Hello, I am Ken Hsiang, the Head of Investor Relations for ASE. Welcome to ASE Group's Third 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 today's event, I'll be going over the financial results. Joseph Tung, our CFO, will be answering questions during our Q&A session. Following the event, our VP In Charge of Public Relations, Eddie Chang, will be available to address the media in Mandarin, Chinese. Page 2; first let's go to our SPIL transaction status line. This is the extent of additional information available at this time. Again, we apologize for any inconvenience this may cause, but we will not be able to provide any additional information on the progress of this transaction during Q&A. This third quarter has been particularly interesting for us. One positive development was that we were pleased for once to have at least a stable NT dollar. We're also pleased with the performance of our SiP technology-related products during the quarter. We also saw strength in a newer class of specialized processing-intensive devices. We also got to see a bit of the future as we work on newer generations of sensors and health-related devices which will help improve people's lives on a daily basis. From the business perspective, our communications market segment traditionally leads the way during the…

I wanted to ask the first question just on the outlook statement. If you could just talk about what are the lingering demand issues and the potential upside? If you could give a bit more detail on maybe the downside risk and also the upside risk you could potentially be looking at?

I think the second half is little bit different from the previous years. I think there are quite a bit of moving pieces as well as some of the industry dynamics that kind of muted the seasonality fluctuations, particularly in the third and fourth quarter. We believe that that's due to some of the uncertainties in terms of product introduction as well as the sell through going forward. So, we think the fourth quarter seems to be -- based on our forecast looks will be very similar to what happened in third quarter at this point.

I guess from upside risk, is it tied to bottlenecks in the supply chain or I mean where do you kind of see the potential might come through?

No, I don't think we'll want to comment on that. I think is basically there's a lot of things going on in the industry and we were just providing some of the information based on our own forecast, see how things will shape up in fourth quarter.

The CapEx now where it looks like it's a bit lower end of what you're originally guiding, maybe the area you're kind of versus your original expectation you're pulling back and if there's an initial kind of base case for next year for CapEx?

I think the CapEx for the year is still pretty much within what we were expecting. And although it could be at the lower end of the number that we expected for the year.

And then if you could give an update on the SiP, like the EMS business is still up year-over-year, maybe your view into next year on SiP sustaining if you see any potential new projects coming in and any offsetting projects that might be going sunset to offset that?

Yes, I think overall, we were pretty happy with what we achieved in terms of our SiP business this year. I think it will have some pretty decent growth. I think we remain confident in the coming year given the fact that we have multiple engagement with different customers and some of them are with mass production potential going forward. And of course, we are building a pipeline. So, some of the project maybe closer to its end of life. Some of them are upcoming. So overall, I think the SiP is still one of our main focuses going forward and we still believe it has pretty good potential. And our focus right now is we need to pick and choose the projects that makes economical sense as well as fully leverage on our technology capability. So, we will be selective in terms of these projects. We are seeing both the expansion as well as the structural improvement in terms of a pipeline.

And maybe last final up on that, what's that percentage of revenue now for SiP within ATM and consolidated?

In third quarter I think in terms of IC ATM it's about 2.5%. In terms of the overall it's about 17%.

I'm Rick from Daiwa Securities. The first question, again this is housekeeping, so your utilization rates across the board for your wirebond testing and bumping for Q3 and what's the outlook for Q4?

Okay. I think in terms of wirebond, it's high 70%s -- I'm sorry low 70%s, and then flip chip bumping -- hold on -- I do have it somewhere here.

I think testing the high 70%s as Ken mentioned.

Yes. Yes. Okay, wirebond is low 80%s. Now wirebonding is mid-80%s, test is about high 70%s whereas material is about mid-70%s. And fourth quarter it will be very, very similar.

Sorry, I missed one -- you said the non wirebonds are high -- the mid --

Mid-80%s.

Mid-80%s, okay, good. Now second question regarding your SiP project for 2018, do you anticipate any new project for your existing major customer?

We won't be able to comment on that.

The final question is what about the inventory levels industry-wide and your customer end, how do you see inventory -- I guess TSMC said the inventory will likely normalize by the end this year, so what's your view on that and what's your view on the seasonality in Q1 next year?

Right now, we see kind of a healthy pipeline. And I think being at the tail-end of the -- of food chain, I think TSMC will definitely have a much better sense on the inventory situation. So, I think whatever TSMC claimed, it should have better credibility than what we're saying here.

What about Q1 next year, do you anticipate any --

Well, I think as Ken mentioned, I think this time around the seasonality fluctuation seems to be a bit more muted than before. So, with that I think there is a possibility that we will have a smaller seasonality impact in first quarter as well.

Can I take a look again for your 4Q EMS revenue guidance?

Make sure you -- name and company first.

Roland Shu from Citigroup. The first question is on your -- I just would like to talk about -- see again for your 4Q EMS revenue guidance, is that similar as 4Q IC ATN revenue or IC package?

The overall revenue mix between IC ATM and EMS in fourth quarter will be 50-50.

And your EMS gross margin focus in 4Q is similar as the first quarter last year. So that was very low, I think somewhere around 8.1%. So, is that means you still have this high volume but low margins product in your EMS business in 4Q?

We'll have a different product mix in the fourth quarter.

And so what kind of the product, is it for the communication, or for the other projects?

Well, we have a wide range of different probability among different products I think in the fourth quarter that kind of reflect that the higher margin product mix will be lower.

And this product will be continue into first quarter or first half next year? Or it -- will this product will continue in first half next year?

Well, it depends on the -- it depends on how the quarter shapes up, we don't have a real picture on that.

I think this is for more general question. I think the TSMC [indiscernible] to grow above the 4.5% to 5.5% for the next 10 years. And that we know ASE in past 10 years your revenue just grow double of semiconductor in the past 10 years. So, can we just take this and your past growth to be the -- maybe the focus for next 10 years, can we say this 10% revenue growth in CAGR will be a good target for you for the next 10 years?

For the next 10 years?

Yes.

CAGR of 10% for the next 10 years?

Yes, I think in the past 10 years you said your revenue grew twice over semiconductor in the past 10 years.

Well, in a perfect world, yes, well, I certainly want to have that. But market changes, industry changes, there's lot of uncertainties involved, so if we have 10 -- a CAGR of 10% for 10 years, good.

Industry growth is rarely linear. So, it would be a very difficult statement to make.

I think the -- yes, just the TSMC, I think early this week they said they expect semiconductor growth to be above 4.5% to 5.5%. I think this is the number from TSMC, so just wondering what's your number in mind…

Yes, well, if you look at this year in -- the currency fluctuation does have a huge impact on our revenue growth. And things like that can happen. So, if everything is in a perfect world situation, yes, we're supposed to grow twice the industry growth and hopefully that is the case.

I think the last question is -- this is also related to foundry, it's taking some value away from OSAT by info and [indiscernible] and those are we know are China OSAT, even Paltech are more aggressive, tried to do revenue or business in the flip chip with a level packaging. So, going forward for what kind of second applications you think you can continue grow your revenue?

I think we have a full portfolio of all different technology or package types that we can offer to our customers, and I think the main focus for us is really to find -- not to find, to offer the ones that has the cost effectiveness to our customers. The thing that our -- the foundries are doing may not be the ideal market for us to get involved with. I think whatever we do in these two have -- has a justifiable return, as well as a justifiable economics involved in there. So, in that regard we don't really see that particular business as something that we want to be focusing on, and whether that is competition from foundry, I think that's debatable. As far as the other Chinese players coming into it, I think competition is given. With or without the Chinese, there is always competition, so I think what we're trying to do is really to continue to stay ahead in terms of technology in terms of cost effectiveness and that's what we're good at and hopefully we can maintain that.

Sebastian from CLSA. First question is on -- can I ask about your gross margin of IC ATM for third quarter if you use the same FX rates as compared to a year ago what would that be?

I think to give you a reference, if we use the same currency or same exchange rate in the same period of last year, then the margin on the group basis should have 0.25%. IC ATM should have about 2%, and in terms of EMS is you have 60 basis points improvement.

So, on IC ATM is 2 percentage points above, so I guess that also mean that the packaging and testing is all around 2 percentage point above -- what it is

Yes.

So basically, if you compare your third quarter this year versus third quarter last year, the revenue base is quite similar, actually it is slightly lower if you look at IC ATM, but the gross margin on the same FX rate, it should be 27% and last year is 25.5%, so is there a structural margin improvement? And can you elaborate on what kind of things you have done or what kind of thing you seem that could cause this kind of the margin improve even if the revenue similar or even lower?

Well, I think it's a combination of lot of things. One is of course we continue to improve our efficiency in terms of manufacturing. We are -- I think the rebalancing or restructuring so-called in our SiP business does pay off. We are seeing positive results coming from that as well, and we are also kind of try to -- in some selected business try to streamline or bring in more linearity in to that business stream so that we can avoid some of the fluctuations involved from different quarters which give us I think a better management of our capacity so we don't have too much waste that's accretive to low utilization, those are the things that we have been working very hard in the past year.

Apart from -- it seems to me a lot of execution and management and you balance your product mix and improve the manufacturing efficiency, apart from all these, it seems a lot of efforts, do you see with or without, if you exclude all this, all your efforts, do you see your competitiveness in the market or pricing environment would also be a factor -- a positive factor to your gross -- structural gross margin?

We certainly hope so and I think that's what we're working on. I think the -- there are some changes so to speak in the competition landscape. I think the -- as you know some of the non-Chinese are being acquired by Chinese and there are some -- a lot of activities going on. I think some of our competitors may need to go through either a learning curve or through some integration stage, that could create some more challenges for them and we have been by focusing on what we do best and I think that give us a better opportunity to stay ahead.

So, looking into next year, based on the same FX rate, do you see possibility to further improve this kind of margin?

I think the focus now is really to maintain whatever we have achieved. I think in a nutshell we achieved quite a bit in terms of protecting our margins given the such unfavorable currency situation. So, I think -- for next year I think the main focus really to try to sustain the margin that we achieved.

Second question is on the material cost that Ken earlier mentioned about the packaging, the gross profit margin "improved" partly due to relatively lower material cost. Can I ask about what material cost and would that be also a favorable factor into next quarter?

Can you repeat that question one more time?

The IC ATM, the [indiscernible] IC ATM when you say that the packaging gross margin improved sequentially in third quarter was many reasons, partly due to relatively a lower material cost.

Correct.

And what type of the material is that a cost lower? And also, what do you see that factor into next quarter?

Usually the material costs are related to the product type and the product mix, so it really depends on what type of product we're running during that time frame, so that is not a trend item. But generally speaking the better the loading that we have, the better efficiency we have in our operations which leads to better margins.

The third question is on the 2.5D or 3D is advance technology packaging. I think recent earnings call, TSMC talk about they see very strong growth, almost double their [indiscernible] this year and see substantial growth next year on their [indiscernible]. So, I wonder what you seen on your 2.5D packaging this year and next year in terms of the pipeline?

We can't comment for them.

No, I'm not asking for them, asking for you.

Right. But the total market on the 2.5D in [indiscernible], and for us it's focus that that market is actually relatively small. So, we would see -- we do see demand for such, but that's not something we really want to comment on that much. I don't see it being a big number mover for us, but it is an exciting area. So definitely the ability to connect both chips together, that's very promising.

Which means that compared to SiP, this won't be a growth driver in the foreseeable future, am I right?

With these types of technology developments, you really never know how rapidly they take form. It just takes one product that has a lot of mass market potential. With that type of connecting -- those types of connections to take shape and then it take -- then it really takes off, right? You really can never tell, but from our perspective, we provide what the mass market demands, so if the mass market needs 2.5D interposers focus that -- we'll provide it and we'll grow with it.

I think from that standpoint, we do see some encouraging development with some of these advanced technologies being applied to wider market arena, going more into the so-called mass market. And for this I think we're offering both high and low-end or mid-end type of technology solutions to address this market. We are seeing this market being developed, but I think how fast and how big that market will shape up, that only depends.

Can I ask just a follow on this one from another perspective as this question is that it seems to me you don't see -- you see a lot of probably some engagement already, but you haven't seen the real takeoff ton of this technology, but in terms of for yourself, do you see yourself doing this need to carry higher business risk because you need to get a lot of thing and the euro is low and if you fail, it's basically need to -- your cost is higher. Do you see that is -- that kind of the higher business risk as a setback factor for you not really wanting to be very aggressive in this basis?

We announced a 2.5D SiP product a number of years back actually. That was made very well. We're not hesitant -- I don't want you to think that we're being hesitant about it for yield purposes. We believe that we will address the mass market, right, so if there is volume to be had, we'll take it on.

Yes, thank you. Last question from me is how do you see the pricing environment nowadays, stable or fears/

I think it's normal. There's going to be a price negotiation every year end and that's what we're going through now and we don't see anything that's abnormal now.

I have no questions on the online. Are there any additional questions on the floor?

Over to phone speakers, we show no questions.

I'm Sunny from UBS. So, I just have one question, can we have some update on the JV in Brazil with Qualcomm? That's it.

They're still on the drawing board. I think we're not making that much progress at this point. I think in any event it's going to be a 2018 beyond event.

Yes, we really believe that that JV is more in the court of our partner, not -- we're just going with them, so they're definitely driving. Okay, thank you for attending the earnings release. See you next quarter.