Kulicke and Soffa Industries, Inc.

Greetings and welcome to the QLIC and SELFA 2025 Second Quarter Earnings Call. 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 Elginy, Senior Director, Investor Relations. Thank you, sir. You may begin.

Thank you. Welcome, everyone, to Kulkin's Office Fiscal Second Quarter 2025 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. GAAPs and non-GAAP 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 Kewlick & Salfa that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest form, 10-K, as well as the 8-K file last night. With that said, I would now like to turn the call over to Fuzan Chen for the business overview. Please go ahead, Fuzan.

Good morning, everyone. Last month, we announced the intent to discontinue the electronics assembly or EA equipment business. subject to local regulatory approval. We acquired this business in 2015 and it is currently a component within the All Other category. We intend to fully support and serve our customers with equipment purchase requirements over the coming quarters. We will also continue to retain EA Equipment Technology as well as the related aftermarket parts and service business to support the existing install base and our customers' operational needs. We believe this decision is not difficult, was critically essential to ensure our underlying business are competitive and are properly aligned with beneficial long-term technology trends. Looking ahead, we intend to prioritize development and further leverage our dominant bulk, wage, and thermal competition position while we have demonstrated clear technology leadership to address fundamental assembly transition within high-volume, leading-edge, and power semiconductor market. Additionally, our APS business, which provides revenue consistency, as well as our emerging advanced dispense portfolio, extends our technology leadership and provides additional growth paths through all these evolving core market opportunities. This restructuring effort is also intended to enhance our long-term financial with anticipated improvement in both margin and through cycle improvement. At a macro level, the ongoing trade situation has increased level of uncertainty throughout global market and the supply chain. This level of macro and industry uncertainty has created hesitation and a more defensive capacity plan approach. throughout our silk market. Sequentially, this hesitation was most evident in the Southeast Asia automotive and industrial market, which had the effect of limiting the seasonal momentum previously anticipated for the June quarter. Interestingly, over the same period, we saw increasing improvement in other Asia regions. While we are not immune from this macro-near-term dynamic, Semiconductor unit growth as well as the increased complexity of semiconductor packaging are expected to expand our self-market. We remain confident in the industry's resilience and also remain confident that our global business, supply chain, and development paths are best optimized as we look ahead. Over the near term, we intend to further strengthen our growth prospects with a focus on vertical wire power semiconductor, advanced dispense, and thermal compression, which I will discuss in more detail shortly. During the March quarter, the general semiconductor and market, supported by improving ball-bounding dilution rate, experienced a 38% sequential increase due to improved demand from ball, wedge, and TCB stemming from the US and China. In view of the changes surrounding the EA equipment business, we decided it was appropriate to simplify our end market disclosure and consolidate LED within automotive and industrial, starting in the current quarter as well as within comparable period. This change is aligned with the external semiconductor marketing forecast, where LED is generally a subcomponent of the industry market. With that said, automotive and industrial was sequentially down in the March quarter over the December quarter, largely due to the final Project W related LED sales, which were recognized in the December quarters. Automotive and industrial excluding LED was down approximately 7% sequentially, but was still up nearly 14% from the same period last year due to ongoing demand improvement of our Estonian and the policy solutions. Winning memory. Software NAND system demand was the primary driver for our sequential reduction in the March quarters. Today, our current memory exposure is centered on NAND, but we remain focused to diversify into dynamic memory through the fundamental advanced packaging transition, affecting HBM for leading edge memory, and also driving momentum for our emerging vertical wire solution for high-volume memory. Finally, within APS, we continue to enjoy a relatively stable base of part, service, and support revenue. Through this dynamic market environment, while there may be some fluctuation over the coming months, we anticipate overall install base and utilization trend will continue to improve, supporting a relatively stable level of APS revenue. At this point, We anticipate the majority of our business has gone through a long-term period of capacity digestion and remains very well positioned for the next set of bulk wage advance expense and the summer completion opportunities. Within Bo Bang Din, our ongoing pace of customer engagement as well as a new product development remain on track with our vertical wire solution which continues to gain momentum. Last month, we officially announced the launch of our latest wafer-label packaging solution, AT Premium Man Plus, which is specially optimized for stack dealing opportunity. This high-potential new memory packaging approach is driving significant interest with the leading customers, some of which are accelerating their transition and may initiate new stack dealing production by 2026. Additionally, This vertical wire capability is also comparable with non-memory final devices, which support high-volume general semiconductor applications. As explained on prior course, similar to leading-edge application, cost-sensitive wire-bounding applications are also aggressively demanding new transistor-dense packaging solution, and our vertical wire technology is very well positioned to effectively address both high-volume logic and the memory transition. In addition to vertical wire, the pace of our liberal bonding development initiative remains on track. We continue to prepare for new solutions to this highly volume market over the coming quarters. Next, waiting with bonding, the power semiconductor opportunity continues to demand higher current, higher reliability, and higher efficiency devices. A few years ago, This power semiconductor application was some of the most cost-sensitive and competitive semiconductor assembly market. The growth in electric vehicle and the sustainable energy has caused this basic power control application to become increasingly complex, requiring better materials, more robust interconnect, and more advanced equipment. In April, We proudly announce the launch of our newest Sonotrode-enabled pin welding system for power semiconductor applications. This new system, which leverages our leading Australian platform, extends our market reach while enhancing alignment with the growing and evolving global demand for electric vehicles and sustainable energy. The use of pins within this market is rapidly growing. which support better inductance and better flexibility as they improve power monitoring and sensing to support higher-efficiency applications. Additionally, within this emerging high-performance power module market, there is an increase in new semiconductor materials such as silicon carbide, but also an increase in the use of copper materials and interconnects. Copper interconnects are a core competency for K-Net which we intend to fully leverage as this long-term market evolution continues. Next, within the Advanced Dispense business, we continue to build our portfolio of solutions as well as our customer-facing engagement. We continue to grow our customer base and recently received an order from a high-volume US-based integrated devices manufacturer. Additionally, our recently qualified solid state battery opportunity has been performing well and we anticipate a potential production ramp to begin over the coming quarters. Over the coming years, we are also focused to expand our advanced dispense market presence. This effort will combine our unique dispense capability with our existing market leading core system technology. Turning to thermal completion, our advanced solution team continue to actively support logic and memory customers in production and development. We remain well positioned and are continuing to take a shift in advanced logic application as the market transition to next generation chip on wafer and also wafer on substrate applications. Larger and more complex multi-chip processor for data center and AI application are expected to drive the next wave of leading-edge customer capacity. We have worked very closely with many customers over the recent years and remain well positioned for leading-edge but also higher-value opportunities, as mobility devices begin transitioning to cheap and heterogeneous applications. Finally, for TCP in-memory, we continue to anticipate our unique fluxless solution, which provides direct copper zero die gap and ultra-fine pitch compatibility will be a key contender for future HBM opportunities. Building on traction from the prior quarters, we expect to ship additional tools to our leading memory customers toward the end of the fiscal year. As a reminder, our innovation in thermal compression and vertical wire have unlocked new market access to logic and memory opportunities, which our company was previously excluded from. Today, as the world takes the next step to transition single-die semiconductor package to multi-die and heterogeneous triple-die packaging format, thermal compilation is rapidly becoming the incumbent technology for high-performance applications. While our vertical wire solutions are increasingly well positioned to address a wide portion of the high-volume market over the long term, As a reminder, we remain the only fluxless TCP supplier who has been qualified for higher volume manufacturing with some of the most advanced semiconductor company. And we are nearly fully booked for physical 2025. More broadly, we have nearly 120 system installed base across 10 different highly engaged customers. This helped to demonstrate our track record for winning, as this installed base captured a wider portion of the market than any of our competitors have been able to address. In closing, we have worked hard to ensure our business is best aligned with critical technology change, such as a vertical wire in memory, TCV in leading edge logic, and our increasingly capable assembly solution in power semiconductor. Additionally, our growing but advanced dispensed portfolio of solution increase our potential across all of these long-term technology transitions. While recent core market utilization rate are promising, we remain in a unprecedented state of macro uncertainty, although remain confident in our technology and the market positions, and are prepared to overcome near-term challenges. At this point, our core structures existing product portfolio and the through-cycle performance are optimized. And we will continue to enable fundamental technology change throughout our supermarket. As we have done for seven decades, we will continue to closely support our customers and emerge a stronger, more profitable, and more growth-centric company. I will now turn the call over to Lester to cover the financial overview. Lester?

Thank you, Pusan. My remarks today will refer to GAAP results unless noted. I would first like to provide some additional details regarding our intent to discontinue the EA equipment business. As Fusun explained, this was a difficult but necessary step to ensure our overall business remained competitive, aligned with long-term technology trends, and it is optimized for through-cycle performance. We remain closely engaged with all key stakeholders as we plan for this intended wind down. We are currently seeking feedback regarding customer's orders and remain in close discussions with local stakeholders. During the March quarter, we accounted for the majority of wind down related expenses, which represented total EA related charges of 86.6 million. These charges were primarily related to inventory write down, supply chain, asset impairment and restructuring related charges. Dependent on local stakeholder feedback and in alignment with our March 31st disclosure, we anticipate residual non-GAAP expenses to be below $15 million and be accrued for in the first fiscal half of 2026. Turning to the March quarter financial results, we book revenue of $162 million and gross margins of 24.9%, which included EA related inventory and supply chain charges of 38.6 million. Total operating expenses came in at $125.1 million, which included restructuring charges of 8.8 million and impairment charges of $39.8 million. Excluding these charges, operating expenses would have been $76.5 million. Tax expense came in at $5.4 million related to our mix of profit and loss across entities during the quarter. We continue to anticipate our effective tax rate will remain above 20% over the coming year. We completed our previous and also initiated our latest repurchase program with a $300 million authorization during our first fiscal quarter of 2025. During the second fiscal quarter, we repurchased over 500,000 shares for $21.3 million. While we do not anticipate current tariff announcements to have a direct impact on our ability to manufacture and sell our products and services to our global base of customers, unique geopolitical and trade dynamics have created near-term order hesitation in certain capital equipment markets. Looking into the June quarter, sequential order activity decreased in Southeast Asia, while order activity increased in China and Taiwan, which was aligned with our utilization data. We have also begun to see global customers begin reallocating equipment across manufacturing sites, which highlights our industry's ability to flex around trade dynamics. With that said, we anticipate semiconductor unit growth will continue to improve through fiscal 2025. While some customers may delay capital expenditures until critically necessary, we expect continued capacity digestion supported by improving utilization rates with ball and wedge bonder to continue over the near term. Looking into the June quarter, we announced a revenue outlook of $145 million plus or minus $10 million with gross margins of 46.5%. We anticipate non-GAAP operating expenses to be 68 million plus or minus 2%, a GAAP EPS loss of 9 cents and a non-GAAP EPS gain of 5 cents per share. Although the near-term market dynamics are challenging, we continue to anticipate an eventual return to incremental capacity growth in core ball and wedge bonding markets and continue to see ongoing capacity digestion and field utilization improvements. Incremental opportunities in worked carburetor, advanced dispense, and thermal compression are in addition to this anticipated improvement. As we remain focused on these strategic opportunities, We are well prepared to navigate near-term macro level uncertainty. 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 while we pull for questions. Our first question comes from Krish Sankar with TD Count. Please proceed with your question.

Yeah, hi. I have three questions. First one, Susan, just kind of curious, can you give some color on June? What are the dynamics? Is it predominantly general, semi, and auto, industrial? It's going to be down quite a bit. and how to think about it beyond June. I understand a lot of moving parts, but any color you can give beyond June would also be helpful.

Okay. So, Chris, we have a Q3 slowdown, and this slowdown is the most pronounced and the evidence in our Southeast Asia region. I'll give you an example. The Q3 Southeast Asia slowdown account for the majority of our total Q2 to Q3 weakness. So give you a number. Our Q2 revenue is 162, and the Q3 guidance is 145. The difference of this two number majority actually is a weakness from Southeast Asia. So therefore, it is really our belief this near-term slowdown was due to a concern regarding the potential and unknown type of impact for auto and the industry from our customers. So I think in the script we mentioned why we see the weaker outlook for the Southeast Asia. In the meantime, we also see the utilization rate improve in Taiwan, China, and other region. And with the utilization rate actually is at or close to triggering in a broader capacity addition. So we see positive and we also have actually a very big actually in Southeast Asia. We believe it's auto industry related and it's because of unknown type of impact. People hesitate to build a capacity just for the industry. So, yes, you know, the number is a little bit bigger. And the reason, I think, is because we have a bigger, larger presence, auto exposure. And also, you know, our manufacturing concept is flexible, you know, manufacturing cycle. And we're working with customer in up-term and down-term with a shorter cycle time. So I think these two together, I hope I explained your questions.

That's very helpful, Fuzeng. Just to follow up on just any view beyond June quarter, is it too hard to say today?

Yes. So June quarter, so it's really our belief. The Q4, June quarter is Q3, Q4. We believe it will be better. is feedback from customer, and also some of the weakness in Q3 will be renewed in Q4. And hopefully this can be a short-term phenomena, and it's also supported by utilization rate. Actually, in some region, actually already the number can trigger capacity buy. So we think Q4 will be better. But how much better? Actually, this also depends on MECO and some clarity with the tariff. If we have better clarity, I think we should have a sequential up from the Q3.

Got it. Just to follow up on TCB, your TCB exposure is predominantly logic, hardly anything in memory. Can you give a color on how it's progressing? I also noticed that your European competitor last week announced five new orders for TCB chipped away. So I'm kind of curious, lay of the land and a little bit if you can talk about TCB, your TCB exposure today and how do you see it evolving in memory if you have a shot? Thank you.

Okay, so, you know, practically, our first revenue for the TCB was 2020. So, although, you know, we don't want to say it's quite large, but I think we make a good progress with high growth rate. And we actually focus with logic first. And we actually are competent at this moment. We can grow in both IDM and also OSET, also in the foundry side for our logic. And this year we put a lot of effort in the memory. We expect to ship additional system by end of the month, end of the year. And we won't say this is easy, but I think we are competent on our technology. and hope we can have some result in 2026. So I think to answer your question, sequentially, we got to focus in actually some segment. And from now, I think it's a good time for us to focus on HVM.

Good. Thank you, Arjun. Thank you.

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

Yes, good morning. I was curious, what was the revenue run rate of the EA business that you're exiting, or any kind of metrics around the size and profitability would be very helpful.

Yeah, hi, Tom. It's Lester. So based on the recent past, the EA revenue was about $25 to $30 million a year. Gross profit is around $7 to $11 million, and the operating expense is about $20 to $25 million.

Great. No, thank you. It's very helpful. And Lester, did you say that there'd be a $15 million per quarter charge through the first half of 26? No, no, no.

Tom, what we said is also consistent with the disclosure on March 31st. I said that after all the write-down this quarter, the $86 million, We think it will be less than 15 for the rest of the shutdown, and that will probably be a little bit in the next two quarters and then more in the first half of FY26. Subject to, you know, our discussions with local stakeholders, we believe that the business, other than to support existing customers and warranty and service, should be done by the first half of FY26.

Great. Thank you very much for that. And then maybe just a quick question on the power semi side. What are the dynamics you're seeing on the powers front?

Well, I think the power is going to grow rapidly, you know, in terms of volume. And, you know, there was a lot of European companies actually investing in it. But recently, I think China actually also gained some market shares. So we are very happy. We still have a very high market shares in the Power Semi. And there's a transition, you know, to the Power Semi to be more effective, you know, with higher power, more cost effective. So we have two actually new product. One is a sonar chart. I actually discussed in my script. And this is for the pin welder. The other one, actually, we call Everline. This is a clever pitch. So we actually announced these two new products. We believe it's going to be an important product. Start to contribute revenue for us in 2026. Great.

Thank you, Busan.

Okay. Thank you. Our next question comes from Charles Shai with Needham & Co. Please proceed with your questions.

Hey, thank you. Good evening, Fushan Lester. Maybe, Fushan, the first question is about the market dynamics. I wonder if you can further unpack a little bit more. China ordering activities up, Southeast Asia is down. That's understandable, but it's a little bit interesting to hear that Taiwan is also up a little bit. In terms of ordering activity, you would assume Taiwan is subject to the same tariff dynamics as Southeast Asia. Why is there a little bit of bifurcation between those two regions? Is it Southeast Asia more impact on auto industrial side, Taiwan more on the general semi side, or what's the reason?

Okay, so let me explain Southeast Asia first. Southeast Asia, we believe, actually utilization rate still not high enough. I mentioned about Taiwan and China. Actually, utilization rate is actually high enough, potentially can trigger capacity buy. But actually, we didn't see that yet. Maybe it's because of hold back. uh for the unknown uh period of time they can long actually utilization rate higher than even slightly higher than 80 right so uh by the southeast asia i think uh utilization rate is below that and uh as you know the teleth impact to auto is a is a big deal and the southeast asia actually have a lot of uh uh actually European investment and also OSEP and create a big base for auto capacity. And the Southeast Asia, the slowdown actually account for almost a majority of the slowdowns sequentially from a Q2 to Q3. I hope I answered your questions.

Yeah, that's a very, very interesting color. Fushun, maybe another question about the fluxless PCB. I think in your preparing marks, there are some new languages there. You are saying fluxless PCB, at least for fiscal 25, it's fully booked. I wonder if you can provide some kind of what that means, because I don't think your fluxless PCB revenue forecast was that aggressive. It was, I believe you were guiding to like 40 to 50% young year growth. When you say fully bulk, do you mean it's, can we even read that as it's actually a little bit supply constrained at this point or, yeah.

Okay. Actually, I think it's really limited in our capacity. We have some capacity in U.S., And right now we moved to Asia and we intend to actually increase capacity. So I probably can say this a little bit better. I think right now we are capacity constrained right now. And we actually will create more capacity is undergoing.

So is the 40 to 50% year-on-year growth, you think you can still reach that target for, yeah?

So for example, I think, you know, we actually, right now, give example, maybe capacity, we actually, you know, we just start in 2020, right? 2020. we actually have a capacity target to reach about 60 system per year. So this is incremental capacity we are undergoing to increase.

Maybe last one. Any update on the leading foundry? I believe you said they do have system already. Any expectation? uh, repeat orders and the timing of it? Okay.

So, uh, so our system actually is a London, uh, you know, uh, high volume production and also multiple system and also a new customer qualification. Uh, this year, uh, our, uh, TCB, uh, TCB only, we expect, uh, about $70 million. Next year, we actually expect probably 100 or above 100. So the difference of 26 and 25, part of that actually is growth of foundry, right? But as we qualify more customer and more devices, I think we will have additional upside on top of that.

Thank you, Fu-san. 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 Craig Ellis with B. Riley Securities. Please proceed with your question.

Yeah, thank you for taking the question, and good evening, Susan and Lester. I wanted to start going back to some of the utilization increases you're seeing in China and Taiwan and just try to understand them in a little bit more detail. we've seen pretty visible signs that certain supply chains, PCs since February, March, have been tracking well above seasonal. Smartphones seem to be doing that early into Q. So the question is, if that is happening and it seems like it's happening on build-aheads given tariff impacts, is there potential that that related demand in the second half of the fiscal fourth quarter or in the fiscal first quarter would be below seasonal because we've already had the utilization benefit early in the year as companies try to best operationalize to mitigate tariff impacts.

Hi Craig, it's Lester. No, we don't think so. I mean, utilization rate, you're right, as Susan said, is quite high in China and Taiwan and also in general semi. But what I think, as we indicated on the call, is in a normal cycle at these utilization rates, people should start doing capacity buys. But we're not really seeing that. And I think the reason for that is, again, there's a lot of cautiousness among our customers They want to see how this tariff thing kind of plays out. So we don't think that the utilization rate is going to start falling. We think it's already remaining at this level. And I think without the tariff uncertainty, we believe that China, Taiwan, North America, and Europe, I think the revenues would be much higher in Q3. And that's why originally we believe that the second half of the year historically has always been in the first half. I think this is a... you know, really been affected by the global trade dynamics as well as the tariffs. I think as we get more clarity on the tariffs, I think then people will start making purchases. I think right now people are doing it just if it's critical necessity. So I think also, as Susan said in her early reply, people are running it, you know, at a much higher utilization than they normally would. So we don't think actually it will fall off in Q4 and Q1.

That's really helpful, Collar Lester. Thank you. And then the second question is more longer term. So interesting ambition to move into the DRAM HBM market and LPDDR market in fiscal 26. The question is, as we think about the memory business now, which is very man-centric, how material could DRAM be in fiscal 26 and 27? relative to the business that you currently have? And how broad would you expect your exposure to be across the memory supplier base?

So I think on NAND, we have very high market shares. HBM, we actually put a lot of effort. In the meantime, there's also many, many competitors over there. uh so we will see you know how where we will do but i think uh you know uh we work closely actually uh with one uh but also you know uh also with others uh but one actually has a base of focus so in terms of uh during staking die uh we actually uh see uh this ability wire uh is going to be very important for the industry in both logic and uh memory uh the first customer uh we see is going to go to production uh this for a stack theorem is going to be in the first half of 2026 right so uh uh and not only almost every memory customer is working with us and including idm So, next year will be a transition year, and we probably can give you more update, you know, about all the, maybe, years ago, the production for the first half, and, you know, we will see, you know, the order. Maybe our fiscal 2026, maybe Q1 or Q2. So, we believe... the vertical wire will take off and there will be many, you know, many customers is going to work on this for the first product. First product is going to be DDR. It's going to have a capability to reduce a phone factor about 30%, right? And this is going to be on a mobile. But this is only a first application. We believe vertical wire is going to find a home for many other applications in the future.

That's a significant form factor reduction, Piusen, and thanks for all the color, you too, Lester.

Thanks.

Our next question comes from Dave Dooley with Steelhead Securities. Please proceed with your question.

Yes. Thanks for taking my question. Just a couple of clarifications. You talked about the utilization rates in Taiwan and China being elevated. Could you just give us what those percentages are at this point? And then also a bit of a housekeeping question. What is your IC unit volume assumption for calendar 2025 and 2026, if you have them?

So hi, Dave. Utilization, just Lester. Utilization in China is over 80%. In fact, it's almost into the mid 80s. In Taiwan, it's just touching 80% or so. And semi-revenue growth, we still expect about 10%, a little greater than 10%.

In calendar 25? Yes. Okay. As far as the HBM opportunity goes, I think you've made it clear you're working with one specific customer here. Is it fair to assume that HBM4 or HBM4E is the cut-in point, or usually it's with a new product? Maybe just explain to us which new product you think you'll get cut in at.

You know, right now, high volume is a 3E, so we expect it will be a future generation. Yeah, more specific, I think, from HBM4.

So HBM4 would be the target point to try to incorporate yourself into the market, so to speak.

Yeah, that's correct.

Okay. And final question from me is you've talked about, I guess, demand hesitation driven by trade policies and tariffs. But could you just talk about any impacts that you might have? I assume that tariffs, that you can ship from Asian facilities into China, so there won't be a major tariff impact from doing that. And then maybe just talk about if there are any higher costs from input costs into your products from tariffs. Thanks.

Yeah, so Dave, you know we manufacture our capital equipment here in Singapore. So shipping it into China will not trigger any tariffs because the tariff right now from China is aimed towards the United States on a reciprocal basis, right? So we don't think there's any direct impact for us. As we indicated, the impact is more on an indirect basis as our customers and their customers are right now a little bit uncertain about how all this is going to play out. So therefore, they're much more conservative in their supply chain. So that's, I think, what we've been talking about earlier. As far as cost is concerned, I think there will be, again, there may not be a direct cost, but there's always going to be indirect costs. Tariffs are going to cost everybody money, right? So I think it's across the board.

Okay. And one final clarification is you talked about the customer hesitation in Southeast Asia. And I guess you're kind of, you know, suggesting that that's an industrial automotive in-market driven industry. And then I think you even mentioned it was European customers. Is that the really way to think about it is European auto and industrial customers are the main customers or the food chain that is in hesitation, so to speak?

Well, Dave, I don't think FoodSense is just these people who are in hesitation, right? I think all our customers are in hesitation, including those in Taiwan and China, which is why at that high utilization rate, they're not making the orders that they normally would make. I think what Fuso is talking about Southeast Asia in particular is we see Southeast Asia actually drop the most sequentially from Q2 to Q3. And part of that is because we have, you know, we have a large auto industrial industry client base in Southeast Asia, and most of them are, you're right, are IDMs from Europe. And they are very – so they are particularly, I guess, affected by concerns about the tariff. So we didn't say it's only them that are concerned about the tariff. I think it goes across the board, is that they particularly have been affected in Q3 when you compare it to Q2.

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

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