Kulicke and Soffa Industries, Inc.

Hello and welcome to the Kulik and Salfa 2023 second quarter results conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. 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 Joel Gindy, Senior Director of Investor Relations. Please go ahead, Joel.

Welcome, everyone, to Keelkens Office Fiscal Second Quarter 2023 Conference Call. Fu Xinchen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are both also joining today's call. Non-GAAP financial measures referenced today should be considered in addition to, not as a substitute for, or in isolation from, our GAAP financial information. Complete GAAP to non-GAAP reconciliation tables are available within our recently filed earnings release, as well as our earnings presentation. This information, in addition to our prepared remarks for today's call, are available 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 Kuehl-Gonzalfa that could affect our future results and financial condition, please refer to our recent SEC filing, specifically the 10-K for the year ended October 1st, 2022, 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, Joe. We continue to operate in a very dynamic global environment. and remain focused on expanding the surf market through cross-customer engagement, prudent acquisitions, and ongoing development activities. Macro factors such as global banking issues, inflation, and downstream inventory digestion are all contributing to a slow but still gradual rate of demand improvement over the coming quarters. While the pace of macro-driven recovery remains gradual, We see strengthening demand in our high-volume market and the broadening customer adoption and interest of our latest advanced packaging system. At this point, our delivery schedule for higher-volume systems put our confidence we are past 12. We now see an uptick in core activities, which support further improvement over the coming quarters. Overall, Our longer-term industry outlook remains fairly consistent and aligned with the third-party market forecast. We continue to anticipate positive semiconductor unit growth in fiscal year 2023 and a higher level of capacity and technology-related demand through fiscal year 2024. In addition to improving level of demand, our end-market opportunities have expanded significantly over the prior years. due to more complex assembly needs, including heterogeneous integration, electric vehicle and infrastructure adoption, new display innovation, and the broadening of connected electronics and power semiconductor needs. As discussed in late February, we have completed the dispense acquisition and we welcome AGA to the KNS team. As a reminder, This new market provides access to adjacent dispenser opportunities in both semiconductor and electronics assembly, collectively representing a $2 billion addressable market and providing a new set of long-term opportunities. Our integration priorities ensure the AJA team can efficiently leverage KNS resources, including our flexible and efficient manufacturing capabilities. our direct sales and distribution network, and our broad portfolio of system and subsystem architectures. We have identified several target market areas for AJA, which we anticipate will ramp in later fiscal 2024. Pending to March quarter's results, we generated $173 million of revenue and $0.38 of non-GAAP EPS. significantly above our prior expectations due to beta growth margin and operating expense performance. Our total capital equipment revenue was $133.7 million in March quarters, with a similar competition across end market as last quarter. Within General Semiconductor, we continue to see technology-related demand for IoT applications, high-performance compute and growth in emerging applications such as artificial intelligence and co-packaged optics. These trends, which are occurring both in leading-edge and high-value markets, are enabling share gain and higher-margin opportunities. Regarding TCB, we generated record quarterly revenue during the March quarters in support of IDM demand for higher-value mobility production. and high-performance computing. During the March quarters, we also shipped several fluxless TCB solutions and are preparing to ship our largest number of quarterly fluxless TCB systems to D-Link, OSAT, Fungi, and IBM customers during the June quarters. In addition to heterogeneous, Assembly complexity trends are also increasing technology-driven replacement for our future-rich high-volume system, which will continue to enhance corporate labor growth margins. We remain on track to introduce several new wire bonding systems through the first half of 2024. Over the near term, we expect customer demand to continue improving due to seasonal strength and ongoing inventory digestion. Moving to LED, we are beginning to see gradual improvement within lighting opportunity and remain engaged with industry leader for both backlighting and the direct emission applications. In addition to supporting ongoing capacity addition with the piezo lamps. We are progressing Luminex engagement and the final qualification in support of large format direct emission application and also emerging automotive display opportunities. Lastly, we are preparing to ramp production related to Project W so that we are ready to move into higher production upon receiving the customer's next phase demand. Within automotive and the industrial, we continue to participate in power storage and the power semiconductor growth, which support transition to electric vehicle and the sustainable energy. We are currently preparing to launch our next battery bundler for higher form factor using both ultrasonic and laser interconnect solution in addition to supporting the production ramp for customer and the commercial vehicles. Within power storage, our base of engaged battery customers continue to grow steadily with renewed interest from our largest EV customers. Due to safety and reliability needs, we are also beginning to see high volume applications such as e-bike transitioning to higher reliability ultrasonic bonding. Finally, we have also engaged in a promising new opportunity supporting the emerging EV toll market. Within power semiconductor, we continue to see a strong ongoing demand driven by charging and inverter applications. which are directly supporting this industry transition. Like many other areas of semiconductor assembly, we see stronger growth in high-tech value and the most advanced applications such as power modules. Compound semiconductors such as gallium nitride and silicon carbide are accelerating this growth and are directly supported by our market-leading portfolio of wage-bounded systems. Next, while memory remains sluggish near term, we are also anticipating improvement toward the end of fiscal 2023. Finally, our aftermarket product and solution segment generated $39.3 million of revenue, fairly consistent with the last quarters. Before handing it to Lester for the financial review, I wanted to summarize a few key points. First, we are actively participating in several fundamental and long-term transitions across our supermarket. These transitions are providing both market expansion and profitability opportunities. Next, we remain in a very strong financial position, which has allowed us to invest through this recent period of market softness. Over the past year, we aggressively deployed resources toward organic development, internal capacity expansion, new inorganic opportunity and return value to shareholders through a competitive dividend and an aggressive pace of open market and accelerated share repurchase. Finally, core activity for high-volume business has recently improved, which provides additional optimism. We are positive. This trend is anticipated to continue improving through fiscal 2023 and 2024. Despite macro and the industry headwind, it remains a very exciting transformational time for the company, as we are on the verge of several new product ramps, which can further enhance our long-term revenue completion and assure cycle profitability. I look forward to demonstrating our effort over the coming quarters. With that said, I will now turn the call over to Lester, who will discuss our financial performance and outlook. Let's start. Thank you, Fusheng.