Kulicke and Soffa Industries Q3 Earnings Call Highlights

Key Points

• Strong fiscal third-quarter performance: Revenue rose 36.2% sequentially and 123% year over year to surpass expectations, with 47.8% gross margin and non-GAAP EPS of $1.20. The company projects fourth-quarter revenue of $375 million, up 13.5% sequentially.
• AI and data-center demand are driving growth: General semiconductor revenue increased 52.6% sequentially, while demand expanded for wire bonding, thermal compression bonding and advanced packaging used in logic, memory, networking and power-management applications.
• Positive visibility into fiscal 2027: Purchase orders extend into the second quarter of fiscal 2027, utilization exceeds 90% across key markets, and traditional wire-bonding capacity has quadrupled. Advanced solutions revenue is targeted at more than $100 million in fiscal 2026 and $150 million–$200 million in fiscal 2027.

Kulicke and Soffa Industries NASDAQ: KLIC reported fiscal third-quarter revenue growth that exceeded its expectations, as demand from general semiconductor and memory customers accelerated and the company expanded production capacity to support customer requirements.

Interim Chief Executive Officer and Chief Financial Officer Lester Wong said June-quarter revenue rose 36.2% sequentially and 123% from a year earlier. The company cited coordinated execution across its operations, supply chain and research-and-development teams as it ramped production amid continued supply-chain constraints and macroeconomic uncertainty.

“Demand continues to improve at a faster pace than previously expected,” Wong said, adding that utilization rates improved sequentially across all regions and end markets.

Third-Quarter Results and Fourth-Quarter Outlook

Kulicke & Soffa reported third-quarter gross margin of 47.8%, GAAP earnings per share of $1.07 and non-GAAP earnings per share of $1.20. GAAP operating expenses were $89.7 million, while non-GAAP operating expenses were $82.6 million.

Wong said operating expenses increased sequentially largely because of higher variable incentive compensation accruals during the company’s second fiscal half, along with some additions to fixed resources intended to support its expanding opportunity base. Tax expense totaled $15.3 million, and the company expects its effective tax rate to remain slightly above 20% in the near term.

For the fiscal fourth quarter ending in September, the company forecast revenue of $375 million, representing a projected 13.5% sequential increase. It expects gross margin of 48%, GAAP earnings per share of $1.29 and non-GAAP earnings per share of $1.42.

Non-GAAP operating expenses are expected to rise temporarily to about $87.5 million in the September quarter, primarily because of the quarterly accrual structure of the company’s performance-based incentive plan.

Data Centers Drive Wire Bonding and Advanced Packaging Demand

Wong said artificial-intelligence applications continue to drive data-center expansion, supporting demand for both thermal compression bonding and wire bonding systems. He said data centers require advanced packaging for performance-oriented logic and memory products, while also requiring established assembly technologies for networking, communications, power management and storage.

“It is increasingly evident that most performance-oriented logic and memory applications will continue to adopt more complex heterogeneous integration approaches,” Wong said.

General semiconductor revenue increased 52.6% sequentially to $227.2 million during the June quarter, driven by greater capacity and technology requirements for ball bonding and advanced solutions. Memory revenue rose 8.8% sequentially to $34 million, following strong growth in the prior quarter. The company said its current memory business is focused on NAND technology and capacity requirements.

During the question-and-answer session, Wong said traditional wire bonding remains widely used in data centers, including in infrastructure, networking, communications, power and storage applications. He said more than a majority of chips in data centers are traditionally packaged using wire bonding.

Wong also said that about 40% of the NAND market now serves data centers. While wedge bonding remains more focused on high-current automotive applications, ball bonding is more commonly used for data-center power-management applications, he said.

Automotive Recovery and Advanced Solutions Expansion

Automotive and industrial revenue rose 9% sequentially to $24.2 million, after improvement in the previous quarter. Wong said the company saw robust demand for high-input/output and high-volume power and mixed-signal packaging, as well as an increase in demand for high-current wedge bonding systems.

The automotive and industrial market has faced industry-level headwinds for several years, Wong said, but Kulicke & Soffa expects to benefit from long-term growth in battery-electric and plug-in hybrid vehicles, which require additional power semiconductor technology and capacity.

Revenue from the company’s advanced solutions segment, which includes fluxless thermal compression bonding offerings, exceeded the prior quarter’s record by 20%, according to Wong. The company maintained its target for more than $100 million in advanced solutions revenue for fiscal 2026.

For fiscal 2027, Wong said thermal compression bonding revenue is expected to reach approximately $150 million to $200 million. The company is engaging with foundries, outsourced semiconductor assembly and test providers, and integrated device manufacturers on heterogeneous integration opportunities.

Kulicke & Soffa is also investing in panel-level and hybrid bonding technologies. Wong said the company is actively engaged with multiple customers on panel-level applications and plans to deliver a hybrid bonding tool to a customer during the first half of fiscal 2027.

Capacity Plans and Fiscal 2027 Visibility

The company’s Singapore manufacturing expansion remains on track for completion in the first half of fiscal 2027. Wong said the new production space is intended to support long-term growth in advanced solutions capacity and technology requirements.

For its traditional wire bonding business, Wong said the company has expanded capacity fourfold from roughly two quarters ago. He said Kulicke & Soffa has previously supported $400 million quarterly revenue levels and would ramp further if needed to meet customer demand, though he said he does not currently see a $450 million quarterly run rate.

Wong said the company is seeing purchase orders extending into the second fiscal quarter of 2027, which he described as unusual for the business. China utilization is above 95%, while utilization in memory and general semiconductor markets is around 90%, he said.

Based on utilization rates, purchase orders and customer conversations, the company expects strength in its traditional business to continue into the first half of fiscal 2027. However, Wong declined to provide a full-year fiscal 2027 outlook, noting the industry’s volatility and saying the company expects to offer more detail on the second half during its November call.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source