Kulicke and Soffa Industries, Inc.

Greetings and welcome to the CULIC and SOFA 2022 fourth quarter fiscal results 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 is now my pleasure to introduce your host, Joseph Algindi, Senior Director of Investor Relations for Kulik & Safa. Joseph, you may begin. Thank you.

Welcome, everyone, to Kulik & Safa's fiscal fourth quarter 2022 conference call. Fuzin Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are both also joining on today's call. For those who have not received the recent results, The earnings 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 Kuelkensofa 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 2, 2021, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fuzan Chen for the business overview. Please go ahead, Fuzan.

Thank you, Joel. Over the past five years, we have evolved into a more resilient, growth-oriented, and dramatically more profitable company by focusing on our corporate cultures, strengthening our established position, and expanding our self-available market. In parallel to these fundamental internal efforts, semiconductor assembly We need both the high volume and the leading edge market is now a more significant contributor to the industry's value chain. Over the past year, we flex our capacity and overcome broad supply chain disruption to support customers through a rapid period of industry expansion. In parallel, we execute on multiple advanced development projects and continue our market expansion strategy. These efforts have increased our base level of revenue and are clearly reflected in our financial results. Through Fiscal 2022, we again generated over $1.5 billion of revenue. In line with Fiscal 2021, although our non-GAAP earning per share increased by 21% over the same period, this higher level of performance increased our resiliency as we look into fiscal 2023. Over recent months, industry leader and the forecaster, Lowell WFE, and the semiconductor unit outlook due to increased uncertainty related to interest rate, global trade tension, and the ongoing supply chain disruption, which negatively impact both inventory and the demand level across general semiconductor, LED, and the memory end market. Considering this dynamic environment, we recently conducted scenario planning across our individual business lines. Based on this detailed feedback, we currently expect fiscal 2023 revenue to meet or exceed our previous cyclical peak revenue in fiscal 2018. This outlook suggests a more typical seasonal pattern through fiscal 2023 with ongoing digestion is the first physical hub, followed by gradual demand improvement in the second physical hub. Expected second-half improvements are supported by well-known seasonal dynamics in addition to a heavier weighting of advanced display and advanced packaging revenue. Despite this dynamic vehicle and the industry environment, secular trends in advanced display, advanced packaging, and automotive have continued to be very resilient. This will provide additional detail on our outlook shortly. Over the prior years, we generated revenue of $1.5 billion in the non-GAAP EPS of $7.45, representing an increase of more than two times over our prior 2018 peak year, which helped to highlight how our cyclical performance has improved. One semiconductor growth has contributed. Since 2018, prudent partnership, acquisitions, and aggressive development expanded our self-available market by 51% to approximately $4.7 billion. This change, which excludes our pending acquisition, provides a more sustainable and consistent path for growth going forward. We will then focus on our long-term strategy and outlook over the coming years. Fiscal 2023 is a critical adoption period for our higher growth solutions supporting advanced packaging, automotive, and advanced display, which are increasingly aligned with long-term fundamental technology transition already underway. Despite the suffer environment, customer engagement and the interest for our growing portfolio of solutions continue to expand. I will provide an update to you this key growth initiative shortly. In addition to our ongoing organic development effort, we have been seeking competency-based acquisition that can further accelerate our growth potential. On September 8th, we announced an agreement to acquire Advanced Jet Automation, AJA. AJA's technology portfolio will further expand our third available market while also materially increasing our access to the evolving micro and the mini-LD opportunity. Over the past three years, success with the Assemblian acquisition has allowed us to enter the advanced discrete market. This access offers the opportunity to identify and engage with innovative providers, including AJA, who are also supporting this emerging high-growth opportunity. AJA's unique and complementary dispensed solution which provide market-leading precision accuracy and repeatability, already address the high accuracy needs of ultraviolet displays and are positioned to address the growing complexity of semiconductor and the consumer electronics assembly. In total, AGA provides KNS with an excess of roughly $2 billion total addressable market in expense, providing an additional layer of growth. These sites for new market access and impressive competency in the emerging advanced display space supplement our broad organic growth initiative. Our existing technical competency, sales and distribution network, and operational strength can help AJA better commercialize new solutions and accelerate growth potential. Turning to our end market, We generated $242.1 million of sales from our capital equipment businesses in the September quarters, which represents a 23% increase over our five-year average. Within the general semiconductor market, a suffer outlook is expected due to the low consumer spending level and also indirect effort of new trade restrictions. However, we continue to execute on share scan in the power semi-market advanced packaging, and also within electronics assembly. Our advanced display business is progressing better than expected, and we significantly exceed our $80 million advanced display revenue target. Advanced display represents nearly 60% of our total revenue. execute on development and further drive adoption across a growing customer base, we expect this market to grow maturely. After several quarters of rapid automotive capacity expansion, we have returned to a more reasonable level of demand for our core automotive solution. We continue to closely support our automotive customers through our leading semiconductor electronics, and battery assembly solutions, which are directly addressing many of the same things, power management, power storage, and power distribution needs for current and future electric and autonomous vehicles. These trends are significant and expected to continue supporting above-average automotive semiconductor growth over the long term. Today, we continue to extend our fundamental strengths by supporting our own capacity expansion and the new product initiative, while delivering on several intimate customer engagement. Our ongoing progress and the execution in this upcoming year into FY24 allow me to provide a brief update. First, we now have multiple facility expansion and the renovation program in Singapore and Pennsylvania, which are providing critically needed cleanroom, lab, and metrology spaces that will enhance our manufacturing and development capabilities. This expansion effort better supports the growing trend and demand for our new advanced packaging and advanced display solution. Our dedicated semiconductor advanced packaging business has grown by 34% over fiscal 2021. and is projected to continue growing materially over the coming years. Customer interest and feedback for our flexible thermal compression system have increased over the past quarters, and we continue to expect this process will address the majority of heterogeneous assembly needs down to a 10-micron pitch. We currently have an industry leadership position in chip-to-substrate process and have multiple promising new opportunities with the key customers in chip-to-wafer process over the coming years. In addition to our focus on emerging heterogeneous integration opportunities, TCB also supports the high-growth, high-volume system-in-package market for emerging logic processors, big signals, silicon photonics, and sensing applications. This new access to high growth opportunity provides a specific example of how we expanded our market reach and are raising our base level of business. As the value of semiconductor assembly increased, our engagement with multiple fiberglass companies has also increased. Why these are not traditional end customers? Assembly process is currently becoming a more significant factor in IT design than in the past. Even though our new solution continues to improve across our growing base of Fabless, Foundry, IDN, and all set customers, and we are working aggressively to support broadening customer engagements. Considering this new momentum, we anticipate some more cooperation to provide meaningful growth over the coming years. To highlight this momentum, our thermal compression business grew by nearly five times year over year. We have also currently identified specific TCB customer opportunities of over $300 million cumulative through 2025. In addition to advanced packaging, we are strategically focused on extending market share through the pending release of our latest electronic assembly system. Looking back, our 2015 acquisition of Assemblion provides several market expanding opportunities for KMS, including additional access into the automotive market, new access into system-in-package future market, and also new access into the emerging mini- and micro-LED space through the success of TESOLux. After securing position in these adjacent markets, we are also targeting share gain within the core electronics assembly market. Recent and ongoing development efforts have positioned us well to expand our access within electronic assembly, which represents a self-available market in excess of $2 billion. Over the past years, we have delivered a new system architecture, which addresses the growing accuracy and the throughput needs of next-generation electronic assembly. Initial customer feedback has been well received. And we look forward to officially releasing our latest system in the second half of fiscal 2023. The last update is regarding our growing portfolio of advanced display solutions, which continue to track to expectations into fiscal 2023. Sustainable development efforts have created multiple advanced display solutions. and also cross-customer development programs, which comprehensively address the LED placement requirement of emerging red lighting and direct emission applications. At the high level, LED technology, which represents the vast majority of display production, will benefit significantly from emerging backlighting trends over the long term. To be clear, LCD technology offers lower production costs and a longer useful life than current alternative display technology, like OLED. Emerging backlighting trends supported by the success of and the growing interest of Luminex further optimize the cost over performance trade-off for LCD technology, specifically with a larger format display. Alternatively, OLED technology provides a thinner, higher-quality image supporting higher relative shares with a smaller-format display. A low image degradation and the production cost have limited broad OLED adoption in high-volume, larger-format display market. Over the coming years, direct initiative display using only a dense matrix of very small LEDs have the potential to challenge all the technology from a performance and a power efficiency standpoint. This trend is only beginning to play out, and we are well positioned to participate through our cross-customer development initiative and also the success of Luminex over the coming quarters. For both advanced regulation and a direct initiative approach to be adopted, low production cost is critically important to driving market adoption. While production costs of mini and micro LED will improve, we are most focused on delivering higher throughput solutions, while support both of these long-term trends. All four smaller coalitions and the success of PISLAB have provided us with the largest in-store base of ultra-high-speed pick and press tool for advanced display. This level of performance improved with the Luminex laser-based transfer method. With Luminex, we are on track to achieve three times the productivity benefit of PistolX over the coming months. Our R&D team are actively supporting several ongoing qualifications in parallel for Luminex as they reach this new milestone. We continue to expand our advanced display install base and pursue multiple Luminex engagement while making consistent progress across several customer development initiatives. Customer interest in our latest Luminex system remains very strong. We have also recently shipped a new customer-specific advanced display solution that further increases our optimism. And the long-term potential with this world technology trend While the internal industry growth rate routinely changes across the semiconductor market, our position has fundamentally improved and better correlated with the secular trend shaping the future of advanced packaging, automotive, and the advanced display market. Through ongoing execution of our development program, integration of AJA, and driving customer adoption, we are aware of the position to further enhance our market access, growth prospects, and the fundamental strengths over the near term. With that said, I will now turn the call over to Lester, who will discuss our financial performance and outlook.