0522.HK FY2026 Q3 Earnings Call Transcript
Date: 2026-10-27
Source: Financial Modeling Prep

Benjamin Poh: Good morning, ladies and gentlemen. I'm Ben Poh, Head of Investor Relations, and today, I will be moderating the call. On behalf of ASMPT Limited, welcome to our third quarter 2026 investor conference call. Thank you all for your interest and continued support. [Operator Instructions] Before we start, let me go through our disclaimer. Please note that there may be forward-looking statements about the company's business and financials during this call. Such forward-looking statements could involve known and unknown uncertainties and risks that could cause actual results, performance and events to differ materially from those expressed or implied during this conference call. For your reference, the Investor Relations presentation on our recent results is available on our website. On today's call, we have the Group Chief Executive Officer, Mr. Bassel Haddad, joining us for the first time; and the Group Chief Financial Officer, Ms. Katie Xu. Bassel will cover the group's key highlights for the third quarter 2026 and provide outlook and guidance for the following quarter. Katie will provide details on the financial performance for the quarter. Now, I will hand the time over to our Group Chief Executive Officer, Bassel.
Bassel Haddad: Thanks, Ben. Good morning, everyone. Thank you for joining us today for our third quarter 2026 earnings conference call. As this is my first earnings call as Group CEO, let me start with a few opening thoughts. I've spent nearly 3 decades in technology, engineering, product and business leadership roles across fabless, IDM and foundry environments. That experience has given me a broad perspective on how technology differentiation and value creation are evolving across the semiconductor industry. As the industry moves from scaling individual devices towards optimizing increasingly complex systems, the importance of integration, interconnect and advanced manufacturing capabilities continues to grow. AI is a major accelerant of this architectural transition. As a result, advanced packaging is becoming a foundational platform for system-level innovation and differentiation. At the same time, the build-out of AI infrastructure is driving greater complexity and new opportunities across electronics manufacturing. This shift plays directly to ASMPT's strength in technology, application expertise and customer engagement. And the potential to position the company at the forefront of this transition is a major reason I chose to join ASMPT. My mandate from the Board is clear: to build on our technology leadership and market position and lead ASMPT into its next phase of sustainable growth, enhanced profitability and long-term value creation. Two months in, I have engaged in numerous discussions with colleagues, met with customers across the globe, and spoken with shareholders and investors. My conviction has only strengthened. I've been particularly impressed by the depth of our technology and engineering capabilities, perhaps even more than I expected. Our opportunity now is to focus those capabilities where we can create the greatest differentiation, move faster and translate our innovation into greater customer and business impact. Technology will be central to how I lead, but it must translate into impact, solving critical customer problems, scaling faster and creating attractive returns. We will be technology-led, customer-driven and financially disciplined. It is still early, and I'm continuing to listen and learn, but I'm very excited about the opportunity ahead for ASMPT. With that, let's turn to our results. Let me briefly share our business highlights for this solid quarter. First, we achieved record group bookings, driven by all-time high bookings for TCB, SMT and Photonics. Next, in TCB logic, orders for our C2S solutions reached a record high, driven by strong demand from AI data centers. Third, our Photonics business achieved record bookings and revenue, driven by production ramps of 800G, 1.6T and next-generation optical modules. Fourth, our group adjusted gross margin of 42.9% was up 35 basis points Q-on-Q and 517 basis points year-on-year, reflecting improvements in both SMT and SEMI. Finally, both our group revenue and adjusted EPS exceeded consensus. Now, let me cover our business highlights in more color. Let's look at TCB, which achieved record bookings in Q3. First, in logic, we received bulk orders for C2S solutions, driven by AI data centers. Specifically, this came from strong demand for larger compound die TCB tools from the OSAT partners of a leading advanced logic customer, as well as orders for other AI-related applications. In C2W, we secured repeat orders from a leading global IDM for advanced CPUs to support client computing and AI inference, reflecting this customer's continued confidence in our C2W solutions. In memory, the industry is reassessing the optimal balance between memory density, thermal management and cost, reflecting a recalibration of customer investment schedules. Thus, even though larger capability-driven investments are being pushed out, we believe the need for capacity additions and selective upgrades remains intact. Meanwhile, we continue to develop next-generation TCB solutions designed to deliver superior throughput, yield and process performance, which positions us well for the next phase of HBM-related customer investments. Next, for TCB panel-level packaging, we're making good progress. Our quarter panel solution is currently undergoing sample bonding with a leading advanced logic customer, while we help develop solutions for the leading global IDMs' embedded and surface silicon bridge die architectures. Our next key area of focus is Photonics. We have a comprehensive portfolio that spans Pluggable Optical Transceivers, Near-Packaged Optics or NPO, and Co-Packaged Optics or CPO. This quarter, our Photonics business in SEMI achieved record bookings and revenue, driven by production ramps of 800G, 1.6T and next-generation optical modules. Meanwhile, our pluggable optical transceiver solutions secured significant orders, reinforcing our leading position in the transceiver market. Notably, our AMICRA business achieved a breakthrough NPO bulk order. In addition, AMICRA's ultra high-precision bonding solutions received major orders from a leading communication services provider for optical transceiver solutions. In CPO, we continue to deepen our engagement with multiple leading global CPO players. Together, these developments demonstrate the breadth of our Photonics portfolio and create a multiyear growth opportunity. In hybrid bonding, our second-generation platform combines competitive alignment precision, bonding accuracy, footprint efficiency and throughput. We continue to work with leading logic and memory customers on programs at various stages of sampling, evaluation and qualification. Let's now cover the SEMI mainstream business. Revenue and bookings remained elevated, and it continued to be supported by AI-related demand for power management and server boards for data centers. AI infrastructure expansion also drove wire bonding and die bonding tool demand, alongside high utilization in OSATs. And finally, SMT booking hit a record high for the third consecutive quarter and highest booking market share. Demand was driven largely by AI server boards and optical transceivers. SMT's high flex solutions for large-format board assembly continued to attract strong demand for AI server manufacturing. Notably, bookings growth in the Americas accelerated on the back of strong demand for AI servers. With these highlights, let me now hand the time over to Katie, who will walk you through our group and segment financial performance.
Yifan Xu: Thank you, Bassel. Good morning, everyone. Let me take you through the group's financial performance. I would like to reiterate that unless otherwise specified, the numbers I'll be referring to today are for the group's continuing operations only with adjustments made on the non-HKFRS measures. This slide covers our financial results for Q3 2026. In Q3, the group delivered revenue of USD 669.2 million, up 6.3% Q-on-Q and 48.7% year-on-year, driven by SEMI and SMT. Group revenue came in above market consensus. Group quarterly bookings reached a record high at USD 1.13 billion, driven by continued AI infrastructure investments, one-off bulk orders and demand pull-in due to extended lead times. Bookings increased by 24.7% Q-on-Q and 137.9% year-on-year, led by strong demand across multiple products, notably TCB, SMT products and Photonics. Book-to-bill was 1.69, the highest since Q1 2021. Group adjusted gross margin was 42.9%. This was 35 basis points higher Q-on-Q and 517 basis points higher year-on-year, driven by improvements in both SMT and SEMI. Group's adjusted operating profit was HKD 922.4 million, up 8.9% Q-on-Q and 379.2% year-on-year due to higher revenue and gross margin. However, adjusted OpEx was up 6.0% Q-on-Q and 16.6% year-on-year, mainly due to higher incentive provisions and increased volume. Adjusted net profit improved Q-on-Q and year-on-year due to higher operating profit. Adjusted EPS was HKD 1.65, up 7.8% Q-on-Q and 489.3% year-on-year, which was above market consensus. Moving on to the Semiconductor Solutions segment. In Q3, SEMI revenue grew to USD 374.2 million, up 1.5% Q-on-Q and 68.0% year-on-year. Year-on-year growth was largely driven by Photonic solutions serving AI-related applications, together with higher sales of wire and die bonders serving both AI and consumer end markets. SEMI bookings were USD 563.3 million, up 31.3% Q-on-Q and 156.3% year-on-year, the highest quarterly booking level since Q1 2021. AI-driven demand benefited the broad range of SEMI's advanced packaging portfolio, notably TCB, Photonics and Flip Chip solutions. SEMI Solutions' adjusted gross margin reached 46.6%, up 6 basis points Q-on-Q and 502 basis points year-on-year. Year-on-year increase was largely due to higher volume and favorable product mix. SEMI adjusted segment profit was HKD 595.4 million, down 1.3% Q-on-Q, but up 620.9% year-on-year. Q-on-Q decline was due to higher incentive provisions, while year-on-year increase was due to higher volume and better gross margin. Next, let me move on to SMT. SMT Q3 revenue was USD 295.0 million, up 13.2% Q-on-Q and 29.8% year-on-year. Bookings reached a new record high of USD 564.7 million for the third consecutive quarter, up 18.9% Q-on-Q and 122.1% year-on-year. This strong performance was driven largely by robust AI server demand and more than USD 100 million worth of bulk orders and pull-ins. Segment adjusted gross margin was 38.2%, up 131 basis points Q-on-Q and 425 basis points year-on-year. Q-on-Q and year-on-year improvements were driven by higher volume. SMT adjusted segment profit was HKD 410.4 million, up 44.1% Q-on-Q and 143.2% year-on-year, driven by higher volume. Now, let me hand the time back to Bassel for the outlook and Q4 revenue guidance.
Bassel Haddad: Thanks, Katie. We expect Q4 2026 revenue to be in the range of USD 670 million and USD 730 million. At the midpoint of USD 700 million, this represents an increase of 4.6% Q-on-Q and 37.5% year-on-year and exceeds current market consensus. This will be driven by double-digit SMT revenue growth, while SEMI revenue is expected to be flat due to longer lead times of AP products. We expect Q4 bookings will remain significantly elevated year-on-year, supported by sustained AI infrastructure investment across both segments. However, Q4 booking is expected to be below Q3 record level due to the one-offs and pull-in in SMT. Looking ahead, AI demand is expected to drive sustained revenue growth in 2027. This concludes our third quarter 2026 presentation. Thank you, and we are now ready for Q&A. Let me pass the time back to Ben to facilitate.
Benjamin Poh: [Operator Instructions] First, I would like to request Gokul to unmute to ask the question.
Gokul Hariharan: Welcome, Bassel, to this inaugural investor call that you're having. Maybe first question to you, Bassel, given that you've spent close on 3 months at the company. When you look at the portfolio of ASMPT and you think about moving forward into the strong growth in advanced packaging or advanced back-end itself, could you talk a little bit about where you are seeing potential kind of areas that you could augment the portfolio further? What is the strategy to get there within the overall advanced packaging space? And also, given previously ASMPT has indicated the [ inclination ] to potentially divest SMT business, any updated thoughts on that thinking itself, given SMT has seen a pretty good resurgence in terms of business momentum in the last few quarters? Yes, maybe that's the first question.
Bassel Haddad: Okay. I'll try to answer both sides of them. So the first one was about my kind of 3 months into the company, not yet actually, 2.5 months. And yes, let me start with that. So I'm 2 months in and still in deep listening and learning mode with our technology teams, customers and markets. As I shared in my comments or prepared remarks, now I'm very convinced, as I was before, even more that we have a strong technology, engineering depth and customer relationship across -- that's across advanced packaging, photonics and electronic manufacturing. As I also shared, we're going to be technology-led and drive where we see the biggest return on our investment. So the foundations are very strong. I'm energized with what I see, and we're going to just invest where we see the market growing and where we see our set of IPs and portfolio and technology delivers the best results. As I move to the second question about SMT. So I cannot disclose the details at the moment of where we are in the process. We will certainly update the market when we can. With that said, SMT record bookings clearly reinforce and reflect the quality and the strategic value of that business. The assessment remains focused on maximizing long-term shareholder value.
Gokul Hariharan: Got it. Maybe one question -- second question is on the TCB side of the equation. I think you did talk a little bit about HBM. There is some pause on HBM for qualification and potentially some density-related concerns, which I think the market has also talked about potential de-speccing in HBM, et cetera. Previously, I think we've talked about memory TCB -- or the memory opportunity in TCB being much bigger than the logic opportunity in TCB. Now that logic is growing quite nicely and you're starting to get some breakthroughs into chip-to-wafer as well, any updated view on the related size of these 2 markets within TCB memory versus logic? And also this memory pushout on HBM orders, does it change your longer-term addressable market expectations for TCB at all? I think the last one we have is $1.6 billion by 2028.
Bassel Haddad: Thank you, Gokul. Yes. So we -- as we mentioned, we believe what we see in HBM layer count stagnation reflects the industry reassessment of the optimal balance between memory density, bandwidth and thermal. Even though we see larger investments have been pushed out, we believe there will be the need to add capacity and selective upgrades. So all in all, it is an adjustment to the timing rather than a change in the underlying demand. So in that, just to summarize the HBM side of things, so we continue to see long-term potential for HBM4 12H and beyond, alongside HBM 8H, both serving different segments of the AI market. And we are well positioned in both areas. To address the other part of your question, so in terms of that TCB TAM, we expect the TCB TAM to expand beyond $1.6 billion by 2028. The expansion will come from different areas, including logic across CPU, panel and C2W. We will provide the official TCB update only by the year-end earnings call in Q1 2027. However, with that said, we do see that the split or the majority of the TCB TAM in the next couple of years would come from logic versus memory -- versus HBM.
Benjamin Poh: Next, I would like to request Sunny to unmute to ask question.
Sunny Lin: So I also want to follow up on the addressable market for TCB. So Bassel, may I clarify, just now you mentioned the addressable market should be larger than $1.6 billion by '28, if we also consider upside coming from silicon bridge integration also panel level?
Bassel Haddad: Yes, that's correct, Sunny.
Sunny Lin: I see. So even that estimate was provided by, I think, March 2026. And fast forward, now we are indeed seeing progress being made for silicon bridge integration and also panel level. And so, I understand you may not be able to update this time around, but should we expect pretty meaningful upgrade to that addressable market that you anticipated a few quarters ago? And I also want to understand, especially for silicon bridge integration, could you share with us your current progress in terms of time line for qualification and also potential volume shipment? And also for this specific TCB tool, how should we think about the tool price and also gross margin compared with the typical TCB that is shipped to the larger foundries or the relevant OSAT providers?
Bassel Haddad: Okay. Let me try to address the different parts of your question. So, on the TCB -- the first one about the TCB market share, so yes, you're right. As I said, we expect the logic portion of the TCB TAM to be the majority of that TAM in the next few years, and it will come from things like bridge and panel, as well as C2W demand, Sunny. So again, the numbers and the color will be provided in our year-end earnings call. Can you remind me of the second question -- second part?
Sunny Lin: Yes. I want to know a bit more details around your progress for silicon bridge integration type of TCB. And so, time line for qualification, potential volume shipment, and also the tool price and gross margin for this specific opportunity?
Bassel Haddad: Okay. Thank you. Yes. So our quarter panel solution has progressed to sample bonding with a leading advanced logic customer. We're also developing solutions for a leading global IDM embedded and surface silicon bridge die architectures. Basically, the timing of it is dependent on the ramp of the customer, and we will be there when the ramp happens. In terms of the gross margin and the pricing, I would say it's too early to talk into it, but we see that falling in the same range of our advanced packaging portfolio.
Sunny Lin: Got it. And my second question would be to look at silicon photonics. So I would like to have your view on the energy upgrade to NPO compared with CPO. How should we think about the pace of ramp between these 2 solutions? And how should we view ASMPT's position in NPO compared with CPO in terms of capability, competitive positioning, et cetera?
Bassel Haddad: Yes. As we mentioned, we have a very comprehensive portfolio that spans pluggables, NPO and CPO. And we're working with our customer base in the different regions to cater to their demand. We believe we have a unique product portfolio, and we mentioned AMICRA that is gaining very good traction in the market. So we are well positioned across all of these subsegments of the photonic market, Sunny.
Sunny Lin: Right. Well, so I think earlier, management mentioned that CPO maybe for ASMPT will be more of a driver into 2028, if not earlier. And so, I wonder if that's still the case based on the current visibility? And do you think NPO may potentially ramp a bit earlier compared with CPO for ASMPT?
Bassel Haddad: Yes. I think what we'll try to do is to provide you a view of the photonic market, again, along the same time with our TCB market TAM update. Yes, we expect the NPO to ramp earlier than CPO. I think we look into CPO from a volume production more towards the end of this decade. And basically, all in all, we -- as you probably see in the results, '26 will be a high-growth year for Photonics. And we still expect Photonics to grow significantly in second half compared to the first half. And the same -- we also expect growth in 2027 coming from these different segments of the photonic market.
Benjamin Poh: Next, I would like to request Kevin to unmute to raise question.
Kevin Wang: My first question will be more on the order outlook side. I think we're seeing a very strong booking to stay elevated next quarter. But at the same time, we're also seeing the SEMI revenue to be largely flat. We believe that -- we mentioned that this is due to a longer lead time for advanced packaging product. I'm just wondering approximately how much -- what percentage of this revenue is coming from advanced packaging? And I believe last time, we did mention also that some of the component lead time is getting longer. So I was just wondering, are we seeing any kind of supply bottleneck or capacity constraint due to the change in product mix or the component supply?
Bassel Haddad: Thanks for your question, Kevin. So let me try to address them. So from a capacity, we have enough capacity to meet demand even with the increased booking we're seeing. So we're not concerned in that regard. In terms of the lead time, lead time that we provided that guidance of 6 to 9 months in AP, that continues to be the case. We're working diligently with our suppliers to ensure that we get what we need from their components and materials that we can ship on time. And you're right in the fact that you see the booking kind of running a bit ahead of billing. That's because of the AP mix becoming bigger part of booking, and that realization into billing is happening over 2 to 3 quarters, 6 to 9 months. Did I miss other parts of your question? Anything else?
Yifan Xu: Kevin, can you go ahead with the second question?
Benjamin Poh: Kevin, are you still there? Kevin?
Kevin Wang: And the second question I have is, I was wondering, can we share a little bit more on the [indiscernible] business potentials? Like what kind of process steps are we currently involved? And potentially, what can we expect the timing of this potential revenue?
Bassel Haddad: Yes. As I shared before, we're working with our customer on that. We're engaged with them in all the right process development and qualification steps the timing of it is really, Kevin, a function of the ramp of the technology by the customer. What we are basically looking for is to be there when the ramp happens and serve our customer needs with our products. We believe we have a very competitive product for that market.
Benjamin Poh: Next, I would like to request Daisy to unmute to raise questions.
Daisy Dai: My first question is about HBM use TCB because some market intelligence firms expect that AI is projected to see sharp rise in adoption from mid-2027 onwards, overtaking 12H configuration. And I remember, if I remember correctly, that your HBM use TCB started from 12H back in October 2024. Do you see that any business opportunity for AI HBM? And also, I want to ask how do you see your HBM use TCB's China opportunity because currently, HBM is a bottleneck for China AI GPU shipment.
Bassel Haddad: Okay. So yes, as we mentioned before, we -- as you see in industry reports, there is kind of a stagnation in the HBM layer count. We believe TCB is needed in some architectures for HBM 8-layer. We continue to work with our customer in this side of the industry to ensure that we have the right product and we do the qualification with them. When the ramp of the demand for TCB in HBM happens, we would be there. And we're excited about the products we have shipped and also working on that would be available for them to use when that capacity as well as capability build happens in the HBM market. Towards the China side, we can't -- we don't comment specifically about a customer. We are a global business. We continue to serve our customers across all major subregions of the world, and we're engaging with our customers to see how our products can help them.
Daisy Dai: And my second question is for Katie. So how should we model the share-based payment? Because 2026 is a very good year for ASMPT. And next year, the management expects a sustained revenue growth? And will the share-based payment also increase next year?
Yifan Xu: You're talking about the incentives, right?
Daisy Dai: Yes, incentives.
Yifan Xu: Yes. So share-based incentives actually for us is non-GAAP item. I just want to call this out. But overall, yes, you're correct. As we continue to see sustained revenue growth, we do anticipate that the share-based payment will increase somewhat. But I cannot -- I do not have the details, and I will not comment on exactly, but I think directionally, you're correct.
Benjamin Poh: Next, I would like to request Arthur to unmute to raise the question. Arthur, please?
Yu Jang Lai: Welcome, Bassel. Last time we met in SEMICON Taiwan. So happy to see you again. I have 2 questions. One to the overall business, and second is to the gross margin. Maybe I will ask CFO. So the first question on the overall business. You mentioned that the lead time of the component is getting longer and longer. And then, what else the management team can do for shorten the lead time and then drive the delivery? That's my first question.
Bassel Haddad: Yes. Thank you, Arthur, and great to meet you again here. So just to be clear, we're not -- based on what we have said a quarter ago, the lead time has not increased. We are in the same, for AP, 6 to 9 months lead time range. We are aware of kind of the industry supply situation, and we're working very diligently to ensure that we get the components on time to deliver to our customer schedules. That includes things that we do in terms of safety stocks and risk buys for some components that we deem could be the bottleneck in our delivery time. So far, this is going per the plan, and we don't see any change to the 6 to 9 months delivery and lead time we mentioned before.
Yu Jang Lai: Okay. And second question on the gross margin. So Katie, I recall that in the SMT's history, sometimes the margin was driven by the 2 factors. One is product mix and one is scale. And the gross margin for the customer electronics actually was lower, and then AI or the auto actually is higher. Can you give us some color for the upcoming quarter and also the SMT business trend?
Yifan Xu: Thanks, Arthur. So, for SMT gross margin, maybe let me just comment really quick on the Q3, like how it played out. You see that the Q3 gross margin for SMT has showed quite a bit of growth Q-on-Q and year-on-year, and it's mainly driven by volume. So Arthur, this is the point that you're making about scale. So you see that the SMT actually has -- the gross margin level actually has pretty good volume leverage. Now, going forward, we do expect the SMT gross margin to stay at this level since the volume will be staying at this relatively high level. And the -- in terms of your comment on the product mix, you're correct, auto industrial usually could get -- could command a relatively better margin. But going forward, I think other than auto industrial end market, as we mentioned already, our SMT business is driven by AI demand as well. So we do see opportunity there to make sure that the gross margin, again, at this revenue level can sustain. Thank you.
Yu Jang Lai: Okay. So AI -- just to clarify, so AI SMT could also improve the mix in the future?
Yifan Xu: The AI -- the product -- the revenue mix will be coming from AI demand.
Benjamin Poh: Next, I would like to request Leping to unmute and raise question.
Leping Huang: I have 2 questions. The first question is about the Photonics business. You mentioned this -- you have -- AMICRA is adopted by a major global communication service provider. So how important is this adoption? Does it mean that your equipment is -- or the NPO is widely adopted by this customer and you see a meaningful adoption in the future? How -- since typically, you don't mention service provider. Typically, I believe your equipment is mainly sold to OSAT or the IDM companies.
Bassel Haddad: Thank you, Leping. So yes, we cannot -- as you just said, we cannot go into the specifics of the customer. With that said, I would say that we expect this opportunity not to be onetime order but continuous, as we continue to deliver and our products meet the customer needs. So we expect some of the continuation of this customer engagement throughout '27.
Leping Huang: Okay. So the second question is about the panel-level packaging. So what's your view on the customers' adoption, the speed of adoption on this technology? So currently, are we still in a trial phase? And where do you expect the high-volume manufacturing -- or the high volume shipment of your panel-level packaging equipment?
Bassel Haddad: Yes. I think I touched on it before. So panel delivers good benefits in terms of scalability, cost structure and so on. So we expect that to ramp over time. Ramp is also a function of the economics of the panel in terms of yield and other things. So we expect basically orders to come potentially late '27 with some revenue realization starting with 2028. But again, that would be based on the customer capacity ramp.
Benjamin Poh: Next, I would like to request [ Tracy ] to unmute to raise question.
Unknown Analyst: So my first question is about the Photonics business. So just wondering within CPO and optical transceivers, like which part of the bonding or the attachment may use more advanced equipment such as TCB and which part may use the hybrid bonding and why you see it is necessary to use this advanced bonding equipment?
Bassel Haddad: You ask about the CPO, NPO?
Unknown Analyst: CPO, NPO, yes.
Bassel Haddad: Yes. I think, again, as we shared in Q2, we have multiple intercept points in NPO and CPO in terms of where our machines and tools can be used. One to call out is the EIC to PIC bonding. That bonding required the accuracy and the performance of TCB versus other bonding instances in that package. So one thing would be EIC, PIC as that technology ramps. And again, we're working with our customers to ensure that our machines are available and meet their customer -- their needs, their specifications.
Unknown Analyst: Okay. And my second question is about the SEMI Solutions gross margin outlook. Just wondering how you expect the SEMI Solutions gross profit margin going forward?
Yifan Xu: [ Tracy ], this is Katie. Thank you for the question. I think looking ahead for SEMI Solutions, the gross margin will continue to benefit from relatively favorable product mix on AP. And the -- I think that we've kind of looked at the mid-40s, right? And I think, again, I'll take it out to the longer run, the semi gross margin could continue to expand beyond the mid-40s.
Benjamin Poh: So next, I would like to invite [ Charlotte ] to unmute and raise question.
Unknown Analyst: I have 2 questions. First one is on the qualification progress of hybrid bonders. So could you share the -- any updates in terms of the qualification? And what are the applications for whether it's C2W or W2W? And I'll just ask this question first.
Bassel Haddad: Yes. So we mentioned that before. So our second-generation hybrid bonding solutions is competitive in alignment precision, footprint, bonding accuracy and UPH, units per hour. We continue to work with Tier 1 foundry and IDM. They are engaging with us as a second source. We believe that is due to pain points on higher precision placement accuracy and void-free bonding. We also believe that both of these customers are still very open to another players to come in. And we remain very confident about the competitive capability of our second-generation hybrid bonding machine.
Unknown Analyst: Yes. Got it. And my second question is on the orders. Could you quantify a bit on how much -- within the new orders in the quarter, how much are contributed from Photonics?
Bassel Haddad: Yes. I think what we have seen, and we mentioned that we expect the booking of Photonics to grow significantly this year but also significantly second half versus first half.
Benjamin Poh: I think we have time for one last person to raise question. And as I see from the queue, Gokul, yes, maybe just -- maybe last 1 or 2 questions.
Gokul Hariharan: Maybe first one on the mainstream SEMI Solutions. The momentum seems to be pretty good, I think, from your customers also. Could you talk a little bit about how you're thinking about it as you go into next year? Especially given the traditional drivers of this business like smartphone, PC are still kind of quite sluggish and the volumes are still declining, are you still expecting that mainstream solutions, the order rate continues to grow into next year, solely driven by the AI power management? And how do you kind of square the weakness in the consumer side of the equation?
Bassel Haddad: Thanks, Gokul. Yes. So we have seen demand in our mainstream solutions from AI data center to what you mentioned, mostly around power with IDMs continuing to invest in their products to really cater to the AI demand. By the way, that also drives business for SMT as well in terms of the board side of things for the power for AI. We are monitoring the situation on the end market in consumer. So far, we have not seen order cuts from consumer, but we continue to monitor that. Basically, our booking on mainstream remains elevated even in Q4, supported by the AI infrastructure expansion and also China OSAT experiencing high utilization. I want to call out also that our exposure is much broader than consumer, right? So we're not only solely tied to consumer. We have a diverse customer base across automotive, industrial, power, communication and computing end markets.
Gokul Hariharan: Got it. Understood. And just a follow-up on your second source commentary for hybrid bonding for the leading IDM and Tier 1 foundry. Could you give us a little bit more color on this? Is this a recent development that you've kind of become the potential second source vendor here? And any indications you're getting from the customers for potential for high-volume shipments, given that they are -- especially for the Tier 1 foundry, the big ramp is going to be second half next year and 2028?
Bassel Haddad: Yes. And I want to tie it to what I said. We're going to be technology-led, and we will look for where we can differentiate our products and be there for our customer and win market share even if they have an existing leading supplier. So we are working with them. We believe every big customer in such a new technology would look for more than one supplier, and we're counting on being the second supplier that cater to that hybrid bonding demand growth that would happen probably in the next 12 to 18 months. We start seeing some moving into the qualification, Gokul.
Benjamin Poh: I think that will be all for the questions for today, and this will conclude our call. Thank you very much for participating, and take care. See you guys again. Bye-bye.