Kulicke and Soffa Industries (KLIC) CORRESPCorrespondence with SEC

The title and role of each of the individuals who report directly to Fusen Chen, our Chief Executive Officer (“CEO”) and CODM, (collectively, “Senior Management”), are set forth below:

The following individuals report directly to our CODM as it relates to management of the Company’s business functions:

The following individuals report directly to our CODM as it relates to the Company’s corporate and support functions:

Segment managers are authorized to make decisions within the constraints of the Company’s strategic imperatives and various operating targets that are defined by the CEO.

Pursuant to the Company’s Grant of Authority, certain actions require further internal authorization, including in some instances, the final approval of the CEO or Board of Directors of the Company. Accordingly, a segment manager is not authorized to take certain actions without the requisite approval. The following is a non-exhaustive list of such actions:

As mentioned in the first response, there are two individuals that directly report to our CODM as it relates to the management of the Company’s business functions, which can be broadly categorized as the sale of Capital Equipment (CE) and Aftermarket Products and Services (APS). The CE business and APS business contributed to approximately 87% and 13% of the total Company’s consolidated revenue for fiscal year 2022 respectively.

The CODM meets with all of his direct reports as a group (the list of direct reports in the first response above) on a weekly basis. Full profit & loss statements, either at the operating segment level or at the company level are not presented to the CODM during these weekly meetings. Revenue information by CE Operating Segments and by APS as a whole is presented at the beginning of these weekly meetings.

In addition to all of the CODM’s direct reports, there are two additional attendees during the weekly meetings: the Vice President of Information Technology (who directly reports to the CFO), and the Director of Global Business Fulfillment (who directly reports to the Senior Vice President, Global Sales & Global Supply Chain). These additional attendees present operational issues relating to information technology, sales processing and sales fulfillment.

The direct reports of the CODM (i.e: Senior Management) rotate on a bi-weekly basis to present their area of oversight, focusing on the strategic and operational issues. Broadly, the Senior Management will organize itself such that one half of the Senior Management will present during the first week, with the other half of the Senior Management presenting in the immediate subsequent week.

Using a single month as an example, Mr. Chong, who is the Head of overall Capital Equipment, will present strategic and operational matters relating to Ball Bonder, Wedge Bonder, EA/APMR, Advanced Solutions, Lithography and ADS, may be presenting in the first and third week of that month. Where required, he will prioritize and focus on noteworthy matters concerning an operating segment during a particular week. Otherwise, Mr. Chong will rotate his update across the various operating segments over a series of weeks when he is scheduled to present. Apart from Mr. Chong, the one half of the Senior Management will also present during those weeks.

Similarly, Mr. Han will present strategic and operational matters relating to APS in the second and fourth week of that month. Apart from Mr. Han, the other half of the Senior Management will also present during those weeks. For example, the Senior Vice President, Global Sales & Global Supply Chain will present matters relating to global sales such as strategic wins and losses across the different regions.

The Executive Summary is a monthly financial snapshot that is provided via email only to select senior employees of the Company and Senior Management, including the CODM. There are no meetings or discussions held in relation to the monthly Executive Summary emails sent.

The intent and purpose of the Executive Summary is to provide all recipients a monthly summary of the revenue, gross margin, operating expense and direct operating margin for the respective CE Operating Segments and respective product/services lines within APS. It serves as a monthly signpost of how each CE Operating Segment and each product/service line within APS is tracking against budget, leading up to each quarter-end.

The CODM does not draw on these monthly signposts to evaluate performance or determine resource allocation, nor does he have any detailed or regular discussions with Senior Management concerning these monthly signposts.

Only during the quarter-end, during the QFR, the Financial Planning & Analysis (“FP&A”) director, Mr. Chong (the Head of overall Capital Equipment and who oversees the CE Operating Segment managers), Mr. Han, APS Segment manager, the remaining members of Senior Management and the CODM will review the financial performance of each operating segment in detail. Only during the QFR and QBR does the CODM make key resource allocation and strategic decisions relating to the seven operating segments.

The annual budget plan is prepared and approved in September of each year for the following financial year. In the April that follows, there is the mid-year review where the forecast that was earlier prepared in September during the annual budgeting plan is refreshed with updated information.

The annual budgeting process involves detailed collaboration across various teams within each operating segment and corporate function, where the individual operating segment budgets are prepared using a bottoms-up approach for expenditure and a top-down approach for revenue. Each of the seven operating segment managers (including APS) will have discussions with the sales team (under the oversight of the Senior Vice President, Global Sales & Global Supply Chain) to obtain sales alignment regarding their revenue targets for the budget. Separately, each operating segment manager will obtain alignment on cost of goods sold concerning his/ her operating segment with the respective manufacturing and operations teams. As for the operating expenses, each operating segment manager will rely on their respective cost-center owners to prepare a bottoms-up budget. As a final step in the preparation of the operating segment budget, each operating segment manager will hold a review session with their respective cost-center owners to determine whether any adjustments to their respective budgets would be required, or whether an overarching adjustment be implemented at the operating segment level.

Corporate functions including but not limited to finance, legal, human resources and IT adopt a similar budget preparation process as the seven operating segments.

Once all seven operating segment managers have finalized their budgets, they will collaborate with FP&A to prepare their presentation to the Senior Management and the CODM. During the presentation to the Senior Management and the CODM, each of the seven operating segment managers present his or her strategy, operating expenses, budget, and headcount information to the CODM at an operating segment level. It is during this presentation that the CODM reviews each of the seven operating segments’ budgeted expenditure and changes if any, will be carried through and subject to CODM’s further review and approval. The CODM tracks the actual results to budgeted results of the seven operating segments on a quarterly basis during the QFR meetings.

In preparing the QFR, the FP&A team reviews the fluctuations between actual results and budgeted results and obtains explanations for the fluctuations from the respective operating segment managers. During the QFR, the director of FP&A will present quarterly operating segment results to the CODM.

Attendees of the QFR include the FP&A director (who is responsible for the presentation), Mr. Chong (the Head of overall Capital Equipment and who oversees the CE Segment managers), Mr. Han (APS Segment manager), the remaining members of Senior Management and the CODM. The FP&A director presents the full profit & loss for each operating segment based on the following structure: (1) actual results vs. budgeted results, (2) actual results vs. next quarter’s forecasted results, (3) full year profit & loss outlook. Significant variances between actual results and budgeted results are discussed, including the formulation of action items or matters to follow-up after the meeting. The variances discussed primarily relate to revenue, gross margin, other cost of goods sold, operating expenses, operating profit and operating margin. These post-meeting items will be coordinated by the FP&A team based on follow-up with the various operating segment managers and subsequently communicated to the attendees of the QFR.

In addition to the QFR, during the QBR, the operating segment managers present actual revenue vs. budgeted revenue for their respective operating segments to the CODM. The revenue information provided by operating segment managers is used to discuss topline growth and production consumption trends.