庫力索法 (KLIC) 2013 Q1 法說會逐字稿

Welcome to the Kulicke & Soffa first fiscal quarter 2013 results call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded. It is now, my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Planning for Kulicke & Soffa. Thank you, Mr Elgindy. You may now begin.

Thank you Jessie. Good morning, everyone. Welcome to Kulicke & Soffa's fiscal 2013 first quarter conference call. Joining us on the call today are Jonathan Chou, Senior Vice President and CFO and Cheam Tong Liang, Vice President of Strategic Marketing and Business Development. Jonathan will provide the prepared comments. Both will be available for Q&A. Bruno Guilmart, President and CEO is unavailable to join the call today. He is undergoing a minor hernia procedure. For those of you who have not received a copy of today's results, the release is available in the Investor Relation section of our website at 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 SEC filings, particularly the 10-K for the year-ended September 29, 2012 and our other recent SEC filings. I would now like to turn the call over to Mr Jonathan Chou. Please go ahead, Jonathan.

Thank you, Joe. Thank you all for joining our call today. Revenue in our first fiscal quarter of 2013 was $114 million, which was at the high end of our guidance revenue range of $95 million to $115 million. The pullback from the September quarter reflects the high degree of seasonality in our business, with the December quarter traditionally the weakest of the year. We have anticipated this decline and took appropriate action at the beginning of the quarter to accelerate our cost containment programs already underway. Specifically, we reduced our operating expense by 10.1% or $5.3 million in the December quarter from the September quarter.

This continued focus on operational efficiencies combined with our stable growth margins helped us to achieve an operating profit of $4.2 million. Importantly, we continue to support the development projects [niche] as having the highest potential to impact our business over the long-term. K&S has been and we fully plan to remain the technology innovator, which sets us apart from others in the industry and allows us to fully support our customers and their future [enrollment].

I will go into more details on our financials in a minute. I would like to note here that even on a lower December quarter revenue level, our strict operating discipline enabled us to generate $51.5 million of gross profit, with gross margins of 45.2%. Our balance of cash and cash equivalents increased by $53.9 million or 12.2% in the fiscal first quarter, compared to the prior quarter. As discussed on prior calls, our Management and Board have had regular discussions as to best use of cash from a long-term view to benefit both shareholders value and the Company's competitive position. We continue for the time being to pursue both internal and external opportunity to that end revenue and pursue a share repurchase or dividend program. Our efforts resulted in five new products being launched last year, with several new launches already planned for the current fiscal year 2013. Finally, while we have not made any announcements regarding external opportunities, that should not be perceived as a lack of activity, rather we have been very active in evaluating many opportunities under our stringent but robust evaluation process by which we determine need and suitability, conduct detailed evaluation analysis and due diligence.

I would like to now update you on some additional business dynamics. As you would expect, the largest decline in volume was related to our ball bonder business. The reduction was seen across all our equipment lines and [cut] divisional seasonality within our sector, including our major OSAT customers. Relative OSAT bonder sales were also down, as expected in the lower revenue quarter along with the December 2011 period. 69% of our bonders sold were sold to OSAT. We also experienced softness of our wafer level bonder demand from the September quarter into the December quarter.

Looking at our traditional gold and copper [IP] bonder unit sales, [top on top] December 2011 versus December 2012, unit sales were down 1.8%. Our copper capable bonder sales represented 74.8% of our total bonder sales, which represents a slight increase from the December 2011 quarter. These data points give us continued confidence in the ongoing copper transition. About 6% of our ball bonders sold were configured for LED market. We continue to view LED space as an attractive, profitable and growing market in the future and remained focused on participating in their long-term development, especially in commercial and general lighting applications.

Turning to our wedge bonder equipment. The wedge bonder market remained fairly sluggish, though we anticipate customer utilization rates will slowly improve over the next several quarters. Additionally, in March, we will launch a new line of wedge bonder product at the upcoming China semi-con show, which we anticipate to help maintain our strong leadership [position]. Overall, we remain focused on accomplishing our objectives of further growing our market leadership position, diversifying out product portfolio and leveraging our technical expertise in an effort to increase value to our shareholders.

I would now provide a more detailed financial review for the December quarter. My remarks today will only refer to GAAP results compared to the December quarter -- to the September quarter. Net revenue for the quarter was $114 million. The net revenue change was driven primarily by lower equipment volume due to typical seasonality within the sector. Considering the sequential reduction in net revenue, gross margin remained fairly robust at 45.2%, with gross profit up $51.5 million. This continued gross margin performance was attributable to our flexible manufacturing model and our technology leadership backed by our ability to provide a steady flow of new equipment features, which support higher average selling prices.

As I mentioned earlier, we did a good job controlling our operating expenses, which came in at $47.3 million, down $5.3 million for about 10.1% from the December quarter. This significant decline reflects our efforts in cost containment in fiscal first quarter and to provide us with additional flexibility within our cost structure, which allows us to reduce our short-term break-even point for the coming quarter. The $5.3 million of quarter-on-quarter expense reduction extends primarily from reduction in variable compensation, [zone] restructuring and travel expenses, of which approximately $2.4 million of the expense reduction extends from our December quarter's cost containment initiatives. These beneficial reductions were partially offset by higher currency exposure related to the strengthening of the US dollar relative to other currencies and also to the $1.8 million net provision adjustment to our research incentive scheme RISC grant.

Income from operations was $4.2 million. Our tax provision came in at $775,000 for the December quarter. Looking forward, we are maintaining our long-term effective tax rate targeting 10%. During the December quarter, we generated an impressive $58.5 million of cash flow to operations. We ended the quarter with a very strong total cash position of $494.2 million, or $6.48 per diluted share. Working capital, defined as accounts receivable plus inventory less accounts payable, decreased by $58 million sequentially to $132.7 million.

From a DSO, perspective, our days sales outstanding increased 15 days to 78 days. With respect to inventory -- our day sales inventory increased by 42 days to 78 days. This increase is largely a function of our rapid bond reduction over the prior front-loaded quarter. Our accounts payable payed increased by 6 days to 29 days.

Looking forward to the March quarter, we currently expect revenue to be in the range of $90 million to $100 million. As we look forward, we are in a strong position. We continue to have clear leadership position in the markets we serve. We are well-aligned with our customers and continue to invest in our R&D to provide the leading edge solutions to meet our customer's short-term and long-term needs. The balance sheet is the strongest in the history of K&S. This unique position within our sector provides all K&S stakeholders with additional confidence and gives us ability to pursue internal and external growth opportunities. We continue to have an industry leading product portfolio, which we expect to further improve and broaden with a series of planned new product launches in 2013. We would now -- we will also continue to stretch operational efficiency. All of our efforts are essential to our longer term business strategy on diversifying our product offerings in order to improve cost cyclical performance.

This concludes my prepared remarks. Operator, we will now be happy to take any questions.

(Operator Instructions)

Lee Simpson, Jefferies.

Sorry I missed the start of the call, so I may be asking something that you have already quantfied. But just interested about what you think the guidance range would be for OpEx going into the March quarter. We saw you did -- you had some operational gains there in the OpEx base. Can we expect that to further continue as the sales tack down? Or is there something else in the dynamic we should be aware of?

Yes, actually, we're -- I said in my prepared remarks, Lee, basically we are holding our OpEx at a very good level. Plus, we are also able to provide additional flexibility in terms of the cost -- based on cost containment initiatives. So if you look at our fixed cost structure, it remains at about $36 million, plus about 4% to 5% tied to the revenue. So to give you a little bit more info in terms of the current quarter, we basically will come in around $40 million to $43 million for the current quarter from an OpEx perspective.

$40 million to $43 million you said?

$40 million to $43 million.

Perfect. Maybe as a follow-up question, I wanted to ask about the nature of the recovery that you anticipate in wedge. It sounds as though it's a slow recovery into tail-end of the year. Is this driven by an industrial semis uplift or is there some other end market dynamic that's helping to lift wedge bonder interests?

The wedge bonder obviously it is experiencing a softer recovery cycle. But we believe that probably -- in terms of the longer term, it will actually come back nicely. Perhaps I can actually have Tong to provide a little bit more insight, in terms of the data he is looking at that would actually provide some additional color of the wedge bonder business.

Okay.

The wedge bonder growth is actually tied to the anticipated semiconductor IC unit growth in the power semi market, but not as much in the industrial segments.

So I mean, within that power semis market, is the transition -- is it from older HBTs to IGBT modules, is that the sort of thing? In which case, it's automotive driven?

Partly is automotive driven.

Okay. Maybe just again, I missed the start of the call. I just wanted to get a housekeeping question. Can you maybe give me a sense for how big the OSATs were in the mix?

I mentioned in my prepared remarks that the OSATs -- I think it was 75% that was sold to OSATs.

75%.

Tom Diffely, DA Davidson & Co.

Quick question on the seasonality. Typically your business troughs in the fiscal first quarter and has a little bit of recovery in the fiscal second quarter, that's happened the last three or four years. This year, it looks a little different. Down sequentially in the fiscal second quarter. Are there trends that are different than what you typically see from a seasonality point of view?

I think it would be compared to the previous year, it's probably slightly lower than the prior year. But we still see some basically continue -- in terms of the mix is still actually improving. Just as an example, I'm turning to the copper ball bonders. So with copper capable bonders, they were 72% in the year earlier quarter and 75%. So I think we'll still continue to see that kind of conversion trend But I would say year-on-year volume [is] slightly down.

Okay. Does it have to do with the -- when Chinese New Years hits? Then, basically your churn this time?

Yes. Well, the current quarter, I think is probably tied into our guidance. It is a shorter period of time basically between Chinese New Year and the remainder of the quarter. This year, the Chinese New Year is coming in a little later than previous years.

Okay. Then what are you seeing as far as the adoption of copper from the IDMs? It sounds like the OSATs are still continuing forward. Do we need to see an acceleration of IDM adoption? Or what has that done over the last couple quarters?

I would say from an IDM perspective, most of our volume basically -- that is actually declining is mostly the [sub-prime]. IDM, I would say -- from (inaudible) what we think, if you look at the lower volume quarter, it's actually a percentage of -- would be higher here from a volume perspective it is about the same.

All right. Then obviously when you look at the cash, cash continues to tick up here, it's $6.50 a share, so well over half your market cap it looks like right now. When you look at the cash, is there a certain level that you think is sufficient to attain the external growth that you are targeting? Or is it -- are we never going to get to a point when you think you have sufficient cash and start looking at some other options?

Sorry. Tom, can you just repeat that? You were talking about basically the use of cash question, I didn't get the full --

Yes. Just kind of curious, what it's going to take to do something like share repurchasing or other uses of cash besides just holding on to it for external acquisitions?

Right, this is really -- this is a conversation that's actually discussed very frequently within our team as well as at the Board level. We just feel that, at this point in time, it is actually better for us to prioritize to basically to focus on internal and these external opportunities. Really, finding opportunities that we leverage ourselves, which are no work and really (inaudible) when you're having synergies from the various (inaudible) that competencies that we have within the Company. I would say, you never say never, in the sense that each -- this compositional prioritization will shift as we go through our buying process, but at this point in time, it is just focused on -- basically our organic growth, as well as inorganic activities.

Okay. In the past you talked about how the goal was really for some advanced packaging technologies, the multi-chip, stacked chips, that kind of thing. Is that still the plan? Is that still the main target? As opposed to just existing or older technologies for revenue growth sake?

Yes, it is. Let me just kind of point out -- now actually maybe ask Cheam Tong to provide a little color about the advanced packaging activities and also some of the other [novel] -- in our quarter. But if you looked at one of our 8-Ks that was actually filed earlier, the Board is actually asking the Management to actually focus on basically advanced packaging as well as the non-core activities or revenues versus that product. So that is something that we are very much focused on, from a Company perspective. So advanced packaging is one of the areas, but this is actually part of probably six if not a little more areas that we are actively looking into. So perhaps Cheam, do you want to talk about the advanced packaging [segment]?

Yes, we continue to look at the advanced packaging. This is really to deliver bonding solution for the emerging 3D IC market. This 3D IC market is primarily driven by the mobile devices such as smartphone and tablet, trying to save space by stacking separate chip in a single package. It improves performance while reduces power which is demanded by the mobile devices. So that is one of the -- what do you call it -- one packing solution that we are looking at. In fact, this is a long-term development program as you know. This 3D IC market is an emerging market. It will take some time for it to materialize and mature.

Krish Sankar, Bank of America - Merrill Lynch.

I had a few of them. Jonathan, related to the guidance for the March quarter, embedded in it, should we assume that the wedge bonder sales stabilized and the weakness is primarily driven by the IC wire bonders?

Yes, you could say that. It is mainly due to the volume from -- on the ball bonder side.

Got it. Okay. I just had another big picture question. If I look at your revenue profile -- I understand that you see the seasonality in December and March. If I look at it over the last three years post the financial crisis, your seasonally trough quarter, whether it's in December or March, the lows have been getting lower as you go the last three years. I'm just kind of wondering is there some trend going on in there or am I just reading too much into it?

Yes, if you look at our -- I guess no quarters are going to run proportional in our industry. The volume actually could shift 60% quarter-on-quarter. So you look at year-on-year, it is about 1.8%. This is kind of a noise in terms of our industry. We are still seeing the -- while there is actually year-on-year slight decline, but I think it is not a kind of a balance downward kind of trend that we should be concerned about. What I like about it, is that our conversions still continue in terms of the copper conversion. We are still actually improving the conversion, let's just say the mix -- the difference between gold and copper capable bonder year-on-year -- so that is still continuing.

Got you. All right. Then, in terms of your break-even level, I know you obviously loaded OpEx. I remember last time, you guys said it's about $95 million as the break-even. Where is the break-even today?

Well, this is something I think this team has actually pulled together, are able to do quite well. Adding additional flexibility in terms of how we would address these trough cycle quarters. If you look at our guidance of $90 million to $100 million, I'm reasonably comfortable that we will be profitable assuming that there is no discrete items and [first-time] events or issues. But we are able to actually lower that break-even point from $95 million to a level that we could stay profitable. Or at least reach a break-even point, as this kind of guided range.

Got you. So even at the low end of the guidance, you'd be profitable?

Reasonably comfortable. Confident that we'll -- that can happen. Obviously, we only guide to the top line. We are able to actually throw in additional cushions on the $95 million break-even point for the Company.

Fair enough. All right. Then, just final question from my end. So, I understand the argument that you would only see any activity from your OSAT customers after Chinese New Years. Is it fair enough to assume that if there is going to be an improvement in demand in March quarter, you would not have visibility on to it until like sometime -- like in late February or early March, realistically?

Krish, I didn't catch all -- your complete question. I think we mentioned that because -- you're saying that the timing of Chinese New Years versus the number of weeks that would be left for the quarter for us to basically shift their products out, is that what you are saying?

I'm just trying to get a sense of when do you think -- if there is going to be any upside, when will your OSAT customers telegraph that to you? Do we have to wait until post Chinese New Year? Or --

Yes, okay. Got it. Basically we get much better visibility after Chinese New Year. Before Chinese New Year, obviously there is -- people are preparing to basically go on this major holiday in some of these key markets in Asia. So yes, I think more decisions and more visibility after the Chinese New Year. That's correct.

Steven Pelayo, HSBC.

Apologies, the audio quality is quite bad on the webcast as well as on the line here. I'm sorry if I'm repeating a couple of these questions. First from a very high level perspective, Morris Chang of TSMC, was talking about a tripling of his 28-nanometer revenues this year. I'm curious, is anything 28-nanometer done in a wire bonded package? Or what percentage is done? Because when you play around with the math, he also thinks the foundry market only grows about 7% this year. I think 28-nanometer is actually bigger than that 7% growth. So, that would imply the rest of the market doesn't really grow. So if you just help me understand what is going on 28-nanometer with bonding and clicks kind of addressable market in the 28-nanometer node?

Sure. (inaudible) to be heard on the call. Let me defer that to my colleague, Tong, for that question on the 28-nanometer, and whether or not that was --

All right. If you could get a little closer to the microphone too, it might help. The audio quality is quite poor.

All right. 28-nanometer is still kind of new in the market. The customer is still qualifying wire bonding at 28-nanometer. Basically, if you look at 28-nanometer the front-end, it takes about 100 days from wafer in to wafer out. So it takes awhile to come to the OSAT. We have not seen much of 28-nanometer yet, but we should be seeing them going forward.

I guess, just so you know, TSMC is already running over 20% of revenues at 28-nanometer. They had $2 billion in revenue last year. They expect it to triple this year. We've already got a good run of 28-nanometer definitely through the wafer side. But now it makes me wonder a little bit more on the back-end. If that is going to be more of an advanced flip chip bumping, what does it mean for the wire bonder market next year? In fact, I think ASC is reporting tomorrow or Thursday. They are already talking down 25%, 30% for their CapEx this year. I guess I'm trying to understand, when you put all those data points together, what is your outlook for the assembly market and therefore Kulicke & Soffa since you dominate there, for the whole year -- for this calendar year?

Okay. Let me further explain this. 28-nanometer -- if you look at what is loading at 28-nanometer first, really the product line -- the SPGAs, the graphics chips, the processors -- and traditionally, this group of products are not wire bonded. They are flip chip. So the wire bonded products are still being qualified. That is the reason why we have not seen the these faculties yet.

Okay. So you do believe there is still a large number of 28-nanometer products that will be wire bonded?

Yes, correct.

Okay.

There is still -- wire bonding is still the most cost effective way of bonding ICs.

Okay great. I guess I wanted to ask if you guys have seen any indications of customers that were primarily big copper users that are making more aggressive transitions to flip chip? Customers like MediaTek were one of those big initial drivers. Of course, they've got a couple of -- or two or three important chips coming out that are going to be done in flip chip. Are you starting to see some of that potential impact in your utilization rates of your copper bonders or are they able to backfill those pretty well? Any thoughts on large customers transitioning more to flip chip and potentially actually seeing it in your utilization rates?

Let me address that, Tong. Basically, utilization rate is still basically at the similar level from previous quarter, based on what we are seeing from here. Although, we are seeing some gradual trends to flip chip, but nothing that really would concern us at this point in time.

Okay. Then just two final quick questions here. I didn't hear what you said on LED. I thought you said 6% were configured for LED market. Can you just reiterate what exactly you said there? Then, really your outlook for that market this year? Then, my last question I'll just go ahead and ask now. Then I'll shut up. Is on the competitive environment -- given that there is so little business that's going on right now, I always like to know if there is any increased efforts or -- in pricing negotiations around the end of the year or anybody being more aggressive on pricing? So LEDs and competitive landscape. Thank you.

LED-wise, in the prepared remarks, came in about 6% of our revenue. If you look at the historical quarter, it's generally with the volume it is actually lower than 5%. So this quarter is actually 6%. We remain very excited about the LED market. We -- as I mentioned, that we'll participate in the more commercial lightings volumes and general lighting sector, in terms of network. We don't guide past the current quarter, Steve, so it is hard for us to kind of give you the kind of view that will go past this current quarter.

Okay. On the competitive landscape, any thoughts there on any shifts going on? Your primary competitor, ASM PT, is very much not within the OSATs. Are they just going to -- is there enough other niche applications going on where they relatively outperform you now? Or just thoughts on, are they being more intense in pricing? Any thoughts on the competitive landscape?

Well I think the LED market for our equipment is anything -- basically something that would require a lot more -- a faster and precision perspective. We don't quite compete with ASM Pacific directly, where they actually are offering [great big] total solutions on the LED side. So from that perspective, we're somewhat more of a niche player in that, based on that explanation. From a LED outlook, maybe I'll ask my colleague, Cheam, to maybe give a little bit of color on where he has been looking at there.

Okay. Basically, if you look at -- in the wire bonder market segment, basically, you would see that we are better off in the high performance wire bonder where you command a slightly better ASP there. So that is an area that we are very strong at and our competitor kind of weaker in those area. However, if you look at the lower end application where our compare are kind of stronger that you do see some competitiveness there.

David Duley, Steelhead Securities.

Could you just talk a little bit about -- I think you mentioned unit volumes in copper were down about 1.8% year-over-year in the December quarter. Given your guidance for March, what do you think they are going to be down year-over-year in March?

Just one second, please. Sorry. I think, you didn't hear everything we said. But, you're basically asking us, what is the year-on-year for March quarter, and what we guided to, right?

I can't really hear what you are saying.

David, can you repeat your question? It is again on the, are you saying the March prior-year quarter?

Yes, just compare your guidance to last March. What is the copper unit volumes down, because you just gave us that number on the December basis year-over-year, it was down 1.8%. I'm just trying to compare what the growth rate is going to be in March. It sounds like it is going to be down more in March, so trying to dig around that.

Okay. If you look at the March quarter is basically from a -- if you're talking about the copper capable -- [I'm assuming], so basically, well we didn't actually report any or are sharing with you about some of these in terms of the mix of the copper versus gold from a volume perspective (inaudible) Yes, so if you look at the prior-year March quarter, what we put on there (inaudible) so obviously it is down from the prior year, based on the current guidance.

So has the, where are we in the copper conversion cycle? Do you think copper is slowing? Essentially, the question comes down to, why is your revenue down year-over-year in both the December and the March quarters? That would indicate that your revenue for -- on an annual basis will be down. Talk a little bit about why that is.

If you looked at the copper cycle, we're in that. If you look at the 130,000 bonders that currently in the field are installed -- the installed bonders, we believe it's somewhere around 40%, thereabouts, in terms of copper capable (inaudible) out there.

What was that? I can't hear you.

It is about, it is -- if you look at obviously our -- what we have shared before, it is about one-third through, but it is probably a little further than that at this point in time. Roughly, out of all the integrated wire bonded ICs, there is actually a 70% conversion eventually. That's where we think it is actually going to end up. So we believe there is still -- there is still quite a way to go from those installed base versus (inaudible) IC that eventually will get to about 70% copper capable. The 30% or one-third of the 130,000 bonders out there, includes about 7,000 if you take that order -- that we have actually sold this quarter in the field, [just for information].

Could you maybe give us what the utilization rates are of your copper bonders now?

I don't have that information in front of me for the utilization for copper bonder, but we do actually have some utilization rates that we actually try to (inaudible) But not something specific about the copper side.

Okay. What is the total utilization?

Just the current utilization rate for the total, based on the installed base that we have is probably about 77%.

Did you say 75?

77%.

77%. Okay. Do you think you are still sole-sourced in copper at the two big custom assembly houses for the medium to high-end product?

Yes we are.

David Wu, Indaba Global Research.

Two quick things, number one on acquisition. If you do an acquisition is there criteria that it has to be accretive in the first 12 months post acquisition? Or other criterias that you use for -- financial criterias that you use for any M&A deal? The follow-up actually is, all these smartphones that are growing strong double-digits, do they use flip chips? Or do they use wire bonders? I just want to clarify that.

Okay. Let me address the first part of your question. Then I'll turn it to Cheam Tong to address the second part of your question in terms of the smartphone -- what kind of technology they use. But [let me say] that since Bruno and myself actually joined the Company about two years ago, we put in a lot of actually, fairly robust processes in place as well as actually planning for what we would like to see -- the vision for K&S. As far as the planning process, we have actually done fairly thorough post-mortems on price acquisitions that K&S has done in the past. I think there is a lot of lessons learned as well as good practices as well. We have also actually incorporated a number of those practices on other companies, where -- that we brought in from other places.

So I believe we have a fairly robust process to screen out opportunities as well as actually ways to develop the integration plan that actually allows us to capture the synergy and the value for the deals that we look at. We do have some high level financials that we like -- obviously every deal we like and look at will be accretive, but we don't -- we basically want to make sure that we are not looking at just kind of short-term financial but also longer term. So, we do look at everything that typically you would see as a Company, we look at from a financial screening perspective. I hope that answers your question. If not, follow-up with another question. But let me turn this to Cheam, about the smartphones in terms of the kind of technology they use.

On these smartphones, there are a lot of chips that go into the smartphones. Things like demands that goes into the smartphone, those are wire bonded mostly, if you look at the connectivity chips, the RL, the wi-fi, those chips are still wire bonded. You look at the power management chips, those are all wire bonded. But if you look at the bigger chips, the application processors, other processors, those are using both, flip chip and wire bonded. A lot of these big chips that are using flip chip in their space -- the memory on top of it or other chips on top of it is still wire bonded. So there is a high percentage of chips that goes into the smartphone are still wire bonded.

Yes. I was wondering if we go to apps processor. Qualcomm has coming -- has, I guess, introduced those LTE Modem integrated application processor. If you see more integrated chips into future, would the percentage of the chips getting wire bonded go up or down?

Okay. I think, you stay fairly, the same.

I see. So there is no different between discrete apps, processor and integrated SOCs?

Correct.

(Operator Instructions)

It appears there are no further questions at this time. I would like to turn the floor back over to Joseph Elgindy, for any closing comments.

Thank you all for the time today. Before we end, I'd like to take this opportunity to remind investors that Management will be presenting in several investor events over the March quarter. On February, 5 and 6, we'll be participating in the Stifel Nicolaus Technology Conference in San Francisco; on March 13 and 14, the Company will also be presenting at the Bank of America Taiwan, Tech & Beyond Conference in Taipei; and finally, on March 19, we'll be hosting an analyst and investor day at the NASDAQ market site location in New York City. For those who can't attend these events in person, a live webcast and recording will be accessible from the Investor section of our website. For those of you on today's call interested in attending our March 19 analyst and investor day, please email me after today's call. We will provide additional details as we get closer to the actual event. Again, thank you all for the time today. Operator this concludes our call.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.