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.

Thank you, Fusa. My remarks today will refer to GAAP results unless noted. Before commenting on our June quarter financial performance, I wanted to address two specific items related to our June quarter performance. First, during the June quarter, we booked impairment charges of $21.5 million associated with our 2017 acquisition of Leetech BV and a minority equity security investment related to a technology asset. Neither of these non-cash impairment charges have a material impact on the near-term outlook, and we continue to support the market opportunities these investments have previously provided. To add context, since our acquisition of Leetech BV, we have deployed over $1 billion towards capital expenditure, acquisitions, and shareholder returns. Of this cumulative deployment, approximately 75% was returned to shareholders through the company's increasing dividend and opportunistic repurchase programs. Next, I also want to set clear expectations regarding our order intake and backlog activity over the coming quarters. We continue to hold a sizable amount of order backlog, roughly four times the size of our third quarter fiscal 2019 backlog. This excess backlog will reduce the book to bill ratio and ultimately land at roughly three to four months of revenue, which is in line with our average lead times. In addition, some of our anticipated incremental opportunities in fiscal 2024 are not included in the current backlog. With that said, it remains a very exciting time for the company with ongoing near and long-term improvements within our core markets and ongoing execution across a variety of end market applications. As an update, our capacity expansion investments are continuing on track to provide critical operation capacity to support the growing demand of our advanced packaging and advanced display offerings. During the June quarter, we generated $190.9 million of revenue, 47.2% gross margin, and 55 cents of non-GAAP EPS. Gross margins came in just below expectations largely due to mix stemming from a rebound in hybrid LED demand and also an increase in higher volume orders. Non-GAAP operating expenses came in at $66 million below our prior expectations due to shift in discretionary spending and ongoing cost controls. Finally, tax expense for the quarter was $148,000, lower than anticipated due to the reduction in profit before tax, mainly from the impairment charges, and a discrete item related to the reversal of uncertain tax positions. Turning to the balance sheet, working capital days decreased from 517 to 465 days in the June quarter, primarily due to the sequential improvement in revenue and relatively flat working capital. Our repurchase program remained opportunistic, and we have increased our repurchase activity by 71% sequentially to $8.5 million during the June quarter. Looking ahead to the September quarter, we anticipate revenue of approximately $200 million plus or minus $20 million with gross margins of 48%. Non-GAAP operating expenses are anticipated to be approximately $70.5 million plus or minus 2% due to additional general and R&D investments. We remain focused on controlling and limiting any non-critical activities and have maintained a very cautious needs-based hiring approach. Our collective cost control efforts have reduced our June quarter operating expenses by approximately $4.5 million from our original budget. Non-GAAP net income for the September quarter is expected to be approximately 24 million with non-GAAP earnings per share of approximately 42 cents. It remains a very interesting period of time at K&S as the value of semiconductor assembly is rapidly increasing. As our core business continues to strengthen, We remain focused on expanding our long-term market access with our competitive advanced packaging, advanced display, and automotive solutions. We look forward to sharing our progress over the coming quarters. This concludes our prepared comments. Operator, please open the call for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Craig Ellis with B Riley Securities. Please proceed with your question.

Yeah, thanks for taking the question and thank you for all the information this morning. I wanted to start off following up on one of your earlier points about the view on calendar 24 industry growth at 10% year on year. I think that was, I'm assuming that's on a unit basis. The question is this, around that level of industry growth, how would you expect KNS to perform given the growth initiatives that you outlined in the improved positioning in some of your larger end markets like General Semi?

Okay. So, we believe 24 will be a better year for us than 23. Above average, you know, right now is forecast, but we do also get a feedback from customer. But what will be the final number, I think a lot really depends on the medical environment, you know. At this moment, still a little bit dynamic, but we feel like 10% probably is a good number. So with this assumption, I think we will see improvement, you know, of our broadband treatment, I think particularly you know, we start to see growth, we believe the bull bounder will grow even more. And not only shipment, I think we'll see the growth margin expansion. So other than bull bounder, the wedge bounder demand still strong. I think due to power semi and the EV. And in addition, I think we will put a new capability to wedge bounder. For the AP, I think we will see the growth, I think, in the heterogeneous integration. We have PCB in non-heterogeneous focus in volume semi and focus on multiple applications such as silicon photonics, 3D sensing and app processor, and also have heterogeneous integration we believe particularly in heterogeneity integration, we can show growth. And we also hope to see actually growth in the advanced display in the W project and also in the Luminex. So we probably will have a better feeling about the industry rate of recovery, maybe by November. Maybe by November, we will have a better feeling about rail recovery. So 10% right now is a number from industry and also from us. And really depend on the next couple of months, the industry is still keeping this forecast. Okay, so Greg, I hope I answered your questions.

Yeah, that's really helpful, Fusun. And then combining that commentary with points that Lester made about higher backlog levels than 2019. But I think if I heard you right, Lester, the the likelihood that backlog does decline over the next few quarters. Can you talk about the visibility that you have into the fiscal first quarter of the year? And if we look beyond the guidance for the fiscal fourth quarter, can you talk about some of the near-term gives and takes for what's typically a seasonal softer part of the business?

Yeah, sure, Craig. Yeah, I did say, I mean, we still have a very, very healthy backlog, just below about $500 million. So we do expect that backlog to come down over time and over the next couple quarters. So as far as near-term visibility, as Susan mentioned, it is pretty dynamic at this point. We believe there will probably be some more seasonality this year than during 2021-2022 during the ramp. Also, I think So for FY24, as Susan indicates, we believe it will be a much better year than 23. However, I think the first half may not be as strong as the second half. But again, there's a lot of moving pieces right now, but we feel pretty good about 24 as compared to 23.

Got it, guys. Thanks for the help, and I'll hop back in the queue.

Our next question comes from Dave Dooley with Steelhead Securities. Please proceed with your question. Yeah, thanks for taking my question.

I was wondering as far as the improvement that you're seeing in your overall revenue in both the June quarter and the September quarter you just got into, what segments are showing improvements sequentially?

Well, Dave, I think ball bonder is the main business unit that is showing improvement. Wedge bonder has remained relatively strong throughout the last couple of quarters. But I think we are seeing ball bonder become stronger. I think this is tied to seeing utilization rates going up. And so I think that's basically the increases over quarter to quarter. And as well as, as Fusad mentioned, we shipped a record numbers of Flexus TCB this quarter, as well as record TCB revenue for the quarter that just ended. Okay.

And as a follow-up on the thermal compression bonding market, could you just, you know, perhaps articulate, you know, what you think your position there is, how big the market is, what percentage of that market you think you're currently capturing? And, you know, there seems to be a little bit of, you know, push and pull as to whether thermal compression bonding or hybrid bonding is going to be a bigger market. If you could just kind of talk about what, you know, which pieces of the market you think each technology would capture or, you know, just characterize how you think you're doing in this particular market.

Okay. So, Dave, we believe we have a quite strong TCV product portfolio. So actually, I think I make a comment. Our TCV have two market. One is a focus on high volume semiconductor. And this is for non-heterogeneous integration. And we serve in the application, such as application processor, 3D sensing. and also silicon photonics. And actually this year are doing quite well. And other than that, I think we have a lot of focus on actually heterogeneous integration. We, last year, starting from last year, we believe we have very strong, you know, our position in actually heterogeneous integration in the C2S trip to substrate. And the customers, are actually already in production. And we, at this moment, engage with multiple customers in the C2W, and we do believe we are on the way to get the market shares. So for our TCP, I think our focus at this moment is working with multiple customers in IBM, 5 Plus, OSET, and also Foundry. to push our TCB capability, you know, to push our technical limitation to the best, and which is below 10 micron. And with all the information we have here, we actually feel quite positive about the direction we are going. So when you hear about, when you ask about our flexible TCB birth of a hybrid. So let me make a comment. I think at this moment, you know, these two markets are not overlapping. You know, of course, hybrid bonding has its advantage, which is non-thermal. Actually, you don't have heat. You also don't have stress. So, you know, this advantage, you know, you know, hybrid has. In the meantime, I think this is a little bit more expensive process. So to ask how do we compare to hybrid, I think it's a hard question. I just want to tell you our mission actually is to push PCB as far as possible below 10 microns. So in the future, I think when they might at some point to compete in a five pitch, And which one have a higher volume? I think it's really a lot, depends. For KNS, I think it really depends on the capability of our TCB, how far it can extend to a fine pitch. And also for hybrid bonding, how cost-effective and how much productivity this process can improve. In addition to actually, of course, there's no thermal, no stress. the process actually is robust. Also, finally, I think it depends on final customer choice, right? So I wish I answered your question. I think hybrid and TCB at this moment is not competing. And, you know, our mission is to push TCB as far as possible. You know, as Chris really described today. Okay, so I just want to provide to you, so it's our belief, I think this year our TCB, we are looking around 60-some million dollars, maybe $68 million, with total dedicated AP probably above $100 million. So by 2025, we actually have a lot of opportunity, but After realizing market shares, we also need to wait a little bit, couple months for the high volume. But we do believe by 2025, our TCP alone should be above $100 million. And a lot of time, our dedicated AP, we are looking for about $200 million.

OK. And then you mentioned some details about high bandwidth memory. I'm wondering what your exposure is there. Are you currently in production? Are they using wire bonders for the stacks? Or maybe just elaborate a little bit.

So actually, we are working with actually not many. Actually, this industry only a few. But also, we also work with a few memory customers. There's a publication by a major customer, one of them, are actually to use wire, vertical wire, actually to be alternative for TSV. So actually, we are working with the customers. I think next year, there is a possibility for one or two customers, maybe in a small volume, pre-production. So we are actually quite excited about this opportunity. Thank you.

Our next question comes from Charles Tsai with Needham and Company. Please proceed with your question.

Hi. Good evening, Fusa and Lester. Thanks for giving me the opportunity to ask a couple questions. I want to start, again, thermal compression bonding. I think a year ago you announced receiving roughly 80 million orders in your backlog to ship by the end of 2023 and 300 million cumulatively by the end of 2025. So this is a two-part question. So how many have you shipped so far out of that 80 million orders? have you turned more of the opportunity beyond the initial 80 million, I mean, more into the from 80 to 300 million opportunity into the backlog? And if yes, how much have you received? Have you turned opportunity into backlog as of today? Thank you.

So these $80 million, I think, you know, remain there. I would think maybe by the latest, by middle of next year, would complete. And Charles, I think, you know, when we look at the opportunity, you know, we have engaging customers. But a lot of times, I think, I can tell you, the customer engage and have a high potential remain there. But sometimes I think their opportunity, their process integration architecture might have fine-tuned. So we actually, as I mentioned, I think 25, we probably were actually above $100 million. But I think at that time, you know, the $300 million, is including this $80 million. I forget actually exactly what I said, but I can tell you all the opportunities are still there. But you know, the customers forecast at that time and also their process, the project, you know, the schedule might have a little bit shift. But I can tell you, I think all the customers we engage are still very positive and maybe the forecast have a little bit different. So right now we are looking at the TCB, I think by 2025, annual revenue will be greater than $100 million.

And, Xiao, just for a point of reference, over the last two quarters, we've shipped over $40 million worth of TCB.

You mean fiscal Q2 and Q3, right?

That's right, fiscal Q2 and Q3.

Yeah. Thanks for the great color, Fuze and Lester. Also on PCB, you mentioned other than the IDM, there's OSAT and Foundry opportunity. I want to ask you specifically about Foundry. I definitely heard some of your IDM strength seems to be carried over to Foundry, at least from what they are doing in terms of evaluation. So can you talk a little bit more about the engagement with the leading Foundry on PCB What's the status there? And I mean, obviously, this is probably a beachhead, but what's the first application of any of the evaluation you're engaging with? Is it the C2S, C2W, or is it flux, with flux or fluxless kind of application? Thank you.

Okay, so I think I mentioned we have a multiple engagement right now in the C2W. We really don't specifically talking about the customers. But I think at this moment, the C2W are fluxless with copper-to-copper contact capability. And that's really we are focused on. And we have multiple of them in our ship, all going to ship. And, you know, this is not the first time we process this process. So I think there are two purposes for fluxless, particularly in the C2W. One is to reduce the effect flux remain and which will impact the year and due to contamination. The other one, I think the copper to copper contact are very important. And not only copper to copper contact, reliable copper contact is reliable, reliability is very important. I think we have a very special, actually, structures and the process, you know, to make a very reliable couple-to-couple contact. And this is common by many customers we are engaging with.

Thank you. So, you know, yeah.

Go ahead, Charles. Please finish your thoughts. No, I think in terms of application, we actually don't specifically comment about customers' process. But I can tell you, we have multiple engagement. And I think C2W is a very focused area, I think, at this moment, and which we are quite excited about.

Thank you. Maybe one last question, very short. Do you have any preliminary view about the fiscal first quarter 2024, the December quarter, in terms of how much sequential is it going to be from the fiscal fourth quarter to September quarter? Thank you.

So, Charles, right, as you know, we don't guide beyond the quarter. As I think both Fuza and I said earlier, there will be some seasonality in the first fiscal quarter, unlike in doing the ramp of 21-22. We do believe that, you know, the business is continuing to improve as well. As far as the magnitude, I think, again, there's a lot of uncertainty macros out there that will give further color in our Q4 earnings release.

so maybe i didn't just make one comment i think uh we do fear you know uh 24 would be a better year uh really i think how much bigger i think i can tell you if you if we can count the biggest opportunity i think it's really ball bounder and our ball boundary came down from a very high level uh so we are actually quite pleased If you remember, I think in Q1, we feel like our ball bounder actually has come to a trough, and Q2 actually showed improvement. So the noticeable change from Q2 to Q3, Q3 to Q4 is also a ball bounder, and we are seeing shortened capacity buy, and also some customers need it for the better capability of bounder to handle more complicated structures. So if you ask me, we feel better, you know, we have good opportunity. I think Bo Banda can carry a very good growth for 24. But really how much is much, I think probably really depends on the recovery rate. I think we will have a better judge probably in November. But we feel like the current rate of recovery is still not very strong. So we do expect our second half will be better than the first half. I hope I did say help.

Yeah, thanks for the abundant color, Fusen. Thank you. Okay, thank you, Joe. I'll hop on that. Thank you. Yeah, thank you. Bye.

Our next question comes from Tom Gisley with DA Davidson. Please proceed with your question.

Yes, good morning, Joe, and good evening, Lester and Fusen. Maybe, Fuston, following up on that last response, what are the utilization rates today and how low did they go a couple quarters ago?

So maybe I'll answer that, Tom. So utilization rate right now is around 70%. The previous quarter was around 60%. And I think the quote for that is about the same, a little bit lower. So we are seeing it go up. We also see Q4 utilization rate will also probably be higher than Q3. So we're seeing that nice trend as it heads towards the mid-70s. Great.

Okay. No, very helpful. I appreciate that, Lester. Wanted to dig in a little bit on the tool refresh that you're doing across your product lines. You mentioned a couple of new ones hitting the market recently. How do you see that rolling out as a percentage of your sales or percentage of revenues or shipments? Is it a two to three quarter transition? Do you think a year from now you'll be largely with the new higher margin tools? Just a little color and that would be great.

Oh, so I think the first two are for low-paying account. And we have another one is for a high performance one. And hopefully we will see maybe some margin improvement in about two quarters, maybe two to three quarters. So hopefully that helps.

Yeah, and Tom, we expect most of the products that Fusun referred to to be released by the first half of 24. Obviously, as it released, it takes a little bit of time to gain traction, but as you said, I think we expect the margin improvements starting in 24, and definitely by the second half of 24, the increase, particularly in ball-bonder margins, should start hitting.

Okay, I appreciate that. And then, I guess finally, maybe just a quick update on the Project W. Still expected to start to ramp in the first half of 24?

No, actually, Tom, if you listen to me, I think actually, you know, this is a tummy issue, but we always fear this is going to be 24 will be a prototyping and a pre-production, right? So I think beyond that, beyond that, I think the volume will be higher. But next year, I think we are working together with the customers just on the pre-production and also prototyping.

Okay.

I apologize for that. I think in about maybe two quarters, if we probably have more insight, we will share with you and share with the public.

Okay, and then final question maybe for Lester. Looking at the cash balance and the share repurchase, your share repurchase levels, although up sequentially or well below where they were a few quarters ago, has there been a different philosophy or change of thought as far as share repurchasing over time?

No, no. I think our philosophy always has been to be opportunistic, right? I mean, Susan always discusses the board every quarter on our capital allocation. So we kind of slowed down for a while and we picked up a little bit, but we believe that we will probably continue to be opportunistic. And I think the volume will continue to grow.

Okay, thank you.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from Christian Schwab with Craig Helm. Please proceed with your question.

Hey, guys. I just have one quick question. Your commentary regarding memory that you saw better than expected improvement utilization rates and a pickup in demand in NAND, we're not really seeing or hearing from anybody else, including the manufacturers of NAND, other than possibly bottoming. So I'm just looking for greater clarity on that statement, please.

Oh, well, I think we actually, you know, NAND, we actually have quite high market shares, right? And I think this quarter we do get, you know, business from, you know, name business. But, you know, at this moment, Christian, even people expect, you know, memory to touch to the bottom, we still see recovery will be still slow. So overall, I think memory, our expectation is even is uptrend. We do believe the best 24, the whole industry, probably can go back to a 22 plus maybe about 10%. So, but I just want to make a comment. I think NAND, we have a pretty good market shares whenever capacity come and, you know, next focus for us and see if we can get also market share again, you know, in the, these upturn, you know, for D-RAM.

Okay, great. Thank you. No other questions.

There are no further questions at this time. I would now like to turn the floor back over to Joe Elgundy for closing comments.

Thank you, Maria, and thank you all for joining today's call. Over the coming months, we will be presenting at several investor conferences. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.

You may disconnect your lines at this time. Thank you for your participation.