Kulicke and Soffa Industries (KLIC) 2 May 242024 Q2 Earnings call transcript

Greetings, and welcome to the Kulicke and Soffa 2024 Second Quarter Results and Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Joseph Elgindy, Senior Director of Investor Relations. Thank you, sir.

You may begin.

you. Thank Kulicke Second to Call. XXXX Soffa and everyone, Quarter Fiscal Conference Welcome, Chen, Officer; also Officer, call. Executive and joining Lester today's Fusen Chief Financial and President Wong, Chief on are

remarks to, should isolation and in our our today's earnings are are GAAP for to Both considered today included for GAAP from referenced available information. earnings along reconciliation measures a substitute presentation. financial in Non-GAAP with at release addition non-GAAP not financial within as or latest prepared be call. investor.kns.com, tables our

In historical relating today's statements and materially results made will to may are the Securities remarks future statements to and condition from to These the financial statements XXXX Private meaning subject forward-looking that addition cause results. Litigation risks statements, our to of uncertainties today. differ contain Reform of the actual events statements and/or are Act within future and

discussion complete filed and most our Form a and affect with associated could and recently refer For our that please and the Soffa X-K specifically the our of condition, XX-K SEC filings, to results Kulicke future yesterday. filed risks financial upcoming recent

go that Fusen. would now like Please to Fusen to With Chen for said, business overview. the call the turn I over ahead,

morning, Good everyone.

challenging and core over beneficial Thermocompression, successes significant Advanced to we recovering investors and coming with market on quarters a employees and years. in automotive continued certain including customer the the the over and successful market and qualification market operational VFO Dispense. expected While LED, driving remain expanding position to new be will customers, our industrial on These a focus a coming efficiency term, focused new be and combined

and wanted our by customer strategy has quarter's This K&S to engagement overriding W discuss allowed evolved been engagement. advanced this engagement Project to include new expand us recent our briefly take example results growth format to Before markets this few has has enter packaging our customer-focused our and successful display and shares customer strategy. high-volume the share XXXX outlook, market, enables intimate co-packaged DRAM. This growing I we A optics discussing and market, leading-edge of next approach expand in actively logic as for enter effort competency. in

Dispense Advanced I explain approach, will shortly. similar a which taking customer-focused business Our is

engagement supply gain has partners, profitability, combined in end unfortunately has the there in and factors likely our for our affected earnings. quarter's as customers' its chain provided decision a our vendor assets potential finished inventory both may access, charge, impairment by non-GAAP which including second a the goods for new canceled Industry the order While played always that with challenges tool, K&S. Project-related raw the open to market be accounted program and and was a strategy a was macro W. well Project role intimate and case discontinue this share will risk be purchase customer, with GAAP with project which as

Advanced reallocation to the maintain Largely sizable resource broadening were Memory, Dispense including restructured Packaging never to and W, and cancellation lean operational accelerate model. of initiatives taken to we decisions purchase related other business actions fulfilling our customer these demand have Restructuring reallocated to have a and are solutions. lightly, a critical and order Advanced necessary although remain the focused for Project

anticipate recoveries semiconductor with XXXX. Near market We continue more technology general we combined by improvement fiscal to and term, greater demand. expect XXXX demand capacity in resilient gradual a memory to opportunity through fiscal led with continue

XX% despite experienced automotive, and customer as packaging Bonder by in semiconductor, Ball improving momentum market. have industrial within an For increase trend. we ongoing the and quarter XXXX, Ball our advanced Also broaden is utilization engagements. general Since revenue we activity continue LED second order already Bonder over supported headwind fiscal

with activity demand robust to as order continue accelerates. for a more gradually We prepare general high-volume in customers applications semiconductor

with market announced response-based Test Company, from a near-term semiconductor were sizable After of fast-growing RAPID provides optimism order bonding upgraded system, order purchase and high with volume low with rate Pro which Assembly and yesterday, ProSuite closed capabilities. utilization on us our Improving recovery. general combined we a X,XXX looping

automotive demand Next, customer demand The fiscal on rate begin across due XX% above coming XXXX over year for quarters. to to fiscal demand and the a year stabilize date headwinds, trough base. our LED most anticipate revenue recovery market although lower run and we has to the automotive quarter rate our recent to rate, softness, Despite limited face near-term current customer throughout and our rate experienced utilization broader XXXX. industrial industrial current with continue to utilization is the run based automotive feedback,

largely rapid ongoing increase power enabling. is electric we performance driven provide in are fairly sustainable global broad opportunity. trend secular energy driven growth trough-to-trough These by smart by distribution which trends and vehicle are need, and This

Demand Finally, has very Memory solution trough customer experienced for change. fiscal has our the year. quarter, we significantly from reduced sequentially memory from to last largely expanded level mix strong due a

XXXX, the year first revenue from of XXXX. entire fiscal half During fiscal Memory our Memory doubled nearly revenue has in our

recover We quarters. across the application expect Memory demand to over continue to coming

core to our strengthen we as a ahead, and improve, is general very on remain continues focused to business near-term anticipated Looking semiconductor execution.

of each. in to base. Dispense a take explain gains share customer would Memory, in wins to Thermocompression and I broadening Advanced our technology like minutes few New the

vertical-fan within or the our qualify over and First, expand memory market solution, to packaging is out, to which wafer continue expected develop coming years. we actively access utilizing level Memory, system, VFO our

solutions year. memory and we is production are emerging strong, momentum expect customer into transition VFO While will next they volume still higher

market. high-volume memory wire for are we customers, new a and solutions. packaging IDM of with support In is who wire leading addition to Vertical solution a production for benefit provide demanding development the actively new our moving currently unique requirements beyond applications. to future The company, vertical well fabless extends memory these key high-volume positioned well solution into wire is continue system-in-package and shielding to vertical cost-effective leading

is supporting connectivity which adoption. team development stack application, future drive of VFO high-volume currently Our can

ongoing as momentum, Dispense business term. momentum to and are assembly interest evaluation market. progress penetrating we gain Advanced begin we expect advanced and dispense market battery Next, high-precision in near are Broadening aggressively to share our the driving and continued in growing display opportunities packaging, customer the our

solutions due excellent a equipped inspection highly to micro-dispensing and Qualifications beyond. self of Advanced win Dispense over customers, foundation repeatability. secure will being compensation, competitive fiscal Advanced in-line coming Our will in are with their which growth and capability the XXXX Dispense support revenue quarter

fiscal or revenue Finally, TCB, Xx in trailing comparing has to expanded quarters our in Thermocompression results. gain X by we bonding continue over which of XXXX demand nearly the momentum

solution heterogeneous integration. Furthermore, momentum is scale continue and and TCB can our As it clear to the to increase becoming Fluxless chiplet support build, to our customer significantly broadly future. demand we solution in for continued expect that TCB leading

a TCB key approximately Foundry XXXX OSAT during $XX build already separate opportunities and We IDM, active new have XX of million sales and customers. have fiscal supporting over of currently Fluxless engagement baseline year with

We TCB customer continue for of a serves inquiries early testament to that growing we receive TCB as the opportunities multiple across in customers. a are other with wide additional of This base demand funnel growth. stage

momentum. efficiently accelerate The this more market create need package will transistor-dense only to

demand reflow, next Advanced and TCB annual we $XXX customer well to Fluxless remain year Our are to committed customer solution, trajectory, dedicated Upon extremely wafer-level-packaging which fiscal qualification approach revenue and anticipate system the demand, near-term healthy we XXXX. solutions positioned million execution. wave by for our free-chip the of mass in Packaging and near-term success TCB including

Contingent near-term across business upon Packaging anticipated to the accelerate. qualification is further growth execution, applications Advanced and

potentially all Looking Also, early more near copper-to-copper a due unique term, as year. a strong higher HBM delay memory of has new to next-generation shipping begin adoption cost or this of high-bandwidth customer very hybrid calendar more and competitive as engagement volume could ownership. for can momentum potentially bonding capability

the a IDM, broad team consumer group a OSAT and engagement remains support on capabilities. stacked-die high customers cost-effective with bandwidth, Currently, process Advanced of leading This Foundry focused our interconnect Solutions fine-pitch that require near-term very customers. and

well leading support high TCB to solution from pitch are volume copper-to-copper Our a with X microns. XX interconnect Fluxless to positioned

chip bonding. expected pick bond to wafer broad robust to wafer reel the future support or market is and capability Our tape tray, or Thermocompression of from substrate, and to and

for as built and assembly best class take the such our sensing parallel, to years a as this recent ramp to shares IDM. OSAT the over begin high-growth progress TCB OSAT and significant allowed and have initial the mass mobile, high-volume Fluxless expand be engagement with have IDM solutions across are markets leading who also made and leading co-packaged first to to XD our Today, with have they to we in long-term relationship. production our we of share optics. through continued us TCB We base In customers,

qualification to over past Today, future interconnect the We future actively TCB new quarters, of additional which Over continued and portion win to customer a our resources partnership sizable we R&D anticipate a forward present the throughout team can allocate support specific opportunities, additional marketplace. to TCB engagements. quarters. towards few global coming have look of our the foundry is engaged need all announcing the we

In we continue brighter to look a to closing, XXXX. forward

an continuing Memory, Packaging progress, forward key growing our and Advanced a with Advanced our look for to intense sharing support transitions to foundation have operational recovery which will and enhancing focus are We market efficiencies, solidify near-term preparing core on opportunities. growth. our for technology future Dispense We

financial turn call over now to Lester? will the update. the I for Lester review

refer Fusen. unless GAAP you, will today My results noted. to Thank remarks

the markets, continues industry related to an to continues and specific time there for While remain it company. across end exciting be headwinds to conditions, macroeconomic

we and begin with of As to term. Fusen over improving activity and to customers are for pleased anticipate both higher ramping technology needs volume mentioned, additional order near the see groups customers capacity

gross this similar quarter's prior we quarter, quarter. X.X% gross the generated the have During million March Without would of and unique margin. to revenue a charges $XXX.X been margin

we of During $XXX.X impairments amount charges, booked million. the pre-tax quarter, this in including recent

that W million expect million. XX low a our million. has $XXX estimate end to below our high impairments estimate XXXX year we recall, of of high By total come the be we fiscal in and of the of you to anticipated $XXX announced including As $XXX cancellation relating of Project to estimate company and charges, March between charges in the pre-tax the

members during in-demand and indirectly tax reduce which unique March booked supported have quarter. reallocating quarter, We the GAAP tax In events items Project R&D addition to which for key of we the prudently through $X.X expenses projects, directly W. related million resources, to included

effective to We XX% rate remainder through an tax above year of fiscal XXXX. the anticipate continue

activity again sequentially. remain have program and we repurchase our repurchase Our increased opportunistic,

market quarter, million open over During quarter. booked of the represents nearly of the sequential March a activity, which increase we XX% December repurchases $XX.X

expectations order Although increases of activity end broader growth. market semiconductor gradual, general recent

headwinds end also of half. revenue to the in within million relating We continue fiscal and the second W near-term anticipate $XX semiconductor power Project anticipate the cancellation of approximately lost to automotive markets and

or expect of includes $X.X down approximately are which million, with operating $XX per quarter, the minus June GAAP share. non-GAAP plus into expect quarter, we margins wind X%, anticipated expenses of Looking of plus additional June expenses Collectively, $XX revenue to minus we $X.XX and EPS gross be of of or EPS Non-GAAP $XXX million, for the million approximately $X.XX million. share per XX%.

Over opportunities Dispense and build to coming as years. we which we a concludes in will foundation the Memory, the prepared milestones, new quarters, comments. providing additional our forward updates look reach This help Thermocompression over coming

Operator, please open the call questions. for

[Operator question TD Krish comes with Instructions] Sankar from Our Cowen. first

rates It wire to this a one more for bottom. better? you're like pull bottom the wire that, business. utilization First Or bonder bouncing for off this think beginning through OSATs is off bonder cyclical visibility on and are through? is the bouncing kind do core until that's Fusen, business, and of going gets i.e., your demand up general see you semi recovery the looks

believe, recovery [indiscernible] this, actually, stronger But center when we second not Automotive, was right? the Bonder Krish, core last and recovery, by strong enough have even quarter mitigated Well, quarter. as are improvement. in general expanded was LED with the of general, I semi Ball semiconductor

Ball of Bonder, in 'XX by fact, 'XX. increase in an In XX% revenue versus has QX

semi going but semi So continued the also increase core LED auto the QX, also bit go and up, a general even to and -- weaker. incrementally to

headwind in even bit Ball semiconductor should a also I probably what we we more Bonder general recovery. need say auto is And have [indiscernible]. I So a little recovery, have industry think a this

phone don't actually if So TCB, way, this of what right? much think actually see be But questions. in part Bonder your As easy can I to year 'XX answer will say add us. I and together, on very a for better in I bigger recovery a a If our be that, some result, should cancel they know right? auto, I Ball is we

is semi, recovery it an we reason, a think we general have I going [indiscernible] But a see when ongoing in also -- the was was slower. way. we're I increase bit the think

But PC, in of the we trough. above Bonder the and compared XX% this 'XX phone that only revenue expect broader moment, XX% more have forward, FY be stronger recovery looking the we will But to auto. and a still And even Ball peak. at

still little So recovery and probably I long think bit industry go a recovery. our broader way this to have needs a

Got the time from Taiwan one follow-up. quick it. you then where it. give foundry? is of thought going give TCB And us an Can call qualification you there? Can done that TCB. update the -- to the on is this other expected hybrid an Got customer around update you warning your to us end be I

Okay. Krish, first to me let tell you.

[indiscernible] the bonding exists hybrid think market. actually in I this the and TCB

only Fluxless at engagement Okay, technology single -- foundry the tell and for can [indiscernible] I So a we for application it's several engagement layer, not moment. is have this, qualification multiple So priority new of with actually us you one right? our project. this And

the As whole Fluxless industry. are I currently and production in technology for we the provider only mass first mentioned, the

And this technology to or the production good, 'XX, very, CY' new and And a intended in So give Foundry progress you, in but very try is of is reach the and in feel discussions begin you half we production advanced right? is the call, qualification right? relented 'XX. first So early prior I lengthy. milestones think to for expect new process the our we next Technology always we update the what for take like Foundry during I Advanced to shipments CY to really are that for short-term in of tell

IDM, And an you can a Foundry engagement a qualification OSAT to is we So we and It's grow projects, We Foundry in do actually we this and bit side. increasing will as XXXX than figure began XX And our the the little longer. to in months in begin have time TCB, to anticipate give TCB the since engage as just Let quarters. relationship IDM We share good example. a have progress coming actually shares in take our importance multiple later, this presence shares me beginning, very of right? in is on expect. application. well we matter to

Dave with question Steelhead next Our from comes Securities. Duley

bonding of Thermocompression bonding guess with bonding. conference going the on guys that dual have about strategy also a I to pursue your follow-up Thermocompression I'm of with and would continue bonding. ago one I few near-term I be Or solution they a these the they the TCB choice do a Thermocompression the all thought as for are of see implied we technology? as how think talking are of memory call And competitors And the technology Thermocompression days with kind current had memory kind hybrid a they will the at as HBMX both for HBMX. memory and just wondering stacking use die? guys bonding? working to where you far

Okay.

production So tool will is actually a now right TCB and TCB. be still generation we believe next

think reasons of One I capability. the is

the is really reason cost. other The

HBM. this of generation calendar our -- will probably next potentially end by a year, And system year. fiscal be issued of engaging are We working together

also of project have physically the as IO actually another VFO. This we and form memory improved XX% performance. package reduce can a a I as electoral exciting increase by we also call think factor well project is

like customers next production for will map But low-power generation first has is also of one potential but have a not DDR, of HBM, actually The the to a be actually memory road one for for a be but customer HBM. HBM. as our intended a

TCB, This of revenue. project advanced and we both actually, for chiplet. actually the memory, will actually So VFO, is have heterogenous for on work logic. focus our on increase our we potential actually both ways. we But integration

the think simple that TCB a used to answer your is believe capable. generation is TCB we be is and focus, going believe I current is to we HBM and And and So of TCB. question, next-generation

my second the with And to Great. Okay. core do has question business.

of Would to announced get a you've that to a from time. fair they is the you roll consistent you're tend big make these at OSATs or that start wire that to for I X,XXX-unit to more big the assume be we usually same you assumption this should that order order, one assuming other here to order up IDMs, guess, first because all big is large other received. orders on You orders order, basis? start kind the Is when I'm collect a new the starting bonder. it

it's Dave, Well, Lester.

We are we one as starting to definitely months, of as utilization requests seeing, RFQs. POs is starting The this customer indicated, as rates see PO big over couple We improving the also increase are last gradually do come the order creeping in. come, up. to well

And indicator is get demand. of markets, end purchases. discussion their to in about starting even also that future some an are with sort weaker volume customers higher we So the of

So be say definitely we ramp 'XX, yes, that believe second first but I earlier, probably half, half would will the Fusen kick FY said than the the off. better as do that, when early should that's

Our comes next from Davidson. D.A. Diffely question with Tom

Fusen, nice though, vertical bonder. on focused you've of the flash stronger side Curious historically, all are the the side. the Because fan-out on Thermocompression and the those explanation the market? memory or Yes. on side, just been NAND DRAM

So if both memory are technologies just types looking curious or DRAM? these at

future, We vertical is NAND back little At you play Actually, low question, bit moment, but memory stronger this believe our this a thank the moment, fan-out, market recovering. Tom. we we to At initial stage. one your right? and working for believe, question, vertical all go but a are fan-out, Start working and with the only, answer applications, is panel, only applicable vertical DDR is this bigger company. right? your the think, actually with exciting, customer the question, with NAND, have the all just actually are I memory is low-power hope memory very memory customers, the development. a customers. behind going is answered the that DRAM This all a for IDM us for started have So not to also it for with company memory get So your I be to we I In the we at even question. other NAND

No, few-part Yes. a question side, perfect. display guess, the on then here. I follow-up And

going the your display how is of First what of dispense outlook sets is display are exit the team from is Project W, tools? with TCB for fungible -- your for the to then and other and

Okay.

So your second let question. answer me

LED I cancellation. is the is unclear micro impact The think due the of industry really project the actually to rare. somewhat

a industry a in whole LED, change despite is needed the we LED, die pick-and-place for is opportunity opportunity smaller of actually, years, will good volume few large still X format this die direct are still for the micro for years. micro years, in LUMINEX sure And the for believe But LUMINEX for transfer X moment, size, at for do So half setback and second be right? 'XX, CY not we high-speed with our . mini [indiscernible] a a application LED our targeting still high system this initiative, display

the sure So really our of some right? ongoing. the of If impacts people. project people, for depends capability is terms in actually project people, the But canceled on of

can mechanical company, a the some we engineer is I contribute for think For engineer. to continue on people, if actually them a mechanical

So in we of futures. useful big do and project people for keep a also part a the the

next Our Cole comes with from Needham Ross question & Co. Instructions] [Operator

Shi. On behalf of Charles

this about order more relative significance be thinking you my systems? What customer? the kind of question of and standard test So to ASP Ball Bonder is, your fast-growing should the we X,XXX uplift assembly from can describe system

system. a new Well, about is Again, our again looping customer. upgraded amount a It's also leading this mostly smartphones, only applications, with is software. technology. most more again, which ProSuite, Ball is China-based bought the PC. Ross, the not new I X,XXX semi consumer, guess of bonding it's order customer existing And advanced advanced some our and Bonder machine this of bonders their serve Again, of general our one they bonders, significant

don't it? March color second And to well. Great. the provide What quantify want you a then quarter? directional ask question the was could I as if like backlog some Can you exiting

Sure.

in -- for trough a which in think ramp book-to-bill cycle. has the when or I about much pretty approximately the a than other level quarter So the was normalized X, you're

down, as -- we some the down So we the improved, that of we we as bookings seen has during said, have received backlog was burn that orders come ramp.

I to a normalized more So about to XX times, now, similar Ball about weeks lead is and Wedge think our it's which XX of for X bonder. XX level Bonder to at much

I There to Elgindy now over would are floor at back comments. like the no further turn to for questions this closing Joe time.

thank for Thank you all and you, joining Maria, call. today's

San Over quarter, the in at presenting conferences and we'll coming Francisco. be Minneapolis, York New

any As great call. always, feel to This with everyone. a questions. follow directly day, free today's And please concludes have up additional