Kulicke and Soffa Industries Q3 2024 Earnings Call Transcript

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Provided by Quartr
August 7, 2024

There are 8 speakers on the call.

Operator

welcome to the CoLick and Safa 20 24 Third Quarter Results. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Elgendy, Director of Investor Relations.

Operator

Thank you, Joe. You may begin.

Speaker 1

Thank you. Welcome everyone to Kuel Kasaba's fiscal Q3 2024 conference call. Fusen Chen, President and Chief Executive Officer and Lester Wong, Chief Financial Officer are also joining on today's call. Non GAAP financial measures referenced today should be considered in addition to, not as

Speaker 2

a substitute for or in isolation from, our GAAP financial information

Speaker 1

presentation. Both are available at investor. K and s dot com, presentation. Both are available at investor. Kns.com along with prepared remarks for today's call.

Speaker 1

In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that may cause our actual results and financial condition to differ materially from the statements made today. For a complete discussion of the risks associated with Kuehlik and Sampa that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest Form 10 ks as well as the 8 ks filed today. With that said, I'll now turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Speaker 2

Thank you, Joe. Good afternoon, everyone. Throughout the past quarters, we continued to execute on several growth initiatives, including driving critical progress in advanced packaging and advanced dispens qualification, enjoying broadening adoption of our new ball bonding solution, while we also observe ongoing utilization improvement across several of our key end markets.

Speaker 3

Before reviewing our quarterly results and performance,

Speaker 2

I would like to mention a few points on the recent industry momentum within thermal compression. There have been 3 key milestones, which we are excited to explain. 1st, the formation of as well as our membership in the U. S. Joint Semiconductor Consortium was announced last month, Resolute Holding Corporation, leading provider of global semiconductor materials, formed this consortium to support industry collaboration and the market adoption of new advanced packaging production solution.

Speaker 2

After joint and the joint tool were created in Japan, the US Joint Consortium represents the 3rd joint consortium globally and the 1st in the United States. A combination of 10 leading equipment materials and process company based in the U. S. And Japan represent the U. S.

Speaker 2

Joint forming members who have the near term goal to establish a U. S.-based R and D facility with advanced packaging capability. Construction for the U. S.-based R and D facility will begin in the current calendar year and at completion will provide access for critical industry leading advanced packaging technologies, material and processes, which are now readily available locally to many of our U. S.-based customers.

Speaker 2

Our second TCB milestone is associated with a collaboration with a subsidiary of a large semiconductor, conglomerate, who has successfully demonstrated our leading fluxless thermal compression, or FTC system, which is capable of direct copper to copper bonding as a standard features, can also enable an exciting new chip to wafer hybrid bonding process. Hybrid bonding involves making both conductive and the direct response provide specific benefit for select end market. With a lower requirement for capital intensive front end investment relative to existing chip to wafer hybrid solution, we expect this boundless FTC process to further expand our long term chip bag at the heterogeneous opportunities. As explained by industry headline, there are many high grade bonding processes, including wafer to wafer as well as chip to wafer. This innovative TCB enabled hybrid solution target chip 2 wafer application for deployment in high volume consumer and the compute market by offering a lower capital intensive path to a hybrid based chiplet assembly.

Speaker 2

At the higher level, adopting chiplet based packaging can reduce product development time, allow for amortizing design costs over broader end market and is critically important in extending MOS load. With that said, our existing FTC system, which can bound copper to copper interconnect as a standard features, can provide a more direct pathway to chiplet based production. For many customers, Los seeking chip to wafer hybrid option now has an additional alternative. As an industry accelerate, the adoption of some of competition, we continue to enjoy growing commercial success and the broadening market access through our intimate and expanding customer engagement. Over the past 4 years, on a trading basis, our TGP business has grown by 10 times and we are still in the early stage.

Speaker 2

This was accomplished through new access to silicon photonics, 3 d sensing and the D DIN edge market, including our 1st mover position in flux as PCB at leading IDM customers. We have continued to drive industry adoption and have announced several wins in the assembly and the test space earlier today, highlighting these rapidly growing opportunities. Also, we continue to make progress in our foundry engagements and remain very optimistic that we can unlock any additional leading edge customers over the near term. Similar to our initial IBM customer engagement, which began in 2020, new technology wins with a leading customer require a lengthy and collaborative engagement process and a significant patient. This recent win and the evaluation progress have solidified our TCE process as a long term solution to support the growing adoption of chiplet based architectures.

Speaker 2

While there are several different technology and the process to support the diverse need of the future chiplet market, we are well prepared to support the industry with our leading solution. We are clearly excited as we are securing position in the new market supporting AI, HPC and mobility, which have historically not included in from our served market. This win provides confidence in our leadership as well as long term potentials for Flex less adoption. Due to thermal completion adaptability, out of box coupled to coupled capability and the broader customer set is provide lower value to entries for mass market chiplet adoption. Thermal compression demand and emerging technology with a long technology life ahead to support this growing market need.

Speaker 2

Even interconnect technology can be challenging for analysts and the investor to forecast, although I would like to remind investor to not overly focus on one specific interconnect technology. There are many packaging transitions across our end market with a growing number of trade offs largely between cost and the performance, but also production capability and the system label requirement. It's critically important to recognize that the high volume cost sensitive portion of the semiconductor assembly market will also need a stacked die solution over the long term. These various market needs are becoming more evident every quarter as we are actively developing several market and the stacked solution, which are being evaluated across our customer base. Many of these higher volume opportunities will likely demand more cost effective process, such as vertical wire and remain independent from many of the LTE PCB and the hybrid focused market.

Speaker 2

From our humble wire bounding loop, we are pleased with our new market footing and access we have demonstrated. Recent customer adoption combined with ongoing innovation provide a strong foundation to support long term advanced packaging adoption. I'm very proud of our team for developing and driving the recent customer success across the portfolio. Turning to our June quarter business results, we were able to achieve our guidance mid point while generating slightly more non GAAP EPS than anticipated due to our operational focus. At high level, we expect most of our end market have already experienced trough level of demand over the past 18 months.

Speaker 2

Over this time, certain market began showing signs of improvement, while other markets faced headwind that we see our corporate label performance. For example, our mobile bounding revenue on a year to date basis has improved by 42%. Despite this relatively meaningful labor of improvement, we also experienced offset due to wear long automotive and industrial headwind, which reduced wage demand earlier this year. At this point, we are pleased to begin seeing the signs of multiple end markets are improving gradually, allowing better coordination and we remain optimistic. While the market environment has become more positive, we expect our high volume solution are still well below the normal demand level we would consider sustainable for the product industry.

Speaker 2

Our global and the Wix businesses have room to grow. Looking at our end market more specifically, we continue to see utilization improvement in general semiconductor, target of demand improvement in LED, automotive and industrial, resilience in APS and the ongoing recovery in memory. Within general semiconductor, utilization rate for wall bonding has continued to improve sequentially, although have yet reached the critical tipping point expected to drive high volume customer to broadly require capacity addition. These order activity has centered around high volume region, where deterioration rate has averaged over 80% for the past 2 quarters. At the same time, the rest of the world has lagged slightly, but it's continuing to improve.

Speaker 2

As expected, global bullbonderefaction rates have exceeded 75% last quarter and are anticipated to be in the high 70% range during the 4th fiscal quarters. Looking out into fiscal 2025, we continue to anticipate semiconductor unit growth expectation will support an additional step up in demand for our high volume solution. We also anticipate ongoing industry growth will continue into calendar 2025 based on market forecast, but also due to ongoing global front end related investment. In addition to the improving general semiconductor dynamic, we also booked approximately $20,000,000 in thermal compression revenue during June quarter, which include our recognition of an additional FTC system, which support the recent TCP enabled hybrid development milestone. Within automotive and the industrial, we have also seen improvement in demand as our intercompany leadership position is actively supporting emerging process, utilizing efficient power storage, power delivery and the power control for electric vehicle, charging infrastructures, industrial application and sustainable energy generation.

Speaker 2

We continue to see many innovations affecting power semiconductor assembly, which are driving the need for more robust interconnect technologies, such as our recent high power interconnect or HPI solution within wedge bonding. HPI being deployed in high volume battery production as well as for more efficient power conversion required for charging and sustainable energy applications. We remain directly involved with several global EV manufacturers. The broader power semiconductor technology transitions as well as the leaders in the dynamic battery market. Over the course of this quarter, we continue to support an exciting expense opportunity recently deployed with a leading solid state battery company.

Speaker 2

While the market of automotive and the industrial may still be digesting capacity, we expect ongoing improvement to continue throughout fiscal 2025. Within memory, we see customers investing in new capacity and the technology, which is supporting the NAND market and gaining support for new standardized solution in the large and established LPDDR market. Wireline is arguably the largest stacked die market in the semiconductor market, relying nearly exclusively on wirebonding technology. We expect higher volume DRAM to transition to 3 d packaging format over the coming years. Several important leaders in the memory market are expected to accelerate development and the pre production activity over the coming quarters.

Speaker 2

With higher volume production to begin in late calendar 2025 or early 2026. Similar to growing leading edge and high volume assembly need for chiplet based architectures, the memory market continued to seek out new way to leverage packaging technology to drive greater transistor density per areas. Our thermal conversion and vertical wire solutions are anticipated to more effectively meet the mass market's performance, manufacturability and the cost requirement, thus emerging technology such as a cheap label heavy bonding that can proactively expensive due to the requirement for front end capability as well as a non year challenge. We remain in a very unique industry position and evident in our leadership enabling critical technology transition, such as direct copper to copper and the fluxless adoption, 4 leading edge applications, high power interconnect solution for automotive and the industrial application, and the vertical wire solution for high volume consumer oriented market. This emerging solution supplements our existing broad portfolio of interconnect solution.

Speaker 2

We are well positioned to support customers' need, while delivering significant long term value to investor. In closing, after nearly 2 years of capacity additions, we are pleased to continue seeing gradual signs of broader based cyclical recovery. Across multiple end market, Gazzner recently project a 17% semiconductor revenue industry growth rate through calendar year 2025. This growth expectation seems very reasonable considering ongoing global front end investment and is expected to be later primarily by AI, Automotive and General Semiconductor, which we expect will directly benefit the company and its investors. Global integration rate, we are moving to the high 70% range, also increased confidence for a more robust 2025 recovery.

Speaker 2

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

Speaker 4

Thank you, Fusen. My remarks today will refer to GAAP results unless noted. While there continues to be headwinds across specific end markets, it remains a transformative time for the company. As Susan mentioned, multiple end markets are showing signs of improvement represented in utilization rate as well as growth expectations into next year, while momentum in our portfolio of advanced packaging solutions is accelerating through both our direct customer qualifications and broadening industry adoption. During the June quarter, we generated $181,700,000 of revenue and a 46.6 percent gross margin.

Speaker 4

Gross margin were largely affected by product and customer mix. Operating expenses came in slightly lower than expected as we have maintained a significant focus on operational efficiency as our development teams remain nimble and were effectively reallocated to support in demand projects over the past quarter. DAP tax expense came in at $4,100,000 during the June quarter. We continue to anticipate an effective tax rate above 20% through the remainder of fiscal year 2024, largely related to our R and D tax treatment under Section 174. Our repurchase program remains opportunistic and we have again increased our repurchase activity sequentially.

Speaker 4

During the June quarter, we booked $44,000,000 of open market repurchase activity, which represents a sequential increase of nearly 18% and a 64% increase over the previous December quarter. As a reference point, we repurchased $728,500,000 through both open market and accelerated repurchase activity under the existing repurchase program since August of 2017. At the end of the June quarter, we had approximately $73,000,000 remaining on this existing share repurchase authorization. In addition to the long term nature of our share repurchase program, we continue to support an industry leading dividend program as we continue to execute on new long term growth opportunities. As Woosheng clearly explained, we remain very optimistic in a broader multi market recovery over the coming quarters.

Speaker 4

Although we may not be at the tipping point yet, we anticipate meaningful capacity demand improvements for our high volume markets over the near term. For the September quarter, we expect revenue of approximately CAD180 1,000,000 plus or minus CAD10 1,000,000 with gross margins of 47%. Non GAAP operating expenses are anticipated to be $69,000,000 plus or minus 2%. Collectively, for the September quarter, we expect GAAP EPS of $0.22 per share and non GAAP EPS of $0.35 per share. Looking ahead, we remain very focused on our close customer engagements and look forward to providing additional details to the technology transitions we are involved in that are supporting new technology and adoption milestones, which will help build a foundation in memory, dispense and thermal compression growth prospects over the coming years.

Speaker 4

This concludes our prepared comments. Operator, please open the call for questions.

Operator

Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Craig Ellis with B. Riley Securities. Please proceed with your question.

Speaker 5

Yes, thanks for taking the question and Fusen, thank you for all the help with the new product information. I wanted to inquire on a near term item first and look a little bit beyond the September quarter. So as you look at the gives and takes for the fiscal Q1 with the broad based or coordinated, I guess, coordinated recovery you talked about, PUCYN, How do you think about the impact of what you're seeing with some improving end markets or portions of end markets versus just still relatively low utilization levels in most of industry? Thank you.

Speaker 2

So Craig, you are asking about Q4 FY 2020?

Speaker 5

Calendar 4Q, yes.

Speaker 2

Okay. So last quarter, I think we expect a greater recovery with a slightly improvement into September. Although we saw the deterioration rate went up, but are still not high enough to trigger broader recovery. So at this moment, actually, I think we are seeing Q4 actually is flat compared to the Q3.

Speaker 5

That's helpful. And then as you look out further, Fusen, and this is more of a question about what your customers are telling you and how they're telling you to get the business ready for what should be some seasonal acceleration in the business. Can you just talk about how you envision the slope of recovery playing out? It seems like we've got very uneven demand dynamics across end markets. Indeed, some are recovering, some seem to be still trying to find the bottom like industrial.

Speaker 5

What does that mean for how the business might perform as we think about calendar 1Q through 3Q next year?

Speaker 2

Okay. So, Craig, you see in the past about 6 quarters, our revenue relatively is quite flat. And but at this moment, it's our feeling this is the first time in the past quarter, we see multiple end market improvement in our coordination. For example, I think early 'twenty three, the bond actually picking up a lot. In the meantime, the which was impacted by industrial and also auto.

Speaker 2

So that's why I think we actually almost have a consecutively 6 months of quite flat. But what we are seeing from our feedback, we've seen auto really coming back. The Q3, Q4, we also get quite good order for EV company for the wage buzzer and memory is also picking up. So if you are asking about 25%, I think that many people have an optimistic view about 25 percent with Gartner 50% to 75%. These will actually trigger broader recovery and in our many end markets.

Speaker 2

So you ask about sustainability, this is our view. These we probably can see the growth into the Q1 because of our generation rate is in China close to 80%. But also, I think it's not impossible if we see flat to slightly very, very minor sustainability over Q1 and Q2 with a stronger recovery in the Q3, Q4 'twenty five. Hope I answered your questions.

Speaker 5

That's really helpful, Houston. Thanks for taking both questions.

Operator

Thank you. Our next question comes from the line of Chris Sankar with TD Cowen. Please proceed with your question.

Speaker 3

Yes, hi. Thanks for taking my question. I had a few of them. First of all, 2 is a clarification. When you said December quarter flat versus September, was it for revenues or utilization rate?

Speaker 2

Actually flat because we also guide 180 for Q4, right? And actually, Q3, we just finished with 181. So I mean flat is the revenue. But utilization, we are actually seeing continue to inching up some area already over 80% for 2 quarter. And average right now, I think, is at 75%.

Speaker 2

We do expect in Q4, we'll go to higher 70%, but still not touch 80% yet. So that's why I answer if ask seasonality, it's hard to get because of recovery expected by Gartner. We will have chance maybe go up in Q1. But it's also not impossible we see flat also or actually very much minor, you know, seasonality supported by a second half based on our recovery.

Speaker 3

Got it. Got it. And then just on that point, Fusen, historically, OSAT had an appetite to add capacity when utilization rate is about 90%, given the lead times are not that long. So, is that a fair assumption? In that case, maybe the recovery is truly later sometime next year till we get to 90% or do you think there's an appetite to add capacity even below 90%?

Speaker 2

Well, I think it's 80% trigger additional buy. Actually, we did see OSAT start to contributing. We actually start from our Q3 and Q4 also from our China. We also have memory OSAT also start to have a buy. So we feel also is the 3 easily in that capacity now.

Speaker 3

Got it. Got it. And then two quick questions on advanced packaging. One is, can you talk a little bit about the status of the TCV coil at the Taiwan foundry? What is going on there?

Speaker 2

Okay. So, Krish, I think we actually have engagement and qualification, actually have multiple projects over there. And this place is we believe is going to be a growth for us in the future. The qualification is for the FRACLEX and this is for the high end products and it's a frontless. And for the frontless, we are the only one in the mass production for following industry.

Speaker 2

And qualification actually take a long time. The previous IBM company, we took a close to 2 years to finish it. But so far, in our opinion, we believe all of these have come out positive. And we have early the production for the 1st customer is intended for first half of 'twenty five. We feel positive and we have an initial discussion about capacity and also delivery schedule at the early stage.

Speaker 2

So we expect to reach a near term milestone and we will be able to update everyone maybe in our December quarter or November quarter. Got it.

Speaker 3

And then final question, I think in the last time, Fruh, you mentioned FY 25 advanced packaging dedicated AP revenue could be 200,000,000. Dollars Are you still sticking with that number or do you think it might be lower than that?

Speaker 2

Chris, could you repeat? I

Speaker 3

think last quarter you said in fiscal 'twenty five, advanced packaging revenues could be $200,000,000 for dedicated AP. Is that still the case?

Speaker 2

Yes. So this is our forecast. Our GCB alone in 25,000,000 last quarter, we forecast about 100,000,000. But for the dedicated, the advanced packaging, this including PCB, also including vertical wire and also including system in packaging. So all these are adding together or close to $200,000,000 And since we're adding more engagement in our site, we are doing a long term forecast at this moment.

Speaker 2

We probably will be able to share with you in the next couple of quarters.

Speaker 3

Thank you very much, Susan. Thanks.

Operator

Thank you. Our next question comes from the line of Tom Diffely with D. A. Davidson. Please proceed with your question.

Speaker 6

Yes, good afternoon. Appreciate the question. When I look at the guidance for flat next quarter at $180,000,000 is there any kind of a shift between end markets or products or is it going to be fairly

Speaker 2

Q3.

Speaker 6

Okay. And then Fusen, when you looked at the slides you produced and you gave a 5 year average for the different segments, when you look over the next 5 years, do you think that those are pretty good numbers or do you think some of those markets were overstated with the big upturn or understated because of growth drivers?

Speaker 2

Tom, could you talking about Wuxi Lumber? Can you update that?

Speaker 6

Yes. On your slide, you had a 5 year average for the different segments. And I was wondering if those 5 year segment the 5 year averages are good on a go forward basis or do you think they're over

Speaker 4

So, yes, Tom, it's Lester. So, I we believe that those numbers are good going forward on a 5 year basis as a projection going forward. There might even be a little bit of an upside going forward.

Speaker 6

Okay, great. And then finally, Lester, when you look at the Project W that was canceled last quarter, what was the cost associated with that? And have those expenses or costs been reallocated?

Speaker 4

So I think for Project W, there's minimal cost associated with in Q3 and in Q4 going forward. And we have reallocated those resources. I think in my remarks, I mentioned that we kept OpEx down because we reallocated those resources in an efficient manner to projects that is that was more in demand for the quarter and going forward.

Speaker 6

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Dave Dooley with Steelhead Securities. Please proceed with your question.

Speaker 7

Thanks for taking my questions. A couple, let's start on advanced packaging. I was wondering if you could just help us understand the applications that you have thus far kind of captured in order to produce this 10x growth in your thermal bonding? And just digging into that puzzle just a little bit further, I think we all recollect your first customer here was a big IDM CTU provider. If you could kind of just help us understand at that big customer, what are you doing chip on wafer or chip on substrate?

Speaker 7

And how does that help you win business at the big foundry?

Speaker 2

So, Dave, I think we start to get a more significant revenue in 2021. So it's about less than $10,000,000 So within 4 years, I think, first, I think we start with OSAT. After OSAT, we are working with IBM company and we develop actually chip substrate. And in the meantime, I think when we work with OSAT, we're also working with the customers who focus on silicon photonics and also like a 3 d sensing. So right now, I think we have special market, silicon photonics, silicon sensing and also have actually more important is a heterogeneous integration.

Speaker 2

So I think last year, we was the 20 3 was $76,000,000 to $80,000,000 So we actually start to focus we need it in the features. There are few bigger area for us. 1 is the OSAT. We actually feel very comfortable. We continue to get more revenue and more application over there.

Speaker 2

And number 2 is chip to substrate. I think we are doing very well. What we are focusing right now actually is going to be chip to wafer. We believe this is a future market as well as a foundry, right? So with these two areas, I think we probably will feel our growth for the next couple of years.

Speaker 7

And does the outsourcing of part of the COOS process to the OSATs, and I think that's the OS part, the chip on substrate. Is that a beneficial trend for you guys given that you already have relationships with EZOSATs and they're using your equipment? Or do you have to go in and kind of prove yourself completely new there?

Speaker 2

Yes, it's a beneficial to us.

Speaker 7

I'm sorry, I didn't hear that.

Speaker 2

It's beneficial to us.

Speaker 4

Okay.

Speaker 7

Okay. Final question from me is just on the core business. A couple of years ago, it was obviously running at much, much higher levels. And I'm just kind of curious, is there any reason that you can see that that core business wouldn't achieve peak levels of revenue again like it was a few years ago, given the appropriate circumstances in the end markets?

Speaker 2

Well, so David, you are asking about the core business line. So actually, the year 2022, 2021, I think we basically went out from like 500 something to about 1.5. This is 2.6 growth, 2.6% excellent. That's very, very significant. So that's why I think 21%, 22%, 1.5%.

Speaker 2

I think a lot of customers, they overbuy a lot of our core business. Therefore, I think it's we are down to this level. But if you look at it, if the guidance on the prediction is correct, the 17% unit growth, just assume half of that is, say, AI related or whatever, even like 8%, right, will achieve a larger capacity buy for our core business. I give you an EBITDA of a normal 4 100 business, like even before COVID, it's about $500,000,000 to $600,000,000 So with a cheaper capacity buy, I think you can calculate, we are still this year is still less than $400,000,000 for Bologna. So we believe we have a huge opportunity in core business.

Speaker 2

Also, our new technology adds value for the future in the Bovanda, including VFO and also in the Weijao of HPI. So we do believe semiconductor downturn normally no more than 6 quarter. We already have 8 quarter, including this quarter, maybe 9 quarter. So longer the downturn actually we believe upturn and somewhere that will be stronger and strong start from there.

Speaker 7

Yes. The longer you stay under the curve, the bigger you'll be over the part of the curve when the things get better, right? Everything kind of evens out that way.

Speaker 2

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Ross Cull with Needham and Company. Please proceed with your question.

Speaker 7

Hi. Thank you for taking my question. I noticed that you mentioned you expect the December quarter to be flat compared to the September quarter. And you're expecting gross margin to remain roughly the same area for the 2 quarters as well? Thank you.

Speaker 4

So actually, I think maybe that was a hi, this is Lester. I don't think we guided to the December quarter. I think what Foutin said was actually the September quarter, which we just guided to is flat to the Q3. He did mention for the December quarter, which is our 1st fiscal quarter for 2025,

Speaker 2

There is some update, but then

Speaker 4

they also be some seasonality in there. So I think right now it's fit to say. As far as gross margin is concerned, yes, think we believe that gross margin will probably stay around the 47% level through the rest of the calendar year, but then we'll pick up in the calendar year 2025 as some of our cost reduction initiatives kicks in as well as some of our newer products, which certainly get traction, but will have a lot more traction in 2025 and those are much higher margin products. So we still are aiming towards a 50% gross margin on a corporate wide basis.

Speaker 7

Great. Thank you for the clarification and the answer.

Speaker 4

Thank you.

Operator

Thank you. Our next question comes from the line of Christian Schwab with Craig Hallum Capital Group. Please proceed with your question.

Speaker 7

Great. Just Fusen, other than Gartner's enthusiasm for revenue growth or semiconductor unit growth, Is any of your dialogue with any of your customers suggesting that the first half of calendar 'twenty five that they plan on giving you a bunch of orders?

Speaker 2

I think everybody we talk, asking the stick on 25 because downturn has been very long. Actually, the short term, we have been in this chart for 6 to 8 quarter already, right, if you look at it. And historically, we don't see this. That means our market is stabilized. And in the future, we have a new product to offer.

Speaker 2

But the short term, I think, is really hard to judge. In the meantime, the utilization rate is an inch into 80%, right? 75%, we do believe finished Q4 will be a high 78 percent and that's why it didn't trigger capacity buy. Maybe customers still have a little bit budget concern and the Mako bodies. So if you're asking me about Q1 and Q2, this can go up, but this can also be flat, also be if seasonality, we don't expect a major one.

Speaker 2

But actually, we are quite bullish. So as many customer we talked to 'twenty five, it will be a good year.

Speaker 7

And then just in further clarity, what type of applications or end markets are people most excited about a recovery in 'twenty five in, automotive, industrial, etcetera?

Speaker 2

Okay. I can tell you, of course, we look at our advanced packaging And we also look at the Wish Bounder is a lot of auto, industrial and mainly the Bull Bounder. So bow bounder actually the customer is in general semi and is also auto and also in AI. So I think the application is quite broad. And I mentioned the average normal year overbought should be 500 to 600 even before COVID.

Speaker 2

And we have been in a prolonged downturn. And we do believe a little bit of broader recovery. I think we probably will be the first one to see that recovery.

Speaker 7

Okay, great. No other questions. Thank you.

Operator

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Joe for closing comments.

Speaker 4

Thank you, Alicia, and thank you

Speaker 1

all for joining today's call. Over the coming quarter, we'll be presenting at several conferences and roadshows.

Speaker 2

As always, please feel free

Speaker 1

to follow-up directly with any additional questions. This concludes today's call. Have a great day everyone.

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Key Takeaways

  • They reported Q3 revenue of $181.7 M and a non-GAAP gross margin of 46.6 %, slightly above midpoint guidance, and guided Q4 to ~$180 M revenue with a 47 % gross margin and non-GAAP EPS $0.35.
  • Their TGP business grew 10× over four years, they booked ~$20 M in thermal compression revenue in Q3, and they joined the new U.S. Joint Semiconductor Consortium to build advanced packaging R&D capability locally.
  • They demonstrated their fluxless thermal compression system for direct copper-to-copper bonding and a lower-capex chip-to-wafer hybrid bonding process, positioning them for emerging chiplet-based architectures.
  • Utilization rates improved sequentially across key markets: mobile wirebonding is up 42 % YTD and general semiconductor bonding utilization reached ~75–80 %, while automotive and industrial headwinds are expected to ease in fiscal 2025.
  • They are advancing high-power interconnect (HPI) solutions for EV battery and power conversion, vertical wire solutions for consumer markets, and 3D memory packaging, targeting ~$200 M in advanced packaging revenue in fiscal 2025.
A.I. generated. May contain errors.
Earnings Conference Call
Kulicke and Soffa Industries Q3 2024
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