Kulicke and Soffa Industries, Inc.

Hello, and welcome to the Kulik and Safa 2021 Fourth Fiscal Quarter Results Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Joe Algindi, Senior Director, Investor Relations. Please go ahead, Joe.

Thank you. Welcome, everyone, to Kulik and Safa's Fiscal Fourth Quarter 2021 Conference Call. Joining us on today's call is Fuzin 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 our supplemental earnings presentation are both available in the investor relations section of our website at investor.kns.com. 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 complete discussion of the risks associated with Kewell-Gonzalva that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended October 3, 2020, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fuzhen Chen for the business overview. Please go ahead, Fuzhen.

Thank you, Joe. As many of you are aware, we recently provided a detailed business review and outlook during our investor day, held on September 23rd. During this presentation, we highlighted how several key long-term trends, such as 5G, assembly complexity, electric vehicles, and advanced display are driving structural improvement to our business, enabling greater long-term visibility and a more consistent level of sustainable cash flow generation in the future. Throughout today's discussion, I will highlight several specific milestones which demonstrate our ongoing progress toward this fundamental enhancement. First, I would like to explain our view of the supply challenges affecting the industry today, which we have been navigating. Recently, there have been disruptions to global supply chain, including power outage in China, COVID challenge in Southeast Asia, and the freight challenge globally. Specifically, within our industry, additional constraints were recently related to substrate and the wafer capacity shortfall, which are constraining the rate of industry growth. We ultimately expect this near-term bottleneck will gradually improve. Specifically, we anticipate improvement in wafer stock toward the end of fiscal 2022, which is consistent with our expectation of a multi-year industry expansion period. It's also critically important to understand that this bottleneck ultimately stems from a short-term inability for industry capacity to meet end-market demand as we transition into the new data era of semiconductor demand. In addition to this new layer of end-market demand, favorable technology transition which we are directly involved in, are well established and are set to accelerate over the long term. This structural dynamic includes a higher level of capital intensity for the assembly process, access to the emerging advanced LED market, 5G adoption, the electric vehicle transition, and the more semiconductor bridge consumer devices. This longer-term trend, hence, our visibility and growth potential. Looking ahead, this outlook is aligned with the long-term target we shared during our recent investor day. We continue to anticipate that fiscal 2022 will be another very strong year, and we also anticipate waiver capacity to improve at a faster rate beginning in the second half of 2022. With that said, I will not discuss our September quarter's performance. We again exceeded our revenue guidance, which anticipated a $465 million midpoint. We were able to generate just over $485 million of revenue during the September quarters, which was a significant effort for our manufacturing, supply chain, and the engineering team. This effort has allowed us to temporarily stretch our capacity in support of our customers during this rapid phase of industry growth. Within the September quarters, our capital equipment revenue increased by over 16% sequentially to $431 million. This was due to ongoing strength in the general semiconductor market, improvement in memory, and the ongoing traction and execution of our advanced LED program. We in General Semiconductor, we are pleased to report several new wins for our dedicated advanced packaging tool, specifically APALMA, our thermal compression system, Catalyst, our high-acuity free-track system, and also LIGHTTECH 500, our design office taper. This specific win highlights our direct connection to this evolving landscape and the growing need for more complex higher-value semiconductor assembly processes. This win also highlights our competitiveness and the potential for share gain in several specific medium-edge assembly applications, including mobile processing, image sensing, and silicon photonics. During the September quarter, we also recognized revenue of our initial LIHTC 500 laser-enabled desktop office solution. This system has been well received due to its good wafer handling, performance, stability, and ease of operations. The need for advanced discography system for back-end processes will accelerate with assembly complexity in the future. This system represents an additional market-ready KMS solution, which addresses the growing complexity of assembly. Physical 2021 revenue related to this three platform increased by over 200% from physical 2020. These systems are highly competitive and we anticipate demand to grow at a similar rate through physical 2022. We remain very focused in driving new engagement and qualifications. The need for more complex assembly isn't only limited to our new equipment solution. but is also occurring throughout the high-volume semiconductor market. To shed more light on this evolving value proposition, our most advanced broadband platform, the Rapid Series, offers key features such as real-time process monitoring, defect detection, and advanced looping that enhance productivity for complex assembly. The Rapid Series represents only 39% of our total broadband sales, in the fiscal first quarter of 2021 and has grown to represent 74% of our broadband business during the fiscal fourth quarter of 2021. These market leading tools are unique and enhance corporate level growth margin. Finally, for the general semiconductor review, we also continue to focus on new development opportunity within the electronic assembly market As we explained during the investor day, the electronics assembly market represents a very sizable and largely untapped opportunity for KNS. I look forward to sharing additional details as we prepare to bring this new solution to market over the coming quarters. Turning to LED, I am pleased to report that we have recognized revenue of just over $80 million in advanced LED solutions throughout fiscal 2021. representing nearly half of our total LED revenue. During September quarters, we recommend an additional portion of system and services revenue related to our customers' needs and ordering scheduling. This is another key milestone for the company, which serves as a testament to our leadership in both advanced backlighting and direct emission display technologies. and highlights our execution and the progress toward a long-term financial target established during the investor day. Additionally, we issued a press release in September 22nd that highlighted our initial Luminex shipment and the broadening market adoption. Luminex is our next-generation mini and micro LED solution, which targets the emerging advanced display opportunity. Luminex has increased our market access as it provides additional process steps, such as pitch adjust, sorting, and binning, but also through increasing our customer engagements. The first Luminex system was delivered with an initially reduced throughput in September. And by October, we provide a software update that enables 10,000 hertz through the scan function. To clarify, this relates to 10,000 placement per second. At this speed, Luminex provides unique production advantage that will help accelerate and broaden advanced LED adoption and our ultimate market reach. Over the coming quarters, we look forward to sharing new milestones and additional customer engagement with this high-potential system. Next, automotive and industrial demand continue to remain strong and above our long-term average. We remain very positive on long-term transition, which are increasing semiconductor content per vehicle. Over the coming years, semiconductor growth with automotive is expected to be significantly above the historical growth rate of general semiconductor. In March of 2021, We enhanced our portfolio of automotive focus solutions with our PowerSheet system videos. PowerSheet specifically targets the growing need for advanced power semiconductor assembly, a critical application required for the electric vehicle transition. During the fiscal 2021, we shipped nearly 400 PowerSheet systems generating over $45 million of revenue. In addition to this structural growth, driving higher semiconductor content per vehicle, we have recently expanded our market access through our new battery assembly solution. We continue to work closely with several customers who are pursuing battery assembly solution for the cylindrical market utilizing both our ultrasonic and laser-based battery assembly solution. We have also recently developed our newly introduced prismatic battery assembly solution. Electric vehicle battery production is anticipated to grow at a 30% trigger through fiscal 2025, providing ongoing and long-term equipment opportunities. Lastly, within memory, revenue grew by over 90% sequentially to 36.9 million for the September quarters, This sequential growth was supported with a strong demand for our leading net assembly solution and a stamp from several memory-focused customers. Finally, before turning the discussion to Lester, I wanted to reiterate our optimism as we look beyond fiscal 2022. Over the past four years, we have worked closely with the customers to solve challenges within the display automotive and the semiconductor assembly market. This close relationship with the industry leader has allowed us to take a calculated risk and pursue multiple development initiatives in parallel. Today, these past investments are beginning to generate returns. Over the last years, we have introduced a driven market adoption of several high potential systems that directly support high growth opportunities within the automotive, semiconductor, and advanced display market. These systems are at a different stage of maturity, providing ongoing opportunity to create value for investors. We have met many organization refinements, which have enhanced this value creation process. We continue to have a funnel of new opportunities that provide additional upside to our long-term target. I look forward to providing additional details on the status of our recent product release and the new development initiative over the coming quarters. With that said, I will now turn the call to Lester Wang, who will discuss our financial performance. Lester?