Kulicke & Soffa(KLIC) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Revenue for the June quarter was $181.7 million with a gross margin of 46.6% [20] - Non-GAAP EPS exceeded expectations due to operational focus [12] - The company repurchased$ 44 million of shares in the June quarter, an 18% sequential increase and a 64% increase over the December quarter [21] - For the September quarter, revenue is expected to be approximately $180 million, with gross margins of 47% and non-GAAP operating expenses of$ 69 million [22] Business Line Data and Key Metrics - Ball Bonding revenue improved by 42% year-to-date, despite headwinds in automotive and industrial markets [13] - Thermo-Compression revenue for the June quarter was approximately $20 million, including recognition of an additional FTC system [15] - High-Power-Interconnect (HPI) solutions are being deployed in volume battery production and power conversion applications [15] - Memory market investments are supporting NAND and LPDDR markets, with high-volume DRAM expected to transition to 3D packaging formats by late 2025 or early 2026 [16] Market Data and Key Metrics - Utilization rates for Ball Bonding in General Semiconductor have improved sequentially, with global rates exceeding 75% last quarter and expected to reach the high 70% range in Q4 [14] - Automotive and Industrial markets are showing demand improvements, particularly in EV-related applications [15] - Memory market customers are investing in new capacity and technology, with several leaders expected to accelerate development and pre-production activities in the coming quarters [16] Company Strategy and Industry Competition - The company is focusing on advanced packaging solutions, including Thermo-Compression Bonding (TCB) and Fluxless TCB, which have grown 10x over the past four years [8][9] - The company is part of the U.S.-Joint semiconductor consortium, aiming to establish a U.S.-based R&D facility with advanced packaging capabilities [5][6] - The company is well-positioned to support chiplet-based architectures and heterogeneous integration, with a focus on AI, HPC, and mobility markets [9][18] Management Commentary on Operating Environment and Future Outlook - Management expects most end markets to have already experienced trough levels of demand over the past 18 months, with gradual improvements in multiple markets [12][19] - Gartner projects a 17% semiconductor revenue industry growth rate through 2025, driven by AI, automotive, and general semiconductor markets [19] - The company anticipates ongoing industry growth into 2025, supported by global front-end investments and improving utilization rates [14][19] Other Important Information - The company has a long-term share repurchase program, with$ 728.5 million repurchased since August 2017 and $73 million remaining under the current authorization [21] - The company is optimistic about a broader multi-market recovery, with meaningful capacity demand improvements expected for high-volume markets in the near term [22] Q&A Session Summary Question: Near-term recovery and utilization levels [24] - Management expects Q4 to be flat compared to Q3, with utilization rates improving but not yet triggering significant capacity additions [26] Question: Recovery trajectory and seasonality [27] - Management anticipates a gradual recovery, with potential growth in Q1 2025 and a stronger recovery in Q3 and Q4 2025 [28] Question: Advanced packaging and TCB qualifications [33] - The company is engaged in multiple qualification projects with a Taiwan foundry, with early production expected in the first half of 2025 [33] Question: Advanced packaging revenue forecast [34] - The company forecasts$ 200 million in dedicated advanced packaging revenue for fiscal 2025, including TCB, vertical wire, and system packaging [34] Question: End market shifts and product mix [37] - Management expects the September quarter to be similar to the June quarter in terms of end market and product mix [37] Question: Project W costs and reallocation [39] - Minimal costs were associated with Project W, and resources have been reallocated to in-demand projects [39] Question: Applications driving TCB growth [43] - TCB growth has been driven by OSAT, IDM, and heterogeneous integration markets, with a focus on chip-to-wafer and foundry opportunities [43] Question: Core business recovery potential [44] - Management believes the core business has significant recovery potential, with historical peak revenue levels achievable under appropriate market conditions [44] Question: Gross margin outlook [48] - Gross margins are expected to remain around 47% through the rest of 2024, with potential improvement to 50% in 2025 as new higher-margin products gain traction [48] Question: Customer optimism for 2025 [49] - Customers are optimistic about 2025, with expectations of broader recovery across multiple end markets, including automotive, industrial, and AI [49][50]