Welcome to the ASE Q3 2013 Earnings Conference Call. [Operator Instructions] This conference call is being recorded. If you have any objections, you may disconnect at this time. Now, I'll turn the call over to your speaker, Joseph Tung, CFO of ASE Incorporated. Sir, your line is open. You may begin.

Thank you. Good morning and good evening, everyone. Thank you for attending ASE Q3 2013 Earnings Release Conference Call. And before we start the presentation, please turn to Page 2 where here you see our Safe Harbor notice. I would like to remind everyone on this call that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to high degree of risk, and our actual results may differ materially from these forward-looking statements. At this point, I would like to pass this presentation to Mr. Qian Zhang to deliver this presentation. And at the end of it, I will be more than happy to answer any questions you may have.

Thank you, Joseph. Good morning and good evening. In the third quarter, we saw a fairly neutral overall electronics market with some highlights related to products within certain smart devices. Within our businesses, Q3 was characterized by a stronger-than-expected rebound within our EMS business, with our Q3 IC ATM results marginally stronger than Q2. And significantly, we successfully launched our SIP-related product services. Let's get into the detail. Page 3. On a fully consolidated basis, the company delivered EPS for the quarter of TWD 0.57, TWD 0.07 greater than the second quarter. During Q3, we saw our IC packaging and direct materials business edge up 3% and 1%, respectively. Our test business saw a decline of 3% during the quarter. Our IC ATM business increased 4% quarter-over-quarter. Our EMS business rebounded back strongly, up 38% from Q2. Consolidated net revenue was a record TWD 56.7 billion, an increase of 12% from the previous quarter. Even given a higher EMS product mix, our consolidated gross margins stayed relatively flat, declining by 0.2 percentage points. Operating margins improved slightly, increasing 0.1 percentage points to 10.7%. Nonoperating expenses were up TWD 0.3 billion to TWD 0.7 billion, up from TWD 0.4 billion. Pretax profit was TWD 5.4 billion, up 7% from TWD 5 billion in the previous quarter. Net income for the third quarter was TWD 4.4 billion, up 16% from TWD 3.8 billion the previous quarter. Net margin edged up to 7.8% from 7.5%. EBITDA increased to TWD 12.6 billion from TWD 12.2 billion. Page 4. You can see our results from a consolidated third quarter year-over-year basis here. Total net revenues increased 16%. Gross profit grew 21%, with gross profit margins increasing 0.8 percentage points. And operating profit grew 27%, with operating margins increasing 0.9 percentage points. Net income grew 28%,…

[Operator Instructions] Our first question is from Tse-Yong Yao from HSBC.

I just wanted to clarify again regarding the report, how the SIP revenue is being reported. Correct me if I'm wrong, but so all of -- at the consolidated level, all of this revenue flows to the EMS part and then any packaging revenue gets kind of netted out through intercompany transfers. Is that correct?

That's correct. I think we are recording all the SIP revenue in other EMS. And for the value-add of the assembly and test, it's like a subcontracted model to be handled by the assembly and test.

So basically, I can just take the difference between -- and you report for example, in Q3, at consolidated level, you reported packaging revenue of TWD 30.7 billion. And then at the -- Sorry, for the IC ATM business, but at a consolidated level, you only reported about the TWD 29-point-something billion. So this delta, about TWD 787, is it safe to assume that this delta is all related to SIP?

That's by and large correct and there are -- of course, there are a little something else in that number. By and large, that's how the numbers are being presented.

Okay. And then getting to your guidance for Q4, for IC ATM, flat to down 3%, is that for the consolidated level of IC ATM? Or is it for the, kind of, the whole business?

That's for the whole business.

IC ATM.

The ATM business.

All right. So the number that shows up at the consolidated level might be different from that flat to down 3%?

It will be 0% to 3% down from the number that is being shown on the IC ATM.

Okay. Okay, great. And then, I did want to clarify -- get a little bit more clarity on your gross margin for the EMS business. So Q3 was 9.7%. If I compare this with the low point for 2012, which was Q4, 10.8%, just trying to understand what the difference -- the 100 basis points difference. Is it lower because of product mix? Or organically lower, structurally lower margins in -- within the same particular type of product?

It's because of the change of product mix.

Our next question is from David Duley of Steelhead.

A couple of questions from me. Could you -- I guess, couple of clarifications. I didn't -- I can't find the presentation, so could you give us the copper revenue and all the details about copper during the quarter, as far as the wirebonding?

Okay. In terms of bonder counts, we have 78% of our bonders being copper-capable. And the total number, it's 12,332. And in terms of revenue in third quarter, we have TWD 631 million.

That was TWD 631 million. And what was that, up or down sequentially?

It is 4% up, to TWD 403 million, which is 64% of total wirebond revenue, up from 63% a quarter ago.

Okay, and the actual dollar number was? I'm sorry, I didn't hear you.

TWD 403 million.

TWD 403 million. Okay. In your SIP revenue, you mentioned, I think, like basically 1/2 of it was Wi-Fi module revenue. What is the -- where does the other 1/2 come from?

I'm sorry, can you repeat the question?

Yes. I think in your prepared remarks, you mentioned that your Wi-Fi, your SIP Wi-Fi module revenue was about 47% of the overall SIP revenue. I'm trying to figure out where does the other 50% come from? Are there any other major product types that you can categorize for us?

What we've shown here is the 47% of the EMS revenue are being communication-related, which includes Wi-Fi modules, and also a bit of the SIP revenue. In third quarter, the SIP revenue is still not so significant.

Okay. So but the other areas that it comes from are -- if 47% of the SIP revenue is Wi-Fi-related, where is the other 53% -- what is the other 53% made of?

I think the numbers that we've shown here, the 47% is communication revenue.

It's a segment breakdown, Dave.

Yes, I realize that and I don't have the charts so I can't see whatever picture that you're trying to ask me to look at. I'm trying to figure out where does the other revenue come from, are there any other major product categories?

Did the file not make it online?

No.

Okay. Let me repeat this page, then. Okay, within our EMS business, the Wi-Fi module business, which had represented 24% of overall EMS revenue in Q2 jumped to 47% of overall EMS business in the Q3. And within that, the communication modules business, which represented 47% of our overall EMS revenue in Q3. And this communication revenue or communication business includes both Wi-Fi modules and SIP.

Okay. Let me ask a different question. When you look at 2014, from a 30,000-foot level, what do you think the growth drivers for ASE are going to be? Is it going to be copper wirebonding? Is it going to be test? Is it going to be SIP? Maybe you could talk about the biggest areas of growth that you see for 2014?

Well, we are looking at -- we are putting our focus on different areas, including material, including packaging, also on SIP as well. I think, of course, in terms of the SIP business, we do have -- we are in the process of developing multi-customers and also expanding product mix and so on and so forth. So I think the growth driver for, not just 2014 but also for the following years will come from our technology development in both material area and also our packaging, as well as in SIP.

Okay. And when you think about your CapEx budget for next year, is it going to be roughly the same dollar amount you spent this year, up or down? Or maybe you could give us some early detail on what you're thinking there?

I think just -- we will have the final number until we do our actual budgeting for next year. But from this point on, I think we are comfortable in saying that it will -- it should be relatively the same as this year's level, short of any major projects that we'll be undertaking next year.

And, Dave, we verified the files online. I think you can take a link and get to it.

Our next question is from Gokul Hariharan of JPMorgan. Gokul Hariharan - JP Morgan Chase & Co, Research Division: First of all, I think you mentioned on the Mandarin call that SIP-based revenues could be close to like 10% of revenues in Q4. I just wanted to know how that breaks out. Is it going to be like 70%, 80% of that coming in the EMS business and just the pass-through of whatever services that you provide at the IC ATM level going to the IC ATM business? And also how should we think about modeling for gross margins, for both in IC ATM as well as the EMS side for this particular part of the business?

We're not breaking down the gross profit margin, but I can -- we are guiding that in terms of consolidated gross profit margin for the fourth quarter, it will be -- it will range from 18% to 19%. Gokul Hariharan - JP Morgan Chase & Co, Research Division: The first part of the question is...

As I mentioned earlier on, I think the SIP revenue is really booked under EMS. And then the value-add portion of assembly and test will be subcontracted to the packaging and test operation. Gokul Hariharan - JP Morgan Chase & Co, Research Division: Okay. My second question is...

When I say 10%, it's really the overall revenue coming from SIP, from an EMS standpoint. Gokul Hariharan - JP Morgan Chase & Co, Research Division: Okay, okay, got it. My second question is on CapEx. So when I look at your disclosure, I think over the last 2, 3 quarters, I think close to 50% are -- even more than 50% of the CapEx is still being spent on wirebonders; likely, to kind of refresh your installed base to copper-based wirebonders. Now that you're reaching like about 70% to 80% refresh rate in terms of your installed base, are we going to see that number come down drastically over the next, say, 2 or 3 quarters?

Actually, it has already come down a lot in quarter 3. Out of $157 million CapEx for packaging, only $25 million is for wirebonding. And in the quarter, we only added about 463 bonders while we retired 263 of them. Gokul Hariharan - JP Morgan Chase & Co, Research Division: Okay. So from next year on, most of the CapEx is likely to be for everyone's packaging and testing, basically.

Yes.

Our next question is from Szeho Ng from BNP.

Sure. For the top rate of bonded capacity has been staying flat last quarter, so I just want to know, has any additional capacity will be built in Q4?

Not at this moment, no.

No, okay. But the reclassification is quite high, right, for that part of the business?

Yes, over 80%.

Okay. All right. And the other question is housekeeping one. Can you talk about employee bonus accrual for last quarter? Both at the consolidated level and also at the OpEx level.

Yes. The bonuses accrual for employees, TWD 520 million for the quarter, and there is another TWD 36 million accrued for directors and supervisors.

As of the moment, sir, we have no questions on the queue.

Well, if there's no further questions, thank you very much for attending the conference call and we'll see you next quarter. Thank you.