Kulicke and Soffa Industries, Inc.

Greetings and welcome to CULIC and SAFA's 2024 Fourth Quarter Results Earnings Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires 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 Elginde, Senior Director, Investor Relations. Thank you. You may begin.

Thank you. Welcome everyone to Kulikin's Office Fiscal Fourth Quarter 2024 Conference Call. Fuzhen 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. GAAP to non-GAAP reconciliation tables are included within the latest earnings release and earnings presentation. Both are available on 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 complete discussion of the risks associated with Kugel-Gonzova that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically the latest form 10-K as well as the 8-K filed today. With that said, I will now turn the call over to Fuzhen Chen for the business overview. Please go ahead, Fuzhen.

Thank you, Joe. Good afternoon, everyone. Although some of our core market remain in a state of digestion, we continue to anticipate a return to capacity growth in the core, bulk, edge, and APS segments throughout fiscal 2025 as we continue to expand shares through technology transitions in advanced packaging and dispense. Yesterday, we made several positive announcements regarding a high-potential foundry win. Our Copper First hybrid bonding process, which we expect will reach 3-micron pitch, and also an expansion of shareholders' return initiatives. Our leadership in flexible thermal compression, FTC, continues to grow. The collective effort by our advanced solution team and the execution across many parallel customer development programs have allowed us to drive market adoption of this innovative process. This recent win represents significant milestones, which highlight the market potentials our system-level competitiveness and also the broader reach that chip-led and advanced packaging can have on high-volume, more mature portions of semiconductor packaging. First, this milestone highlights that AFTC is a very competitive and compelling industry solution, which is capable of directly supporting many different sectile applications, including the world's most advanced logic and memory production. but also within our high volume logic market, which are transitioning from the mature free chip process. We are very proud of our innovations within TCB technology and also our strong foundational base of leading customers, which illustrates the current market need and the longer term potential of this competitive technology. Secondly, our current win and innovation highlight our leadership position in the technology transition. KNS is the first and the only provider of flux-less systems which are proven in the production environment. Today, we have a global TCV install base of over 100 systems and are approaching $200 million of cumulative TCV sales. Of these install-based, approximately 30 systems are running FTC in either a development or production environment across five major IDM, OSET, and Fungi customers. Maintaining this level of support across different emerging applications and customer locations continues to be accomplished by our dedicated Advanced Solutions team. Across customer engagement, have been essential in the development of our FTC platform, Arptura, and provide the critical market insights which enable us to develop a very flexible and capable system architecture which can support a broad range of new packaging formats. While there are many different marketing acronyms used to explain the growing mix of advanced packaging offerings, such as on-wafer, on substrate, on interposer, on IC. We have built a system which supports a wide variety of material handling configuration and is very capable of supporting the most advanced TCB requirement, whether chip-to-chip or chip-to-wafer. As a need for advanced fine-pitch FTC and copper-phosphate hybrid growth, We expect our competitive position will continue to improve across high-performance applications. Finally, these announcements serve as a reminder that the future of semiconductor assembly will require new and increasingly more complex assembly solutions that can provide greater transistor density at the package level. This growing need extends way beyond the most advanced process known. Emerging packaging technology provides a new level of value increasingly necessary to offset the limitation of two-dimensional no-shrink. Today, our new product portfolio, including vertical wire, HPI, FTC, and copper-first, provide capable solutions where positioned to support packaging-labeled transistor density across end markets. We have been focusing extensively on this transition for years, are pleased with our recent progress and look forward to additional adoption. Turning to the fourth quarter's result, we delivered revenue of $181.3 million and a non-GAAP EPS of $0.34. From an end market standpoint, key portion of general semiconductor, automotive, industrial, and the memory have improved as anticipated, while LED demand remains very soft. We continue to anticipate coordinated recovery of our two most significant end markets, general semiconductor and the automotive industry, through fiscal 2025. For the September quarter, general semiconductor reduced sequentially, primarily Due to strengthening quota, TCV revenue stemming from shipment schedules and the revenue recognition timeline, which create quota to quota variability. Excluding TCV, general semiconductor increased by 11% sequentially, driven by capacity digestion and the returning demand from global offset as anticipated. A lower December quota trend to be seasonally suffer averaging 10% sequential reduction over the prior three years. We are confident rather more bonding demand will improve further through fiscal 2025 due to reasonable unit growth combined with high field iteration rate. For automotive and the industrial, we are seeing demand improvement after a challenging year. As I explained last year, last quarter, The demand improvement in general semiconductor driven by board bonding were completely offset by the challenge within automotive and the industrial during fiscal 2024. At this point, we believe both critical markets are past trough and expect coordinated recovery to accelerate in fiscal 2025. Despite this recent period of capacity digestion, we continue to participate in emerging transition, driven by secular growth in electronics, in electrical vehicle, and the sustainability trends. We have a strong network of global customers who are critically enabling these transitions, which we continue to support. Over the past four years, many countries, in addition to European Union, have implemented targets or policies to incentivize EV adoptions. Just last month, the International Energy Agency, IEA, reported seven million EV was sold globally in the first half of calendar 2024, representing a 25% year-over-year increase. While our core wage SMT and the battery assembly solution are directly enabling this critical transition within the automotive market, we continue to seek out new solutions which can expand our market access. During the recent September quarters, we recognized revenue for an advanced dispense system positioned to support a 30-state EV battery manufacturer. This will represent a new market for our advanced dispense business, but also diversify our growing base of battery-related opportunities in the US, Europe, and Asia. We anticipate follow-up orders in the coming quarters to support this customer's production rack. LED overall remains soft within ball-bounding and continues to be in a state of digestion across the traditional wire-bounded, high-bright lighting market. While this current level of demand will likely persist over the coming quarters, we remain focused on driving adoption of our Luminex laser-based mini-LED placement systems, which is positioned for a direct emissive and advanced big lighting adoption over the coming quarters. During the September quarters, we booked revenue for one Luminex system, which is in less state development and production readiness. We look forward to qualifying additional customers who seek ultra-fast LED placement through 2025. Lastly, we see ongoing strengths related to both capacity addition and technology change within the memory market. In addition to the improving capacity need for traditional stack NAND applications, we are working with key memory customers to leverage vertical wire applications in next-generation low-power D-WAN packages, as previously explained, but also within NAND applications. Initial vertical wire LPDDR solution leveraging a vertical fan-out configuration are currently running at the two key memory customers, which we anticipate will move into low-volume production environment next year. Like LPDDR, memory customers are also seeking new stack packaging format for NAND memory, which also utilize our unique set of vertical wire solutions. Both approaches offer smaller package footprint and performance benefits related to an improved die-layout, low parasitic capacitance, and also low parasitic resistance. These unique vertical wire solutions are a compelling example of how new packaging formats are mitigating no-shrink challenges. We expect similar approaches to extend beyond memory into higher-volume general semiconductor applications over the coming years. We are pleased with our recent progress and the emerging position supporting advanced packaging applications, serving the compute market. This leading-edge market is now being enabled by chiplet and heterogeneous packaging techniques, and was previously excluded from our server market despite our dominant bulk and wage-bounding shares, and has been a key target of our advanced solution strategy. We are proud to demonstrate our strengths, progress, and potential with this long-term advanced solution strategy. A lot of additional technology changes are providing opportunities in several other areas as well. While the current TCA wins for Foundry, IDM, and also customers who are supporting leading-edge applications, expanding our market potentials, we want to remind investors that leading-edge applications are now the only opportunity for advanced packaging. Besides copper-first hybrid and FTC, all production-ready assembly techniques, including vertical wires, are providing new solutions for memory and high-volume general semiconductors. Additionally, high-power interconnect is enhancing power semiconductors and battery assembly approach. These all represent critical technology transition, which are enhancing the value of our respective assembly processes. We are well prepared for this transition and have multiple market-ready solutions to support our extensive customer base. Consortium participation, broadening market engagement, key customer adoption, and a comprehensive set of advanced packaging solutions highlight our preparedness needs. to address next set of industry challenge. After an extended period of capacity digestion, we also expect ongoing improvement and a cyclical recovery across key end market, most notably general semiconductor, automotive, and industrial. Looking into fiscal 2025, we remain optimistic due to the recent technology win, but also due to underlying market condition. The relatively high global vol bounding devaluation rate, combined with reasonable semiconductor unit growth, is expected to trigger additional growth in our core market during fiscal 2025. In addition, the expectation of a broader automotive and industrial recovery are also supported with our results this quarter. Finally, Rather, medical economic improvements are also expected to stimulate global semiconductor unit growth through fiscal 2025. I will now turn the call over to Lester for the financial update. Lester? Thank you, Fusheng.