Kulicke and Soffa Industries NASDAQ: KLIC reported fiscal second-quarter 2026 results that management said reflected faster-than-expected improvement in demand and stronger customer sentiment, supported by above-average utilization across much of its served market. Interim CEO and CFO Lester Wong said the March quarter was led by general semiconductor and memory demand tied to global data center capacity expansion, while traditional markets such as premium smartphones showed improving conditions.
Demand trends and end-market drivers
Wong said utilization rates have increased over the past year and “the need for incremental capacity continues to grow,” describing demand across both advanced packaging and high-volume traditional packaging solutions that support data center-related networking, communications, power management, and storage requirements. He also pointed to “positive momentum within automotive and industrial end markets.”
Revenue rose 21.5% sequentially in the March quarter, and Wong said the company has improved visibility for fiscal 2026, with an expectation of “a slight sequential improvement into fourth fiscal quarter.” In response to an analyst question on longer-range quarterly expectations, Wong added that the company expects fiscal fourth-quarter revenue to be up “maybe 5%-10%” sequentially and said he expects “strength throughout the business, the core business, as well as our Advanced Solutions business through the rest of the calendar 2026.”
Segment and product commentary: TCB, memory, and power semiconductors
Wong said revenue recognized for the company’s fluxless thermo-compression bonding (TCB) solutions increased sequentially, supported by outsourced semiconductor assembly and test providers (OSATs), foundries, and integrated device manufacturers (IDMs). He said the company’s fiscal 2026 outlook “remains strong for Thermo-Compression and supports aggressive sequential growth.”
On adoption of fluxless TCB, Wong told Needham analyst Denis Pyatchanin that the strongest adoption is coming from “general semi,” particularly at foundries and IDMs, with a focus on logic. He noted that Kulicke & Soffa delivered its “first HBM system in December and it’s undergoing qualification,” but reiterated that general semiconductor demand is currently driving the end markets.
Wong also highlighted several newer offerings announced during the quarter:
- ASTERION TW, announced in late March, which Wong said is positioned for “increasingly complex, high current, and high reliability power applications,” complementing clip attach and pin welding solutions.
- ProMEM memory features and an expanding DRAM solutions portfolio, which he said supports both cost-sensitive and high-bandwidth memory applications.
- Advanced packaging programs focused on panel-level base system architecture and the “long-term industry development of true production-capable hybrid solutions.”
On hybrid bonding, Wong said the company is “increasingly focused” on the technology and believes it is time to “invest and accelerate market engagements,” even if broad adoption is still “a few years away.” In the nearer term, he characterized TCB as “the production solution for today’s most complex heterogeneous applications.”
Wong said the company expects its TCB business to grow “at least 70% sequentially this fiscal year,” generating “over $100 million of revenue.” TD Cowen analyst Krish Sankar asked whether incremental buyers were IDMs, foundries, or OSATs. Wong responded that growth is “across OSAT, IDM, as well as the foundry,” adding that the company is also talking with “some of the fabless customers.”
In memory, Wong said shipments increased 93% sequentially to $31.3 million, with the current focus on NAND technology and capacity requirements. He said the company expects to gain DRAM market share with new solutions as advanced packaging trends evolve in the memory market. In a later exchange, Wong said the company is seeing a rebound in memory “particularly in China,” driven by Chinese memory OSATs “expanding significantly,” which is boosting ball bonding demand.
On vertical wire, Wong said there may be “a little bit” of revenue, but called it “more of a 2027 and beyond play.” He described vertical wire as aimed at die stacking for low-power DDR, which he said will be needed for on-premise AI and potentially in the data center.
Geographic utilization and automotive/industrial strength
Asked about utilization rates by geography, Wong said China has been at very high utilization for the last couple of quarters and was “over 90%, around 92%” in the March quarter. He said utilization was also strong in Korea, Japan, and Taiwan, while Southeast Asia remained “a bit soft” but improving. Wong added that North America and Europe also improved, though he said utilization was “still being led by China as well as Japan, Korea and Taiwan.”
Automotive and industrial shipments increased 63% sequentially, which Wong attributed primarily to “high IO and high volume power and mixed signal packaging.” He also said the company is positioned to benefit from longer-term growth in battery and plug-in hybrid vehicles that require new power semiconductor technology and capacity. When asked by B. Riley’s Rebecca Zamsky what drove the upside in automotive and industrial, Wong said it was “more automotive,” citing increased semiconductor content driven by ADAS and infotainment, as well as higher IO counts and rising current requirements that he said the company’s newer tools serve well.
Aftermarket products and services (APS) demand decreased sequentially due to lower refurbished system sales, while the broader consumables portion of APS remained consistent sequentially, according to Wong.
Financial results and outlook
Wong said the company delivered revenue above guidance and continued to ramp production in core markets and fluxless TCB while emphasizing operational efficiency. Gross margin was 49.3%, and the company delivered GAAP earnings per share of $0.66 and non-GAAP EPS of $0.79. Wong said gross margin remained strong sequentially due to customer and product mix.
Operating expenses were $81.1 million on a GAAP basis and $73.8 million on a non-GAAP basis. Tax expense was $7.4 million, and Wong said the effective tax rate is expected to remain “slightly over 20% near term.”
For the June quarter, Wong guided for revenue of $310 million, up 28% sequentially, with gross margin of 48%. Non-GAAP operating expenses are expected to be $85 million, which Wong said reflects higher variable compensation and increased critical headcount to support market opportunities. The company targets GAAP EPS of $0.87 and non-GAAP EPS of $1.00.
On operating expense trends, Wong told Zamsky that a significant portion of the expected increase is variable incentive compensation and sales commissions tied to higher revenue. He also said the company is increasing fixed-cost investments in R&D, particularly in advanced packaging, including panel-level architecture and hybrid bonding.
Capacity expansion for Advanced Solutions
Wong said the company is expanding its Advanced Solutions segment production footprint, stating that over the coming year it anticipates significantly expanding production capacity to support approximately $400 million of revenue. He said the expansion involves $20 million of capital expenditures, with $12 million expected to be deployed in fiscal 2026. The investments began in April and are planned to significantly expand thermo-compression capacity by the first half of fiscal 2027.
Asked by Steelhead Securities analyst David Duley what prompted the capacity investment, Wong said the company sees “a very bright future” for fluxless thermo-compression and described its system as flexible, including support for both formic acid and plasma processes, and material handling that enables multiple applications. He also cited inbound interest from foundries, IDMs, OSATs, and “fabless customers, or customer’s customers,” adding that the company believes “this is the time to be prepared for a significant ramp” in fluxless TCB over the coming years.
On how the company plans to fill that capacity, Wong said it expects both market expansion and share gains. He pointed to potential expansion into memory opportunities such as HBM, which he said would be “a very big market” if it opens up for the company, and added that within logic its solution is “holding up against most of the competition.”
About Kulicke and Soffa Industries NASDAQ: KLIC
Kulicke & Soffa Industries NASDAQ: KLIC is a global supplier of semiconductor and LED assembly equipment. The company specializes in the design, development and manufacture of advanced die bonding, wire bonding, flip-chip bumping and wafer-level packaging systems. Its solutions support a wide range of applications in consumer electronics, automotive, communications and other high-growth segments within the semiconductor and LED industries.
Key products include precision wire bonders for microelectronic packaging, die attach systems for chip placement, flip-chip bonders for advanced packaging architectures and LED packaging platforms that enable high-volume production of automotive and general-illumination LEDs.
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