Joseph Tung - Chief Financial Officer

Daniel Heyler - Bank of America Gokul Hariharan - JPMC David Duley - Steelhead Securities Szeho Ng - BNP

Welcome and thank you all for standing by. At this time, all participations are in a listen-only mode. Questions will be taken at the end of the presentation. (Operator Instructions). Today’s call is being recorded. If you have any objections, you may disconnect at this point. And now I’ll turn the meeting over to your host Mr. Joseph Tung. Sir, you may begin.

Good morning and good evening everyone. Thank you for attending ASE Q3 2014 Earnings Release Conference Call. Here on Page 1 is the Safe Harbor notice. I would like to remind everyone on this call that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to high degrees of risk, and our actual results may differ materially from these forward-looking statements. For the ASE Group, we are delighted to announce that we ended Q3 with record revenues and gross profits Group wide, as well as individually for our assembly, tests and EMS business units. Our performance during the third quarter can be tied in large part to strength within our SiP related products. During the third quarter, various product launches within consumer communications influenced much of the business trends and product mixes within our business. The quarter was characterized by rapid adjustment across the entire electronics manufacturing chain with some of our customers picking up and others slowing down. It seems more than ever our business, as well as much of the electronics industry has been and will be heavily influenced by the app inflow of various smart devices, which require innovative manufacturing. Looking forward, our comprehensive technology offerings will bring us the variety of SiP product opportunities. Some of these opportunities will have higher IC ATM technology content, much like the products we are currently working on and some with higher EMS or SMT content giving a different financial return profile. With that let's get into the details of the quarter. Page2, quarter-over-quarter consolidated P&L. On a fully consolidated basis, for the third quarter, the company delivered basic EPS of NT$0.94 versus NT$0.66 in Q2 increasing 42% and fully diluted EPS of NT$0.82 versus NT$0.64 in Q2. While diluted EPS for quarters one to two is NT$1.08, EPS for the first to third quarters is NT$1.98. This may imply a different EPS for the third quarter. Due to accounting rules stipulating that the diluted share basis of each quarter to be independently calculated, total EPS announced for the first two quarters plus the third quarter do not aggregate. As such, we believe that dilution mechanics behind diluted EPS may distort our results, so we believe that our shareholders may be well advised to focus on basic EPS. During Q3, on a consolidated basis, we saw our IC packaging, test, direct materials and EMS businesses increase by 5%, 3%, 18% and 30% respectively. Even with significantly higher EMS revenue mix, we were able to keep our consolidated gross margins roughly flat, edging down 0.2 percentage points to 21.3% from 21.5%. Gross profit increased 13% from NT$12.6 billion to NT$14.2 billion. Operating expenses edged up slightly from NT$6 billion to NT$6.1 billion. However, as a percentage of revenue, operating expenses declined by one percentage point from 10.2% to 9.2%. Our operating margins expanded to 12.1% from 11.3%. Operating profit finished at NT$8.1 billion, an increase of 22% from the second quarter. During Q3, our non-operating gain was primarily composed of an ECB mark-to-market gain of NT$642 million and foreign exchange activity gain of NT$438 million, offset by interest expense of NT$504 million and other operating expenses of NT$70 million. Our ECB mark-to-market numbers are T-IFRS based calculations on the likelihood of ECB holders converting. Our pretax profit was NT$8.6 billion, increasing 42% from NT$6.1 billion. Net income for the third quarter was NT$7.2 billion, up from NT$5.1 billion increasing 41%. Net margin increased to 10.8% from 8.7%. Page 3; you can see the quarterly results on a year-over-year basis here. This year’s SiP product ramped up production slightly earlier than last year. Comparatively, the third quarter of 2014 has significantly more SiP related revenue than that of 2013. From here you should note that net revenues have increased 17% with gross profit increasing 23%, gross profit margins increased 20.4% to 21.3%. These margin improvements are primarily the result of improved product mix. Operating profit increased 33% from NT$6.1 billion to NT$8.1 billion. Operating margins also improved 1.4 percentage points to 12.1% from 10.7%. Net income increased 63% from NT$4.4 billion to NT$7.2 billion. Net margins increased from 7.8% to 10.8%. Fully diluted EPS increased 44% to NT$0.82 from NT$0.57, while basic EPS increased 59% from NT$0.94 to NT$0.59. Page 4; IC ATM P&L. Let’s take a closer look at the results of the IC ATM business. Please note, the intercompany revenues including SiP technology business performed by our IC packaging business unit on behalf of our EMS business unit, are eliminated during consolidations. Our IC ATM revenue increased 8% during the third quarter to NT$42.2 billion. Revenues from IC packaging; test and direct materials businesses increased by 8%, 3% and 18%, respectively. NT dollar appreciation had a 0.44% unfavorable impact on revenue and a 0.23% unfavorable impact to gross margins. For Q3, our gross profit improved to NT$12.1 billion from NT$10.6 billion, while our gross margin improved 1.6 percentage points from 27% to 28.6%. The gross margin improvement was the result of higher revenue within our semi-fixed cost structure and favorable product mix. In particular, margin improvement was related to raw materials and depreciation expenses. Raw material expenses stayed flat at NT$9.5 billion, while as a percentage of revenue decreased down 1.7 percentage points from 24.1% to 22.4%. This was primarily the result of improved product mix. Depreciation expense increased NT$0.2 billion to NT$5.7 billion. However, as a percentage of revenue, depreciation decreased 0.6 percentage points from 14.2% to 13.6%. Improvements in raw materials and depreciation expenses were offset by relatively higher factory supply costs, utility costs -- higher factory supply costs are due to change in product mix, while higher utility costs are due to summer weather and higher summer rates. Total operating expenses increased by NT$0.1 billion and NT$4.7 billion. I’m sorry, to NT$4.7 billion. Operating expenses as a percentage of revenue came down 0.6 percentage points to 11.2% from 11.8%. As a result, operating margins increased to 17.4% from 15.2%. Operating profit in Q3 increased to NT$7.3 billion from NT$6.0 billion in the previous quarter. Page 5, IC ATM Q3 on a year-over-year basis. Our IC ATM business had 12% revenue growth. Gross profit increased NT$9.6 billion to NT$12.1 billion, representing a 25% increase from a year ago. Gross margins improved to 3.1 percentage points to 28.6% from 25.5%. The gross margin improvement was primarily the result of product mix and better overall utilization of key equipment. Operating profit increased from NT$5.4 billion to NT$7.3 billion, a 37% improvement. Operating margins climbed 3.2 percentage points from 14.2% to 17.4%. Page 6, our packaging operations. On a more detailed view of our packaging operations, we again achieved record revenues within our packaging business unit. Packaging revenue increased 8% quarter-over-quarter in Q3 to NT$34.3 billion. Our packaging gross margin increased 1.6 percentage points to 25.8%. The gross margin increase is principally a result of product mix change as we had a higher mix of SiP related devices. As a percentage of revenue, relative decreases in raw materials and depreciation offset impart by increases in factory supplies and utility expenses accounted for the packaging margin improvement. Raw material expenses stayed flat in absolute dollar terms, however, as a percentage of revenue decreased 2.4%. This was principally the result of favorable product mix change given higher growth of advanced packaging. Depreciation, and amortization expenses increased NT$0.2 billion to NT$4 billion. However, as a percentage of revenue decreased 0.4 percentage points. Factory supply expense increased NT$0.4 billion, where as a percentage of revenue, 0.8 percentage points. This was principally the result of higher SiP product mix in which in part consumes a higher rate of factory supplies. Utility expense increased NT$0.2 billion, where as a percentage of revenue, 0.3 percentage points. This increase was the result of weather and higher summer peak rates. During the quarter, capital expenditures for our packaging operations amounted to 281 million, of which US$110 million was used for wafer bumping and flip chip packaging equipment, US$153 million for common equipment including SiP and US$18 million for wirebond-specific purposes. Our capacity overview. During the quarter, we added 323 wirebonders and retired 91. We exited the quarter with a total of 15,994 wirebonders in operation. 8-inch bumping capacity remained unchanged at 95,000 wafers per month and 12-inch bumping capacity increased from 60,000 to 75,000 wafers per month. Page 7; within our packaging product breakdown, our advanced packaging including SiP increased to 29%. Our IC wirebonding business decreased to 61% and our discrete and other segments stayed relatively flat. These moves illustrate our SiP related services ramping during the third quarter. We expect that our advanced packaging segment including SiP will continue to take segment share during the fourth quarter. Page 8; the test operations. We recorded a high for test revenues, increasing by 3.5% sequentially up to NT$6.8 billion in Q3. Gross margins for our test business improved 2.6 percentage points to 39.8%. The increase in gross margins was principally the result of higher revenues within a semi fixed cost structure. Overall, cost of services for test remained flat at NT$4.1 billion. Our testing utilization rate improved to over 80%. CapEx for the test business was US$70 million in Q3. We added 150 and retired 99 testers. At the end of Q3, our total tester count stood at 3,295. Page 9; our material business. In Q3, revenue from our material business edged up 2% to NT$2.6 billion. NT$1 billion was from sales to external customers. Our internal self-sufficiency rate stayed roughly flat declining slightly from 34% to 33%. Gross margins declined by 0.6 percentage points to 19.7% during the third quarter. The gross margin decline was principally the results of typical fluctuations in product mix. Page 10; EMS. Revenues for our EMS business increased to NT$26.8 billion from NT$20.5 billion, up 31% sequentially and up 37% from the same period last year. Comparing with previous year, some of the increase is related to an earlier ramp of SiP related business. Our overall EMS gross profit margins declined to 8.6% from 10% a quarter ago, as a result of higher SiP and Wi-Fi module product mix. EMS gross profit increased 12.1% or NT$0.2 billion ending at NT$2.3 billion. Despite the gross margin decline, operating margins held steady at 3.4%. Our EMS business’s involvements in our current SiP products are relatively minor, limited to material procurement and product logistics. If put more simply, the current SiP products have a significant amount of IC ATM technology. However, we do expect to engage new SiP product business without very significant IC ATM technology going forward. Capital equipment expenditures for our EMS business was US$74 million. Most of the CapEx is for investing in a new EMS product line. Page 11; EMS product mix. During the third quarter, our communications related products, mainly our Wi-Fi module and SiP technology products ramped As such, the communications segment share increased from 44% to 55% while all other segment shares declined. Page 12; balance sheet. For our balance sheet this quarter, our cash and cash equivalents and current financial assets declined to NT$36.8 billion from NT$45.4 billion the previous quarter. During the quarter, we paid our cash dividend of NT$10 billion. In Q3, our interest-bearing debt increased to NT$94.9 billion from NT$87.0 billion in the prior quarter. We still have NT$133.7 billion in unused credit lines. Page 13; CapEx. In Q3, our CapEx was US$430 million. US$281 million was used for packaging; US$70 million for testing; US$74 million for EMS; and US$5 million for interconnect materials. Year-to-date, we have spent 906 million on CapEx. We are on track with our capital equipment spending plan. However, we may adjust such plan in accordance with the needs of our customers. EBITDA for the third quarter amounted to US$530 million. Page 14; you can find our IC ATM market segment exposure here. During Q3, we saw a rebound within the communications market segment as our SiP technology related devices ramped. The segment gained 3% with automotive and consumer declining 3%; computing remained flat. Our fourth quarter outlook. Looking at our customer forecast, we believe that many of our customers are showing resilience in a fairly neutral environment. However, we believe that our customer base may differ in product exposure when compared with some of our competitors. Based on our current business outlook and exchange rate assumptions, management projects overall performance for the fourth quarter 2014 to be as follows. IC ATM production capacity should expand 1% going into the fourth quarter. Blended IC ATM utilization rate should improve by 1% to 3%. Our EMS third quarter growth rate should continue into the fourth quarter. Consolidated gross margin should decline slightly with higher SiP product content, while consolidated operating margin should be flattish. Thank you. We are ready to take questions.

Thank you. We will now begin our question-and-answer session. (Operator Instructions). Our first question comes from Daniel Heyler from Bank of America. Your line is now open. Daniel Heyler - Bank of America: Hi. Thanks very much. I have a few questions. So first, if you could talk a bit about the capital spending environment for next year. You did talk about maybe having some new EMS-related projects, SiP related EMS projects for next year. And if you also have any preliminary ATM CapEx forecast. There has been talk about maybe 20% decline in the industry for IC ATM spending, I'm wondering what you think about that? Thanks.

No, we're not giving any CapEx projections for next year at this point. But we'll go principal, we're going through our budget cycle. According to local regulations, if we are to give any projected numbers for CapEx, we need to have a Board approve such numbers first. But I will say for this year our original plan for CapEx was $900 million to $950 million. So far things are moving on track. In the fourth quarter, in preparation for our new SiP projects particularly is on the EMS part of the business, there will be additional CapEx [recorded] for such new projects. So for next year, there is no CapEx yet budgeted for new projects, whatever project we have in the pipeline, we have already reported in this year’s CapEx. Daniel Heyler - Bank of America: Thanks, Joseph. And on that SiP project, you've alluded to having less ATM content versus the very high ATM content in your current SiP projects. I'm wondering at an aggregated level whether it nets out to be about the same consolidated margin level or should we anticipate a change there?

I think the return profile will be a bit different. The more IC ATM, the margin will be more likely IC ATM project on the year-end. So, we’re moving to more EMS, we will stay closer to EMS model. Daniel Heyler - Bank of America: But at an aggregated level would it still kind of have a similar profile on a consolidated basis or would it be below the current SiP margin?

I think it’s very difficult to maybe comparison as such, because it’s the products are different, devices are different, the cost content of it is very different. So, I will say that when we look at such businesses, we really look at the return profile. I would say the return in our invested capital assuming similar to IC ATM. Daniel Heyler - Bank of America: Okay, got it. That makes sense. Okay. And then on the -- looking at the seasonality, previously you've had a pretty big -- as you've talked about earlier, a pretty big fourth quarter ramp and then a relatively sharp first quarter relating to SiP and some of the EMS businesses typically have been down quite a bit on the first quarter. I'm wondering because you said a more smooth ramp this year and less of a spike in the fourth quarter, should we anticipate a smoother first quarter relative to last year as a result?

I think the pattern -- for the existing project, I think the pattern should be similar to last year, both for this year, but then for next year because we have a new projecting coming in. So, I think first quarter on the EMS side a bit I think the seasonal volatility will be lower than what we have witnessed this year. Daniel Heyler - Bank of America: Okay. And then on the NASSCOM, the utilization trends; you talked about utilization net-net ATM being up supported by SiP obviously. I'm wondering what the non-SiP utilization in ATM, what that's trending like?

I think what we -- the capacity as well as the utilization number that we’ve given is to help everybody in the calculation on -- has some flavor on what kind of top line growth we will have in the fourth quarter. So the way, I would suggest it will to do that is to use 100 times 80 as the base and then using 101 times 81 to 83 to see the difference. IC ATM and then for EMS, we have already mentioned that the growth rate will be similar to what we have seen in quarter three. Daniel Heyler - Bank of America: Okay, great. Maybe just in terms of the revenue trend, you’ve typically given pretty good color in terms of end market trends going into the fourth quarter. If you could elaborate more on the automotive trend, computer, industrial and consumer trend, how that's trending into the fourth quarter.

By and large, I think the most of the growth drivers for quarter three and then going forward into quarter four will be communications. In fact in quarter three, our communication had a double-digit growth and computing is about 9% and then consumer automotive about 1%. I think going into quarter four, I think most of the growth will really come from communications. Daniel Heyler - Bank of America: Yes. I am just wondering that some of the foundries talked about maybe non-communications and non-high end phones being down kind of double-digit range; I am just wondering if that’s kind of in line with you guys are seeing?

I think the overall, the so called non -- I don’t what the word was. I think in our portfolio, I think looking from the focus of our customer, it seems that the non-traditional type of [index] seems to be flattish to slightly down for the fourth quarter. Daniel Heyler - Bank of America: Okay. Just finally and I’ll get back in the queue. Your view of the wearable; so you’ve got product early next year. Do you envision this being a broader and much bigger market in 2016? What's your timeline in terms of seeing this as? I know that you have a lot of customers coming to you and approaching you for projects. I just wondered to what extent do you see the wearable and 8IoT markets timeline; is that more 2016 or 2017 event or do you think it's meaningful next year? I know you have obviously one big customer but aside from that, what's your profile?

So far I think we are pretty much resource constrained, so we are currently handling one customer only. And I really can’t comment on what kind of demand profile would be for -- because all the different companies have different devices and the demand of such products, I really can't comment on that. Daniel Heyler - Bank of America: Thank you, sir.

Thank you. Our next question comes from Gokul Hariharan from JPMC. The line is now open. Gokul Hariharan - JPMC: Yes, hi. Thanks, gentlemen for taking the questions. First of all, I had a quick question on wirebond. After many years we are seeing that wirebond is finally growing pretty strongly. Year-to-date I think it's up about 11%, 12% year-on-year. And that's a pretty different pattern from most of your competitors. I understand that you have a much higher IDM exposure. But as we go to next year, how should we think about this? Is it something that is sustainable at these levels or are we going to see that settle down to a lower level?

We believe that there are still a lot of devices using wirebond solutions. In other words, wirebond is still a predominant packaging solution for a lot of devices such as TV and set-top boxes, SOCs, microcontrollers, analog ICs and so on so forth. So, at the same time, our wirebond capacity only increased incrementally. So, we are expecting to maintain a very good loading level in our wirebond capacity. Of course, it will fluctuate on quarterly basis. But overall, I think it will be maintaining satisfactory levels. Gokul Hariharan - JPMC: Okay. On the bumping, 12-inch bumping capacity, we’re finally starting to see you guys invest a bit more aggressively on the wafer bumping side. I think you added about 15k over the last quarter. Any rough guidance into next year, what you're thinking about? Is that you had something -- is it in the area where you're still going to see a lot more investment especially on 12-inch bump going into next year?

We don’t have a fix percent at this point, but I will not be surprised if we add another -- we had some more capacity particularly in the 12-inch bumping. I think what we are seeing is we need to increase some of capacity particularly in our only factory to make it more -- make it a more economical scale for us. Gokul Hariharan - JPMC: Okay. So is this…

It depends on how the market moves and then we will plan for the CapEx on next year. Gokul Hariharan - JPMC: So, this is quite interesting because some of your peers that are essentially adding bump capacity, but at the same time they have to retire wirebond because some of customers are actually migrating from wirebond to bump. You guys are pretty comfortable holding onto your wirebond capacity and still adding wafer bump. So you -- do you still think that you have enough of backfill on wirebond to kind of keep it relatively high utilization through next year?

Well, I think the reason why we have a healthier wirebonding business is because of copper pillar transition, I’m sorry copper wirebonding transition. And I think that transition actually helped us gain a lot of market share particularly in the wirebonding world. So, at this point, in terms of wirebonding revenue, we have 68% of the copper wire and it’s up another percent from previous quarter. And we do believe that we can maintain a healthy portfolio of wirebonding business going into next year as well. Gokul Hariharan - JPMC: Okay. Just one housekeeping question. I see that your OpEx ratio has come down significantly. Now that you're adding more SMT-related SiP business also next year, how should we think about the OpEx ratio and potential operating margin for these businesses? Is the OpEx expense not going to grow much at all, even when you add some of these businesses next year?

I think most of the addition will be at the -- level. And in terms of operating expenses, we will have some increase going forward because as we continue to expand the business scale. But I think the plan is to maintain it at September levels. Gokul Hariharan - JPMC: Okay. And last question from me, you have a fundraising plan I think that's been announced. Could you talk a little bit about the proceeds, as well as any updates on your views on industry consolidation; M&A et cetera as well? Thanks.

I'm sorry. I didn't get the first part of the question. Gokul Hariharan - JPMC: I think you have talked about potential fundraising plan. Could you talk a little bit about what the proceeds are? Is it primarily to retire debt? And second also, what is your current thinking on potential industry consolidation as well?

Well, I think that's really just the preparation for any funding requirement as needed. At this point, there is no immediate plan for us. Although, we do want to have the program set up because we are expecting interest rates to move up. But at this point there is no real particular need for the fund raising activity at this point. What we’re doing is really the preparation work now. Gokul Hariharan - JPMC: Okay. And any update on what are your current views around industry consolidation? I think you’ve talked about potential consolidation in the industry in the last 12 months or so. But any update on the views?

No, I think what we’re hearing or what we’re seeing is talk about Chinese buying some of the [wholesale] players, but I think our knowledge is as much as yours at this point. Gokul Hariharan - JPMC: Okay. Thanks guys.

Thank you. Our next question comes from David Duley from Steelhead Securities. Your line is now open. David Duley - Steelhead Securities: Thanks for taking my questions. A couple of questions; you mentioned some of your customers are doing well and some of your customers not doing so well and that you have a kind of a favorable mix versus some of your competitors. Do you think that’s the key reason that your revenue performance was let’s say better than your large Taiwanese competitor or maybe just a little flavor as to why you think you did better than your competition this quarter?

Well I think by and large really the SiP technology that we have and helping us saving basically new sets of business going forward. And with the potential of such business we believe that will continue to support our business growth for quite a bit of time. I don’t think the -- in terms of competition right now in order to be successful in SiP business, you really need to have the full set of skills including system level of technology as well as IC ATM, assembly and test and even substrate. I think we are uniquely positioned as the only player at this point that has all the ingredients needed for their business. So, I think that’s the main reason that's helping us in maintaining our business momentum comparing to our competitors. David Duley - Steelhead Securities: Okay. And just another question along these lines. I think Amkor reported and was talking about they saw -- and we've seen it from other companies a slowdown in high-end Android phones, right? And I guess the simple way to look at that is one big player is losing share to another big player. So, I was just wondering if you saw kind of the inventory build or slowdown on the Android side of things, like many other people have seen?

In terms of -- we’re not seeing a major inventory direction to come at this point. I think things for us is pretty stable at this point. Of course, there will be seasonal adjustments, some of the non -- or I’d just say maybe Android based players, there is some seasonal -- but it's really selective customers. So, I can't really speak for the whole industry. David Duley - Steelhead Securities: Okay. And did you have any 10% customers during the quarter?

Yes. That's the company. David Duley - Steelhead Securities: Say that again. I didn't hear what you said.

We do have -- you’re referring to IC ATM, right? David Duley - Steelhead Securities: Yes.

Yes. We do have one customer slightly over 10%... David Duley - Steelhead Securities: But you have another customer on the other side, on the EMS side that’s over 10%?

Yes, we do. David Duley - Steelhead Securities: Okay. And the SiP ramp that you referred to that’s providing very strong growth in the third quarter, and I guess what you’re saying is that sequential strong growth will continue in Q4. Are you ramping up incremental new programs in Q4 or is it just an extension of the current programs that are getting further in their ramp stages?

Well, as we mentioned, we have -- we do have various engagements, customers on new SiP related projects. But so far, I think what -- it really with -- once that are with better visibility are the continuation of what we’re doing now including the new project that will be ramping starting from either late this year, end of this year or early next year. David Duley - Steelhead Securities: Okay. And could you give us an idea as to what you think the size of -- the overall size on revenue side of your SiP business is currently?

Right now on a consolidated basis, it’s about 10%. And we believe that will grow to over 18% close to 20% in quarter four. David Duley - Steelhead Securities: Okay. And do you maybe share a target for what you think that might do in 2015?

No. I don't have a target. David Duley - Steelhead Securities: Okay. And I guess one final question from me is I think on this conference call usually you're making a projection on the following year's CapEx. And I realize you don't want to give a hard number. Do you think the CapEx will be flat, up or down? I'm giving you a big wave there.

A little bit of each. You have one-third for each and then you have a flat. We'll put it this way I will be surprised to see lower. David Duley - Steelhead Securities: Okay. Thank you.

Thank you. Our next question comes from Szeho Ng from BNP. Your line is now open. Szeho Ng - BNP: Yes. Good evening gentlemen. Just want to know what percentage of revenue coming from structured CIP? Hello?

Yes. We're looking at the numbers now. Szeho Ng - BNP: Okay, all right. Thanks.

About 18%. Szeho Ng - BNP: 18% of the IC ATM revenue, right?

Our assembly. Szeho Ng - BNP: Okay, all right, great. And second one; for the EMS revenue in Q4, could you talk about the monthly revenue pattern by any chance?

Sorry. I didn’t get the question. Szeho Ng - BNP: Sure. For the EMS part in Q4, is it okay to talk about the monthly revenue pattern?

It’s pretty flattish. Szeho Ng - BNP: It’s flattish, okay. Okay, all right guys. That’s all. Yes. Thanks very much. Good quarter.

Thank you.

Thank you. Our next question comes from Daniel Heyler from Bank of America. Your line is now open.

Hi Dan. Daniel Heyler - Bank of America: Hey Joseph thanks. Just a follow-up, sir. On the -- your comments on the materials, I was trying to understand the fluctuation in material content in SiP quarter-to-quarter, your previous comments. Could you simplify it for me a bit? Does SiP have more ATM material going through? Is that what's moving the margins? I think you said earlier that the material -- kind of movements in materials is affecting the margin swing a little bit on a quarter-to-quarter basis. So explain the difference between the SiP and the other ATM products?

Well, percentage wise, it is similar but the unit price of such device may differ a lot. So just grab a number saying one piece is for $20 and 80%, material is 16 and the other is $10 of the material 8 field. And then really on the value added part of it, if you take out the material, you look at the value added part of it. That's where you made your return and you may have similar return, but if you use that return divided by the full price or different prices, you will get a different margin. That's the point what we're trying to say. Daniel Heyler - Bank of America: Yes. And then you have much higher value add on the ATM side, 20%?

Yes. Daniel Heyler - Bank of America: Okay. And then just kind of looking at slide seven; it was interesting. Your communications contribution to packaging was 33% in the fourth quarter last year and then it’s 29% this year. So does that -- did your SiP business grow year-on-year? I mean it's in more products and the units are higher, so I presume it's growing quite a bit year-on-year, right?

Yes. Daniel Heyler - Bank of America: So, then it means that the other wireless is down quite a bit year-on-year. Is that a fair assumption?

Did you say 29? Daniel Heyler - Bank of America: Yes, your contribution in the third quarter -- I'm sorry, I'm kind of comparing third quarter's 29% contribution. I imagine that -- does that go to 33% again in the fourth quarter contribution? Is that number going up or do you expect that to be flat, I guess is what I should ask first?

Are you saying communications or are you saying advanced packaging? Daniel Heyler - Bank of America: In the packaging slide on seven, 29% of revenue.

Yes. That’s advanced packaging; it’s 29%, not comm. Daniel Heyler - Bank of America: Yes. I’m sorry, advanced packaging. Do you expect that to go to...

Daniel, you will have a pretty similar pattern going into quarter four from last year. Daniel Heyler - Bank of America: Right. Well, then on slide, then on that point then on slide, what’s interesting is on slide 11 on EMS. EMS is now -- communications there is at 55% relative to 47%. So that’s a huge increase. Is that entirely driven by the SiP business or there is also there other products in there that are driving that up too on the comm mix on slide 11.

Both the SiP and the Wi-Fi module. Daniel Heyler - Bank of America: The Wi-Fi module is still growing?

Yes. Daniel Heyler - Bank of America: Okay. And then on the -- okay, I wanted to ask on the -- your test margins are at record levels; you’ve done a fantastic job there on utilization above 80. Is this a structurally kind of better utilization rate we’re going to see next year or is this kind of a one-off?

There will be quarterly fluctuations. Daniel Heyler - Bank of America: It just seems as though there is a lot of -- I mean, I guess I’m wondering there is a lot of test -- content increasing in high-end mobile devices and the test content is rising. So I’m wondering if that's helping, if there is something structurally going on the test margin ASP related?

Nothing is particularly different at that's point. I think we're linking our assembly and test customers more. So we're just trying to keep them as loaded as possible. Daniel Heyler - Bank of America: Okay, fair enough. That's pretty much it from me tonight. Thank you gentleman.

Thank you.

Thank you. Our next question comes from David Duley from Steelhead Securities. Your line is open. David Duley - Steelhead Securities: Just two follow-up questions. Could you just give us what the overall utilization rates are of your IC ATM business; did you say 80%?

85. David Duley - Steelhead Securities: Okay, 85% utilization? And then you mentioned some helpful math for us about how we should look at the growth rate of the IC ATM business given the sequential numbers that you gave us. Could you just quickly review that again for -- I'd just like to hear how you view that.

I'm suggesting that you use capacity of 100 times utilization n now 80 to come out with your base and therefore next quarter, you use capacity of 101 times utilization of 81 to 83 come out with the implied growth rate. David Duley - Steelhead Securities: Okay. Just had a curiosity, why would you start with the 85%?

You can do that too, but the base will be just minor difference. Math is harder. David Duley - Steelhead Securities: Okay, got you. Now the strategic question. Do you believe that your SiP capabilities are allowing you to gain share in your IC-ATM business?

Eventually I think it should help because when you’re doing the SiP products, you actually get involved with a lot of different chips that actually gives you some business leads in terms of what chips are in the mix and whether it helps you target your business a bit more. David Duley - Steelhead Securities: Yes. I would think that since you have control of the complete process that you would have a lot of influence on some of the individual components that go in there and making sure that you're the guy that tests and assembles them?

I think eventually that will help, yes. I wouldn’t say we have control over it, but I definitely think that that provides a very good business leads for us going forward. David Duley - Steelhead Securities: Okay. And I guess I had one final one on this -- basically you talked about going forward, the value added content of your IC-ATM business will be less than some of these new SiP products. And obviously the gross margin profile would be lower on those. Now you also mentioned that you looked at it on a return on invested capital basis. Can you just help us understand how -- a little bit more detail here, why you think picking up lower gross margin business is a good idea?

Well, first of all, I think we’re not saying that going forward we will only have SiP business which is lowering IC ATM content. We're saying we will be doing variety of different devices, some with higher IC ATM and some with lower IC ATM. But overall, if we look at the return, it does give us -- it's a good return business and accretive in both in ROIC as well as in EPS. And I think the key here is really to manage the material portion of the business. Make sure that, we continue to have a pass through and have arrangement, so that we don't engage in too much of an inventory risk. So, I still believe that given the higher turnover in terms of value added revenue or I should say CapEx to value added revenue ratio based on the return profile of such business, I think it's still a very worthwhile business for us to get into. David Duley - Steelhead Securities: And is the overall revenue big enough to absorb some of these lower margin things so that we don't see a big degradation in the margins of the business in total? Is that what you're trying to tell us, I guess?

I'm sorry? David Duley - Steelhead Securities: Well, I'm just kind of wondering going forward, is the current base of business in the SiP area big enough to absorb some of these less profitable or lower margin pieces of business so that the overall gross margin that you report in your EMS business doesn’t degrade a lot?

Tough to say, David. It really depends upon loading, also depends on timing of all these different businesses. So I think it would be unfair for us to throw that out there. David Duley - Steelhead Securities: Okay. Thank you much. Have a good evening.

Thank you.

Thank you. (Operator Instructions).

Okay. If there are no further questions, I will wrap up. We had I would say a pretty good third quarter and we’ll continue to see momentum in our SiP business going into quarter four. And we are engaged in new projects in the SiP areas which is providing us with a very decent return. And we will continue to put our resources, R&D resources on such business with very good potential. And we will talk to you guys again next quarter. Thank you.

That concludes our conference call for today. Thank you everyone for participating. You may now disconnect.