Kulicke and Soffa Industries, Inc.

Greetings and welcome to the Kulikun Sofa 2023 third quarter results. 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, Joe Elkin, Senior Director of Investor Relations. Thank you, sir. You may begin.

Thank you. Welcome, everyone, to Kulikin's Office Fiscal Third Quarter 2023 Conference Call. Fuzin Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are also joining on 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 the 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. Beginning with the June quarter 10-Q filing, we have amended our segment reporting and will provide additional segmentation details of our previous capital equipment reportable segment. This change has no effect on the composition of our APS reportable segment or our end market disclosures. During this revision, a material weakness was identified over internal controls related to segment reporting and subsequently triggered the filing of the amended 10-K for fiscal year 2022 yesterday evening. Please note there was no impact on any reported amounts of the primary financial statements to previously reported periods associated with this amendment. Additional details are available within the 10-K-A filed yesterday evening. 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 Kuehl-Konsalfa that could affect our future results and financial condition, please refer to our recent SEC filings specifically the amended 10-K for the year ended October 1st, 2022, and the 8-K filed yesterday. With that said, I will now turn the call over to Fuzhen Chen for the business overview. Please go ahead, Fuzhen.

Thank you, Joe. We continue to make progress across a broad set of growth initiatives. During the June quarter, we delivered new ball and wedge solutions supporting high-volume semiconductor applications. innovative advanced packaging solutions supporting heterogeneous integration, and reach new milestones with our emerging advanced display prospects. We also maintain an aggressive pace of development and broaden our technology engagement in several areas. Additionally, our core market continues to improve due to technology trends, incremental capacity needs, and an ongoing product refresh cycle. We continue to see gradual demand improvements across the global market and anticipate more meaningful demand recovery as the medical environment improves and the inventory is digested throughout the electronic value chain. Longer term, we continue to anticipate nearly 10% semiconductor unit growth in calendar year 2024 and anticipate unit growth will remain above average in 2025. In the near term, we remain focused on delivering new innovation, which addresses long-term technology-driven growth opportunities in both our core and emerging equipment businesses. I wanted to spend a few minutes to outline several specific initiatives in our board, which are advanced display and advanced packaging prospects that are increasing the value of our assembly solution. First, we have begun the Bore Bounder Equipment Product Refresh, which recently introduced PowerCom and PowerNext Bore Bounder Platform. These systems have been well received by customers as they provide new capabilities for high-volume system-in-package applications. They also enable an improved machine-to-operator ratio, which provides customers with efficiency improvement and greater geographical flexibility. Over the coming quarters, we expect to release additional bold bonding solutions which will complete our portfolio refresh. We are excited to provide a new level of value to customers and look forward to additional margin and cash flow benefits to investors over the long term. It has become clear that our core high-volume semiconductor market has increasingly become more complex, creating the need for more advanced solutions and advanced features. Growing complexity needs have already improved board bonding gross margin by over 300 basis points since 2020, and we anticipate additional improvements going forward. Next, more efficient power control and a fast-growing battery market create new technology opportunities and support higher growth rate for our leading wind-bound platforms. Sustainable energy, electric vehicles, and more efficient consumer devices are driving demand for compound semiconductors such as silicon carbide and gallium nitride, and are also creating new technology-driven demand for more complex module-based power devices. This multi-chip module-based power devices are driving a transition from aluminum to copper interconnect. Similar to the goal to copper transition we led within high-volume ball bonding, this shift in power semiconductor require new capabilities such as our high-power interconnect or HPI solution, which we already recently announced. HPI extends our existing technology leadership in wage bonding and has provided new opportunity with the leading customers who are directly supporting power semiconductor and the electric vehicle transitions. We are also closely engaged with the strategic customer on the most critical and demanding semiconductor assembly application, which is support space exploration and satellite communications. To summarize the wage opportunity, We have a strong and dominant historic position which has more than doubled our wage-related revenue since 2020. We continue to support the most critical and demanding power semiconductor and the cylindrical battery application. And we remain very optimistic for future growth as we are closely engaged with the customers who are enabling this market. Next, within advanced display, we have reached new milestones for our portfolio of solutions, which address long-term backlighting and direct emission opportunities that are demanding new mini and micro LED assembly solutions. Even in the current September quarters, we have reached new technology milestones with Lumilex, and we are well prepared to support higher volume demand as the market grows. We recently announced a collaboration leveraging Luminex technology with a leading SMT provider to accelerate the adoption of advanced display technology in both backlighting and direct image application. The Luminex system is designed for many LED opportunities for larger format direct image display and also for the high-volume display transition to advanced backlighting. We have made significant progress with our Luminex system, which supports a final placement throughput of 540,000 dyes per hour with a yield of 99.9%, with even higher throughput in the years expected as we continue to develop this solution. We have demonstrated the ability to accurately place micro-LED sized dye at a 4-micron 3-sigma. While we have seen early adopting customers using traditional die-attach equipment to support initial backlighting applications, over time, LED die size will continue to shrink and we anticipate demand for our dedicated high throughput, high accuracy Luminex system will accelerate. Additionally, we continue to make progress on Project W and expect to provide additional visibility into Project W's fine fiscal 2024 revenue expectation over the coming quarters. Finally, while we are now providing more value in the high volume semiconductor market, as wire bonding become more and more complex, we are also actively expanding our market shares in leading edge logic and optical applications, which is our competitive thermal combination portfolio. Recently, we have appreciated the increased customer interest and the peer commentary regarding the longer-term contribution thermal compression technology can provide to support rapidly evolving triplet and heterogeneous trends. We have worked aggressively to expand our engagement to leading commercial customers and also global technology consortium. We also recently announced an expanded partnership with the UCLS Center for Heterogeneous Integration and Performance Scaling. also known as UCLA chips. Together, we look forward to extending TCP pitch to below 5 microns. In addition to this expanded technology relationship, we recently shipped a regular number of fluxless TCP systems to a brotherly group of commercial customers who are spearheading the transition to chip and heterogeneous integration. Our strength in TCB has centered around higher volume opportunities supporting application processor, 3D sensing, and the silicon photonics, which are transitioning to TCB for technical reasons, such as smaller form factor, thinner substrates, and improved years. We have also already grown our share in chip to substrate TCB for heterogeneous application in production. In addition to this proven market win, we are pleased to also announce our active engagement in several trip-to-waiver evaluations, which can materially accelerate growth of our dedicated advanced packaging portfolio over the long term. Pending to our June quarter results, we generated $190.9 million of revenue and $0.55 of non-GAAP EPS above prior expectations due to continuing shrinking cost control on non-critical matters and discrete tax items. Moving to the end market discussion, 79% of total revenue stemmed from capital equipment and improved 13% sequentially, supported by utilization improvement in general semiconductor, LED, and the memory end market. Within general semiconductor, more bonding equipment sales increased sequentially by 45%, largely due to increased utilization rate and the stronger demand of our highest performance rapid seeders. We also reached new record quotas for our thermal compression business and a book rating for several fluxless systems and our latest TCB platform. Within LED, we have also seen utilization rate improve, which supported demand for our UltraLux Plus system. As of August 1, last week, the United States has implemented the anticipated ban on incandescent light bulbs in favor of more efficient LED lighting. We anticipate the evaluation rate will continue to improve through the September quarters for high-bright LED lighting applications. Next, automotive and the industrial has slightly softened, although it remains quite strong from a historic standpoint. Demand for power semiconductors continues to be robust due to our contribution to the blood EV transition and the increasing content of semiconductors per vehicle. We also look forward to sharing news regarding our battery assembly opportunity over the coming quarters. In memory, we recognize a better than expected improvement in utilization rate and a pickup in demand for our land assembly solution. Historically, we have enjoyed a dominant position in net assembly and have continued to expand our market reach into DRAM applications. Looking into fiscal 2024, we are excited about prospects such as a vertical fan-off, also known as a VFO, which is expected to further expand our shares in high-tensity DRAM applications and can provide significant cost improvement over TSV-based approaches used in applications such as high bandwidth memory. I look forward to sharing more details on this exciting opportunity over the coming quarters. To summarize, we remain actively engaged with multiple customers who are enabling technology transition in automotive, semiconductor, and display opportunities. Our investment in development, engineering capability, and the new market opportunities have enhanced our fundamental strengths, increased our value-add, and have solidified key pillars to our long-term growth strategy. We are currently progressing several parallel qualifications and evaluations, and we look forward to providing a more detailed outlook over the coming quarters. Finally, within our core capital equipment market, we have seen clear demand improvement. and our forecasting utilization rate to further improve through the September quarters. Looking into the next few years, we continue to anticipate about average semiconductor unit growth and also anticipate taking shares in new market. We look forward to delivering a steady pace of a new system in the future and also announcing new customer and the technology way over the coming quarters. With that said, I will now turn the call over to Lester who will discuss our financial performance and outlook. Lester.