Kulicke & Soffa Industries Inc Q3 FY2022 Earnings Call

Greeting and welcome to the Kulicke and Soffa 2022 Third Fiscal Quarter Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Joseph Elgindy, Senior Director, Investor Relations for Kulicke & Soffa. Joseph, you may begin.

Thank you. Welcome everyone to Kulicke & Soffa's fiscal third quarter 2022 conference call. Fusen Chen, President and Chief Executive Officer; and Lester Wong, Chief Financial Officer are both also joining on today's call. For those of you who have not received a copy of today's results, the release, as well as our supplemental earnings presentation, are both available in the Investor Relations section of our website at investor.kns.com. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kulicke & Soffa, that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended October 2, 2021, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Thank you, Joe. Today I would like to provide an update on the progress and status of our key growth initiatives around advanced packaging, advanced display, electronics assembly, and automotive. These initiatives are progressing well and provide upside potential to our long-term financial targets. Before discussing these growth-specific opportunities, I wanted to step back and discuss the broader macro and industry environment. As we discussed last quarter, the industry continues to be constrained by supply-chain challenges, largely around wafer capacity, which softens the near-term rate of semiconductor assembly expansion. In addition to these known industry challenges, which we have explained on previous calls, we also face an increasingly dynamic macro environment. Regional COVID lockdowns and logistical challenges are continuing, broader inflation, consumer confidence trends, and wafer fabrication equipment forecasts are now also impacting our near-term outlook. Although not unique to K&S, consumption of consumer goods, such as smartphones, PCs, and general electronics play a significant role in impacting semiconductor growth rates in the near-term. While we do not yet have clear visibility into fiscal 2023, we intend on providing additional details and a longer-term outlook during our upcoming November earnings call. However, during today's call, Lester will provide additional commentary that highlights our cash-flow and profitability improvements over the past few years and expectations over the coming quarters. At this point, I would like to provide an update on our strategic execution and progress supporting the broader trends in advanced packaging, advanced display, electronics assembly, and automotive. At a high level, our global research, development, procurement, and business teams continue to be very engaged, supporting several exciting opportunities with top customers. We have developed several enabling systems, and our growing base of customer engagements serves as a testament to our competitiveness, which implies upside to our long-term financial expectations. Within advanced packaging, our dedicated solutions are currently running 35% higher for FY 2022 than expectations during our Investor Day. Specifically, our thermocompression systems are very unique and feature-rich, relative to alternatives. I am pleased to announce we have secured purchase orders totaling approximately $80 million, with delivery dates over the coming 18 months. It is important to note that our leading thermocompression solutions are being adopted by a broad set of customers including integrated device manufacturers, OSATs, and OEMs. As explained in detail last quarter, market opportunities go beyond next-generation heterogeneous applications. Thermocompression is also being adopted in key markets such as mobile sensing, mobile application processors, and silicon photonics. We remain very focused and continue to aggressively take share and increase our presence within this growing opportunity set. Additionally, a material portion of our high-volume assembly solutions are also benefiting from the broadening adoption of Multi-Chip modules and system-in-package applications. These applications, which provide greater transistor density at the package level, are increasing the capital intensity of assembly, positively impacting long-term growth rates of the ball, wedge, and APS businesses. As a reminder, ball and wedge bonding continue to represent nearly 80% of total semiconductor packages and offer compelling production benefits that support the increasing value of the assembly process. We have clear leadership positions across these sizeable, growing markets, especially within the most complex applications. Ultimately, this growing capital intensity has added a new layer of technology-driven growth and also increases the need for new product features and capabilities which will continue to enhance profitability. Our progress, strategy, and ability to enhance gross margins highlight our value contribution within this evolving semiconductor market. Next, I wanted to provide an update on our growing opportunities within the emerging advanced display market. Since 2017, we have developed enabling innovations that extend the power efficiency, performance, and manufacturing costs of these key emerging display technologies. Advanced display is a meaningful, high-growth market opportunity where we continue to be very engaged with several key customers and continue to pursue a multi-pronged approach, supporting new applications within backlighting as well as within the direct view and micro-LED opportunity. We continue to expand our advanced display installed base, pursue multiple LUMINEX engagements while making ongoing progress across several customer development initiatives. We have already demonstrated a clear leadership and first-mover position in advanced display as we are engaged with approximately 10 high-potential customers and look forward to outperforming our long-term targets. Ongoing customer engagements, qualifications, and acceptance remain our key priority areas over the coming 12 months. In addition to intimate involvement in these long-term technology transitions which expand our semiconductor and display opportunities, we are also extending our presence in both the electronics assembly and automotive markets. Turning to electronics assembly, our largest total addressable market opportunity, our competitive solutions currently support high-reliability automotive, system-in-package, and memory applications well although they represent only a small portion of the total addressable market. This creates a fairly significant prospective market opportunity, which we have been pursuing through the development of disruptive SMT systems, which are expected to ramp towards the end of fiscal 2023 and will accelerate share gains over the coming years. Finally, within automotive, we continue to expand our solutions supporting the electric and autonomous vehicle transitions across our growing base of OEM customers. K&S has a long-established position within several automotive markets, and we remain very involved in this exciting, long-term market evolution. The auto transitions driving electric and autonomous adoption are demanding more power control, power distribution, and power storage applications which directly benefit our competitive wedge, electronics assembly, and battery assembly solutions. Turning to the June Quarter business results, we generated revenue of $372.1 million and non-GAAP earnings per share of $2.09. Capital Equipment remained flat at 87% of total revenue. We experienced strong demand across end markets during the June quarter. General semiconductor increased roughly 12% sequentially, due to strength in ball and wedge applications. Also, demand strengthened sequentially for our dedicated advanced packaging solutions including thermocompression, wafer-level bonding, and lithography systems. Within LED, similar to last quarter, over 80% of LED sales supported our growing advanced display opportunities. At this point, we are comfortably within our full-year expectations on advanced display contribution and look forward to growing this business over the coming years. Auto and industrial remain very strong across our product lines and have sequentially strengthened within our growing power semiconductor applications. As mentioned earlier, we remain very focused and positioned well to support the long-term growth opportunities of the automotive market. Finally, memory came in strong for our core NAND-based solutions, which we support across all major memory customers. We are also very focused on delivering new DRAM assembly solutions over the coming years. In summary, our progress on new growth initiatives and customer engagements remains on track and provides upside to our long-term financial targets. Efforts to expand our served market while directly participating in fundamental technology changes remain a high priority throughout the organization. As stated earlier, there are additional macro and industry risks we did not previously anticipate and expect to provide greater detail to our outlook over the coming quarters. Our ability to succeed in development and customer engagements near term will enhance our visibility into fiscal 2023 while providing upside potential to our existing long-term financial targets. We look forward to demonstrating this progress over the coming quarters. With that said, I will now turn the call over to Lester who will discuss our financial performance. Lester?

Thank you, Fusen. My remarks today will refer to GAAP results, unless noted. As Fusen mentioned, we continue to remain very focused on mid and long-term growth prospects by executing on our internal development goals, maintaining our pace of customer development engagements while actively returning value directly to shareholders through our growing dividend and aggressive repurchase programs. It's also very important to remind callers today that our financial performance has already improved dramatically due to several technology changes which reduce our reliance on annual capacity expansion. In parallel, we have continued to strategically expand our served market. During the June quarter, we generated revenues of $372.1 million and very strong gross margins of 51.2%, up by over 500 basis points, year-on-year. This strong gross margin performance highlights our consistent operational efficiency and improving product mix, and also highlights our incremental value-add to the industry. Non-GAAP operating expenses during the quarter came in better than expectations due to a $4.5 million foreign exchange gain. Tax expense for the quarter came in at $5.2 million, significantly better than expectations. This favorable benefit was driven by a partial release of a valuation allowance, previously recorded against a net deferred tax asset. This favorable benefit is directly related to the success and outlook of our Advanced Display solutions. Non-GAAP net income for the June quarter was $125.1 million, representing a very strong non-GAAP net margin of 33.6% and non-GAAP EPS of $2.09. Turning to the balance sheet, days of accounts receivable decreased slightly from 86 to 85 days. Days of inventory increased from 104 to 107 days and days of accounts payable remained flat at 49 days. Over the past four quarters, we have generated $380 million of free cash flow, highlighting our longer-term potential. During the June quarter alone, we generated free cash flow of $99.7 million and closed the quarter with a net cash balance of $471.7 million. During the recent March quarter, we announced the accelerated repurchase program and deployed $146.2 million in repurchases. During the June quarter, we completed the accelerated repurchase program and reinitiated our open market program. We deployed a total of $61.9 million to both programs in the June quarter. At the end of the June quarter, we had just over $300 million remaining under our repurchase authorization and continue to manage an active, price-dependent, open-market approach. This remaining repurchase authorization, combined with our growing dividend yield, provides consistency and value-creation opportunities at the share level. For the September quarter, in line with Fusen's comments regarding softening macro and industry environments, we anticipate revenue of approximately $280 million plus or minus $20 million. Gross margins are expected to reduce to 47% plus or minus 50 basis points, due to additional expediting fees, near-term facility resizing effects, and also higher than expected inflation. Non-GAAP operating expense is anticipated to be approximately $70 million, plus or minus 2% and non-GAAP EPS to be $0.93, plus or minus 10%. While we do not yet have comprehensive visibility into fiscal year 2023, we expect the September quarter guide should be comparable to our average quarterly run rate through fiscal 2023. At this level, non-GAAP EPS of over $3.50 is achievable. As a comparison, this would represent approximately 7.5 times the non-GAAP EPS generated during fiscal year 2019. As the industry recovers and we expand our served available market beyond fiscal 2023, we expect to exceed our recent fiscal 2021 and 2022 performance. It remains a very exciting time for the company as we have significantly broadened our market access and remain intimately involved with fundamental technology changes across the semiconductor, advanced display, electronics assembly, and automotive markets. Our core business evolved in a very positive way over the prior two years increasing our resilience to industry cyclicality significantly. Near-term, the entire organization remains extremely focused on executing our multi-faceted growth strategy and maintaining our emerging leadership positions within these high-growth technology-driven opportunities. Over the near-term, expanding customer engagements, winning qualifications, and recognizing revenue are top priorities for the team. Our ability to execute on these priorities over the coming quarters is critical to enhancing our longer-term visibility and financial outlook. While there are some near-term challenges due to the macroeconomic environment, we strongly believe we are well positioned to take advantage of major technology changes which will start to pay dividends in the second half of fiscal 2023 and beyond. This concludes our prepared comments. Operator, please open the call for questions.

Our first question coming from Krish Sankar from Cowen.

I actually had a few of them. First one, Lester, I just wanted to clarify. Did you say FY '23 quarter should be similar to September quarter revenue run rate?

No, I didn't say that. What I said was, as Fusen indicated, Krish, given the volatility and uncertainty in the market right now, we are not in a position to say FY '23 will provide more details on the November call. What I did say is that if FY '23 was at the same run rate as Q4, we would generate EPS of $3.50, which shows the company is actually very profitable even at a lower revenue level, much more profitable than the last down cycle.

Got it. Got it. That's very helpful. A couple of other questions. I just wanted to check, you guys highlighted the decrease is due to macro concerns BE Semiconductor highlighted that some of the Chinese costs are also slowing. So I'm kind of curious, have you seen any weakness in China? And what percentage do you have seen for China for you?

So Krish, are you asking whether China is also slowing down?

Yes. And what percentage of sales for you is from China?

Okay. So I think it's well known that macro factors are impacting consumer demand. That has led to a period of capacity digestion for some of our customers. And of course, all set is a big pool. On top of that, I think the China LED is also slowing. So these are the two areas we are seeing a slowing down. And maybe the last area, we still see steady supply chain challenges that cause the bottleneck for our customers. If there is weakness, I think in this area and the capacity dilution period for us, we are seeing maybe about two quarters. Beyond that, we are quite optimistic about the strength coming back in the second half of '23. In the meantime, we also anticipate generating strong cash flow even together with this very short period of slowdown.

And Krish, did you ask what the percentage of revenue in China was?

Yes, yes.

It's 52%, the same as the previous quarter.

Okay. Got it. And then just two quick housekeeping questions, Lester. You guys didn't mention in the backlog. Can you just tell us what the backlog is? And what is the lead time for wild bonders today?

Well, Krish, I don't think backlog is a very good indicator for our investors in terms of looking forward, particularly now that we give long-term guidance. The reason is that backlog can be a little bit confusing because different people use different definitions of backlog. For example, a lot of people use backlog in terms of just the purchase orders they have. Our definition of backlog is actually the purchase orders we have with a specifically determined delivery date. We also have purchase orders, obviously, that do not have a specific delivery date, which we don't put into backlog. So we don't think backlog is a very good metric for us. And in any event, the backlog has been pretty consistent in terms of the variation over the last quarters or so, each quarter-on-quarter has probably reduced about 10%. So again, we don't think backlog is a great indicator and that's why we didn't include it anymore. I think also the final point is that, as you know, Krish, a lot of our U.S. listed peers do not provide backlog information; they only do it during the annual report at the K level. To answer your question, lead times now is a little bit over three months.

Next question is coming from Craig Ellis from B. Riley Securities.

Yes. And Fusen, I really appreciate the deep dive on the market expansion initiatives to kick things off. So I wanted to follow up just on some of the order dynamics and the implications for the business, given what you're seeing in the order book. So it looks like the business is returning to more typical seasonality with revenues being down meaningfully in fiscal fourth quarter. The question is this: as you look beyond that to the fiscal first quarter one, what is the historic range for seasonal performance of the business? And related to that, how would investors reasonably expect the business to perform versus historic seasonality this year?

So actually, I don't think this is a seasonality issue. I think what we are facing is the whole industry. The customer demand is actually impacted by global macro issues. You can see from a lot of customer products, actually this slowdown looks quite dramatic in recent months. So it might not be seasonality; I think it's softness in capacity projection that is affecting this demand issue. And we do believe this probably would last about two quarters and a maximum of three quarters. In the second half, we expect the market to pick up globally for the whole industry.

Got it. And then just a clarification with regard to the very strong gross margin performance in the quarter, another above guidance result. Lester, what were the specific factors that caused gross margin to exceed initial guidance? And what was our relative contribution?

Well, I think, Craig, what caused the gross margin to be very strong in the quarter is, as usual, our product mix. We had a higher contribution from our advanced packaging business unit as well as our Wedge Bond business unit, which did very well during that quarter. We also had a machine that came in a very high margin because it's been expensed before. So I think it's mainly product mix that caused the margin to be higher than anticipated.

The next question is coming from Charles Shi from Needham & Company.

Fusen, I want to go back to your comment on capacity digestion. Did I hear correctly? You think it's going to last about two quarters, and in the second half of your fiscal or calendar '23, you think the demand is going to pick up? And also tying to the same question, I think in September last year, you were expecting $1.5 billion average revenue through 2024-2025. I kind of forgot, but what is 2023 shaping up relative to that $1.5 billion average revenue guide?

Okay. So Charles, I think I remember in the Investor Day, that's what we said. I think our 2020 revenue was $632 million, if I remember correctly. In 2021, I think it's in the middle of Investor Day; we didn't finish that yet. But I say it's $1.5 billion, and we did say '22, we feel like it will be as good, as good that means it's also to $1.5 billion. And we also said average of our next few years will be $1.5 billion. So at this moment, I think we see macro slowdown and inventory correction and capacity digestion, and so this will last maybe two to three quarters. So with this unexpected phenomena, we do expect right now the first half may be lower and a pickup in the second half. So to achieve $1.5 billion probably will not be quite possible. But we do believe with '24, we are looking for a very, very strong '24 with a lot of new products, and even at this moment, if there's a correction, I think '24 will push even higher for the core business. So we still have a chance to achieve what we say. The next few years, '21 is $1.5 billion, '22 is $1.5 billion, and in the next couple of years, I think average we can still be higher than $1.5 billion. I hope I answered your questions.

Yes. So maybe a second question. I understand that for your wire bonder business, maybe the visibility is a little bit not as great as, let's say, three to six months ago because of macro. The advanced display side, I would assume that there's things that are more under control because you have a lead in that market, and you probably – your customers are probably engaging with you over a longer term. Any thoughts on what your advanced display outlook for fiscal '23? Are you going to exceed the level of fiscal '22? And adding on top of that, I want to see if you have any comment on recent market chatter that Pixalux customer seems to be moving to OLED for their premium product lines around 2024, which could mean the mini-LED may be displaced? And are you hearing anything like that?

Okay. So let me talk about our advanced display. So we entered this market in FY '19. So up to date, I think cumulatively, we generated over $200 million in advanced display. And this is including FY '22; we expect the revenue for advanced display to be going to be higher than $90 million. So for '23, it's a year because of qualification and adoption year for the Luminex. And because of qualification, we will add not just hiring business, but we do expect in '23 over $100 million of sales as we continue to drive Luminex qualification for advanced display revenue through '23. We do expect significant growth in FY '24. So I don't know if I answered your question. Okay. The second question is OLED compared to micro LED or mini LED. I can tell you, a lot of people try to make a micro LED and mini LED work and with a lot of effort from throughout the whole industry because there are a lot of LCD capacity out there. People want to reuse it. The commitment is, on the LCD side, the forecast I think is positive. The growth rate, year by year, by analysts, is showing significant growth. Customers can at a certain point actually have a dual strategy, but I can tell you all the customers we are working with have a very, very strong commitment. All the customers have a strong commitment in this mini-LED and micro-LED.

Our next question is coming from Christian Schwab from Craig-Hallum Capital Group.

Just for a little bit further clarity on the commentary of two to three quarters of digestion. Do you believe the baseline of the business during this digestion period falls below the kind of the '21 baseline of $900 million over the course of the next year? Or do you see it greater than that?

So Christian, I think we are really confident on the long-term growth prospect for the whole industry. And since this capacity digestion and mega demand inflation or macro factor has really recently started to impact the whole industry, I think it’s a reasonable assumption. Actually, as an example, I think it's not an unreasonable assumption since we are going to see the first half is going to be lower compared to our previous few quarters. This quarter is a low and we actually expect it will not bounce back right away. So we hope the water and mix more, and we think it's the three quarters. And compared to our $1.5 billion EBIT, we think you should pick up free long rate; of course, it's not going to be flat. If you use the number we just guide for the long four quarters, it will be between $1 billion to $1.5 billion, right? So that's what we see and try to be realistic. I think $1.5 billion probably will be difficult. But we do believe our second half will pick up, and we will still generate very healthy cash flow for the company and the investor.

Great. And then what do you think utilization is at your leading OSATs today, and would it have to return to for more aggressive capacity additions?

So Christian, utilization right now is running pretty flat around 80%, but then you do have pockets, both in terms of end markets. Obviously, automotive is a strong end market, and also in terms of regionally, I think China, because of the ongoing COVID issues, is a little bit lower. As far as what we need it to be, I think historically, if it's above 80% and in the mid-80s, I think that was when basically there's capacity expansion. But again, these are, as you know, very dynamic and volatile environments. So right now, I think everyone is trying to figure out exactly how the next couple of quarters are going to play out. But we do believe, as Fusen said, the second half of FY '22 will be much stronger.

Your next question is coming from David Duley from Steelhead Securities.

Could you update us on the details of the remaining buyback? Going forward, please outline the plan for the buyback in the September quarter and beyond. Will there be any additions to it? That's my first question.

Okay. So Dave, we indicated that we have about $309 million remaining at the end of the quarter in our authorization. As you know, we completed the ASR and reinitiated our OMR program. We plan to actively use our OMR program to buy back stock, as we believe it is undervalued. While we don't provide specific guidance, we will continue to utilize our OMR program moving forward.

The guidance you gave for the September quarter, what would you guess would be the cash flow from operations based on that guidance?

I would say cash flow from operations would probably be similar to the EPS.

Okay. And then, Fusen, you gave us a lot of detail about, I think, the ramp-up in the thermal compression bond business. Could you just review again? You mentioned, I think, three or four applications? It sounds like it's a pretty broad-based ramp. If you could just do some of the bigger applications for the thermal compression bonder going forward. And then if you could just remind us what your revenue targets are perhaps in this fiscal year and next fiscal year?

Sure, sure, sure. So actually, we are quite proud and also show a lot of confidence about this product. I think in the next few years, we will see significant growth. Our product actually addresses a variety of customers and applications. This includes 3D sensing, silicon photonics, our mobile logic, and also chip-hybrid heterogeneous applications. We are covering a lot of customer needs, and more and more people are actually coming to us. We do believe our heterogeneity integration is going to grow significantly. The $80 million we mentioned is not just purchase orders; it's appeal with the delivery there and will continue to grow. This $80 million largely will be shipped within FY '23. Our fluxless TCB, we believe, will be the mainstream interconnect for future heterogeneity integration down to a 20-micron pitch. Of course, smaller than 20 microns, there will be somewhat niche product architectures and other technology, but we are quite bullish. I think for the heterogeneity integration for many years, our TCB should have a high volume and we are working with more and more customers. For the total advanced packaging revenue, this quarter alone, we are talking about dedicated. I think different companies have different definitions of advanced packaging. But all dedicated advanced packaging, we are talking about our TCB, like some compression, we also have a high-accuracy free chip. We didn't talk about it this time, but it’s picking up momentum, and we’ll update for the next couple of quarters. This quarter, we are around $64.9 million. It did not include ICO advance bond, including advanced wonder; I think it is about $130 million for this quarter. ICR, this area is our growth area, and we are quite confident about it.

Okay. And then just as a clarification, the weakness you're seeing in the September quarter, what end markets or product lines are you seeing weakness in September versus June?

Okay. Mainly, I think it is really bull bonder. And if you hear the script I mentioned, I think every year right now is about 1 trillion finished die, finished wafer, and you cut it about 1 trillion die and need to have a package. Actually, 80% of those 1 trillion die are packaged. So this explains why I think when the industry slowed down, the bull bonder was impacted first. So actually, wedge bonders are very, very strong because we actually will continue to be strong. I think it's auto-related, and also power semiconductors are also very important. So to answer your question, I think it's very easy. During the capacity titration period, I think bonders are impacted. And again, when the industry picks up, the bond will be the first one. That is really the nature of the bonder. But we still see both in the AV cycle will continue to grow because it's the easiest way to do the interconnect and this will represent the most market share for the whole semiconductor packaging measure. We do believe every cycle, ball bond will continue to grow. We are seeing new use of ball bond; for example, in the memory, we are working with a DRAM leading company to replace TSV. We see early adoption and lower volume production maybe in 2023. In previous scripts, I talked about our multi-chip. The number will we go from 1,000 to 2,000. This is the market expansion and capacity extension. Also, I think 5G; there are many multiple bandwidths, even have ball bond to create a pitch in isolation to prevent the interference of the next die. So longer, I think the next week – next quarter, maybe two to three quarters will be lower. But when it picks up, it will also pick up very, very fast.

Okay. And then final question for me. Just curious, you talked about a two-quarter inventory correction or two quarters of weakness. What gives you confidence? Is that your customers telling you that? Or are you picking up on what TSMC has said on their conference call? Just kind of curious why you can monitor the customers' level of inventory. Why do you think it's just two quarters?

Well, they are from a two-way. One is, of course, I talked to you, actually our sales team. And of course, we also reached out to our customers. And that was the indication to give us higher confidence that the second half will pick up. That's the first reason. The second reason is that multiple mature node capacities are going to finish construction, and they will start to need to put the capacity to do in a package. I think just China alone, they are mainly – I actually don't have the number, but I think they are close to 30 mature node capacities that will come up. The first one they need is going to be a ball bonder. Also, historically, we see the weakness of the ball bonder is no more than four quarters. If you see, I think I actually reached our pick probably two quarters ago when we reached $480 million. It was really average real demand. I mentioned it was another customer needed hurry to put the capacity. We quickly just put in. So there was one quarter. We reached $480 million. One quarter, we reached about $420 million. After that, the ball bonder started to drop a little bit. But at this moment, we never see ball bonders lower pipe quarter for us. With these two, we see some confidence that our second half will be better.

Next question is coming from Hans Chung from D.A. Davidson.

So first, I was wondering, what's the semiconductor unit growth for this year based on your September quarter guidance? And also, what is your view on 2023?

For the quarter for FY '22, I think we think it's about 10% unit growth for the year. I think for '23, based on what we see and based on industry experts, I think it will be close to a normalized level of about 6.5% unit growth.

Okay. And then for the Automotive segment, so during the quarter, why the revenue coming down a little bit? Because I think across the industry, the automotive has been pretty strong. And then I mean it's very strong across the supply chain, either as a semi company or equipment guy. So I'm just curious about the dynamic during the quarter for the automotive segment?

Well, I think we came down just a little bit in the one segment, Hans. I think a lot of it is just customer schedules. I think we had a very strong automotive business from our wedge bonder business, as Fusen said, and it still continues to be strong. I think for the ball bonder of the automotive business, there's been some a little bit of shifting maybe into the next quarter. So I don't think the automotive business is soft. I think it's just slightly softer, maybe it came down a little bit.

Got it. And then last one, just do you have any update on the Luminex regarding any customer feedback or any new clarifications going on? Just any update on the Luminex?

So we are actually engaging close to more than 10 high-potential customers, and we ship out our few system and enhance clarification. Our goal actually in the next 9 months, 2 or 3 months, we want to ensure we have a few set we hope to finish our qualification. All in all, this is probably the most productive system that is going to hit the market. If you know, to move the display big spread from one place to the other place, you need to move about 25 million. Our speed is much, much faster than any competitor can claim and can do. So we are quite optimistic about the progress, and we'd like to finish the qualification in the next 9 to 12 months. We have a goal for the whole advanced display to go more than $100 million, and we believe it is achievable in 2023. So if we do reach it in 2023, the whole advanced display business, since we introduced this segment of business after 2030, it will be more than $300 million. We believe that '24 will be even bigger than that.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Joe for any further closing comments.

Thanks, Kevin, and thank you all for joining today's call. Over the coming months, we will be presenting at several virtual and in-person investor conferences with D.A. Davidson, Needham, and Credit Suisse. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.