Q4 2020 Kulicke and Soffa Industries Inc Earnings Call
Greetings and welcome to Kulicke and Soffa third quarter results conference call. At this time all participants are in listen only mode for a brief question and answer session will follow the formal presentation.
And he wants it require operator assistance from the conference. Please press Star zero on your telephone keypad and.
As a reminder, this conference is being recorded its my pleasure to introduce your host jog, Indeed, senior director of Investor Relations for Kulicke, and Soffa pick and <unk> you may begin.
[music].
Thank you welcome.
Welcome everyone to Kulicke and Soffa fourth quarter fiscal 2020 conference call.
Joining us on the call today are for use and Chen President and Chief Executive Officer, and Mr. Wong Chief Financial Officer for.
For those of you who have not received a copy of todays results the release as well as the supplemental earnings presentation are both available from the Investor Relations section of our website at Investor Day, and that's Dot com.
This new supplemental earnings presentation provides additional details regarding and market trends and our outlook.
In addition to historical statements todays 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 995.
Our actual results and financial condition may differ materially from what is indicated in those forward looking statements.
For a complete discussion and other risks associated with Kulicke and soffa that could affect our future results and financial condition. Please refer to our recent assets you filings specifically the 10-K for the year ended September 22019, the 10-Q for the period ending March 28, 2020, the 10-Q for the period ending June 27.
In 2020, and the 8-K filed yesterday.
With that said I would now like to turn the call over to whose and Chen for the business overview. Please go ahead Susan.
Thank you Joe.
We are pleased to report lot, despite global cold and I didn't really get charged injuries.
Oh operations pest occupy them and and the supply chain remain healthy and there was true that drink with it and.
Oh focus on employee welfare.
Collaboration and I step he has a low all global force to operate efficiently. So we'll just unique Bureau.
We approach all the regions flexibility and dedication of our employees.
We're also pleased with our pets off the bottom and.
And you put up traction and the like employee and state of our core business.
Oh go about the minimum volume continues to make significant and the meaningful progress on several fronts.
Your question Old don't come and island was a significant technology transitions.
Impacting the semiconductor assembly market.
And what do you market and the other display market.
What do you know cost and he called the <unk> somebody space memory logic, and the image sensor because yes.
And more complex and towards unions integration, which is increased interest and adoption for higher density package and options.
Okay, and I guess your free chip and the similar completion.
Well the Middle chart, and we saw tooth I mentioned and altering our wehrly for that and the Newpage and approach for <unk> and I'll, let you pass through deeper both <unk> and the performance.
Just wanted to bundle channel it is essentially extending modality and all that and assembly, which many of the old coal I bought and businesses as well as our dedicated <unk> advanced packaging solution.
Oh, and what's our chicken sold was yet and that took and logic <unk> for.
Emergent to the industry de multi chip assembled it's gonna next year.
Yeah, we see heterogeneous integrations for compression and logic system, and then <unk> mobile application process and the images and so.
From a need for all kinds of losses and the Apama did you get your advanced packaging system.
In parallel we all share in general, it's just an index jumped because yes.
Hi, volume cost sensitive devices, which continue to benefit our core wire bonder business.
We are actively engaged and the weird petition to support ongoing transition and anticipate adoption to silver and overcome yes.
And this is a major trends such as autonomous.
Okay, and hybrid and the 40 electric vehicle, increasing semiconductor demand for the broad automotive market.
Oh multiple products and a broad base of automotive customers for <unk> insight to use provision of transition.
And we anticipate demand for all high reliability and the pull from this focus on what your system to grow low was that the men for probably in hybrid and the 40 electric vehicles.
Oh initial success and automotive post <unk> and the distribution. So it was young and it's been many future EBITDA wheeze edict Rico, representing only a tiny fraction opt and there is a global production.
We have recently experienced increased demand for poles, and <unk> supporting electrical vehicle as well as charging station infrastructures.
Hello, traditional automotive demand has been below our long term average we expect a gradual recovery to continue and the reason that we are publishing to support is a broader technology transition.
Finally, we didn't just great. We continue to ramp production of all piece for luck system, which is a critical solution to enable new flow of lighting.
Your transmission, yes lots for evolution luck and EBIT performance and the <unk> for the high volume and display market.
But the most it'll be de <unk> unit growth for caused a significant.
Media and the Michael and OE D and Neil you only production is expected to approach 500, you didn't unit, Robbie Oh quota and U.S. and you called it the production Mike and the 2022.
And the war continue building a great <unk> for several years. This would represent a significant cap that you couldn't opportunity for soltan mixing and the final plus and then.
We are price was a performance market acceptance and a low red be dependent and a piece for loves and are committed to developing additional technology solutions that support the EPS abroad for the bus it'll be transition.
It's a skew towards low income trend supporting advanced packaging.
Automotive and the display we.
We also and this is a more fundamental recovery in our coal business is driven by and improving semiconductor unit growth rate.
And so do you mind to send me, though that you need production do you kind of study in early fiscal year and uniting.
Which dramatically reduced the industries need for incremental equipment capacity.
Yes, extending the crime and production is she's study called the uncommon and that seems to be behind us.
This will always September result, near term outlook and the recent customer feedback we continue to do and just <unk> and ongoing units three and be called <unk>, which go 2021, and the expense you any girls you school and the bus and I'd to return to a more normal growth rate over the coming years.
Okay and extend the pure over low capacity addition.
And it goes will be called <unk>, it's been being driven by Fiveg low from home consumer products and the smartphone recovery.
Yes, and market dynamics, and Oh, and the bus and when you're ramping interest spread it to ship all she said that didn't and patents through fiscal year content and you want.
His study called and demand for all for stronger you and Needless to say countries will have a low we are anticipating team and to you for <unk>, where did you have to be school and anyway.
What do you mean is called and these strong brought and nickel environment. The men and then Nick.
Total she doesn't the uncertain environment and the old and limited visibility, we are anticipating and revenue will be and the physical your 2021 to increase approximately 20% to 25% over fiscal year 2020.
This estimate for sure and you will certainly come to the unit girls.
School or the buns and <unk>, we'll do you tend to historic average Oh, six to seven plus and doing it the fiscal year 2021.
And going back to the September quarter performance.
I thought you could they increased by 21% and EPS increased by 9% sequentially and kept the equipment.
<unk> represented 76% of overall revenue and the sequential growth was largely due to a steep recovery within the general semiconductor market.
You know something called the <unk>, our largest and bucket and the most all set this customer for fall into this category.
Hi cause we have consistently to discuss how the install base of Wirebonders has been linear for UGI alleging that.
And at this point incremental spending under the old put is triggered and the need for broader capacity additions in a generalist and you can do the space.
Well she's trends in Fiveg smartphone game in I O G and and increasing demand for multi die why Obama did that.
Interest.
What I would you know something on the and luck and shows the steepest sequential change.
We also experienced sequential improvement, we deemed to advance and with the market.
It was the overall was sequentially down due to a sizable step for general lighting older units and whatnot.
Hello, and the buttons and we do see us for at least for your margin increased sequentially.
We expect healthy demand for both general lighting.
And the other ones and we do have because you over the coming quarters.
The auto and industrial end market as well as all members and margin improved sequentially low remained well below their long term average.
We didnt auto and industrial we are seeing a gradual recovery you know traditional went on with your market.
You know memory, we are beginning to see a few customer eating overall capacity and that we expect decent markets will recover as generalists and make onto the force already covers.
The advanced packaging and Lucky also grew sequentially and they'll be present, all looked at the cash <unk> advanced packaging system, that's simple and 'cause your free chip start bumping metrics.
And that's really for system in package and the simple completion and the income our kids and that's a PAMA and edgy premium systems why are these <unk> advanced packaging and market.
We present, Justin I put that capital equipment sales.
It is important to note that multi day, the bundled packages and the advanced it'll be assemblies are becoming material components, Ohio General semiconductor memory, and the non it'll be and markets.
Productivity, we estimate overall, so depots and of all kept that you're gonna sales during the September quarter was support advanced packages.
Looking into the December quarter, we anticipate general semiconductor and the L.D.
To be the primary driver ultra and near term demand we.
And despite strong demand Sue the December quarters, which again suggests physical contact only one wheel and not follow historical seasonal pattern.
Operationally, we are focused on rent and production is able to satisfy the strong team and they bought and distributor for December.
Over the past few years, the brother industries, and the medical and Berman wasn't child engine.
Although the strength of our balance sheet and the market for dish is a low cost <unk> as you all market expense just strategy.
<unk>, new low income growth vector and to return capital to investors.
I'm confident in the company's direction and that you expect new opportunities and automotive displays and the advanced packaging and combined with a broader general semiconductor recovery will fundamentally enhance our business model over the coming years.
I would now like to kinda cool over to let alone who will cover this quarters and signage overview in greater detail and stuff.
Thank you for who said my remarks today will refer to GAAP results unless noted while fiscal 2020, clearly came with challenges we were able to generate full year revenue of $623.2 million, representing a 15% year over year increase.
Income from operations during fiscal 2020 came in at $58.5 million and represented a 171% sequential increase highlighting our business model operating leverage and potential as we execute on our strategic goals for.
For the September quarter, net revenue was $177.7 million up 18.1% sequentially gross margins came in at 50% and generated net income of 15.8 million and 25 cents of EPS on a non-GAAP basis, we generated net income of $18 million or 29 cents.
Per diluted share growth.
Gross margin came and much better than expectations.
This is partially due to favorable product mix and also a favorable end of your adjustment related to our warranty accrual well.
Dealt this favorable adjustment gross margins, what and approximately 47%.
However, we anticipate and gross margins to be around 45% over the coming quarters.
Operating expenses for the quarter came in on the higher and of our long term target range due to end of your incentive compensation accruals associated with the stronger September financial performance.
As to send match and our global development and operational team continued to aggressively work to what several long term initiatives. While we also ramped near term production capacity.
We also have several S.G. and able to later products that have been delayed to the softer demand environment over the past few years.
We anticipate our GAAP operating expense model to remain consistent at 53 million, a fixed expenses plus 5% to 7% of variable expenses tied to revenue.
However, we are anticipating the variable component to approach the higher side over the coming quarters.
Tax expense for the quarter came in at $8 million due to increased profitability and jurisdictional adjustment.
Total effective tax rate for the year came in just about our long term tax target of 18 per se.
Turning to the balance sheet, we ended the September quarter, well, the total net cash and investment position of $530.1 million, which was up sequentially by $14.3 million and represented $8.49 per diluted share.
On a book value per share basis, we closed the September quarter was $12.30, representing a slight sequential improvement.
We generated $25.8 million, a free cash flow and the September quarter, driven by higher operating income and strong working capital performance.
From a day standpoint, we improved working capital efficiently during the September quarter day.
Sales of accounts receivable was down from 117 to 101 day.
Days of inventory improved from 127 to 113 day.
And days of accounts payable increased from 55 to 50 a day.
For the December quarter, we are guiding revenue to be approximately 240 million plus or minus $10 million.
We're guiding gross margins to be approximately 45% plus or minus 50 basis points due largely to product mix and higher freight charges. This margin forecast also support a near term market share strategy for recently introduced product in a wedge bonding business.
GAAP operating expenses is expected to be approximately 70 million plus or minus 2% and non-GAAP EPS to be 53 cents, plus and minus 10 per se.
This guidance suggests operating income increased by over 60% sequentially and highlights the business models to leverage. This also highlights our potential to create meaningful long term shareholder value as we support the significant transition within the semiconductor automotive and display market.
This concludes our prepared comments operator, please open the call for questions.
Thank you well now be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question Q EBIT Press Star two if youd like true for question from the Q for participants using speaker equipment, maybe net pick up your handset.
For pressing star one one moment, please what we poll for questions.
Our first question today is coming from Craig Ellis from B. Riley. Your line is now live.
Hi, Thanks for taking the question and congratulations on the strong recovery and the business guys and the first question I wanted to follow up on with some of the elements related to guidance. I believe you are but one of the things you mentioned Buster what's that.
That opex will be and the high side of a typical model. So can you just help us understand how long that will play out and give us some further insight and that this specific issue.
And so is that are keeping opex towards the high end up for modest range.
[laughter] share Craig and I mean, as you as we've indicated for fall over the last couple of quarters, we've had a lower level spending over the past six quarters due to a lower travel initially and cost reduction reasons. During this downturn and 19 and obviously because of Cove. It now you also have variable expenses.
And also as I said during 2019, we had a very low.
<unk> corporate wide reduction and that's critical and discretionary related expense, it's basically two and pushed out certain projects that was not critical at the time somebody project and now being more critical and we're also actually increasing our technology engagement with new customers. So I think for the rest of EPS by 21, and again I don't guide beyond the quarter, but.
I would say that it would probably be on the high side of the.
Seven for is that 5% to 7% variable.
That's helpful and then I'll turn to a couple of profit questions if I could.
First and use and can you just give us a better sense of what you're seeing for pixelworks upon that and catalyst as we go through fiscal 2000, and why and it sounds like and market demand is I guess coming back and fairly broadly and it seems like you've got good traction with those products, but.
Any any color and an update on picks for losses.
Fiscal 21 prospect specifically would be helpful.
Sure.
For the piece for US you know, we previously even though our call we will target to achieve all of $14 million they've been true for Whitewave. So I'm very happy to be pulled up we let you go.
For the day for 21 actually first quarter April 21, and we see a sequential growth compared to Q4 overall, Inc. White 20.
And the weak guidance, maybe a long day for next couple of quarters, it's like from the ones and so once you want the Q4.
Okay and love the from the between $15 million to $20 million. So we actually would expect involve a concept and then we will let you about $60 million to $80 million for piece for us.
For for 21.
Actually about 22, we have a goal to be 100 million and our business and does somewhere you know all day long 21, 22, we even tend to either do something you put up you know talk to the margin.
And the young 22, we didnt get the gist business should grow faster.
And ER and used to be sure above 100 million dollar and will grow all possibly so I'll go it alone 20 for 20.
And you fly.
40, I think 20% all kinex and revenue total revenue up probably will be and spread related so that's a piece for us.
Yeah, and the bus tickets and particularly our Tcten I still ahead towards it and utilize it neupogen and usability and open in my script and we believe we make the video detection and we do from a Oh, we want.
Intensive level for you if I win.
Yeah, and 21 and for the guidance because you you'd expect to be much bigger and in 22.
And.
So then all right yes.
Oh no.
Yes, one more question, then I'll hop back and MCU. So I appreciate the color on fiscal 20 brands revenue potential. So it looks like if I'm doing the math right and that the company expects around 760 million and revenue and that assumes a 6% to 7% semi unit growth.
I think in the past you noted that it's possible the semi growth would be as high as 10 per cent and and Ah.
21, and 22, following two years or so below seasonal growth. So if we see a semi unit growth more and the double digit range vs, 6% to 7% how would we think about for models for potential for upside versus the 20% to 25% for 760 million ish.
And revenue.
So maybe.
Okay and so it is when you feel good about all the cool and Houston is recovery and we have for your uses of system double this woman.
What we think is a for the 28 and 25% and the you mentioned you know and it's close to maybe sit and 61 region to babysit for Nike translates so.
So at this moment, that's all price you know and Oh, we plan for all.
Revenue more weighted let's hope.
And that we will have a bit of August trends all six for hub. So that's all up revenue, but it looks like there will be so we probably thought.
For instance, sensible and we'll give you more update you next quarter.
That's great. Thanks, so much guidance and I'll hop back in the queue.
Thank you for next question today is coming from Tom Diffely from D.A. Davidson. Your line is now live.
Oh, Yeah, yeah. Thank you maybe just a follow up on the last line of questioning so what is driving the unusual seasonality or lack of seasonality this year versus previous years or is it truly just a recovery and the general semiconductor ahead of expectations.
Okay. So.
Total, let me give you a little bit of color.
And we'll have a stretch and we are seeing right.
So currently we are she and strengths in the fiveg or consumer products.
I don't view smartphones and the increase in its IP.
Also mcgee by wire bonded tickets for <unk>.
And we also see ongoing strength in both traditional and <unk> and the device and it would be you know of what these credit the product because he and the deal [noise].
So I can summarize and healthy people reason behind us and.
So number one.
Probably and I think.
Good day.
I mentioned, a few of them all costs and the and again that's right. So when you got election day over a certain number of treating burden, but other watch ups you actually.
Income business so.
So, yes, and because of on the investment and okay I'll pull back from customers.
And I'm a true.
I think from decently calibrated.
Total related shoot consumer path and catch.
Yes, a walk from home and also stay at home, that's driving more need in PC gaming and the on the home occasion, but.
So numbers for the reason I think is that she can print losses.
Actually we ship by G units and then how did you actually is a key and market.
That's why I love, the increasing demand for its IP and the very complex multi multi die wire bonded module and the Pik interest.
So the increasing complexity in this day, but she is actually a slight and incremental capacity.
But you do from that for all of the bunch of wire bonding.
So that's what we see is simple names I think why above the actual also means for them almost like investment GAAP.
So the loss of reason and like I mentioned already and just upcycle. We also see on constraints for botox with each and every day and the ones and we didn't put up and taking the views.
So these are for the reason behind the credentials and yes you okay.
Okay No I appreciate the color that looks pretty impressive.
Okay, and then just follow up on the Pixelworks too when we look at the growth for 40 million. This year, the 80 million or so next year.
And does that require and expansion to multiple customers or does it require a new tool from you what are the the individual growth drivers or is it just the market itself is going to be a little stronger.
Okay, I feel like and so.
Are you.
Actually both but actually more probably it's all you and engine and the next a couple years also or one you also we intend to introduce a multiple products for brought them all at the bands and would be a portfolio and though we do expect GAAP ongoing development activity.
And if we put in will sustain our competitive advantage as we abroad and all but it'll be portfolio. So I mentioned, one probably moving and 21 about 80 million.
And beyond that I think that we will need multiple pulled up for jobs and business and that we are preparing for that right. Okay. And then finally, you know maybe just a quick overview.
Overview, what are your expectations are for the public catalyst and 21 as well. Thank you.
Okay. So 21, you know I think GAAP, we still working off you decide when a low we already had though for you, but we actually.
And we'll try to complete all together and we feel comfortable and no 21 or two we know for you more design win I forgot the 22 will be a more shipping and along that.
So yes.
And probably do I mentioned, a little piece for loss.
And does the spread business.
And 100 million and dollar that's our goal we also expect maybe and Latam.
Oh, well educated educated and the bonds packaging.
We talk about all the free trip.
GGB and also if you pay me all these together can also be true Bohemia and all that it is really all critical.
Great. Okay. Thank you.
Thank you for next question is coming from Krish Sankar from Cowen and company. Your line is and our lives.
Hi, Thanks for taking my question and congrats on the very impressive guidance I had a couple of them first one comes into play. So did you can comment on.
It's like 21 revenue growing 20 to 20 per person.
And more for its tough because could you repeat it.
It looks like the December quarter midpoint up to 40 million and it's probably going to be the highest revenue quarter and flight 21, and just wanted to double check on that math here and that's true and secondly is that mainly because the picks and looks and some really front loaded and with new products for like many other.
EBIT coming out in Q1 of next year and cut into Q1, and therefore, it like slow down after that.
And Chris Let me answer that I don't think we see that the December quarter will be the highest quarter from let's just go 20 Watt and we didn't play that seasonality has switched and front and Oh sorry for that.
And part of the year and as Susan said, you know Oh for now. That's this is what we see we see 20% to 25%, but and sponsor to an earlier question I mean, as we go head for the into our fiscal year, we will get better visibility and I can happen and at that time, we revised guidance, if we believe that necessary and I again for you.
Second question is you know.
I'll be up and ramp is not because exelixis front load and I think the ramp visits and somebody indicate it's across the board and.
And advanced display as well and you know traditional LCD and selling general Sammy driven by again, five G Oh, and the aisle t. and and with me, a little bit of recovery and automotive and and memory as well.
Got it sounds like <unk> <unk> and <unk>.
Thank you for your volume remember.
All 12 actually is for Q1 overall liking right. So you said almost two years and shifts and you know all we reach a channel.
Every quarter.
From that point, you don't lead Guy up for you got from truck. So I'm curious more than we even transistors and 92 GAAP up in the next quarter Q1 for <unk>.
So we didn't see you know again say, it's going to be I, just for long, but the for them for you.
And it's all.
And this war will not be able for the for many many years or so and that's what we've got plenty and you know and because of a good this and coming back and so strong we just cannot play and you know equal the clean up that's what we had low Cleveland business and it's a pending for 25% goals.
That's true and can be stronger than that and we ordered the a bench and.
Next quarter, we will pick the book you will have a bid for the older for.
For second have older 21, and you probably will pull out there.
Got it got it and that's helpful and they I do remember you guys definitely called the bottom and beginning of last year.
A couple of other questions one tick and one that let's do you know it does look like in the December quarter, there's going to be more many pixelworks shipments relative to the September quarter, but and just trying to get some reasons why the margins much to be you know and they got on gross margin and 45 person and just trying to figure out.
Good drop through happening because my understanding was that big so that's a super high margin for you and that should be pretty nice drop through all the way to the bottom line.
Yeah, there's drop through from that as you know I mean Ah yes.
Yeah, the drop through its and $175 million, we get very good operation flow through and if you look at what we are guiding and in terms of Oh I.
Non-GAAP EPS I mean, it's going by 60% and Meanwhile, net revenue was only go up by 35%. So that does show that the operating leverage is happening and and as far as well I think most margin went down I think as I indicated it as for us its product mix. So there's more traditional.
Traditional LCD ball Bonders.
As losses ball Bonders and general and also capital equipment is a larger piece and.
The quarter, rather than 80, ethanol Ats business and high margin plus I get the call for and unique items like a be a freight charges because of the great demand by customers. We are doing more things like air freight and the freight and that increases I'll call as well and we are introducing a new product and a wedge bonder business unit and.
And as part of the market penetration strategy.
The margin are down a little bit.
Yeah. So this is a one time will not be low for you.
Got it got it that's very helpful and this and the final question.
Oh for foods.
And you know.
One the mold, many leading products and the marketplace should.
It should be assumed picks and looks and how your typical consumer seasonality the embedded and it would do you thing because it's still in a growth mode.
And they should not think a whole lot about seasonality and a quarterly basis.
Well that's true.
A question in a day or the piece for us and one is just an idea that's true.
What I just mentioned too low.
It's a question for you so $40 million if you for last year, we know they're happy for the whole achievable and low for the Polyone.
Actually she quite well and you know our ship and and.
All of this and the plan.
And before though you said between now and we think we've exhausted and you know what do you view and the high side. So you don't want high 70 80 million dollar business. So we didn't see it's just an idea for a diesel losses.
The seven point I think on this is that initial and pulled out and their customer base and is not many so it oh. So then you know I'll point, you will see some more spotty right or you know a business quarter by quarter, and hopefully by introducing and multiple about maybe a year from.
No and up interest and we'll see you know more repeatable.
And people and the multiple bids and there's no awful.
Got it. Thank you very much was and thanks for lesser.
Hi crush.
Our next question today is coming from David Duley from Steelhead Securities. Your line is now live.
Yeah. Thanks for taking my question I guess the first question for habit is about your core wire bonder business, the larger OSAT and Taiwan was talking about a huge difference between supply and demand somewhere between 30 and 40%.
Not eating more capacity and also talk about how for wire Bonders now for I guess I want to say are slowing down a bit because they're having to do more stacking and having to connect more wires per device I'm, just wondering what sort of intensity increases you're seeing as you move.
And to a calendar 2021 on on the Wirebonder front art.
You know what are these stock packages and and more wires like 15, or 20% more wirebonder intensive than previous packages or or could you comment on that and then also just comment on what the utilization rates are pure equipment.
Okay. So I can walk and so first part and the mix for our.
This study to explore all the utilities and basically you instead of simple.
So and so did I electricity.
Let's just say it is.
For many people come and above all the ball Bonder Sunset and.
Yes, and also for the last year and I think we reported isn't wrong and we will continue to be low.
Good day evolve the ball Bonder is a very important and pod overall picky and solution.
And so overall I think that Youre yearly production, you know whats in commodity prices.
Before the package and it's about one trillion.
Our GAAP devices looking for to.
And you pay for it.
Yeah.
70 per se, but.
Actually use oh for bundle.
And the what are we comfortable will fight and Walt.
And though we yes, no more educated and or more complex and credit for number one day.
And the idea is not only.
Smartphone and.
And the only a station and there is a whole interest I'll, just and the bleeding edge and lost a little a few batches and Oh, they didn't need and I have a bit income predicts wirebonder process to put on margin back to get up and it's IP and also a monkey by module by module.
And Doug you talked about this a new one because it would be for increasing capacity and these are complex you die and that will drive you know overwhelmed to come to you and simple.
So I don't want to answer your question about but let me give you a call them.
So we'd be involved.
You know part of the overall for the buttons ball bonder, he's a very pretty speech, but for the analogy you couldn't do us three D packaging for its onboard and sticking and so actually yes I am.
And the company has a different definition of advanced packaging.
So I think all kit as well.
But the but maybe you should be fine its volume.
Yes, we mentioned Oh all of that he could do advanced packaging.
And then last TV Apama start bumping is AGP net.
So this part actually present in our September quarter, my percentage over total capital equipment sales.
Hi.
Yeah, I do believe you know advanced packaging, because as a specialty caught and because the basic homepage and looping capability you can come and net you know ought to be and street back to die and we didn't the day I think this could that maybe you know we load up.
These from Bob you bought multi by I think and pigs, Jean will not be possible and so we have a lot to be industries. The marquee day and Eugene I Shouldnt go by you should know and the ones bundle that should be considered as as advanced packaging. So.
So for those would be as the IP margin I'd take each it's about it per se.
Three D stick by memory is about 5% of our September capital equipment sales for September.
Okay, and then I know I think all in all these shows for include the banks, it'll give us and Buddy.
And we'll all she has done I think you know, we'll not be able to a true about video really high you know kind of provision so it'll be simply because of all our Kansas and Oklahoma oil a September quarter sales. So all these agents and get it we'd be the old products. So do you coupons and overall.
From about Houston support for the best packaging.
So I don't know if I answer your question.
We I guess my my question was more about just wire bonder intensity. It seems one of your large customers and Taiwan was talking about on their call last call that for wire bonders are literally slowing down because they're having a kind and connect more leads per device and having to do more loop [laughter]. So you need more and why.
Wirebonders took per device or so.
So [noise].
For the intensity of the wire bonding is increasing and so I'm just wondering if you're seeing from absent.
Absent for that metric.
[laughter] increasing by 25%.
20% to 10 per month.
Well I can only to Europe, you know, we only she and the beginning in oil price huge demand and at this moment.
And but we believe because we'll fight you bring in video pretty complex you know multi day packaging that'd be quite low bonder and Oh right now we have a need to have a capacity constrained and you know, we'll give you more precise number and maybe and next couple.
Oh, well give you.
The demand for a percentage increase cortical bone so Dave let me ask and so the utilization question right. So for the September quarter utilization was above 80%, Taiwan and taught out.
Significantly above 80% or you know China is almost at full capacity over 90%.
Asia also has improved significantly and they're now up to around 75% or so obviously Europe and North America has improved but that actually lagging the and the market.
But yes, I think that you know since simple answer for you.
The upside we for you're not going to use and so simple and Oh the ball bonder be also be public or not so along with a new product.
Deduction, we talk about the piece syrups and a future will be a new product portfolio and just right and.
That's because you guys and we mentioned it and the bone, though I think that he's also published in the deep you know and Vicki agenda for me, so cool and upcycle.
Thank you.
Thank you as a reminder, its star one to be placed and the question queue. Our next question is coming from Christian Schwab from Craig Hallum Capital Group. Your line is now live.
Great. Thank you congrats on.
The net.
So.
[laughter] previous question.
And wouldn't.
Good day.
[laughter].
Yes.
And she.
And as well as we continue.
And your.
And Jim you'd like.
Sure.
From automobiles.
In addition.
And yet.
Increased capital needs.
Some of these chips.
Could you give us a day.
Yeah.
Semiconductor unit growth.
And for setting here.
The next few years.
And you expect.
Oh no.
And.
And you do.
Overtime what percentage.
[noise] well a.
Krish and I'm, sorry, I think you.
Your boys do not come but it cleared for us.
But I didn't hear your question also bought a union culturally aligned.
And at this moment and I think.
Industry actually and head, but given for GAAP.
And no he's only been more positive.
For all of you say frame I think I'll weep Brent.
On day, one and 22 and just wanted to be a long six per se.
And ER, even flow monkeys, and dynamic trench, yeah from the update you.
Maybe not one or two for this.
And at this moment and I think that's what we opinion.
We don't see we don't do it.
Okay, very good and all right and next two years and so we have seen of all six <unk> and that's about all for fan base can be pasta.
But we haven't do a have you guys it shouldn't change.
Okay, great no other questions. Thank you.
Thank you. Our next question today is coming from Craig Ellis from B. Riley Your line is and our lives.
Yeah. Thanks for taking the follow up questions I'll just start with one that goes back to the utilization color that you provided lester thanks for the granularity there would it be fair to say that the strength and the business that you are seeing in the fiscal first quarter is really led by China, and southeast Asia and <unk> and.
And that so given the utilization levels and Europe and North America.
Would it be fair to think that as we look ahead to fiscal two Q, but more of the incremental strength would be coming from those geographies or is in fact, the order day.
Dynamic different then what we see if we just did a one to one correlation with utilization levels.
I would say Craig.
For Q1, actually is China, and Taiwan onboard and Southeast Asia Southeast Asia utilization is as that improving but not for the levels, where Taiwan and China is I think going forward.
I think that continued growth will also come from China, Taiwan, Taiwan is lagging a little bit behind.
Oh, the the China interest the utilization, but they already very very high. So we can see continued strength from.
Hi, Juan and and you can and southeast Asia over the next two quarters or so and then as North America and Europe are they will catch up hopefully you know assuming they felt the cold and issue. So I would say, it's probably in that sequence, but we see continued strength and the next two three quarters kind of net Taiwan and southeast Asia.
Great and then the next one is really just a housekeeping question on the color you provided around fiscal once you when Q gross margin. So clearly there's increased shipping costs because of order intensity with customers and then you talked about the new wedge product impacting gross margin can you quantify what the combined impact.
And those two are for us.
And I.
I would say probably.
Around and maybe 150 basis points or so.
Great and 100 and very helpful.
And and then.
Tax rate for the quarter and year or should that be 18%.
Yes, I think we're still for Kathy 18%.
Okay, and then lastly long term question Fusen. So so it's clear that you're gaining some visibility and two new product ramps on a multiyear basis very encouraging to see that and and we clearly have a rebound and the general semi business that as you've articulated.
At multiple times and slipped by numerous secular dynamics and plus some cyclical things like a saar recovery and.
And a smart phone recovery. The question is this you know as you look at how the business is unfolding on a multiyear basis are you starting to gain visibility.
And at the low end of that target model, which was 1.15 billion and and and $4 and earnings per share or where do you not yet have visibility to revenue. It's about level that should look out for 22 and and 23.
Okay. So Craig.
A quick look at is in my script and nation you.
The next day negative you any goals actually is very uncommon, but especially.
As the industry 19, and funding needs for the linear due to the income.
So even though some of the way let me answer the question because it's a.
If we if that's true, yes, probably 18, even stronger.
And they need to close one right and then you didn't notice.
And then Oh, we have no we haven't I didn't like the life for the and a we have a this year thats for niche attendees about six city also right. So if you and the diesel true to get us one bit of Sonia and total video and come and you're right. So that's for me love for and he is about seven.
And to me and our [noise].
So did I believe can be presented the video very solid you know it me too long wait for all core business.
But you know because of a one story Ya and video really two loans, yes and.
And I mentioned already and this is a very uncommon hope and we in this war I think wall you have a negative unit girls. So.
So what for the Taser I.
We feel like the 700 million dollar run base should be sustainable. It's a day as you know for that business.
So bite into yes.
In total and get into yours.
Tony probably true we've mentioned already seen GAAP display we already guided 21, maybe you will reach 60 80, right. So on the higher and AG is only the EBIT close to you know I just so it would be about 2020 2022 keys for it we just sit as 100 million dollar War I see.
We can feed it and can touch it I think you know we feel good about the goal.
Let's take it you actually we get it and not have to hear about US right. You know, we intend to level for you more significant design wins.
Anyone and that probably true I think oh, putting all that and they did you indicated interrupt indicated.
War indicated you know, what let's pick and will be and to me and though and I.
Yes, we can also brought another 58 Union and dollar can you and you always together I think at 1 billion barrels a day.
Looks like though.
These are all attributable you know from.
For all of you at this moment there so but if we got very lucky with a couldn't this and if you know before what you know and when will we almost BRL 250, meaning that our bone day I think you for the business School and Crazy.
She and go we probably will be also higher this $700 million, Oh, EBIT highly <unk> and Jimmy and Oh can be and maybe even higher there, but we really don't want too low.
And can lead to want to see you know all cobiz and overall, but we did this and should be sustainable and all above us and demand dollars.
So overall, we feel good the you know for me I think it would be covered and and we also be they're all portable net itself and that we are under construction.
And hopefully you had a buy plenty plenty true and are not putting on day one.
A company wasn't going to be luck.
Good day, and hopefully you know we have a good possibility that you every day.
That's very helpful. Thanks, everybody and good luck.
Thank you, we reach and our question and answer session I'd like to turn the floor back over to management for any further or closing comment.
Thanks, Kevin. Thank you all for the time today, well be presenting at Needham Sidoti D.A. Davidson conferences, and also the CEO summit over the coming months and.
As always please feel free to follow up directly with any additional questions have a great day, everyone. Kevin. This concludes our call. Thanks Bank and that does conclude today's teleconference and webcast. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.