Hello, I am Ken Hsiang, the Head of Investor Relations for ASE Technology Holdings. Welcome to our third quarter 2023 earnings release. Thank you for attending our conference call today. Please refer to our safe harbor notice on page 2. 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. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP. I am joined today by Joseph Tung, our CFO. For today's session, I will be giving the prepared remarks. Joseph will then be available to take your questions during the Q&A session that follows. The overall environment for our businesses during the third quarter was relatively soft from a historical perspective. Devices related to new communications products introduced during the quarter generated a small pickup in demand. But by and large, the post-COVID inventory digestion and suboptimal demand environment continued. For the third quarter, both our ATM and EMS businesses saw a mild seasonal uptick. Our ATM business's results were on the higher side of our expectations. We believe this is primarily attributable to higher than expected unplanned orders. In this soft loading environment, our customers have become more cautious when booking regular production forecasts on the expectation that there would be more capacity available when needed. We do, to a certain extent, try to apply an unplanned order rate to our outlooks, but for the third quarter, unplanned orders were a bit higher than expected. These unplanned orders were sporadic and disparate, and not isolated to any particular product type or market segment. For ATM factories, during the quarter, key equipment utilization rates were still relatively low, averaging out in the mid-sixties. Our EMS business's pickup was slightly below our initial expectation. We believe this was due to some loading being pushed out into the fourth quarter. With that, please turn to page 3, where you will find our third quarter consolidated results. For the third quarter, we recorded fully diluted EPS of $2 and basic EPS of $2.04. Consolidated net revenues increased 13% sequentially and declined 18% year over year. We had a gross profit of $24.9 billion, with a gross margin of 16.2%. Our gross margin improved by 0.2 percentage points sequentially and declined by 3.9 percentage points year over year. The sequential improvement in margin is principally due to higher ATM business loading in the current quarter, offset in part by higher EMS revenue mix. The annual decline in gross margin is principally the result of lower loading during the current downturn. Our operating expenses increased by $1.2 billion sequentially and declined by $0.8 billion annually. The sequential increase in operating expenses are primarily due to higher profit-sharing expenses and miscellaneous increases, such as D&A, factory supplies, and others. The year-over-year decline was primarily attributable to lower bonus and profit-sharing expenses across the company. Our operating expense percentage declined 0.2 percentage points sequentially and increased 1.2 percentage points year over year to 8.8%. The sequential operating expense percentage decrease was primarily related to lower salary and bonus costs relative to revenues generated. The annual operating expense increase is primarily due to higher mix of ATM business during the quarter. Operating profit was NT$11.4 billion, up NT$2 billion sequentially, and down NT$12.3 billion year over year. Operating margin was 7.4%, improving 0.5 percentage points sequentially and declining 5.2 percentage points year over year. During the quarter, we had a net non-operating gain of NT$ 0.8 billion. Our non-operating gain for the quarter primarily consists of net foreign exchange hedging activities, profits from associates, and other non-operating income, offset by net interest expense of NT$ 1.2 billion. Tax expense for the quarter was NT$ 2.9 billion, net of a one-time capital gain tax of NT$ 0.7 billion. Our effective tax rate was 18.1%. We believe our full-year effective tax rate to still be about 21%.Net income for the quarter was NT$ 8.7 billion, representing an increase of NT$ 1.1 billion sequentially, and a decline of NT$ 8.8 billion year over year. The NT dollar depreciated 2.9% against the US dollar sequentially during the third quarter, and 4.5% annually. From a sequential perspective, we estimate the NT dollar depreciation had a 0.8 percentage point positive impact to the company's growth and operating margins. From a year-over-year perspective, we estimate that the depreciating NT dollar had a 1.2 percentage point positive impact to growth and operating margins. As a rule of thumb, for every percent the NT dollar appreciates, we see a corresponding 0.27 percentage point impact to our holding company growth margin. 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 NT$ 25.8 billion, with a 16.8% gross margin. Operating profit would be NT$ 12.6 billion, with an operating margin of 8.2%. Net profit would be NT$ 9.9 billion, with a net margin of 6.4%. Basic EPS, excluding PPA expenses, would be $2.31. On page 4 is a graphical presentation of our consolidated financial performance. As you can see here, the current correction appears to have had a stronger impact on our ATM business than our EMS business. Our traditionally strong third quarter ATM revenues are just now near our first quarter 2022 levels. On page 5 is our ATM P&L. It is worth noting here that the ATM revenue reported contains revenue eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses. For the third quarter 2023, revenues for our ATM business were NT$ 83.7 billion, up NT$ 7.6 billion from the previous quarter, and down NT$ 15.1 billion from the same period last year. This represents a 10% improvement sequentially, and a 15.3% decline annually. Gross profit for our ATM business was NT$ 18.6 billion, up NT$ 2.4 billion sequentially, and down NT$ 10.2 billion year-over-year. Gross profit margin for our ATM business was 22.2%, up one percentage point sequentially, and down seven percentage points year-over-year. Gross margin was on the higher side of our expectations. The sequential margin improvement is the result of improved scales of efficiency from higher loading, offset in part by slightly higher summer utility consumption and outsourced services. While the annual margin decline is primarily the result of lower loading due to the current downturn. During the third quarter, operating expenses were $9.8 billion, up $1 billion sequentially, and down $0.4 billion year-over-year. The sequential increase in operating expenses was primarily driven by higher compensation-based expenses and higher R&D-related factory supplies. The annual operating expense decline was driven primarily by lower profit sharing and bonus, offset in part by higher R&D-related costs. Our operating expense percentage for the quarter was 11.7%, up 0.2 percentage points sequentially, and up 1.4 percentage points annually. Sequential operating expense percentage increased as a result of higher R&D and compensation-related costs. The annual increase was due to lower loading and thus lower operating leverage. During the third quarter, operating profit was NT$8.8 billion, representing an increase of NT$1.4 billion quarter-over-quarter, and a decline of NT$9.9 billion year-over-year. Operating margin was 10.5%, improving 0.8 percentage points sequentially, and declining 8.4 percentage points year-over-year. For foreign exchange, we estimate that the NT to US dollar exchange rate had a positive 1.4 percentage point impact on our ATM sequential margins and a positive 2.2 percentage point impact on a year-over-year basis. Without the impact of PPA-related depreciation and amortization, ATM gross profit margin would be 23.3%, and operating profit margin would be 11.9%. On page 6, you'll find a graphical representation of our ATM P&L. Revenues and their corresponding scaled efficiency are still a ways off from previous 2022 peaks. On page 7 is our ATM revenue by market segment. You can see here the seasonal pickup of some communications products during the quarter. We also saw a smaller pickup in our computing segment. Our automotive, consumer, and other market segment declined on a relative and absolute basis. We believe this decline to be out of character for the seasonally strong third quarter. However, it is indicative of the current softness in demand. On page 8, you will find our ATM revenue by service type. You can see here that we are experiencing a stronger pickup in our advanced packaging services, which includes bumping and flip chip. Our wire bonding and test business saw their relative shares decline during the quarter. It is worth noting that on an absolute dollar basis, both wire bond and test service types increased in revenues. On page nine, you can see the third quarter results of our EMS business and a graphical representation of its market segment allocation. During the quarter, EMS revenues were NT$ 71 billion, improving NT$ 10.6 billion or 18% sequentially, and declining NT$ 19.7 billion or 22% year-over-year. Sequential revenue increase is primarily attributable to the seasonal nature of our EMS business, while the year-over-year revenue decline is primarily due to the broad-based soft electronics demand environment. Sequentially, our EMS business's gross margin declined 0.2 percentage points to 9.1%, while our operating margin improved 0.4 percentage points to 3.9%. The operating margin improvements were driven primarily by loading and favorable foreign exchange impacts to raw materials. Our EMS third quarter operating profit was NT$ 2.8 billion, up NT$ 0.7 billion sequentially, and down NT$ 2.3 billion annually. For our EMS market segment, our consumer segment picked up seasonally as industrial and automotive segments declined on a relative basis. And while the automotive segment lost relative share, it grew during the quarter by 7% on an absolute dollar basis. From the full year perspective, we continue to expect our automotive market segment to outperform other segments. On page 10, you will find key line items from our balance sheet. At the end of the third quarter, we had cash and cash equivalents and current financial assets of NT$ 71.9 billion. Our total interest-bearing debt was down NT$32.1 billion to NT$219.2 billion. Total unused credit lines amounted to $347 billion. Our EBITDA for the quarter was NT$27.8 billion. As mentioned in the previous quarter, our net debt to equity this quarter was up as a result of cash usage for our annual dividend payment. On page 11, you will find our equipment capital expenditures. Machinery and equipment capital expenditures for the third quarter in US dollars totaled $239 million, of which $121 million were used in packaging operations, $89 million in test operations, $28 million in EMS operations, and $1 million in interconnect material operations and others. Current quarter EBITDA of $0.9 billion continues significantly to outpace our equipment capital expenditures of $0.2 billion. It is worth noting that with more excitement surrounding AI, our leading-edge advanced packages in our vertically integrated or VI Pack offerings are getting a lot more attention from our shareholders as well as our customers. At this point, we are expecting incremental customer adoption of our fan-out and interposer-based solutions, along with increasing collaboration with upstream foundry partners on leading-edge advanced packaging. As a result, we will be making incremental investments to support these businesses, subject to financially justifiable returns. And while revenues related to these products are relatively small, representing a low single-digit% of ATM revenues, we believe we see significant growth opportunities in the coming year. We are in October now, and the year is almost done. Much of the original wafer banks for our ATM business still remain to be addressed. As with many situations during the downturn, our wafer bank situation has become a bit complicated. During the third quarter, while some wafer banks were gradually being worked down, the composition of some of those wafer banks appeared to be replenishing instead of just declining. In effect, we saw newer wafers started to come in and replace older ones. Devices on these older wafers may continue to be sold, perhaps by being reskewed or by being marked down. And if that is the case, we will provide packaging and testing services for those products. But for us, the focus going forward should be placed on the newer generation of products. And while we are not in position to predict how long those new products will stay in the channel before they sell through in the end markets, we do believe that the overall environment heading into 2024 appears to be improving. Our customers have been more cautious in their approach towards restocking. Overall demand looks marginally better as consumers finish their post-COVID catch-up spending. Businesses are looking to implement AI to optimize their business operations. Consumers are discovering how new AI technology may help improve their lives. It is an opportunity to target a new generation of products at a new generation of consumer demand. Looking out into the fourth quarter, we see many products continuing their seasonal builds. And while we did see a welcomed, mild seasonal ramp, we have not necessarily seen a rapid recovery for the industry. As an extension to this concept, we believe the seasonal forces of product cycles are still stronger than the recovery we are encountering. As such, we see our fourth quarter revenues to be more indicative of waning seasonal builds than the rising momentum of a full recovery. For our EMS business, the third quarter shallower than normal product ramps turn into a longer building season, with a peak in the fourth quarter. Product mix and the cessation of foreign exchange benefits will result in a lower quarterly operating margin, similar with year-to-date levels. We would like to summarize our outlook for the fourth quarter as follows: For our ATM business, in NT-dollar terms, our ATM fourth quarter 2023 revenues should decline low to mid single digits quarter-over-quarter. Our ATM fourth quarter 2023 gross margin should be flattish as compared to the third quarter 2023. For our EMS business, in NT dollar terms, our EMS fourth quarter 2023 revenues should increase percentage-wise in the low teens quarter-over-quarter. Our EMS fourth quarter 2023 operating margin should be similar or slightly higher than our EMS year-to-date 2023 operating margin of 3.3%. That is the conclusion of our prepared remarks. I would like to open the floor to questions. Now, we would like to 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. Thank you. We have a question from Mr. Gokul Hariharan of J.P. Morgan. Uh, hello. Yes. Thanks for the opportunity. So, my first question on the Wafer Bank comment, quite interesting. Could you talk a little bit more, Ken and Joseph, on the composition of the Wafer Bank? Are you seeing new wafers coming in for one kind of application, while the older wafers that are not yet getting fully depleted is for some other kind of application? Is there any different application that you're seeing in terms of the Wafer Bank inventory buildup and reduction? To the extent that you have visibility for, could you talk a little bit about how quickly this Wafer Bank could potentially get depleted over the next maybe couple of quarters or so? That's my first question. Well, I don't think we can predict how fast or how what kind of pace that the original wafer bank will be worked down. We are seeing these original wafer banks are being progressively working down to a certain level. But at the same time, the wafer, the overall wafer bank is still at a relatively high level because of some of the wafer banks are being replaced by the new wafers that are coming in. I think at this point, it's really the new products that are being launched, which is mostly in communication, consumer, as well as in computing area. It's quite widespread in terms of new wafers coming in. I think the overall inventory digestion is still going on. It should continue for some time. But I think the bright side of it is that we are seeing that being worked down, and we're seeing signs of this inventory being consumed, and the digestion, we should be at the tail end of the industry digestion now. Thank you. Thanks, Joseph. So, if we look at the Q4 guidance down low to mid-single digit. You saw a pretty good improvement in communication by both auto and industrial kind of tailed off in Q3. Is that the same trend going into Q4, that communication is still relatively strong, while you see communication consumer is relatively strong, while you see the drop-off continuing in auto and industrial? Lastly, I think on the auto industrial side, any thoughts on how this is likely to play out, given it's been a sector which has been relatively strong until very recently, seems like seeming to go into inventory correction now. Based on prior history and your judgment, do you think this is going to be still a drag for most of next year, like first half of next year, at least? I think overall situations are stabilizing now, and auto seems to be one of the best spots, and we are making quite a bit of progress in moving up the auto part of the business. I think last year we have overall about 7% of our revenue coming from automotive, and that ratio has been up to around 10% for this year. And we believe it will continue to grow, although we are seeing some level of the growth, the momentum seems to be slowing down a little bit because there are same area, there will be some inventory that needs to be digested. But overall, I think the overall trend is still going fairly healthy. For quarter 4, I think it's across the board. I think a lot of the new products are being introduced, and we are seeing a seasonal uptick from these new products that are being launched. Our next question is from Miss Laura Chen of Citigroup. Hi, thank you. Can you hear me? Yes. Yeah. Thank you for taking my question. My first question is about the CoWoS on substrate advanced packaging extension. Can you provide us more detail about the, how big of the capacity you are preparing? A lso, in terms of the growth outlook, even though so far it's at very low single digit of the IC ATM business. I was just wondering your view on the capacity expansion plan and also the growth outlook. That's my first question. Thank you. Well, instead of giving out the numbers for capacity, I think what we can say is we have the sufficient capacity, install capacity that are generating the revenue that we're generating now. W e do see pretty good potential going forward, and we'll be making the necessary investments provided those are, financially justifiable. And what? Most of the cap that we're gonna put in, or investment we're gonna put in, are for debottlenecking the capacity. And at this point, we are confident that we should easily double that part of the revenue next year. Okay, thank you. A lso, my second question is also just wondering that you said the ATM business will see slightly down, but at the same time, the growth margin seems to be resilient at their current level. So just wondering, like in terms of the technology mix or applications, what helped you held relatively well for the profitability into Q4, even though we see some feel some softness? Well, a lot of it comes with the product mix that we're building. And we are in quarter three and also in quarter four, we are seeing that the higher margin products being representing a higher percentage of our overall revenue. And also, I think the pricing continued to be resilient. G iven our scale and our technology offering, and the efficiency or the level of automation that we have, we have continued to being able to maintain a reasonable pricing level and also to have pretty good control over our costs and making the margin at a, we're not totally happy, but quite satisfied level at this point. Even when we're anticipating a mild decline in revenue going into quarter 4, given the efforts that we put in, we believe that we can maintain whatever margin we achieved in quarter 3, if not higher, a little bit higher. Next question is from Mr. Bruce Lu of Goldman Sachs. Hello, can you hear me? Yes. Okay. Hi, Bruce. Thank you for taking my question. Hi. I think, the management sounds a lot more bullish or positive in terms of AI revenue potential. Given that technology for AI in terms of packaging is so complicated for me. Can you tell us what, what is the service you provided for AI? It's more related to fan-out or, structure or anything, what kind of profitability, what kind of return on equity, what kind of capital intensity for this business? Well, we are getting pretty good traction with our customers in terms of both our fan-out as well as interposer-based kind of packaging products. W e will be aggressively engaging these customers and try to fit their needs. But at the same time, we are also increasing our collaboration with the upstream foundries in providing the sufficient capacity into this area. So we are optimistic about the revenue from these different package type products coming from both directions. One is our own solutions, and the other is really the collaboration with foundries. But which one is stronger for the for the past 3 months, which one turns out to be more positive to give the management, like, stronger confidence? Well, I think the, Collaboration with foundry or your. Collaboration is more stable there, and it's more obvious. In terms of our own solution, I think the design or the process of it is still, subject to a lot of customer discussion and also co-working with our customers. But we are making a lot of progress on that, and we're actually in mass production, but in terms of real volume, I think we should be seeing that coming from next year. Okay, sorry. So, what was the profitability for that, capital intensity? Say what? Profitability. The profitability for the AI-related business and the capital intensity for that. Well, you're seeing our margin being gradually improving, so I guess at least the margin should be equivalent. Our next question is from Mr. Charlie Chen of Morgan Stanley. Hello, thanks for taking my question. So, first of all, congrats for the good execution, especially for 4th quarter, gross margin improvement. Thank you. And so first, yeah, sure. So first, the question is about your view about the cycle. And then now, customers placing rush orders, your order bank get depleted. But do you think now is the hard bottoming cycle, meaning for the first quarter, you wouldn't expect further decline of the fab utilization? T hen just give us some color about the cycle recovery. Thanks. Well, I certainly don't have the crystal ball for it. I think the market is still still very volatile. I think one good sign of it is we same as everybody else, we believe that we're at least at the, maybe at nearing the the end of the inventory digestion. But still, I think that's really not. At this point, I don't, I personally don't believe that this is really the real issue here. I think the real issue is still whether the overall consumption will recover more in a stronger pace than what we're what we're really seeing now. That really involves a lot of different various exogenous factors. the recent war that's going on in the Middle East certainly doesn't help the situation. W e thought that the inflation is in check now, but with the war going on, that may put another variable into it. So, it's very hard to predict how, how fast the industry will recover. We're just gonna take that years. I think there are good signs, there are bad signs, but, overall, I think we would just, we just focusing on what we do best and serve our customers. And, we are cautiously optimistic about next year. We believe that, going into Q1, throughout the whole year of next year, we will continue to see year-over-year growth. Okay. Thanks, Joseph. So, just to look back,? When did you start to see or feel the so-called rush orders? Can you give us the kind of the timing, when to start to see that? We have been seeing rush orders throughout the years, as particularly at the, the last month of any particular quarter, we see some rush that's coming in across the board. I think that's the reason, the reason for that is, the customers are, like Ken mentioned, is at this point, more cautious about restocking. S ince there are, ample capacity as well as wafers and also materials, I think the customers will tend to wait till the last minute until they see they have a clearer view of their upcoming demand, they will put the orders in. So that's what we have been seeing for the past few quarters, and we are seeing that still going on at this point. Next question is from Mr. Rick Hsu of Daiwa Securities. Yeah, hi. Great, good afternoon. Can you guys hear me? Yes. Okay, great. First question is regarding your capacity utilization across the board, ATM. I think, if I don't remember wrong, Kim said something about mid-sixties for Q3,? So I assume, given your slightly decline in Q4 ATM revenue, so your loading should be below mid-sixties in Q4. Is that? It will be slightly lower than 65, yes. Okay, great. Second question. Your foundry partners, like TSMC, UMC, see some good early signs of demand stability from PC and smartphone consumer electronic products. Do you guys agree? D o you see any counterseasonal possibility for your Q1 loading, assuming the early sign recovery, demand recovery from this consumer base? Well, there are spotty signs of optimism, but, end demand remains to be seen. There could be some volatility in 2023. but we believe that things are starting to look up, and that's why we, like I said, like, like I said, earlier, we are cautiously optimistic about next year. All. Thank you so much. Thank you. Thanks. Next question is from Brad Lin of Bank of America. Hello. Hi. Thanks for taking my question. I have two questions, one on generative AI, and second on the silicon photonics. So basically, firstly, we are encouraged to learn the management's positive comments on the new generation of the consumer demand. I'm quite curious about what kind of the new application should we expect for the consumer market, and what are the applications that are in sight for the ASE? And also, what time do we expect it to, well, take off? Thank you. Take off in what? In silicon photonics? No, no, for the new generation of the consumer demand, which may be brought by the generative AI. I think the AI is coming, and we’re expecting the AI technology to proliferate into so many different kinds of edge devices. T hey will be the main thing for the next few years. It will be a mega driving force for the industry to grow, and we're certainly to be well prepared for it. I think the real cream for us is not just the AI chip itself, but the proliferating applications into all different kinds of devices that will create tremendous peripheral chips demand for us to satisfy. Got it. So that's a structural trend, and then we should see a lot of the new applications to come in the upcoming years, in AI? I think the momentum will start to really start to accelerate going to 2024. Got it. Got it. And then, my second question is on the CPO. So we have learned, ASE started development of the CPO or Silicon Photonics for a couple of years, during the SEMICON. So may we learn the opportunities and also the implication of the new technology, and what are the key barriers or challenges for ASE here, in this new technology? Thank you. Well, not being a technology guy, I think, well, from what I've heard, that's still a few years away. Right now we're still focusing on the Silicon Photonics chips packaging test. going forward, I think the technology will push the development of CPO, and we're still at the investing stage. And when the demand really come, we will be ready for it. Next question is from Miss Sunny Lin of UBS. Hi, could you hear me okay? Yes. Thank you very much for taking my question. So my first question is on interposer-based 2.5D package. I think currently the mainstream solution is based on silicon interposer. But there's increasing discussions on the technology move into RDL-based 2.5D package. And so based on your engagement with the key customers, when do you think that shift will start to happen? F or ASE, I assume that you should be getting more opportunities if the industry does start to make that shift? Yeah, we're seeing that happening now, and we are aggressively engaging our customers who are looking for a more cost-effective kind of solution. at this point, I think if you call silicon-based, silicon interposer-based, it's still a bit more matured kind of technology. And I think the RDL-based, there will still be some discussions in terms of the design or the process of it that needs to be worked out individually with the customers that we are engaging now. We are in mass production at this point, but with limited amounts. But we see this has a pretty good potential, and we will continue to make investment into it, and continue to work very closely with our customers to start expanding that part of the business for us. Got it. So a quick follow-up on this part of the business. And so in terms of the competition, and obviously the leading foundry is also aggressive on the overall technology roadmap. Some of your competitors are also focusing on exploring the opportunities. And so for ASE, what are some of the competitive advantage that you think you have when competing with the key projects? Well, our long partnering relationship with the foundry certainly give us an edge. Given our scale and the technology that we have been building over the years, I think we are, certainly ahead of our competitors, and in whatever products that we are building today, or whatever technology that we're developing. So, the competition is given. There's always gonna be competition. The key here is really to stay focused and continue to bring out the satisfactory offering to our customers, as well as our strong foundry partners. Next question is from Mr. Szeho Ng of China Renaissance. Hi. Thank you. Yeah, my first question is regarding the pricing environment. So far, seems to be quite stable, but would there be a risk that the pricing environment will be more aggressive, when the inflation point really kicks in, when the market really bottoms? Well, pricing is, pricing pressure is always there. But given our scale and our leading position, I think our pricing is more resilient than our competitors. We will continue to find the most suitable pricing strategy for to satisfy ourselves as well as our customers. I see, All. Same question regarding the CapEx this year, and also any, initial outlook for next year's CapEx. Nothing for next year, but for this year, we are sticking to our original CapEx roughly for equipment, about $1 billion. And the split of it will be around 50% in assembly, 30% in tests, 17% in EMS, and 3% for material. Next question is from Mr. Gokul Hariharan of J.P. Morgan. hi, thanks for taking my question. So for some of these 2.5D packaging and advanced identity related products, could you talk a little bit about how much more capital intensive these investments are? I think long term back, we used to talk about 1.1 dollar revenue for $1 of CapEx for flip chip and much lower for wire bond. Could you talk a little bit about how we are seeing this capital intensity going up for some of these investments? Second, what is ASE's stance on taking some customer supported capacity build-ups? Some of your competitors or some of your peers have kind of done some of the capacity expansion in partnership with some of the AI customers. Any thoughts on how ASE is approaching this kind of capacity build-out? L astly, I think we've been seeing CapEx spend, CapEx declining since 2021. So do you feel like we are reaching an inflection where we start to have to add some capacity, increase CapEx, in next year? Or you think given utilization is still mid-60s, next year outlook is still not that clear, to guide for any meaningful capacity? Thank you. Well, like I said, we are seeing a better overall market environment for next year. It wouldn't be surprised that next year's CapEx although I don't have the number here, but I do believe that the CapEx that we need to put in for next year will be higher than this year. In terms of the, the advanced packaging, I think the, like we said, now we're still at the very early stage in developing this part of the business. And so I think we don't have sufficient data points to come up with the real or more precise investment intensity at this point. Plus, like I mentioned, earlier on, whatever investment that we are on the table today for, this type of products, is mostly for, debottlenecking the, the current capacity that we have. So I don't have a, real number for, in terms of capital intensity for this type of product until we collect more data points, and, until this, this part of the business becomes a, larger, enough, pool of business that we can come up with the, more meaningful, numbers for it. I think, whatever we, we're gonna do is we will look at the demand, we will look at the, the technology that's required or the equipment that's required, and also the, the business terms that we can get, so when we put the investment in, it will be suitable for the, for the demand and also, that it create a justifiable financial return for us. Okay. Got it. My second question is on the adoption of chiplets. We've seen a lot of that happen in the HPC side. Broadly, could you talk a little bit about how the chiplet adoption helped or changes ASE's role, either adds to it or takes away something, but just how you think about it? And more specifically, do you see more chiplet-related packaging potentially getting adopted even in the communication, the mobile smartphone segment, which is largely monolithic now, looking out maybe a couple of years in terms of what you see and have discussions with your key mobile customers? Well, I guess the chiplet is certainly the, the, the, technology that's required for it, especially for advanced nodes. There, there's physical boundaries that we need to break through, through the, chiplet packaging. So it is a growing trend, and, we will, at this point, we think, it's still predominantly in the HPC area or networking. When or how fast it will move into other areas, I think it will take some time for us to, to have a better grasp of, this development. Next question is from Bruce Lu of Goldman Sachs. Hi, Joseph, I wanna ask about the dividend. Given your, EBITDA is so much stronger than the CapEx, can we expect a higher dividend payout ratio moving forward, or at least for this year? you're paying, NT$ 8, NT$ 7 for the last two years, given the weakness of this year, but your cash flow is still very strong. So can we expect a higher payout ratio this year? I think we have been paying 60%-65% over the years. Well, this is not up for me to answer. I think this has to go through the board. given the circumstance, I think we will have a good discussion on how we address this issue. Sorry, I think you- Yeah, I understand that. Just like, you should maintain the 60%-70%, given that the earnings declined more than that. we don't want to see the dividend per share goes down much, I mean, that's the investor feedback. Another question for the a nother question for your testing. I mean, I think I do recall in early 2022, management turns more aggressive in testing, which generate pretty stronger growth on earnings. However, you look at from second, third quarter, your testing revenue, your growth was substantially lower than your packaging business. At the same time, your peers, their testing is doing pretty good, with, very impressive share price. So what kind of testing strategy can we expect? Do we expect some change for the testing? Do we turn more aggressive into the testing? Do we get involved in the wafer level testing moving forward? What kind of strategy we gonna can we expect? Well, we still have the same view on testing that we believe still has, it does have good potential for us. We want to remain aggressive in making testing a larger part of our overall. We're gonna come back and revisit the overall situation, see how we can move further toward our target and to bring this part of the business up. What are the business that we should be pursuing? What kind of new technology that we should be investing in? That's an ongoing process. I think the reason, kind of a slower growth pace in tests is because of the overall products shifting in this, in this market at this point. So, I think that that's one of the main reasons why we're seeing some of the differences in the test business growth pattern between us and our competitor. But we're gonna, we're gonna look into this, and we're gonna put our focus back on our tests, and we'll continue to drive that business. Next question is from Mr. Szeho Ng of China Renaissance. Oh, yeah. Thanks for taking the question. Regarding the interposer business, do you have any plan to get into the fabrication part of the business? I'm sorry, I didn't get your question. Do you have any plan to build interposer internally? Build interposer internally? I wish we could, but no, I don't think we have any plans of doing that. I see, because it doesn't fit our DNA,? I think for interposer. Doesn't fit what? It doesn't fit our DNA, I mean, the business or the know-how. I'm not sure this is really what our strength is, and this is a wafer process and or assembly house, so I, I don't see a real good fit in it. Yes, that makes sense. Yeah. Okay, thank you very much. Next question is from Mr. Charlie Chen of Morgan Stanley. Hi, Charlie. Hey, Joseph. Thanks for taking my question again. So I'm not trying to be picky, but I'm very interested about your previous comments. You said that usually in the previous quarters,? Rush order only happened in the quarter end, but now we are at the beginning of the quarter, you still see rush orders coming in. Am I getting anything wrong, or is that a sign of kind of demand is actually better than expected? How do we read this? Thanks. No, I, I'm saying the pattern seems to be remaining. That's to say, by end of the quarter, we could see some other rush orders coming in. I'm simply trying to say that, the quarter end rush order seems to be the pattern of up until now. Yes. Okay, Thanks. So another follow-up question or two, if I may. One is the AI chip testing business,? No matter GPU versus ASIC, it seems like your competitor in the testing business are gaining a lot of market share. I just want to know any fundamental reasons behind that. And second part of the question is more about long term, because as we can see data for mature node foundry, that's a capacity expansion is happening in China. So just wondering if China in the long term will gain market share, whether that means ASE in the back-end foundry service will lose market share, because you probably- I'm not sure,, but you probably sold your China operation a couple years ago. Well, I think our China operation remains in Suzhou, which is under SPIL. It's a bit different from. It's quite different from the four factories that we sold two years ago. I think the Suzhou factory today is a more advanced facility than the four that we sold. And it does suggest the going demand in China, particularly when things are, the whole industry is kind of polarizing at this point, where China demand remains in to China, and the outside of China goes to outside. So I think the Suzhou being more advanced, more efficient, more cost-effective, kind of a facility, I think it does, it's doing quite well, actually, in China, particularly in terms of serving the Chinese customers with a higher-end technology requirement. So we are confident that in China, we could be losing some revenue in terms of dollar, but in terms of business, we're actually gaining better quality business in China. The first part of the- Oh, testing, yeah, for the GPU and ASIC. Yes. Other than congratulating our competitors doing a very good job in securing that business, well, we have some catch up to do, and we will do so. Okay. Okay. All, good to know. Thank you. If you have any questions, please raise your hand. There are no more questions. Okay, thank you all for coming. Sorry for my low voice, because I caught a cold. But, thank you again for joining us, and we'll see you next quarter. Goodbye.