Kulicke and Soffa Industries, Inc.

Greetings and welcome to the CO-LIC and SOFA 2024 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, Elgandy, Director of Investor Relations. Thank you, Joe. You may begin.

Thank you. Welcome, everyone, to Kuala Lumpur's fiscal third quarter 2024 conference call. Susan 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. Gap to non-gap reconciliation tables are included within our latest earnings release and earnings presentation. Both are available at investor.kns.com along with prepared remarks for today's call. 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 and are subject to risks and uncertainties that may cause our actual results and financial condition to differ materially from the statements made today. For a complete discussion of the risks associated with CULIC and SOFA that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest form 10K, as well as the 8K filed today. With that said, I'll now turn the call over to Fuzhen Chen for the business overview. Please go ahead, Fuzhen.

Thank you, Joe. Good afternoon, everyone. Throughout the past quarters, we continue to execute on several growth initiatives, including driving critical progress in advanced packaging and advanced dispense qualification, enjoying broadening adoption of our new multi-solution, while we also observe ongoing utilization improvement across several of our key end markets. Before reviewing our quarterly results and performance, I would like to mention a few points on the recent industry momentum within thermal compression. There have been three key milestones which we are excited to explain. First, the formation of as well as our membership in the US Joint Semiconductor Consortium was announced last month. Resonec Holding Corporation, leading provider of global semiconductor materials, formed this consortium to support industry collaboration and the market adoption of new advanced packaging production solution. After joint and the joint tool were created in Japan, the U.S. joint consortium represents the third joint consortium globally and the first in the United States. A combination of 10 leading equipment materials and the process company based in the U.S. and Japan represents the U.S. joint forming members who have the near-term goal to establish a U.S.-based R&D facility with advanced packaging capability. Construction for the U.S.-based R&D facility will begin in the current calendar year, and at completion will provide access for critical industry-leading advanced packaging technologies, materials, and processes which are not readily available locally to many of our U.S.-based customers. Our second TCP milestone is associated with collaboration with a subsidiary of a large semiconductor conglomerate, who has successfully demonstrated our leading fluxless thermocompression, or FTC system, which is capable of direct copper-to-copper bonding as a center feature, can also enable an exciting new chip-to-wafer hybrid bonding process. Hybrid bonding involves making both conductive and dielectric bonds, provide specific benefit for select end market. With a lower requirement for capital intensive frame and investment relative to existing chip to wafer hybrid solution, we expect this boundless FTC process to further expand our long-term chip net and heterogeneous opportunities. As explained by industry headline, there are many hybrid bonding processes including wafer-to-wafer as well as chip-to-wafer. This innovative PCB enables hybrid solution target chip-to-wafer application for deployment in high-volume consumer and compute market by offering a lower capital intensive path to hybrid-based chipnet assembly. At a higher level, adopting triplet-based packaging can reduce product development time, allow for amortizing design costs over a broader air market, and is critically important in extending most loads. With that said, our existing FTC system, which can bound copper-to-copper interconnect as standard features, can provide a more direct pathway to triplet-based production. For many customers, those who seeking chip-to-wafer hybrid option now has an additional alternative. As the industry accelerates the adoption of thermal compression, we continue to enjoy growing commercial success and broadening market access through our intimate and expanding customer engagement. Over the past four years, on a trading basis, our TCP business has grown by 10 times. and we are still in the early stage. This was accomplished through new access to silicon photonics, 3D sensing, and the leading edge market, including our first mobile solution in flexible PCB at the leading IDM customers. We have continued to drive industry adoption and have announced several wins in the assembly and the test space earlier today, highlighting these rapidly growing opportunities. Also, we continue to make progress in our foundry engagement and remain very optimistic that we can unlock an additional leading edge customers over the near term. Similar to our initial IBM customer engagement, which began in 2020, new technology win with a leading customer require a lengthy and collaborative engagement process and a significant patient. This recent win and evaluation progress have solidified our THC process as a long-term solution to support the growing adoption of triplet-based architectures. While there are several different technologies and processes to support the diverse needs of the future triplet market, we are well prepared to support the industry with our leading solutions. We are clearly excited as we are securing position in a new market supporting AI, HPC, and mobility, which have historically not included from our self-market. This win provides confidence in our leadership as well as long-term potentials for flux-less adoption. Due to thermal compression adaptability, out-of-box couple-to-couple capability and a broader customer set, it provides lower value to entries for mass market triplet adoption. Some combinations remain an emerging technology with a long technology life ahead to support this growing market need. Even intercontinental technology can be challenging. for analysts and the investors to focus, although I would like to remind investors to not overly focus on one specific interconnect technology. There are many packaging transitions across our end market with a growing number of trade-offs, largely between cost and performance, but also production capability and the system label requirement. It's critically important to recognize that the high-volume cost-sensitive portion of the semiconductor assembly market will also need a stack die solution over the long term. These varied market needs are becoming more evident every quarter as we are actively developing several multi-die and stack die solutions, which are being evaluated across our customer base. Many of these higher-volume opportunities will likely demand more cost-effective processes, such as vertical wires, and remain independent from many of today's PCB and hybrid-focused markets. From our humble wire bonding route, we are pleased with our new market footing and access we have demonstrated. Recent customer adoption combined with ongoing innovation provide a strong foundation to support long-term advanced packaging adoption. I'm very proud of our team for developing and driving the recent customer success across the portfolio. Turning to a June quarter business result, we were able to achieve our guidance midpoint while generating slightly more non-GAAP EPS than anticipated due to our operational focus. At high level, we expect most of our end markets have already experienced trough level of demand over the past 18 months. Over this time, certain markets began showing signs of improvement while other markets faced headwinds that restrict our corporate level performance. For example, our world bonding revenue on a year-to-date basis has improved by 42%. Despite this relatively meaningful level of improvement, we also experienced offset due to well-known automotive and industrial headwinds, which reduced wage demand earlier this year. At this point, we are pleased to begin seeing signs of multiple end markets are improving gradually, allowing better coordination, and we remain optimistic. While the market environment has become more positive, we expect our high-volume solutions are still well below the normal demand level we would consider sustainable for the broader industry. Our cobalt and weight businesses have room to grow. Looking at our end market more specifically, we continue to see utilization improvement in general semiconductor, pocket-of-demand improvement in LED automotive and industrial, resilience in APS, and ongoing recovery in memory. Within general semiconductor utilization layer, full wall bounding have continued improved sequentially. A lot have yet. reached the critical tipping point expected to try high-volume customer to broadly require capacity addition. This order activity has centered around high-volume region, where iteration rate has averaged over 80% for the past two quarters. At the same time, the rest of the world has lagged slightly, but is continuing to improve. As expected, global bull-boundary valuation rates have exceeded 75% last quarter and are anticipated to be in the high 70% range during the fourth fiscal quarter. Looking into fiscal 2025, we continue to anticipate semiconductor unit growth expectations will support an additional step-up in demand for our high-volume solution. We also anticipate ongoing industry growth will continue into calendar 2025 based on market forecast, but also due to ongoing global front-end related investment. In addition to the improving general semiconductor dynamic, we also booked approximately $20 million in thermal compression revenue during June quarter. which includes our recognition of an additional FTC system, which supports the recent TCP-enabled hybrid development milestone. With automotive in the industry, we have also seen improvement in demand, as our intercom leadership position is actively supporting emerging processes utilized in efficient power storage, power delivery, and power control for electric vehicles, charging infrastructures, industrial applications, and sustainable energy generation. We continue to see many innovations affecting power semiconductor assembly, which are driving the need for more robust interconnect technologies, such as our recent high-power interconnect, or HPI, solution within wedge bonding. being deployed in high-volume battery production as well as for more efficient power conversion required for charging and sustainable energy applications. We remain directly involved with several global EV manufacturers, the broader power semiconductor technology transitions, as well as the leaders in the dynamic battery market. Of note this quarter, we continue to support an exciting dispense opportunity recently deployed with leading solid-state battery companies. Whilst the market of automotive and industrial may still be digesting capacity, we expect ongoing improvement to continue throughout fiscal 2025. Within memory, We see customers investing in new capacity and technology, which is supporting the NAND market and gaining support for new stack die solutions in the large and established LOP DDR market. Wire NAND is arguably the largest stack die market in the semiconductor market, relying nearly exclusively on wire bonding technology. We expect high-volume DRAM to transition to 3D packaging format over the coming years. Several important leaders in the memory market are expected to accelerate development and the pre-production activity over the coming quarters, with higher volume production to begin in late calendar 2025 or early 2026. Similar to growing leading-edge and high-volume assembly needs for chip-based architectures, the memory market continues to seek out new ways to leverage packaging technology to drive greater transistor density per area. Our thermal combination and vertical wire solutions are anticipated to more effectively meet the mass market's performance. manufacturability, and the cost requirement, thus emerging technology such as a cheap label heavy bonding that can prohibit the expensive due to the requirement for front-end capability as well as a non-year challenge. We remain in a very unique industry position and evident in our leadership enabling critical technology transition such as a direct copper-to-copper and a flux-less adoption. for leading-edge applications, high-power interconnect solutions for automotive and industrial applications, and vertical wire solutions for high-volume consumer-oriented markets. These emerging solutions supplement our existing broad portfolio of interconnect solutions. We are aware of positions to support customers' needs while delivering significant long-term value to investors. In closing, After nearly two years of capacity digestion, we are pleased to continue seeing gradual signs of broader-based cyclical recovery across multiple end markets. The government recently projected a 17% semiconductor revenue industry growth rate through calendar year 2025. This growth expectation seems very reasonable considering ongoing global front-end investment and is expected to be later primarily by AI, automotive, and the general semiconductor, which we expect will directly benefit the company and its investors. Global integration rate, we are moving to the higher 70% range, also increased confidence for a more robust 2025 recovery. I will now turn the call over to Lester for the financial review update.