business.

Joseph Tong: So as we continue to grow that part of the business, also on tests, I think it will help the overall margin for ATM business as we, as time goes on. So can we expect that there will be over a corporate average say like if the overall ATM business reach the say like 80% utilization rate. Usually, we can expect like 25% growth margin, but with the cost of if that reach the state is fine utilization rate and also the loadings. So that will be much higher than that's what we expect before. And such capacity is higher than corporate average margin.

Speaker Change #110: Also on tests.

Joseph Tung: It will help the overall margin for our ATM business, as time goes on. So can we expect that there will be a higher corporate average, say like if the overall ATM business reached, say like, 80% iteration rate, usually we can expect like a 25% growth margin, but with the COAS, if that's reached the satisfied iteration rate and also the loadings, that will be much higher than we expected before? At such a point, such capacity is higher than the corporate average. Okay, I got it. Thank you.

Speaker Change #110: It will help the overall margin for our ATM business.

Speaker Change #110: We as time goes on.

Speaker Change #111: So can we expect that there will be overall corporate average say like a if oh, well ATM business reached a say like 80% utilization rate I, usually we can expect like 25% gross margin, but do we see pull us Dave.

Speaker Change #112: We used to say it is five year Treasury I know so the loadings, so that would be much higher than that what do we expect before.

Speaker Change #112: Subsequent this capacity as well.

Speaker Change #113: Higher than corporate average margin.

Joseph Tong: Okay, God, thank you.

Liyen Chen: And also, my next question is on the EMS business. You mentioned that the better-than-expected near-term is due to the earlier ramp for the new products. So, would you expect the sustainability will continue into the peak seasons into Q4? Or can we expect that Q4 will be even stronger, like the historical pattern? Now, I think the first half versus second half pattern should be similar to typical seasonality.

Speaker Change #114: Okay got it. Thank you and also my next question is on the EMS business. You mentioned that are the better than expected and your tone is that due to the already of rent.

Joseph Tong: And also my next question is on the EMS business. You mentioned that the better than expected in your turn is due to the earlier ramp for the new products. So we do expect the says that the ability will continue into the pick seasons into Q4. Or can we expect that the Q4 will be even stronger, like the historical pattern. No, I think the first half versus second half pattern should be simmered to a typical seasonality.

Speaker Change #115: For that to so for the new products. So how would you expect the sense sensibility.

Speaker Change #116: So stability will continue into the peak season into Q4.

Speaker Change #117: Or can we expect that Q4 will be even stronger like at their historical patent.

Speaker Change #118: No I think the first half versus second half pattern should be similar to a typical seasonality.

Bruce Lu: Next question is from Mr. Bruce Lou of Goldman Sachs. Thank you for taking my question. I think I want to ask again for the events package. So Joseph used to comment that the cat pet to revenue ratio. Can you comment about what is the cat pet's revenue ratio for the events package. You know, you spend a lot of money this year. How much revenue you can generate next year. In addition, KSNC commented that the event package in gross margin is somehow approaching the up to the corporate average with a 50% rate. So can we expect?

Speaker Change #119: Next question is from Mr. Bruce Lu of Goldman Sachs.

Zheng Lu: The next question is from Mr. Bruce Lu of Goldman Sachs. Charlie, thank you for taking my question. I think I want to ask it again for the advanced packaging, all right?

Zheng Lu: Got it. Thank you for taking my question I think I wanted to ask it again for the advanced packaging alright. So it does have used to comment that the capex to revenue ratio can you comment about what is the type of.

Zheng Lu: So Joseph, you used to comment on the capex to revenue ratio. Can you comment on what the capex to revenue ratio is for advanced packaging? You spend a lot of money this year.

Speaker Change #121: That's the revenue raised implement advanced packaging you know you spent a lot of money. This year how much revenue you can generate in next year. In addition, <unk> commented that the events packaging gross margin is somehow approaching though to the corporate average with 50 plus percent rate. So can we expect.

Zheng Lu: How much revenue can you generate next year? In addition, TSMC commented that the advanced packaging gross margin is somehow approaching the corporate average, which is 50 plus percent, right? So what can we expect? Is there any reason that we can assume that your profitability was somehow similar with TSMC for your advanced tech? I don't think we should make that kind of a simple comparison because TSMC, the packaging they do, as well as the business model, are slightly different from ASE. Joseph has already talked about it.

Bruce Lu: Is there any reason that we can assume that your growth your profitability was somehow similar with KSNC for your event package?

Speaker Change #122: Yeah is there any reason that we cannot assume that.

Speaker Change #123: Your growth your profitability was somehow seem there was just some people youre the best packaging.

Speaker Change #124: I don't think we should make that kind of.

Joseph Tong: I don't think we should make that kind of the simple comparison because KSNC, the package they do, as was the business model slightly different for easy. Joseph has already talked about it the for the OS that we're doing right now, the margins higher than the ATM, the corporate average. That's where we're going to stay.

Speaker Change #125: Simple comparison because TSMC.

Speaker Change #124: The.

Speaker Change #124: The package what they do.

Speaker Change #124: Once the business model is slightly different for IAC.

Speaker Change #126: <unk> has already talk about it.

Joseph Tung: The OS that we're doing right now, the margins are higher than the ATM, the corporate app. And that's where we're going to stay. We're not going to comment on the TSMC margin because the equipment, the process, the order, everything they use is slightly different than the ASE. Now in terms of how we bridge the dollar, I think normally we're talking about the CapEx dollar. I think it's a dollar for dollar. So for the rent tax, it's also a dollar for a dollar.

Speaker Change #126: For the Oh asked that we're doing right now the margins are higher than the ATM the corporate average.

Speaker Change #126: We're going to stay and we're not going to comment comparing to the.

Joseph Tong: We're not going to comment. Compared to the TSMC margin, because the equipment, the process, the older video, everything they use are slightly different than the the may as.

Speaker Change #126: The TSMC margin because the equipment the process.

All of the everything to us are slightly different than the ASC.

Joseph Tong: Now in terms of the how do we bridge the dollar. The I think normally we're talking about the cat pet's dollar. I think it's a dollar for dollars. So for the rent taxi, he's also available now. That's the current software. We will actually need to, once it gets to volume, then we'll have a better assessment of that. I think the general that seems to be the other case, yes.

Speaker Change #126: Now in terms of the.

Speaker Change #126: How do we bridge the dollar.

Speaker Change #126: I think normally we're talking about the Capex dollar I think is a dollar for dollar.

Speaker Change #127: So Paul the rent packaging is those who have followed without it.

Joseph Tung: That's the current software that we will actually need to update. Once it gets to volumes, then we'll have better access. I see. In general, that seems to be the case. Thank you.

Paul: That's the that's the current thought of it well, we will as we need to.

Paul: Once it gets to volume than.

Paul: We will have we will have better assessment above that.

Paul: Yeah.

Speaker Change #129: I'll, just say generally that seems to be the case, yes.

Joseph Tong: Thank you.

Zheng Lu: The second thing is that I want to ask about the systematic for your EMS business. I think the third quarter guidance seems to be a little bit lighter than historical systematic. So what was the reason for the lower systematic because of because of that we didn't hear any delay for the flagship model smartphone is it because of the smartphone or because of other applications? Bye-bye, everyone.

Speaker Change #130: Thank you the second thing is that a lot of basketball.

Joseph Tong: The second thing is that I want to ask about the system on this for your EMS business. I think the third quarter guidance seems to be a little bit lighter than historical as a scenario. So what was the reason for lowest is not because of, because we didn't hear any delay for the flash and model smartphone. It's because of the smartphone or because of other applications. I think the people are expecting the new phone volume system. You know, people are sending an uptake on the shipment. So this quarter, and because of the earlier launch of the product, we're seeing a better than expected second quarter, and that same kind of momentum should go into quarter three.

Speaker Change #130: <unk> for you.

Speaker Change #131: EMS business I think the third quarter guidance seems to be a little bit lighter than historical seasonality. So what was the reason for lowest isn't a lot of it goes because we.

Speaker Change #132: We didn't hear any delay for them for the us.

Speaker Change #133: Our flagship model of smartphone is this because of the smartphone or because of other applications.

Uh huh.

Joseph Tung: I think people are expecting the new phone since, you know, people are seeing an uptick in shipment and this quote and because of the earlier launch of the product. We're seeing a better than expected second quarter, and that same time of momentum should go into quarter three. But, as a whole, you know, the other general market, the recovery is still a bit slow.

Speaker Change #133: I think the.

People are expecting the new fall.

Speaker Change #135: Ballroom since Oh.

Speaker Change #133: Setting up a uptick on the.

Speaker Change #134: On the shipment.

Speaker Change #133: So.

Speaker Change #133: This quarter and because of the earlier launch of the product.

Speaker Change #133: We're seeing a better than expected second quarter.

Speaker Change #133: And that same kind of a mid Wednesday should go into a quarter.

Speaker Change #133: Quarter three.

Joseph Tong: But as a whole, you know, the other general market, the recovery is still a bit slow. So I think, for the full year perspectives, I think EMS will have also have a muted year in terms of top line.

Speaker Change #133: As a whole.

The other general market.

Speaker Change #133: The recovery is still a bit slow.

Joseph Tung: So, I think... From a full year perspective, I think EMS will also have a muted ear in terms of our top line. If you have any questions, please raise your hand. Next question is from Jason Tseung of CLSA. Hello, can you hear me?

Speaker Change #133: So I think.

Speaker Change #133: For the full year perspective.

Speaker Change #133:

Speaker Change #133: MFS will have also have a muted year.

Speaker Change #133: In terms of top line.

Operator: If you have any questions, please raise your hand.

Speaker Change #138: If you have any questions. Please raise your hand.

Jason Zhang: Next question is from Jason Zhang of COSA. Hello, can you hear me? Yeah. Oh, okay. Thank you for taking my questions.

Speaker Change #136: Next question is from.

Jason Zhang: Jason Zhang of CLSA.

Jason Zhang: Hello can you hear me.

Jason Tseung: Yeah. Oh, okay. Thank you for taking my questions.

Jason Zhang: Yeah, Oh, okay. Thank you for taking my questions. My first question is regarding on the propulsion.

Jason Zhang: My first question is regarding the proportions of your advanced packaging. Can you give us how many percentages that event packaging account for your total revenue. And you mentioned about 250 mediums. Is that your target in coming years, or is expectations on the contribution for all that best packaging in this year? Thank you. As we as we got it before, you know, this year we're expecting to double the revenue in terms of leaving at. Package and test and we are and the incremental revenue should should be over $250 million. And as I mentioned, that we are currently slightly ahead of our schedule.

Jason Tseung: My first question is regarding the proportion of your advanced patent. Can you give us how many percent that is? The Event Taxing Account for your total revenue?

Speaker Change #139: A proportion of your advanced packaging can you give us a helping percentage that.

Speaker Change #145: Our advanced packaging account for your total revenue.

Jason Tseung: And you mentioned about $250 million. Is that your target in the coming years or are you expecting... expectations on the contribution from Advanced Packaging this year? Thank you.

Speaker Change #141: And you mentioned about a 250 <unk>.

Media is is that your target is in coming years or is.

Speaker Change #140: Expectations on the contribution from advanced packaging this year. Thank you.

Joseph Tung: Uh, as we uh, as we got it before, you know, this year we're expecting to double our revenue in terms of leading ads. Pageant Test, and we are, and the incremental revenue should be $250,000,000. As Tien mentioned, we are currently slightly ahead of our schedule, and I think the momentum continues to be strong.

Speaker Change #146: Oh as we as we guided before New York This year, we're expecting to double the.

Speaker Change #142: Uh huh.

Speaker Change #142: Revenue in terms of where leading edge.

Speaker Change #143: X gene test and we are.

Speaker Change #144: The incremental revenue.

Speaker Change #144: Should be over $260 million.

Speaker Change #144: As Tim mentioned that we.

Currently slightly ahead of our schedule.

Joseph Tong: And I think the momentum continues to be strong and going into next year, which is backing another. doubling of revenue in just this segment.

Speaker Change #150: And I think the momentum continues to be strong and going into next year.

Joseph Tung: And going into next year, we're expecting another double-doing of revenue in just a second. Okay, thank you. My second question is... The percentage of our leading edge. Revenue is about 5% this year, going from $2.50 to $1.00. [inaudible] Thank you.

Speaker Change #144: We're expecting another.

Speaker Change #144: Doubling of revenue this segment.

Speaker Change #144: Yeah.

Speaker Change #144: Okay.

Joseph Tong: Okay, thank you. My second question, and that's a percentage: the percentage of our leaving edge revenue is about 5% this year, going from 2.5 to over 5% this year. Thank you, 5% of AT&T business, right? Correct. Okay, thank you.

Speaker Change #148: Okay. Thank you my second question.

Speaker Change #147: That's a percentage.

Speaker Change #149: The percentage of our leading edge.

Speaker Change #149: Revenue its about 5% this year growing from two and a half to two over.

Speaker Change #149: Over 5% this year.

Speaker Change #151: Thank you 5%.

Speaker Change #151: T in business right.

Speaker Change #149: Nope.

Jason Tseung: 5% of the ATM business rate per row. Okay, thank you. My second question is in terms of the industrial and auto business. Because previously, we merged the new fab from IDM players, and we know that currently those segments remain weak, so have we found any synergy or upsides coming from these kinds of new businesses? or can we comment on whether we see any improvements or recovery on those segments? Thank you. Well, I think in terms of autumn, the overall sentiment is still very soft.

Speaker Change #153: Okay. Thank you.

Joseph Tong: My second question is in terms of the industrial and auto business, because practically, we merged the new, bad, wrong, ID employers, and we know that currently those segments remain weak. So, have we found any synergy or upsides coming from those kind of new business? Or can we comment that whether we see any improvements or recovery on those segments? Thank you. Well, I think in terms of overall sentiment still very soft, but we have been continuing our growth in the automotive business, largely because of the market share gain, which we are leveraging on our automation to continue to expand our market share.

Speaker Change #154: My second question is in terms of the industrial and auto business.

Speaker Change #155: Because perhaps practically we merged.

Speaker Change #155: The new fab wrong IDM players.

Speaker Change #155: And we know that the currently those segments.

Speaker Change #155: That's weak so have without any synergy or upside is coming from those kind of new business.

Speaker Change #155: Or can we comment.

Speaker Change #156: Whether we see any improvement or recovery on those segments. Thank you.

Speaker Change #157: Well I think in terms of automotive overall sentiment is still very soft.

Joseph Tung: But we have been continuing our growth in the automotive business, largely because of the market share gain and which we will leverage our automation to continue to expand our market share. For this year, I think, in terms of APM, the automotive part of the business will represent roughly 11% of the overall sales, and we'll see that momentum continue. We have a question from Mr. Charlie Chan of Morgan Stanley.

Speaker Change #158: But we have been continuing our growth in the automotive business.

Speaker Change #159: Largely because of the market share gain.

Speaker Change #159: And which we will.

Speaker Change #159: Leveraging on our automation.

Speaker Change #159: The continued to expand our market share.

Joseph Tong: For this year, I think in terms of ATM, the automotive part of the business will represent roughly 11% of the overall sales, and we'll see that momentum continue to go.

Speaker Change #160: For this year I think in terms of ATM.

Speaker Change #160: The automotive part of the business, who will represent roughly 11% of the overall sales.

Speaker Change #160: And we'll see Devon winter continue to to to go.

Charlie Chen: We have a question from Mr. Charlie Chen of Morgan Stanley.

Speaker Change #161: We have a question from Mr. Charlie Chan of Morgan Stanley.

Charlie Chen: Thanks for taking my follow-up question. So, actually, two follow-up questions from me.

Joseph Tung: Thanks for taking my follow-up question. Actually, I have two follow-up questions from me. First of all, I think Tien seems to suggest that the new CAPEX for advanced packaging margin should be above the corporate margin, but Joseph can clarify whether it is above the corporate average margin or above the ATM margin. Thank you. Bye.

Charlie Chan: Thanks for taking my my follow up question. So.

Charlie Chan: Actually two follow up questions for me. So first of all the things can cause such as that.

Charlie Chen: So, first of all, I think it seems to suggest that the new KPSR Advanced Packaging margin should be above the corporate margin, but Joseph McCarver is at above corporate average margin or above ATM margin. Thank you. Above corporate ATM margin. Corporate ATM margin. Okay, okay, that's clear. Thanks.

Speaker Change #162: The new Capex for advanced packaging.

Speaker Change #163: Margin should be above the.

Speaker Change #164: Corporate margin.

Joseph: Joseph May clarify is that the above.

Speaker Change #167: Corporate average margin or above ATM margin.

Speaker Change #166: Thank you.

Speaker Change #166: Yeah.

Charlie Chan: Above the corporate ATM, the corporate ATM margin. Okay, okay, it's clear. Thanks.

Speaker Change #166: Above corporate margins.

Speaker Change #168: Corporate ATM margin, okay. Okay, that's clear thanks.

Charlie Chen: Yeah, and also, doubling this revenue next year, so it's a doubling of 5%, or a doubling that 250 million USR's incremental Ramiya. That's doubling; I mean, the next year's leading edge revenue will be doubling this year's leading edge revenue. Okay, so this year is around a 5%. Next year should be closer to 10 or more than 10%. Well, we are expecting other parts of the business to grow as well. So, as we may have to be seeing, yeah, whether it will be exactly 10% or a little over or a little under 10%.

Joseph Tung: Yeah, and also doubling this revenue next year. So it's a doubling of 5%, or doubling that 250 million US dollars. Incremental Ramming, I'm doubling, I mean... Next year's leading edge revenue will be doubling this year's leading edge. Okay, so if this year is around 5%, next year should be close to 10% or more than 10%. Well, we are expecting other parts of the business to grow as well. So a lot remains to be seen, yeah, whether it will be... Exactly 10% or a little over or a little under.

Speaker Change #169: Yeah and also <unk>.

Speaker Change #169: <unk>.

Speaker Change #169: <unk> revenue next year, so is that a doubling.

Speaker Change #169: In a 5% or a doubling that 250 million U S hours.

Speaker Change #169: Incremental revenue.

Speaker Change #169: Uh huh.

Speaker Change #169: Does it mean.

Next years.

Speaker Change #170: Leading edge revenue will be thoroughly this years, leading edge revenue.

Speaker Change #171: Okay. So you said this year is a.

Speaker Change #172: Around 5% next year, it should be close to 10 or more than 10%.

Speaker Change #173: Well, we are expecting other part of the business to grow as well.

Speaker Change #174: Remains to be seen whether it will be.

Speaker Change #174: Exactly 10% or little over or a little under 10%.

Bruce Lu: Next question is from Mr. Bruce Lu of Goldman Sachs. I want to want to know again for the best packaging in terms of investment direction because, you know, event packaging for me, there are like 10 different technology from TSMC called SAR, you know, SOR, CPX or whatever. I mean, it seems to me, it's very complicated, and how do you decide which one is the direction to go for ASE to invest?

Speaker Change #175: Next question is from Mr.

Zheng Lu: Next question is from Mr. Bruce Lu of Goldman Sachs. I want to know, again, about advanced packaging in terms of investment direction because, you know, advanced packaging for me, there are like 10 different technologies from TSMC called ASAOR, you know, SOICPX or whatever. I mean, it seems to me it's very complicated.

Speaker Change #175: Bruce Lu of Goldman Sachs.

Zheng Lu: Hi, Alan who wants to know again for the advanced packaging and tinsel, even less than that mentioned because you know that in packaging for me. They are like 10 different technology from TSMC cough as Hey are you now.

Speaker Change #176: So whatever I mean.

Zheng Lu: And how do you decide which is the direction to go for AAC to invest in? That's one thing. The second thing was, like, TSMC is talking about ramping up panel-level packaging in three years, which means that it could be the case that they don't want to invest in the current cohorts because, in three years, they're going to migrate to, you know, panels, and they're going to leave that to the current OSET partners. So that could be a short-term business, you know, potentially. So how can we prevent this kind of risk? Or you know, what is the direction to go?

Speaker Change #177: And it seems to me, it's very complicated how you decided which one is the direction to go for IAC to invest that's one thing. The second thing was like TSMC is talking about ramping up the panel level packaging in two years, so which means that it could be the case that they don't want to invest in our current cohorts because in doing.

Bruce Lu: That's one thing. The second thing was like, TSMC is talking about rambling of the panel level packaging in two years. So, which means that it could be the case that they don't want to invest in the current course because in two years, they'll come migrate to, you know, panel and they can leave that to the current author partner. So, that could be a short and business, you know, potentially. So, how can we prevent this kind of risk or, you know, what is the direction to go though?

Speaker Change #177: They will migrate to a panel and maybe I'll leave that to the.

Speaker Change #177: The current OLED panel, so that could be a short term business.

Speaker Change #178: Potentially so how can we prevent this kind of risk or you know what is the direction to go.

Joseph Tung: Um, it's a good question. For example, ASE has been working on the panel solution for over five years. Just to give you a status report.

Joseph Tong: It's a good question. For example, ASE has been working on the panel solution for over five years. Just to give you a status report, we started with a form factor of 300 millimeter by 300 millimeter square. We've been doing that with quite a few key customers for a number of years, qualified few product. Then we decided the 300 millimeter by 300 millimeter would be naturally expanded to 600 by 600. And then we're doing a lot of a study with customers, partners, equipment suppliers, and materials. Right now, we have firmed up the business plan. So, out of the cat packs that we talk about, the 600 by 600 panel also is part of the overall cat packs that we make investment.

Speaker Change #179: It's a good question.

Speaker Change #180: For example.

Speaker Change #181: He is he has been working on the panel solution.

Speaker Change #181: Over five years.

Speaker Change #182: Just to give you a status report.

Joseph Tung: We started with a form factor of 300 millimeter by 300 millimeter square. We've been doing that with quite a few key customers for a number of years, and we've qualified a few products. Then we decided that the 300 millimeter by 300 millimeter will be naturally expanded to 600 by 600. And then we're doing a lot of the study with customers, partners, equipment suppliers, and materials. Right now, we have to firm up the business plan. So all of the TAP Hacks that we talk about it.

Speaker Change #183: We started with our form factor off 300 millimeter by 300 millimeter square.

Speaker Change #183: We've been doing that with quite a few key customers for a number of years qualify a few products.

Speaker Change #183: The.

Speaker Change #183: Then we decided.

Speaker Change #183: The 300 millimeter by 300 millimeter will be naturally expanded to 600 by 600.

Speaker Change #183: And then we're doing a lot of the study with customers partners equipment suppliers of materials.

Speaker Change #183: Right now we have.

Speaker Change #183: Firm up the business plan.

So out of the Capex that we talk about it.

Joseph Tung: The 600 by 600 panel also is part of the overall Cap Hacks that we make the investment. We believe that by... the second quarter of next year, we will have all of the equipment ready.

Speaker Change #183: The 600 by 600 panel.

Speaker Change #183: Also as part of the overall capex that we make the investment.

Joseph Tong: We believe that by second quarter of 25 next year, we will have all the equipment ready. In the meantime, we are collapsing with our partner as well as customers in terms of the detail volume ramp. I think technology development typically would take 10 years in terms of the volume readiness; that's always the tricky part. How do we do the overall cat packs, whether OS, COW, panel or different kind of equivalent of technology, that that's really the IP of OSAT. We have the work with partner as well as multiple customer, not a single customer on a single partner.

Speaker Change #183: We believe that by.

Speaker Change #183: Second quarter of 25 next year.

Speaker Change #183: We will have all of the equipment ready.

Joseph Tung: In the meantime, we are collaborating with our partners as well as customers in terms of the detailed volume ramp. I think technology development typically would take 10 years in terms of volume readiness. That's always the tricky part.

Speaker Change #184: In the meantime, we are collaborating with a partner as less customers in terms of the detail.

Speaker Change #184: Volume ramp.

Speaker Change #184: I think technology development typically would take 10 years.

Speaker Change #184: In terms of the volume readiness, that's always the tricky part.

Joseph Tung: How do we do the overall CAP Act? whether OS, COW, panel, or different kinds of equivalents of technology, that's really the IP of OSAT. We have to work with partners, as well as multiple customers, not a single customer or a single partner. Now, there will be fungibility between all of the technology. The Common Usage, The Sheer Usage, and the flexibility to convert if needed.

Speaker Change #184: How do we do the overall capex.

Oh S C O W panel or different kind of equivalent of technology.

Speaker Change #184: That's really the IP of OS that we.

Speaker Change #184: We have to work with partner.

Speaker Change #184: As well as multiple customer and not a single customer in a single partner.

Joseph Tong: Now, there will be fungibility between all of the technology, the common usage, the sheer usage, and the flexibility to convert if needed. I don't think we're easy to say, one technology can easily replace another technology. Each technology will cater for a different set of target customers. So when you talk about the co-loss, there will be different level co-loss. You already said that. Even with the panel, the panel will be targeting at different line width, different line space. Each one is different. It's very complicated, but our job is to prepare the whole portfolio of toolbox. Wherever the customer have a specific product mix, they need to ramp.

Speaker Change #184: Now there will be fungibility.

Speaker Change #184: Between all of the technology.

Speaker Change #185: The common usage the sheer usage.

Speaker Change #185: And the flexibility to convert if needed.

Joseph Tung: I don't think we're easy to say one technology can easily replace another technology. Each technology will cater for a different set of target customers. So when you talk about the co-auth, there'll be different levels of co-auth. You already said that. Even with the panel, the panel will be targeting a different line width, different line space. Each one is different.

Speaker Change #186: I don't think we're easy to say one technology.

Speaker Change #186: And easily replace another technology.

Speaker Change #187: <unk> technology will cater for different set of target customers.

Speaker Change #188: So when you talk about the co loss there'll be different local colosky already said that even with the panel the panel will be targeting at different line with different lines space. Each one is different it's very complicated, but our job is to prepare.

Joseph Tung: It's very complicated, but our job is to prepare the whole portfolio of tools; wherever the customer has a specific product mix they need to ramp, we are readily available to do that ramp for them. And that's why we need to work very closely with our foundry partners as well as customers, because it's a very, very dynamic time. You can't really know a priori what the volume mix is going to be.

Speaker Change #188: The whole portfolio of toolbox.

Speaker Change #188: Wherever the customer have a specific product mix do you need to ramp.

Joseph Tong: We are readily available to do that ramp for that. And that's why we need to work very closely with our Foundry partner as well as customers, because it's a very, very dynamic time. You can't really know a priori what the volume mix is going to be. But our job is to make sure we have all of the technology development; we have all of the building ready. And then when we need to, then our team will be very busy to convert one line to another, or the other back to another, just to make sure we have the operational efficiency.

Speaker Change #188: We are readily available to do that ramp for that.

Speaker Change #188: And that's why we need to work very closely.

Speaker Change #188: With our fund III partner Atlas customers, because it's a very very dynamic time.

Joseph Tung: But our job is to make sure we have all of the technology development, we have all of the buildings ready. And then when we need to, then our team will be very busy to convert one line to another, or the other back to another, just to make sure we have operational efficiency. Your panel size seems to be different from what TSMC was trying to do.

You can't really no APR REIT, where the volume mix is going to be our.

Speaker Change #188: Our job is to make sure we have all of the technology development, we have ordered the.

Speaker Change #188: The building ready.

Speaker Change #188: And then when we need to then our team will be very busy to convert one line to another or the other back to another.

Speaker Change #188: Just to make sure we have the operational efficiency.

Joseph Tong: Your panel file seems to be different with, you know, KSMC was 22. Is that going to be different? Is it going to be an issue? I'm not going to comment on TSMC's panel size. I think you have to ask TSMC. But ASC is pretty determined. We would do 600 by 600. Our customer seems to be comfortable with that dimension. The equipment will be different. The process will be different. But again, as I said, we cannot say one panel; there is no universal definition of any process. What ASC is working on the 600, 600 has a certain feature size as a certain cost model.

Speaker Change #192: You do a panel size seems to be different with <unk>.

Speaker Change #191: Q since he was trying to do is that Colombia is different or is it an issue.

Joseph Tung: Is that going to be different? Is that going to be an issue? I'm not going to comment on TSMC's panel size. I think you have to ask TSMC. But ASE is pretty determined.

Speaker Change #205: I'm not going to comment on Tsmc's panel size.

Speaker Change #189: I think you have to ask TSMC for ASE is pretty determined we will do 600 by 600.

Joseph Tung: We would do 600 by 600. Our customer seems to be comfortable with that dimension. The equipment would be different. The process would be different.

Speaker Change #190: Our customers seem to be comfortable with that dimension.

Speaker Change #190: The equipment will be different.

Speaker Change #190: The process will be different but again as I said, we cannot see one panel.

Joseph Tung: But again, as I said, we cannot say one panel. There is no universal definition for any process.

Speaker Change #190: There is no.

Speaker Change #190: Universal Def.

Speaker Change #190: The definition of any process well ASE is working on the 600 600 has a certain feature size has a certain cost model.

Joseph Tung: Well, ASE is working on the 600 600 as a certain feature size, as a certain cost model, and then we're working with our partner, as well as our customer, to make sure they're comfortable. Can you discuss the application with the panel's customer? to support power management or for AI for, you know, Oh, actually, it's for all of the above. Okay, thank you. My next question is for a gross margin in the second half. I think Joseph mentioned that in the second half, the ATM goes. Our next question is from Mr. Gokul Hariharan. Hey, I had one quick question.

Joseph Tong: And then we're working with our partner as well as our customer to make sure they're comfortable.

Speaker Change #190: And then we are working with our partner as well as our customer to make sure they're comfortable.

Joseph Tong: Can you discuss the application for the panel's customer? Is it for a power management or for AI? Well, actually, it's for all of the, all of the above. Okay.

Speaker Change #195: Can you discuss the applications for the panels customer.

Speaker Change #195: This support power management or for AI.

Speaker Change #190: No.

Speaker Change #190: [laughter].

Speaker Change #193: Oh actually is for all the all of the Abbas.

Speaker Change #194: I see.

Speaker Change #193: Okay. Thank you. My next question just for a gross margin in the second half I think Joseph you mentioned that in the second half ADM goes.

Operator: Thank you.

Operator: My next question is for a growth model in the second half. I think Joseph used to mention that in second half ADM goes.

Speaker Change #193: Okay.

Gokul Hariharan: Our next question is from Mr. Doku Hariharan. Hey, I had one quick question on your smartphone segment, which is the largest segment. I think Joseph, you talked about some improvement in demand from a particular set of customers.

Speaker Change #196: Our next question is from Mr. Delco Hardy hormone.

Gokul Hariharan: On your smartphone segment, which is the largest segment, I think, Joseph, you talked about some improvement in demand from a particular set of customers. Could you talk a little bit about what the status of the smartphone segment is, both for high-end SOCs as well as for other auxiliary products? What is the inventory level?

Speaker Change #193: Hey.

Speaker Change #197: One quick question.

Speaker Change #199: Our smartphone Fickman logistic men.

Speaker Change #200: You talked about some improvement in demand from a particular customer.

Gokul Hariharan: Could you talk a little bit about what is the status of the smartphone segment both for high end at OC, as well as for other accolary, auxiliary products. How is the inventory level, and are you seeing a more broad-based enthusiasm from customers to actually order more, or are things still quite sluggish?

Speaker Change #198: Could you talk a little bit about what is the status of the smart.

Speaker Change #197: One <unk>.

Speaker Change #197: Hickman.

Speaker Change #202: The other.

Speaker Change #197: Uh huh.

Speaker Change #197: After a deep <unk> how is the inventory level and are you seeing a more broad based enthusiasm from customers, who actually are there more things are still quite sluggish.

Gokul Hariharan: And are you seeing more broad-based enthusiasm from customers to actually order more, or are things still quite sluggish? The second part of that is for Tien. I think you talked about the toolbox of packaging technologies that you have. Smartphone has been an area where packaging technology has largely been stagnant for quite some time, so could you talk a little bit about are we seeing anything in the horizon where packaging technology could evolve towards something similar to the 2.5D fan-out for the smartphone segment in the next couple of years?

Gokul Hariharan: Second part of that is for 10, 10; you talked about the tool box of portfolio of packaging technologies that you have. The smartphone has been an area where packaging technology has largely been stagnant for quite some time, I guess.

Speaker Change #201: Second part of that is with Tien Tsin, I think you talked about the toolbox of.

Speaker Change #203: <unk> portfolio of packaging technology that you have smartphone has been.

Speaker Change #204: <unk> packaging technology has largely been stagnant for quite some time I guess could you talk a little bit about are you seeing anything in the horizon that packaging technology.

Joseph Tong: Could you talk a little bit about are we seeing anything in the horizon where packaging technology could evolve towards something similar to the 2.5D fan-out for the smartphone segment in the next couple of years. Okay, the first question is regarding the cell phone, and the one of this year we're seeing an uptick on cell phone. If we look at the Q3 and Q4 forecast, that the cell phone is ramping up in just the overall. So I think overall this year, the cell phone over our shipment, I mean, we're not in the position to come on that, but based on the forecast we're looking at, it seems to be a moderately positive compared to, for example, automotive industrial.

Speaker Change #207: Towards something similar to B I D.

Speaker Change #207: On the smartphone segment in the next couple of years.

Gokul Hariharan: Okay, the first question is regarding the cell phone, and through one of this year, we're seeing an uptick in cell phone shipments. And if we look at a Q3 and Q4 forecast, cell phone shipments are ramping up, and just overall. So I think overall this year, the cell phone overshipment, I mean, we're not in the position to comment on that. But based on the forecast we're looking at, it seems to be moderately positive. Comparing to, for example, the automotive industry, that's the first comment.

Speaker Change #208: Okay. The first question is regarding the cell phone and.

Speaker Change #206: Q1 of this year, we're seeing an uptick a cell phone.

Speaker Change #206: If we look at Q3 and Q4 forecast that the cell phone is ramping up.

Speaker Change #206: In the just the overall.

Speaker Change #206: So I think overall this year.

Speaker Change #206: The cell phone over shipment I mean, we're not in the position come on that but based on the forecast we're looking at it seems to be.

Speaker Change #206: A moderately positive.

Speaker Change #209: Comparing to for example, automotive industrial.

Speaker Change #210: Okay. That's the first comment.

Joseph Tong: Okay, that's the first comment.

Joseph Tong: In terms of the toolbox, and also the how could cell phones specifically, that segment, can utilize some of the new technology opening plays. We believe on the technology roadmap, with all of the AI initiatives. Over time, you have two types of devices.

Tien Yu Wu: In terms of the toolbox, and also how cell phones specifically, that segment, can utilize some of the new technology we're putting in place, we believe on the technology roadmap, with all of the AI initiatives. Over time, you have two types of devices. First, when do we expect the high-performance computing type of architecture to permeate into the cell phone? That would be the first question.

Speaker Change #211: In terms of the toolbox.

Speaker Change #210: Also the <unk>.

Speaker Change #212: How could cell phones, specifically that segment.

Speaker Change #212: Neutralize some of the new technology open in place.

Speaker Change #212: We believe on the on the technology roadmap.

Speaker Change #212: With all of the AI initiatives.

Speaker Change #212: Over time, you have to type of devices first.

Joseph Tong: First, when do we expect the high performance computing type of architecture to permeate it into the cell phone? Okay, that will be the first question. And we believe with all of the AI features coming in, if the market response is very good, I'm pretty sure the leading cell phone technology suppliers, we're starting adding either more higher level of memory or higher level bigger chips into it. If that is the case, then the current technology, but that only be applicable to high performance computing, naturally, will take some shape into the cell phone market.

Speaker Change #212: When do we expect the high performance computing type of architecture to permeate into the cell phone, okay that will be the first question and we believe with all of the AI features coming in if the market response is very good I'm pretty sure the leading cell phone technology suppliers.

Tien Yu Wu: I would believe with all of the AI features coming in, if the market response is very good, I'm pretty sure the leading cell phone technology suppliers will start adding either higher levels of memory or higher level, bigger chips into it. If that is the case, then the current technology that is only applicable to high-performance computing will naturally take some shape in the cell phone market. Now, the second type of thing would be the edge device. I think one of the earlier comments that we did not get a chance to answer is with all of the FAPs. I think, statistically, we have like 84 FAPs coming up right now.

Speaker Change #212: We're adding either more a.

Speaker Change #212: Higher level of memory or higher level bigger chips into it if that is the case then the current technology, but that only be applicable to high performance computing naturally will take some shape into the cellphone market.

Joseph Tong: Now, the second type of thing would be the edge device. I think one of the earlier comments that we did not get a chance to answer is, with all of the facts, I think statistically, we have like 84 facts coming up right now. They're pretty much in the traditional, not the leading edge. So in the next few years, with all the semiconductor over demand versus supplier, I think the general industry view is, with AI at the top, over the next few years, there will be more edge devices, such as autonomous driving, such as robots, such as drones, start coming out.

Speaker Change #212: Now the second type of thing will be the edge device.

Speaker Change #213: I think one of the earlier comment we did not get a chance to answer is with all of the facts I think statistically we have like 84, fabs coming up right now out there pretty much Indiana traditional now the leading edge. So in the next few years with all of this tradition.

Tien Yu Wu: They're pretty much in the traditional, not the leading edge. So in the next few years, with all of this traditional FAB capacity coming online? How do we balance the semiconductor over our demand versus supplier? The I think the general industry view is, With AI at the top, over the next few years, there will be more edge devices, such as autonomous driving, such as robots, such as drones, start coming out. Now, in any kind of edge device or edge device system, you will utilize a lot of actuators, MEMS, sensors, and microcontrollers in integrated and heterogeneous integration. So if you think about the potential robot, the potential autonomous driving, the potential drone. They will use a lot of conventional semiconductor devices as well as an AI engine or an AI brain.

Speaker Change #213: No.

Speaker Change #213: FAP.

Speaker Change #213: Capacity coming online.

Speaker Change #214: How do we balance the semiconductor over demand versus supply here.

Speaker Change #215: I think the general industry view is.

Speaker Change #215: With AI at the top over to thanks few years there'll be more edge devices, such as autonomous driving such as robots, such as drones start coming out.

Joseph Tong: Now, in any kind of edge device or edge device system, you will utilize a lot of actuators, MEMS, sensors, and microcontrollers in the integrated and hydrogen integration fashion. So if you think about the potential robots, the potentials autonomous driving, the potentials drones, they will use a lot of conventional semiconductor devices, as well as the AI engine or the AI brain.

Speaker Change #215: Now in any kind of edge device or edge device system.

Speaker Change #215: We will utilize a lot of actuator Mems sensors micro controllers.

Speaker Change #215: In the integrated and heterogeneous integration fashion.

Speaker Change #215: So if you think about the potential robots to potential autonomous driving the potentials drills.

Speaker Change #215: They will use a lot of conventional semiconductor devices as well as the AI engine or the AI brain.

Tien Yu Wu: Now, the FEMI talked about it, in 2030, 31 to 32, the industry will hit $1 trillion. Then, if we want to hit one trillion, naturally, we will use up all of the FAP in the leading edge as well as the traditional package level. And the OSAT or ASE, All of the automation that we put in place, all of the building blocks we put in place are targets, to capture not only high-performance computing, as well as the next generation AI brains to the edge device, as well as robotic fingers, or all of the heterogeneous integration, or any kind of a system package that our customers or system designers would like to do.

Joseph Tong: Now, the family talks about it. In 20, 30, 31, the 32, the industry will hit $1 trillion. If we want to hit $1 trillion, naturally, we will use up all of the facts in the leading edge, as well as the traditional package level. And the OSAT or ASE.

Speaker Change #216: The semi talk about it in 2030 31 32, the industry will hear one bill one trillion dollars.

Speaker Change #216: The.

Speaker Change #216: If we want to hit one trillion.

Speaker Change #216: Naturally we will use up all of the fab in the leading edge as well as the did the traditional package level.

Speaker Change #216: And the <unk> or ASC Aldo.

Joseph Tong: Out of the automation that we clean place, out of the building blocks we clean place, our target to capture not only the high performance computing, as well as the next generation AI brain to the edge device, as well as to robotic fingers or all of the heterogeneous integration or any kind of a system package that our customers or a system designer would like to do, is a very low answer to your question, but I hope that's comprehensive. Yeah, that's very clear.

Speaker Change #216: Out of the automation that we clean place are the building blocks, we've put in place.

Speaker Change #216: Our target.

Speaker Change #216: To capture.

Speaker Change #216: Not only the high performance computing as well as the next generation AI brain to the edge device as well as two robotic fingers.

Speaker Change #216: All of the heterogeneous integration or the or any kind of <unk>.

Speaker Change #216: System in package that our customers our system design and we'd like to do is.

Tien Yu Wu: It's a very long answer to your question, but I hope that's comprehensive. Yeah, that's very clear. So one follow-up on that, Tien, if you had to sort of guess, when do you think the smartphone or cell phone SoC will start using chiplets? Is it in the next two years, next three years?

Speaker Change #216: It was a very long answer to your question, but I hope that's comprehensive.

Yes, that's very clear.

Gokul Hariharan: So one follow up on that, Tien, is if you had to, I sort of guess, when do you think smartphone or cell phone is those these starts using chiplets? Is this in the next two years, next three years, or is much further than that in terms of the cognitive uniqueness and market acceptance? But I think the chiplets already started. They made the chiplets really is a concept. In other words, now when you have, when you start integrating chip, they become the chiplet. So today, we're seeing the chiplet architectures in a supercomputing, high performance computing, but even when you clearly go to the electrical vehicle or ask the current generation of cell phone, you can pretty much argue, this is the beginning of the chiplet.

Dan: One follow up on that Dan.

Speaker Change #218: If you had to sort of guess when do you think smartphone telephone as those these docs using chip lit is it in the next two years three years or it's much further than that in terms of technology readiness and market acceptance I think the chip has already started.

Gokul Hariharan: Or is it much further than that in terms of technology readiness and market? Well, I think the chip has already started. The chipless is really just a concept. In other words, when you start integrating chips, it becomes a chip. So today, we're seeing chiplet architectures in supercomputing, and hyperflex computing.

Speaker Change #219: So you made that the chip last really are is a concept in other words, no where you have when you start integrating shared it becomes a chip led.

Speaker Change #220: So today, we're seeing that shipment architecture in a supercomputing hyperflex computing, but either way you clear. Please go to the.

Tien Yu Wu: But even when you carefully go to the electrical vehicle or ask the current generation of cell phone, you can pretty much argue this is the beginning of the chip. So I think the chiplet concept, and the platform are being validated by the market. And over time, I think Chippewa will become more pervasive.

Speaker Change #220: Electrical vehicle or ask the jet the current generation of cell phone you can put you can put them to argue this is the beginning of the shipment. So I think the triple a concept of platform are being validated by.

Joseph Tong: So I think the chiplet concept, the platform, are being validated by the market. And over time, I think the chiplet will become more pervasive. Therefore, the heterogeneous integration, the power management, the embedded, all of this technology that we're developing today would become very useful. And that's where the panel, for example, that the panel, I do not get a chance to comment. We think about, at a power management level, there will be a lot of integrated devices, integrated package, they're thinking about it. So the panel needs to be lower cost, flexibly enough to accommodate the power management integrated package, but also needs to go high enough to accommodate the current form of high performance computing.

Speaker Change #220: By the market.

And over time, I think the Chippewa will become more pervasive.

Tien Yu Wu: Therefore, the hydrogen integration, the power management, the embedded, all of this technology that we're developing today will become very useful. And that's where the panel, for example, that the panel, I did not get a chance to comment on. We think at a power management level, there will be a lot of integrated devices, integrated packages. They're thinking about it. So the panel needs to be lower cost, and flexible enough to accommodate the power management integrated package.

Speaker Change #220: Therefore, the <unk> integration.

Speaker Change #221: Power management the.

Speaker Change #221: The embedded all of this technology that we're developing today will become very useful and thats where the.

Speaker Change #221: Panel for example that the panel.

Speaker Change #221: Do not get a chance to comment we think about it a power management level.

Speaker Change #221: There'll be a lot of integrated devices integrated package, they're thinking about it so the panel needs to be lower cost flex will be enough to accommodate the power management integrated package, but also needs to go high enough to accommodate the current form of high performance computing.

Tien Yu Wu: But it also needs to go high enough to accommodate the current form of high-performance computing. But any kind of package will have a different set of target customers. If you're talking about 3D, you're talking about 2.5D, or interposer.

Joseph Tong: But any kind of package, we have a different set of target customers. You're talking about 3D, you're talking about 2.5D, we're in a poser, that feature size and continuing to move up, become smaller and smaller, together proportional to the lithography, and also the density requirements. So our job is to make sure we have a whole spectrum of technology in our pocket. Whenever the customer come in, they need 10% of high end, 40% of mid end, and 50% of low end. We can easily provide them a comprehensive selection of tools in an automated manner.

Speaker Change #222: But any kind of package will have a different set of target customer.

Speaker Change #223: About three D. You're talking about 2.5 deeds were in a poser.

Tien Yu Wu: That feature size can continue to move up, become smaller and smaller together proportional to the lithography, and also the density requirements. So our job is to make sure we have a whole spectrum of technology in our pocket. Whenever a customer comes in, they need 10% of the high-end, 40% of the mid-end, and 50% of the low-end. We can easily provide them with a comprehensive selection of tools in an automated manner.

Speaker Change #223: <unk> feature size and continuing to move up becomes smaller and smaller together proportional to the lithography and also the density requirement.

Speaker Change #223: So our job is to make sure we have a whole spectrum of technology in our pocket.

Speaker Change #224: Whenever the customer come in they need 10% of high end.

Speaker Change #224: 40% of Mitt and and 50% are low and we can easily provide them a comprehensive selection of tools in automated manner.

Speaker Change #224: Okay.

Operator: Okay. If you have any questions, please raise your hand.

Speaker Change #224: Okay.

Operator: OK. If you have any questions, please raise your hand. Oh, we have a question from Bruce Liu. Bruce, sorry about interrupting your question earlier. Please keep two questions at a time.

Speaker Change #225: You have any questions. Please raise your hand.

Bruce Lu: Oh, we have a question from Bruce Lu.

Oh, we have a question from Bruce Lu booths.

Joseph Tong: Bruce, sorry about interrupting your question earlier. Please keep two questions at a time. Thank you. Okay, just one quick question. Joseph, you did mention earlier, the second half, Gokul's margin for 80 and will go back to 25-30% due to better product mix, better testing, more events. It seems to be slightly lower than, you know, right? And we expect that to go back to 25-30% in Gokul's margin fourth quarter. You know, what slows us down for the Gokul's margin recovery? I think the overall recovery was slower than we were expecting, and because of the volume shortage or the gap, we are now the margin prospect for the second half seems to be a little lower than what we were originally expecting.

Speaker Change #226: Oh, sorry about interrupting your question earlier please.

Speaker Change #226: Please keep two questions at a time thank.

Speaker Change #230: Thank you.

Dylan Liu: Thank you. OK, just one quick question. Joseph, you did mention earlier that the second half gross margin for AT&T will go back to 25%, 30% due to a better product mix, better testing, and more events. However, it seems to be slightly lower than our guidance. Can we expect that to go back to 25%, 30% in gross margin in the fourth quarter? What slows us down for gross margin? I think the overall recovery was slower than we were expecting and because of the volume shortage or the gap we are now, the margin prospect for the second half seems to be a little bit lower than what we were originally expecting.

Speaker Change #229: Okay, just one quick.

Speaker Change #225: Great question, Joseph you did mentioned that.

Speaker Change #225: Earlier.

The second half gross margin for Aegean will go back to the 25, 30% due to better product mix better testing more of an event.

Speaker Change #228: It seems to be slightly lower than.

Speaker Change #225: And we expect that to go back to the 25, 30% in gross margin in fourth quarter, you know what.

Speaker Change #227: What what slows us down for the gross margin.

Speaker Change #227: I think the overall recovery was slower than we were expecting and.

Speaker Change #227: Because of the volume.

Speaker Change #227: Shortage or the gap.

Speaker Change #227: We are now.

Speaker Change #227: The margin prospects for the second half seems to be a little bit lower than what we worry or are you expecting.

Joseph Tong: We do expect that going into fourth quarter, we should be able to go back into our structural margin range and when the overall utilization goes beyond 70%. And as I mentioned, it's more challenging now, but I think for the whole year, will still try to struggle to see if we can still reach the lower edge of the structural margin, which is about 24%.

Dylan Liu: We do expect that going into the fourth quarter, we should be able to go back into our structural margin range when the overall utilization goes beyond 70%. And as I mentioned, it's more challenging now, but I think for the whole year, we'll still try to struggle to see if we can still reach the lower edge of the structural margin, which is about 24%. But not, but the product makes an improvement, and more testing revenue is still intact in the third quarter. Is that right? I'm sorry? The what? The more testing revenue or the more advanced packaging contribution in the third quarter is still intact. However, just the traditional packaging, the user experience is lower.

Speaker Change #227: We do expect that going into fourth quarter.

Speaker Change #227: We should be able to go back into our social margin manage.

Speaker Change #227: When the the overall utilization.

Speaker Change #227: It goes beyond 70%.

Speaker Change #227: And that's as I mentioned.

Speaker Change #227: It's more challenging now.

Speaker Change #227: For the whole year.

Speaker Change #227: Was it will spill. So I just struggled to see if we can still reach.

Speaker Change #227: The lower edge of the of the structural margin, which is about 34%.

Joseph Tong: But the product mix improvement and more testing revenue still impacts in third quarter, is that right? I'm sorry? What? The more testing revenue or the more advanced packaging contribution in third quarter still impacts. Just the traditional packaging that is actually lower. That was the main reason for lower cost margin third quarter. Is that right? That's correct. In terms of testing, we are progressing as planned. The overall general market recovery seems to be slower. That's dragging the margin up in this.

Speaker Change #235: But not but the product mix improvement and more passing revenue was still impacted in total days all right I'm sorry, the what.

Speaker Change #231: Uh huh.

Speaker Change #232: More passing revenue or the more advanced packaging contribution go go there feeling impact just the traditional packaging has that changed at all with that was the main reason for lower gross margin is that right.

Joseph Tung: That was the main reason for the low cost margin in the third quarter. Is that right about the thing? That's correct. In terms of testing, we are progressing as planned, but the overall general market recovery seems to be slower. That's dragging our margin a bit.

Speaker Change #233: Is that right on the thing that's correct.

Speaker Change #234: In terms of testing we are progressing as planned.

Speaker Change #236: The overall general market recovery seems to be slower that's dragging our margins a bit yes.

Operator: Okay, thank you.

Joseph Tung: Okay, thank you. There is no question from the floor. Okay, if there's no... More questions? We will end the conference call today. Thank you very much for attending, and we will see you next quarter. Thank you. Goodbye.

Speaker Change #237: Okay. Thank you.

Operator: There is no question from the floor.

Speaker Change #238: There is no question from the floor.

Operator: Okay, if there's no more questions, we will end the conference call today. Thank you very much for attending, and we all we all see you next quarter. Thank you.

Speaker Change #238: Okay, if there's no.

Speaker Change #238: More questions, we will end the.

Speaker Change #239: The conference call today. Thank you very much for candy and we will we will see you next quarter. Thank you. Thank you.

Operator: Goodbye.

Speaker Change #239: Goodbye.