Kulicke and Soffa Industries, Inc.

Greetings, and welcome to the Kulik and Soffa third quarter results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to introduce your hosts. Joe Elgindy, Senior Director of Investment Relations for Kewlick and Soffa. Thank you, Mr. Elgindy. You may begin.

Thank you. Welcome, everyone, to Kewlick and Soffa's fourth quarter fiscal 2020 conference call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer. For those of you who have not received a copy of today's results, the release as well as the supplemental earnings presentation are both available in the investor relations section of our website at investor.kns.com. This new supplemental earnings presentation provides additional details regarding end market trends and our outlook. 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. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kewlick and Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended September 28, 2019, the 10Q for the period ending March 28, 2020, the 10Q for the period ending June 27, 2020, and the 8K filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Thank you, Joe. We are pleased to report that despite global COVID-19-related challenges, our operations, test of development, and the supply chain Our focus on employee welfare, collaboration, and safety has allowed our global workforce to operate efficiently through this unique period. We are proud of the resilience, flexibility, and dedication of our employees. We are also pleased with our pace of development, new product traction, and the improving state of our core business. Our global development team continues to make significant and meaningful progress on several fronts, increasing our long-term alignment with significant technology transitions, impacting the semiconductor assembly market, the automotive market, and the display market. Within our core semiconductor assembly space, memory, logic, and image sensor applications are adopting more complex heterogeneous integration. which is increasing interest and adoption of higher density packaging options such as high accuracy free chip and thermal compression. Fundamental challenge with two dimensional no shrink are well reported and the new packaging approach provide an alternative path to deliver both cost saving and performance. This fundamental change is essentially extending the value of deck end assembly which benefit our core high-volume businesses as well as our dedicated advanced packaging solution. Customers are seeking solutions and technology partners for emerging 2D and 3D multi-chip assembly techniques. Here we see heterogeneous integrations for complex logic systems, memory, mobile application processors, and image sensors, driving a need for our catalyst and Apalma dedicated advanced packaging system. In parallel, we are seeing general system in package applications for high volume cost sensitive devices, which continue to benefit our core wire bounder business. We are actively engaged and aware position to support this ongoing transition and anticipate adoption to accelerate over the coming years. Next major trend, such as autonomous, Plug-in hybrid and fully electric vehicles are increasing semiconductor demand for the broad automotive market. Our multiple products and the broad base of automotive customers provide insight to this progression of transition. We anticipate demand for our high reliability and performance-focused automotive system to grow along with the demand for plug-in hybrid and fully electric vehicles. Our initial success in automotive power storage and distribution solutions has been beneficial even with electric vehicles representing only a tiny fraction of today's global production. We have recently experienced increased demand for power semiconductor applications supporting electric vehicles as well as charging station infrastructures. Although traditional automotive demand has been below our long-term average, We expect a gradual recovery to continue and remain wear pollution to support this broader technology transition. Finally, within this plate, we continue to run production of our piezo-lac system, which is a critical solution to enable new forms of backlighting. This transition is a logical evolution that can deliver performance and power efficiency for the high-volume display market. Advanced LOED unit growth forecasts are significant. Mini and micro-LOED annual unit production is expected to approach 500 billion units, roughly half of current annual semiconductor production by calendar year 2022. And the work continues growing aggressively for several years. This represents a significant capital equipment opportunity for sorting, Mixing, and Final Placement. We are pleased with the performance, market acceptance, and the rapid development of Pacerox and are committed to developing additional technology solutions that support this broad advanced LED transition. As we execute toward this long-term trend, supporting advanced packaging, automotive, and display, We also anticipate a more fundamental recovery in our core businesses, driven by an improving semiconductor unit growth rate. As a reminder, semiconductor unit production declined steeply in early fiscal year 2019, which dramatically reduced the industry's need for incremental equipment capacity. This extended decline in production is historically uncommon and seems to be behind us. Based on our September results, new-term outlook, and the recent customer feedback, we continue to anticipate an ongoing unit-driven recovery throughout fiscal 2021 and expect unit growth, excluding advanced LED, to return to a more normal growth rate over the coming years. After an extended period of low-capacity addition, unit growth recovery is being driven by 5G, work from home, Consumer Products, and the Smartphone Recovery. This end-market dynamic and our advanced LED ramping are anticipated to shift our seasonal demand patterns through fiscal year 2021. Historically, demand for our product is stronger during the second fiscal half, although we are anticipating demand to be first half weighted in fiscal 2021. While demand is currently strong, the broad medical environment remain dynamic. Considering the uncertain environment and our limited visibility, we are anticipating revenue within fiscal year 2021 to increase approximately 20 to 25% over fiscal year 2020. This estimate assumes annual semiconductor unit growth, excluding advanced LED, will return to a historic average of 6 to 7% during the fiscal year 2021. Turning back to the September quarter's performance, capital equipment increased by 21% and the APS increased by 9% sequentially. Capital equipment represents 76% of overall revenue and the sequential growth was largely due to a steep recovery within the general semiconductor market. General semiconductor is our largest end market and the most offset dashed customer fall into this category. In prior course, we have consistently discussed how the install base of wirebonders has been running near full utilization rate. At this point, incremental semiconductor output is triggering the need for broader capacity addition in the general semiconductor space. We see strengths in 5G, smartphone, gaming, IoT, and an increasing demand for multi-die wirebonded packages. While our general semiconductor end market shows the steepest sequential change, we also experienced sequential improvement within the advanced LED market. LED overall was sequentially down due to a sizable set of general lighting orders in the June quarter, although our advanced LED sales for the display market increased sequentially. We expect healthy demand for both general lighting and Advanced LED Applications over the coming quarters. The auto and industrial end market, as well as our memory end market, improved sequentially. A low remained well below their long-term average. Within auto and industrial, we are seeing a gradual recovery in the traditional automotive market. In the memory, we are beginning to see a few customers adding overall capacity, and we expect this market to recover. as general semiconductor also recovers. The advanced packaging end market also grew sequentially and represent our dedicated advanced packaging system that support high-efficiency free chip, start bumping, mesh refill system in package, and the thermal compression, and include our catalyst APALMA and AT Premier systems. Why are these dedicated advanced packaging end market? We present just 9% of capital equipment sales. It is important to note that multi-die advanced packages and advanced LED assembly are becoming material components of our higher general semiconductor, memory, and now LED end markets. Collectively, we estimate that over 30% of our capital equipment sales during the September quarters support advanced packages. Looking into December quarter, we anticipate general semiconductor and the LED to be the primary driver of the near-term demand. We anticipate strong demand through the December quarters, which again suggests fiscal 2021 will not follow a historical seasonal pattern. Operationally, we are focused on ramping production level to satisfy the strong demand level anticipated for December. Over the past few years, the broader industry and the macro environment was challenging. A lot of the strengths of our balance sheet and the market positions allowed us to execute our market expansion strategy, create new long-term growth vector, and retain capital to investors. I'm confident in the company's direction and expect new opportunities in automotive display and advanced packaging, combined with a broader general semiconductor recovery to fundamentally enhance our business model over the coming years. I would now like to turn the call over to Lester Wong, who will cover this quarter's financial overview in greater detail. Lester?