Hello, I am Ken Hsiang, the Head of Investor Relations for ASE. Welcome to ASE Group’s Second Quarter 2017 Earnings Release. All participants consent to having their voices and questions broadcast via participation of this event. Please refer to Page 1 of our presentation which contains 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 a high degree of risk and our actual results may differ materially from these forward-looking statements. For the purposes of this presentation, dollar figures are generally stated in new Taiwan dollars unless otherwise indicated. For this earnings release, Dr. Tien Wu, our COO will be providing a recap of the quarter and I will be going over the financial results. Joseph Tung, our CFO and Tien Wu will be answering questions during our Q&A session. Following the event, our VP in-charge of Public Relations, Eddie Chang will be addressing the media in Mandarin Chinese. Without further delay, our Chief Operating Officer, Dr. Tien Wu.

Good afternoon. What I would like to do is to give you recap for the second quarter performance as well as the first-half recap. Also I would like to give you a indication for the second half outlook. As you can see on the chart, our Q2 revenue came in US$2.189 billion 3% quarter-on-quarter and 13% year-over-year. As you all know, second quarter of 2017 has been a challenging quarter. We have seeing some inventory adjustment, also mild. We have also seen some demand. Regardless ASE Group has performed above our expectation. The Q2 net earnings came in US$260 million. Ken Hsiang will give you a more detailed breakdown for the composition of the US$260 million net earnings. To recap the first half, revenue for the group came in US$4.32 billion, year-over-year represent 13% growth. The first half industry environment we all know that we have seen some mild inventory adjustment as was some slowdown in particular segment. Our observation based on the customer input is the inventory status right now for the second half will be in check. It’s purely a demand driven. We do have some healthy product cycles, but right now for the second half, from the ASE group perspective, we maintain our view of quarter-to-quarter growth. We are optimistic about the demand. We have seen healthy demand in the industrial, automotive. PC is also in check, we believe the wireless will have some new product cycle and should be healthy to the ASE growth. Let me give you a recap for the ASE-SPIL transaction update. I’m sure many of you have questions. I would like to give you a summary. On this page, we have reported all major events through the announcement. Just to give you recap. November 16 last year, Taiwan has offered approval. On May 16 of this year, United States has offered approval. We have filing showing the August 25, 2016 we filed with the Chinese MOFCOM. On June 6 of this year, we withdrew and re-filed the same case. And right now we have no new additional information to report. The only we can tell you is that all parties are aggressively going through the process and hopefully we can get this done as soon as we can, thank you.

Thank you Dr. Wu. As Dr. Wu stated in his opening remarks, we expected a soft seasonal environment to the communication sector and we got it. We even properly foresaw the amount of NT dollar appreciation impact to our earnings, to our results and margins. We also were able to unlock value within our balance sheet. We generated a sizable gain for our shareholders and as a direct result of that gain; we are required to accrue bonuses within the company that is the picture of our finance that our financial results will show. So before we get into the detail of the financial presentation, we have prepared two slides here to go over the impact of NT dollar appreciation in the investment gain in our second quarter results. I apologize for not being able to make the cut off time to the printer for these the slides. I would recommend that you take pictures of the slides as it isn’t included in your packet. The slide will also be available from our website. We’ve prepared an estimated summary of the impact of NT dollar appreciation on the group and IC ATM and EMS business units. There are three tables here. The top table shows the various average US dollar to NT dollar exchange rates used for this earnings release, quarter-over-quarter or year-over-year and first-half comparisons. The table on the bottom left shows the impact NT dollar appreciation had to the group. IC ATM and EMS gross margins for quarter-over-quarter and year-over-year. And finally, the table on the bottom right shows our revenue growth rate in US dollar and NT dollar formats. And then to -- during the quarter we entered a transaction to introduce a local partner to help co-develop our [Indiscernible] sites Living Zone. Again associated with this…

Yes. Thank you. It’s Randy Abrams, Credit Suisse. The first question I want to ask if you're seeing changes in seasonality for second half. The guidance applies kind of mid to high single-digit growth for IC ATM, and also I think EMS looks a bit more flattish than the prior couple of years. So if you’re seeing a shift in seasonality. And maybe if you can elaborate on the wider range of outcome to some of the volatility you’re seeing?

We’re not seeing different seasonality. If you’re asking between this year versus the previous few years. So I think the third quarter, I think we have provided some implied guidance that you can probably crunch out the numbers.

I guess what I was asking here, you seeing maybe then a bit softer than prior year like last year I think it was up over 10%. In the past years EMS, it look like had a sharper ramp in third quarter. So is it either softer, do you see potentially say a bit more shifting in the fourth quarter than normal?

I think the industry has experienced the first half where we do have some slower demand. In other words, if the second half is mainly product driven than we need to be careful. We can only speculate it to a certain extent, but right now based on the customer forecast, based on internal stimulation and this is the set of the implied guidance that we can come up with. In terms of the overall demand for any segments, I think it’s fair to use the whole year number in the -- instead of using the first half number.

Hi, guys, as Tien mentioned we don’t see any significant changes in terms of seasonality. I think we are seeing some ramp up in both IC ATM as well as EMS. In terms of magnitude, I think we’re coming off with slower first half and we will see some softness in some segment market. Therefore the overall momentum seems to be impacted a little bit, but more so on the EMS -- but I think the EMS is really not the change of seasonality, but more towards our effort in rebalancing our SiP bases, which we have been more selective in terms of what business we want to get into and that has an impact on the overall growth momentum.

Follow-up on the EMS rebalancing. The first half and actually gross margins have done very well to pick up that’s you’re guiding. It looks like the sales are bit mild but more a gross margin impact. Is it just more of the mixed profile that second half have more SiP and less of the traditional EMS at higher margin?

That’s correct. I think going into the second half, I think particularly in the EMS business that is SiP business will start to pickup and it has some impact on the margin.

Okay. The other question I wanted to ask. Just your tick I guess seeing SPIL in the market. It looks like their sales have been a bit slower like sales are probably down slightly year-on-year and gross margins say reported are down about four, five points from where they were say year or two ago. Are you seeing change just with this deal kind of going on for a while, changes that somehow it's behaving in the market just from competitive positions?

I don’t think we can see for a SPIL. I think we really need ask them those questions.

Okay. And then the final question I just wanted to ask. When you mentioned softness in the market, I think there were some softness Android, first half. If maybe you can point to any area you’re seeing softness continue as you go towards second half?

We’re not going to comment on the product. Thank you.

Thanks a lot.

Name and company.

Yes. Hi. My name is Rick Hsu from Daiwa Securities. Good afternoon. So, my first question, again is a housekeeping question. So among your wirebonding, testing and pumping, what capacity was a new add and retire for each segment second quarter?

Let me dig out the numbers. I think for founders we had 205, we retire 50 or so.

Yes. 50.

All right. In testers.

Added 104, deleted 90. Ended the quarter at 3,796 with 1,184 consigned.

Your next is question is utilization, right?

That’s right. Thank you.

Pumping in each were 98.

97.8, and then 12-inch at 128, 128,000 [ph].

Yes. And utilization.

Okay. In terms of packaging we are at above mid 70s and for test we are at low 70s, substrates, we are at mid-70s second quarter.

Right. Thank you. So what about the utilizing rate for Q3?

Q3 we’re expecting packaging to be at low 80s, testing at high 70s to low 80s, whereas substrates, it will be inch up to low to mid 80s.

All right. Thank you so much. The second question is, if I look at the guidance from TSMC it looks like the foundries will likely see in above seasonal demand for Q4 and although Q3 is kind of so-so, will you guys see the same trend for your Q4 business outlook about seasonality?

We do believe we will see a quarter-to-quarter growth in Q4 comparing to Q3. At this point in time we do not see a strong deviation from the normal seasonality. But that could be due to the product timing.

All right. Thank you so much.

I think we do have different customer base and also products mix with foundry, I think in TSMC in particular. But I think the percentage doesn't really represent true picture if you make the apples to apples comparison.

Thank you. No further questions from me.

Any more questions? Name and company

So, my first question is on your fan-out business. Can you give us some guidance about your current capacity. What kind of semiconductor project that you’re doing for fan-out now. And for next year what kind of growth you’re expecting from this business? Thanks.

The current fan-out capacity on 12-inch, right now, it’s about 15,000. We will continue to grow the fan-out capacity throughout the year. At this point in time I will not give you the precise number. It really depends on the utilization, as well as the customer adoption rate. I will not be able to comment the specific customers, but we do have a good portfolio of customers. In other words, we do more than five customers signing up for those capacities. And right now if you're asking the utilization, utilization rate is quite healthy.

Okay. Thanks. So I know, it’s a bit sensitive talking about customer, but in general what kind of semiconductors for example, the industry is talking about [Indiscernible], RFIC, even memory, so what kind of semiconductor product you are doing by this fan-out service now?

It’s a combination of high performance computing, as well as the wireless. And in terms of the number of chips as was to composition has all variety, but I think the beauty of fan-out is you can really mix a different nodes as well as the functionality that you can really have a concentrated heterogeneous integration at a low cost. So I think that is the whole premise of fan-out.

Okay. Yes. So, on that fan-out technology, I know there are some discussion regarding technical issues, for example, you've seen the fan-out level carrier, the euro is still quite low and there is some pattern issue, for example, the key IP owned by Infineon and now it belongs to Intel, right? So how ASE solve these – all these problem? And what is a key advantage that ASE has now?

I think what we are ready to disclose at this point in time is fan-out is not a standalone process. In other words, when we talk about capacity for 12-inch fan-out, we are implicitly informing our customers that a fan-out will be a platform of solution. In other words, the current stage of the 12-inch of a particular process node, and that will be scalable and that would extended into a finer node where those IP issues you just mentioned will become a concern. Now while on ASE end, I think we already give a very clear indication. Fan-out is a major platform solution that ASE is driving. So we’re making great strides. We're not ready to disclose any detail, so I’m pretty sure in the next coming year or two and we will like to disclose the whole portfolio of the fan-out solution including the 12-inch, including the panel and some of the IP issues, some of the patterning issues, some of the design tool issues, all of this will be part of the overall solution that we’re presenting to all of our customers. But it is a major platform that we are driving.

Okay. Thanks. So since our company is quite well prepared, well planned for this fan-out trend, right? So this is my main question to you, so in the coming years how ASE is going outgrow semi-industry or the packaging industry organically. So what kind of service or [Indiscernible] you think that can make -- come into outgrow?

All right. If I look at the last 10 years average, the ASE growth has been 2x for semiconductor. And that number has been quite steady. I present this a few times. And I think the recipe for our continued growth with reasonable margin return will be based on innovation and technology. And I think Ken Hsiang already talk about it, we do believe that, the transistor, the integration, the power consumption will be an issue. We also understand that from the process, the wafer process perspective, the investment becomes more hefty over time. So the scalability of the Moore's law as well as how can packaging augment the of the Moore's law, we just took on more and more, the ASE is coming up with portfolio solution, the fan-out will be one of them. We also the embedded solution, we also have the 2.5D, so all of this will become the building block for the innovation, for the readiness of the next wave of application. Mind you, we do not know exactly when the next wave will hit us. And which next wave would be ahead of the other next waves. But right now, IoT, the automotive, the VR and the new generation of high performance computing, the new generation of happy memory. There is a combination of application that is in the marketplace. The good think about ASE, if you look at whole industry and knows that, I believe we are the best position from a technology perspective. We’re also the best position from a customer portfolio perspective. We also have the more in-depth engineer at a system level, as well as the IC level. We also have the widest partnership in all geographies with all segments, including foundry, design house as well as the ADS [ph] company. Going forward this is about global business. This is about technology innovation. It’s about partnership. I think in all three metrics ASE is very well-positioned. Then the only question is how fast we scale and during the scalable process how can we maintain the margin rebalance or a calibration. And I think this is a primary challenge of ASE Group as well as for the rest of the world. But so far based on the last few years performance we have been on track in terms of partnership, technology development, scalability growth, as well as rebalance our product portfolio to maintain a certain margin at a certain cost curve, and I hope that offers you some outlook.

Yes. That’s very helpful. So I will have some follow-up at [Indiscernible] Q1. Thanks.