Q4 2020 Camtek Ltd Earnings Call
Yeah.
Ladies and gentlemen, thank you for standing by and I would like to welcome all of US the Capex fourth quarter and full year 2020 results Zoom Webinar. My name is Kenny Green and part of the Investor Relations team of Cam Tech. This is the first time way of running our conference call at the live zoom webinar and I apologize in advance of any.
Unfortunately, the technical issues, we may face during the call. Our goal is to increase engagement with investors and analysts and we hope this new type of quarterly call is the step in the right direction. All participants other than the presenters are currently muted following a formal presentation I'll provide some instructions for participating in the live question and answer session.
Any time during the call you May also submit a question via the Q&A chat and we will endeavor to answer as many of those questions as possible.
I'd like to remind everyone that this conference call is being recorded and the recording will be available for download from <unk> website within a few hours after the call.
You should have all received by now the Companys press release, if not please view it on the company's website with me today on the call. We have Mr. Rafi, Amit <unk> CEO, Mr. Moshe Eisenberg, <unk>, CFO and Mr. Rami Lanka <unk> CFO.
Rafi will open by providing an overview of Capex results and and discuss recent market trends Marcia will then summarize the financial results of the quarter.
Following that Rafi Moshe and Rami will be available to take your questions.
Before we begin I would like to remind everyone that the first that certain information provided on this call are internal company estimates unless otherwise specified. This call may also contain forward looking statements. These statements are only predictions and may change as time passes.
Statements on this call are made as of today and the company undertakes no obligations to update any of that forward looking in any of the forward looking statements contained whether as a result of new information future events changes in expenses and expectations or otherwise invest.
Investors are reminded that these forward looking statements are subject to risks and uncertainties that may cause actual events or results to differ materially from those projected including as a result of the effects of general economic conditions. The effects of the COVID-19 crisis of global market and on the markets in which we operate including the risks of a continued disruption to our and our customers.
Providers business partners and contracts and contractors business as a result of the outbreak and effects of the COVID-19 pandemic.
Risk related to the concentration of the significant portion of Capex expected business in certain countries, particularly China from which we expect to generate significant portions of our income for the foreseeable future, but also of Taiwan and Korea, including the risks of deviations from our expectations regarding timing and size of orders from customers in these countries.
Changing industry and market trends reduced demand for our services and products the timing of development of new services and products and the adoption by the market increased competition in the industry and price reductions as well as due to other risks identified in the company's filings with the FCC. Please note that the safe Harbor statements.
In today's press release also covers the contents of this conference call.
Furthermore, during the call certain non-GAAP financial measures will be discussed these are used by management to make strategic decisions forecast future results and evaluate the Companys current performance. We believe the presentation of non-GAAP financial measures is useful to investors' understanding and assessment of the company's ongoing cooperation.
And prospects of the future of.
A full reconciliation of non-GAAP to GAAP financial measures are included in today's earnings release, I will now like to hand, the call over to Rafi, Amit <unk> CEO.
Rafi. Please go ahead.
Okay. Thank you Kenny.
Good morning, and thank you for joining our call today.
I will start with some highlights from the fourth quarter of few words on two of 'twenty and continue with reviewing our current business.
Total sales in the fourth quarter were $48 $6 million close to a 50% increase over Q4 19 and record quarterly revenue in.
In the fourth quarter, we continued the momentum of increasing sales to our existing customer as well.
Two new customers.
Gross margin was 48, 2% and operating margin was 18, 9%.
Marking an important improvement.
And profitability.
Paired with the first half of 2020.
For all year, we achieved record revenue of 156 million dollar of 16% growth over night.
Over 2019 and record operating profit of $26 8 million.
In the last two weeks, we have received multiple system order from several customers totaling about $25 million.
The press the backlog, we have on hand, together with sales and pipelines pointing towards strong sales forecast for the first half of 2021.
We are anticipating sales of over $110 million in the first half of 2021.
Implying approximately 65% growth over the first half of 2000 of 2020.
We also see continued momentum of orders into Q3, but it is too early to give accurate forecast.
For the first quarter of 2021, we expect an impressive sales level of between $54 million to $56 million.
The year of 2020 was an exceptional year for us just as it was for the all semiconductor industry.
In the first quarter, we had concern of bulk of our ability to install system due to the COVID-19.
The restrictions on shipping system to certain countries yet in the fourth quarter, we face a completely different situation where to adjust our.
Production capacity and feel true poor due to the demand for our systems, our flexible operational infrastructure and our global organizations the laws to successfully execute this growth.
And the requirement of our customers.
In the first quarter of 2021. This trend is continue and even accelerate it.
Our strategy is to maximize growth in all segments in which we operate.
The front end mid end and beckon, mainly post dicing.
We continue increasing the number of new customers.
Reiterating new market segments, and strengthening our presence in existing customers.
By providing the highest level of service and support we create a strong commitment between comtech and its customers.
Strategy of addressing a wide range of customers also include customers with entry level product the need the only basic configuration of our systems, resulting in a lower asp's in the short term.
Our experience show that in the future.
Sort of many of these customers will purchase systems.
With more complex configurations capable of detecting smaller defects to meet to meet the end customer requirements.
In the second half of 2020, we saw improved margin.
We can already see the strength continuing in the in order we have received for the year 2021.
The configuration of system order are more complex and the SP is higher than what we saw in 2020.
As a result, we expect continued improvement in the gross margin in the first half.
The drivers of our market segment.
What change from those I mentioned in the previous calls.
The main drivers of.
Our advanced packaging memory, Cmos image sensor and RF devices for five G smartphone.
Five G is pushing demand for high end smartphone sales.
Impaired to previous generation. Despite the chief porn include more silicone more advanced packaging of larger number of RF devices in each phone.
As a result, we are experiencing demand for five G related applications with.
We see adoption of new packaging technologies by our customers adoption of new technologies requires extensive use of inspection and metrology systems.
All of the drivers I mentioned serve the demand for end product such as mobile phone laptop server automotive medical and more.
Specifically for 2021 the main growth.
Is expected to be the advanced packaging, both in inspection as well as in metrology. The Cmos image sensor in 2020 accounts.
It accounted for about 30% of our business.
This is unusually high and was the result of healthy demand for our customers in 2021, we expect the CIA is segment to be more in line with previous year share of about 10% to 15% of our revenue.
In the Bureau of space, we see a lot of activity. However, we believe that it will be more at the end of the year or beginning of next year before we see meaningful business.
Okay.
The preview of previously announce we continued to gain momentum in the front end market.
Penetration process, specifically in the front end segment is after a very long and meticulous evaluation well.
We have penetrated several new customers in 2020, and we expect to continue with that in 2021 for 2021, we expect this segment to account for more than 10% of our business.
In 2020, we met an important milestone by receiving qualification for our system in order for our production lines for one of the worlds top integrated circuit.
Manufacturers, our systems have been implemented in the customer's development and production sites globally.
We continue our of development effort.
From several levels developing special features upon customer request to support ongoing sales.
Constantly improving the detection engines and continuing the development of new generations of systems and solutions based on key customer input and industry roadmap.
We plan to launch new product to the market this year.
We have managed to operate optimally under the COVID-19 circumstances, but we cannot fully predict the global amplification of the epidemic and its potential impact on our business.
Things tend to the 2021 is going to be a record year in sales and growth along with improved profitability.
During Q4 of last year, we have raised about $64 billion to support our growth strategy beyond or growing gross organic growth. We are continuing our efforts to find companies that are suitable for acquisition.
We are especially interested in companies with product served market like ours, and we'll be able to use our sales and support infrastructures.
Before I hand over to MS share for more details on our financial result, I would especially like to thank our employees for their dedicated work during these challenging times more share.
But again.
Hello.
Yes.
Okay.
Uh huh.
Okay.
Yeah.
How much of it.
Thank you Rafi, Amit we are solely from the technical glitch that we haven't.
Of note. Thank you Rafi, we had record results in the fourth quarter most of those of revenue, which also gain above our guidance.
As well as in terms of our gross and net profit driven.
In my financial summary ahead, I will provide the results of ILUVIEN basis the rig.
Conciliation, particularly the GAAP results and the non-GAAP results appear in the tables at the end of the press release issued earlier today.
For the fourth quarter revenues came in at $48 6 million to.
The 46% increase over the $33 two legal the world.
Recorded in the fourth quarter of 2019.
Full year revenue were a record $155 90 loans were up 16% year over year.
The results were driven by demand across all our geographies segments from application.
The geographic revenue split.
For the quarter was as follows Asia, 83% and the rest of the World 17 per day.
The distribution of sales for the full year was 89% Asia with new especially in Europe contributed 11 per carton.
Gross profit for the quarter was $23 4 million on the gross margin.
For the quarter was 48, 2% versus 48% from the fourth quarter of growth.
Gross profit for the year was $73 7 million of representing a gross margin of 47 three percentage.
This is compared with the gross margin of 48, 6% last year.
After relatively lower gross margin in the first half of 'twenty range in the second half of the year. We saw an improved margin, we expect over $110 million in the first half of 'twenty 'twenty one.
The combination of favorable order mix.
And the leverage we have in our operating model is expected to support the continued improvement.
Our gross margin.
Which will count about 50% of in the first half of revenue per loan.
Operating expenses in the quarter were $14 2 million growth.
This is compared with $10 5 million more of in the fourth quarter of last year and to the $11 9 million loans reported in the previous quarter.
The increase over the previous quarter is mostly due to increased R&D instead of the more marketing activities to support the growth in revenue.
Operating profit in the quarter was $9 2 million compared to $5 4 million loans reported in the fourth quarter of last year.
Operating margin was 18, 9% compared to 16, 3%.
Mostly due to increased revenue.
Operating profit for the year was $26 8 million growth of 17, 2% of revenue the.
This is compared to operating profit of 25 million growth in 2019 or 18, 7% of revenue.
I would like to briefly discuss the significant impact.
Of the devaluation of the U S dollar in general and specifically against the Israeli shekel.
As an Israeli based company a significant portion of our expenses in the strength mainly salaries.
Our pace in chicken and if the result of the devaluation has increased in dollar terms.
<unk> 'twenty planning the.
Despite the negative impact we managed to improve our profitability.
One positive impact of the devaluation of was the relatively lower tax expenses in Israel in the fourth quarter due to the devaluation of the dollar based offerings.
Net income for the fourth quarter of 2020 was $8 $8 million or 21% per diluted share the.
This is compared to a net income of $5 4 million growth of 14 cents per share from the fourth quarter of last year.
Net income for.
For the year was $26 million of 64 cents per diluted share of.
This is compared to a net income of $23 $9 million or <unk> 60 per cent per share growth.
The 19th.
During the fourth quarter, we completed the bulk of a public offering in which we raised approximately 64 of the from Nomura.
And we have issued four zero of $25 million share.
Which affected the EPS in the fourth quarter and the year 'twenty from.
In addition to the cash we raised in the public offerings. We also generated $8 five $8 3 million of door in cash from operations operating activities in the quarter.
Net cash and cash equivalents and short term deposits as of December 31st 2000 per earnings increased to 177 8 million of.
Compared with 106 million growth at the end of the first quarter of 'twenty.
During the 2010, we generated $25 8 million 12 of the cash from operations.
Certain balance sheet items.
Such of inventory accounts receivable and payable levels significantly increased due to the higher business volume index.
And the expectation for further growth in 2010 point of view.
And the hope you mentioned earlier, we expect revenues in the first quarter of 'twenty 'twenty, one to be between $44 54, and 56 million growth.
We have a strong sales forecast for the first half of the year and anticipate over $110 million in the in this period.
And with that Rafi, Rami and myself will be open to take your questions. Thank you Ms share at this time, we will begin the question and answer session.
If you have a question. Please click on the res res hand icon Atmos Amato power of the bottom of the screen.
Our introduce you and ask you to mute after which you may ask your question. If you wish to submit a question via the vs.
Of the Q&A chat you May also do sales and we will endeavor to on today's questions as many as possible. After we conclude the live Q&A session.
As we have a lot of people on the call I will now take the few moments to poll for your questions. So if you do have a question. Please click on race hands.
Okay.
Okay.
Okay.
Our first question will be from Patrick Ho.
From Stifel. Patrick Please go ahead.
Okay.
Yeah.
Patrick.
Patrick do you on mute.
Now you're right.
Great. Thank you again and congratulations on the really nice corner of the year.
Let me first of all given.
Given the rise in system orders over the next two quarters and give us your tissue space.
The industry overall, how do you see of parts procurement and your ability.
You'd have to procure parts I'd given.
The tight supply environment that we're seeing today.
Yeah, Ravi do you want to answer please.
Okay.
Am I correct.
Patrick can you hear me, yes, okay.
Okay. So I missed the current described the quick question.
And of our Diamond day relates to the second product from them and if.
If I Miss anything bigger than.
Good day.
So from a current procure manner and overall our supply chain.
We are very well or behind the statement.
We have the inventory on hand to be affordable.
During the quarter.
We have not experienced any issues related to procurement.
Furthermore, with the increase the number of subcontractors. So we don't see any issues with that from the strength, we believe that really the Adrian.
The dry and install all the machines in the guidance.
Great and maybe as my follow up question from Moshe in terms of gross margins really strong gross margins to end the year and it continues to rise as we go into the first half of 'twenty one.
What are the biggest influence is the simply volume or are your new products also going to contribute to.
So the gross margin uptick that we're going to see in the first half of 'twenty one.
So so.
I would say that the Boeing volume as well as new products and.
Some new orders that came in with the high gross margin will be contributing to be improved margin in the program.
Prof of 'twenty 'twenty one.
Definitely the new products that we're rolling out will have a meaningful impact on the profitability.
Great. Thank you very much.
Thank you.
Our next question will be from Charles sheet from Needham Charles will.
Well on mute you.
Please go ahead.
Yeah.
Hi, Yeah can you guys hear me.
Sure.
Great Great. Thanks for taking my question and congrats on the strong quarter and I'm very bullish price half our guidance I have a group of questions. The first stop I noticed that your guidance for the first half of that revenue run rate is already of the.
$200 million target model that you think you you cannot achieve.
You know about the two years I wonder whether the the strong demand in the near term really change your view of when.
About the timing of your.
I'll be out of Potage of many of pocket model there.
Oh.
The first of all of the F&B, leaving the in the first half of 2021, we are already in the run rate of our target model of around $200 million.
It's still early for us to provide the.
Outlook for.
For the second part of the year or zone as Rafi mentioned Q3 is also looking good the day for them, but we don't get the CP.
Guidance for Q3.
But as I mentioned.
We are we are already in the run rate of.
Close to our target model.
The result, we managed to improve the gross margin and gross margin will be more than 50% as indicated in all of the target model.
Okay.
Okay.
So maybe this is a very good segue into my question about the gross margin you mentioned a few of the favorable factors.
Including the more complex systems higher asp's, especially from Europe to the inspection product.
May I ask what is the other two factors I'm thinking are also contributing first is do you see a mix of <unk>.
<unk> back to a little bit more three D.
Pulling all of us over our shipment in the first half 'twenty, one, which essentially carries higher margin if I understand correctly and the second of the whether the currency.
Of that.
Depreciating, our U S dollars that also impact has a positive impact on your gross margin.
Okay.
The next tax free.
The first half of your question.
And we definitely see in the mix of the products that we're going to ship in.
In the first half of 'twenty.
'twenty, one and definitely throughout the 21, we'd see a mix with a lot more metrology equipment. This is definitely going to contribute positively to our gross margins in the overall profitability.
With respect to the devaluation.
Of the U S dollar of an.
The impact on the financial result, as I said.
In general the devaluation it hasnt.
As a negative.
Impact on our results.
So the gross margin with the if the coal will be impacted negatively.
Uh huh.
They can dig into it the God if the dollar will stay pretty much of the current label.
The forecast the gross margin of over 50% in the.
A couple of years.
Okay.
Got it. Thank you maybe my next question I would like to ask a little bit more about the same upstream is that the necessary last year was.
Unusually strong for you guys nearly 30% of the revenue and net you you've set the.
The overall contribution as a percentage to the revenue will go down.
Wonder our dollar.
Term are you seeing a growth year for Cmos image sensor revenue or do you see like a more relatively flat.
Any color would be great.
So.
Let me make of the personal of the Cmos image sensors, and I think as rapid indicated.
Very strong this year.
It was mainly from two reasons first of all very strong demand.
Cross from most of our customer and I think specifically, we have lots of who we can say that we gained market share at least the two major accounts.
So this accounted I would say too.
The very strong year compared with our previous per person.
Percentage of the business.
We still see this segment of the strong.
But it will be range of payoff.
Double digit type of pay 10% to 15% next year it will not reach the kind of percentage. It has reached the <unk>.
Got it got it thank you very much of.
I'll go back to the queue. Thanks, Thank you John.
Thank you.
Next question will be from Craig Ellis from B Riley.
Craig. Please go ahead.
Yeah.
Hugh.
Craig you need Tony of yourself.
Okay.
Okay and the and.
In the meantime.
Okay.
Yeah.
Craig you may need to unload some of them.
I hope the.
Moving.
Okay, we'll come back to Craig afterwards.
Next question will be from the urban crafts.
Oven. Please go ahead.
Okay.
Hi, Robyn.
Okay.
Okay, well also have to come back to urban in the stack.
We also have a question from Shanghai Cohen.
<unk>.
The cat he asking of him.
Hi, Shar.
Right.
Just wondering the.
The role of memory routine euro of first half forecasts.
I assume that that is not including any of any memory and if not a can you speak a little bit about your visibility into the memory net.
True.
Rami.
Think we mentioned it in the spring briefly discussed in general we see a lot of activities in the memory space.
We expect this business.
Income a two which we expect to see orders in the second half of this.
The fear or beginning of the following year.
There is no contribution to the business in the first half in the end of the forecast that we book the balance of over $110 million of reserves.
That does not include any systems.
Okay.
And.
My next question Nathan.
Can you speak about jewelry of IBM Liam.
Is that is that mainly impacting H, one or do you see the smoke hormone impact on your on your business.
And I'm not talking about the ICM that we mentioned yes exactly this is definitely this is definitely a.
Okay very significantly.
In the low however, and I think we mentioned the city. We already have received I will take multiple quarters or several global sites that have all of those machines, partly of being sold and others will be installed in the first quarter. So definitely in the meaningful business in the first.
Pat.
The next year.
Of this year 21, and it will definitely be in the long term of very significantly.
The gross margin neutral.
Yeah, I would say in general when we when we mention the.
The key IDM worldwide.
You know the.
The good reason.
In the not too many what we call the day.
Key IDM.
And when we talk about the new packaging technology, New advanced packaging technology.
Then usually these specific idea of Ms. They actually develops the the these technologies and probably they would be the first to move to high volume.
And we believe the this process.
Maybe we'll start next year and it will accelerate in the the.
The next coming years, so we see a huge potential of inspection and metrology to this type of the.
New packaging technologies.
Got it thanks.
Okay.
Okay.
<unk> the answer to your questions, we will now move over to our.
Urban crafts.
Please go ahead, yes, do you hear me yesterday, Okay and.
And 'twenty Southern change 28, China in 2019.
You provided dividends to your investors.
Is there any reason why there were no dividends given to investors from 'twenty to 'twenty.
We haven't decided yet or you haven't decided.
Okay. Another question.
Uh huh.
Do you expect to do to increase your business in China around Taiwan in view of the world situation there.
Well why do you put together of China, and Taiwan by the way.
Why do I put it together right fourth day with some sort of connection because of the.
Difficulties that are going on there.
But I don't think that the what I think.
Okay. The way how we look at if you talk about the conflict between the way so it it's yours in China.
The if you look of the audit of the overall Asia I would say, it's all just Asia, Taiwan Korea, Japan. They are out of this conflict.
So in general I think that it's not under one one package totally different situation.
We don't see any limitation in the Taiwan.
And probably there are some different the environment in China because of the conflict with the U S. So it is not the same so you expect so there wouldn't be the conflict as far as increasing business for both countries is that right correct, okay, and as well as well.
Those two countries do you also expect true.
And Chris your business in Europe, and the United States.
Look in general I think the the.
If you look on the last few years, we can see the mass of our system, our tours to Asia about almost 90% in the fourth quarter of the it was a we see more from U S and Europe, but if we talk about you know yearly overview I would say that the the.
Trend of over 90%.
Those to Asia.
Is more reasonable.
Oh I see.
So you will expect to encourage more business in Israel.
And then the friendly Arab countries in the Middle East.
Our business is the word of the semiconductor build fab so folks in Israel actually we have today you know Intel is the pure front end fab, we don't do any packaging in Israel. So we don't see any potential selling.
Selling machine in Israel in Israel is the most of the Arab country, we don't see any packaging industry.
In these countries.
Thank you.
Okay.
Thank you Evan we will now move on to create the Ellis from B Riley.
Craig I Hope you know we have two questions.
Questions.
Hey.
Well, let's take the Craig's online Craig of you that.
Okay.
Okay. So I guess we have.
I think of program, we review of Craig, but we got the list of questions and we will of rip them. So net net that start with the first one.
With the profile of the.
$25 million of business that we mentioned in the.
In the industry. So I would say I wouldn't give the profile of about 60% of six businesses from several customers in the event.
Yeah.
Several of your patients so it's not the specific but the.
Applications between the whole breadth of applications with great growth in the advanced packaging.
I would say about the 20 close to 20% is Cmos image sensors and the rents I would say our general.
And looking forward this is more or less of the trend of the business all of the repeatedly.
The percentage of the business the can see looking forward also into the first quarter.
The Cmos image sensors definitely would be next in dollar volume.
The next year compare to just the year that we completed.
I would say that the main growth would come in the advance packaging sales.
The coming over the.
50% of that so this year it would be the more in the range of the 60 plus percent of the business. So looking forward. This is really the area, where we see the major growth.
Okay.
So our next question from Craig is well see I S revenue mix of declining wood revenue dollars per ads.
Okay.
M&A funnel.
Hum.
Yeah.
The other question about our M&A.
The activity.
And.
As we said in the beginning of the call. We are very active in the ground.
The work in trying to put together refunding and walk through the expanded.
Having said that the goal is not something immediate and.
<unk>.
Instead of you know we will provide an update.
On each call on the progress.
But at this point there is no.
Nothing to report other than independent we are starting the process, but we have the proper department.
I would like to share I would like to add the people should remember that we're still.
It was still suffer of the of the COVID-19, we cannot travel and in many countries throughout the border are close.
Moving from Israel cannot fly today, so all of the activity of MMA is very limited.
You know we can we can make survey we can.
The evaluate but eventually with to meet with two of them to find you have to drill down. So this cannot be done without visiting the potential.
Companies.
One last question Craig that we received from you.
The related to the Opex level next year.
So overall, we expect.
The G&A to stay pretty stable next year.
Most of the growth of the increase in the operating expense of leverage will come from the sales and marketing, where we use of them with.
In certain places of the world.
The third parties to like agents.
Our help us.
The.
The channel.
And is there.
The as the function of the growth in the revenue we will use more agents of this is the area that we expect an increasing.
Also we will beef up somewhat the R&D activity.
In order to support the growth and develop the mentioned we are also planning to launch a new.
The product. So this will require more R&D resource.
Yeah.
If anybody has any additional questions. Please E. The raise.
Raise your hand, or a email so asking the question and answer the box.
So you have an additional question from from Patrick Ho of Stifel.
Patrick Please go ahead.
Thank you very much for the follow up question.
You talked about advanced packaging being a growth driver for.
For 'twenty and 'twenty, one, which makes a lot of sense.
And we've seen a lot of fan out applications, particularly for the <unk>.
What other applications of one of the market growth areas do you see do you see high performance computing and some of the new techniques out there.
Also gaining adoption in 2021 that will help your business.
Rami do you want to answer yeah. So I would say that there are two additional areas no doubt trade now is growing in the will grow in the rate of the barrel per day, 30% annually definitely if the growth area. We.
We see two more areas.
The first one is obviously the what you call the of high performance computing all of the heterogeneous integration.
Definitely an area of existing that you see the servers market in all of these market of adopting these technologies.
And it's definitely an area that we are seeing from increased business.
The other part of the overall and this is where we see in the longer term obviously the high bandwidth memory. So this is also using advanced packaging. These areas of schooling and as we've said, we expect there to see business in the latter part of the year or.
In the quarter.
Now I would like to add one more comment about you know.
You know the wire bonding is still kind of still very common is not disappear yet.
And but we still see that the more in core customers shift to what we call flip jeeps a flip cheap.
The flip chip PGA more of higher density and the peaches, becoming smaller and the use of the copper.
P.
Pillar in order to make the the connections. So we can see even I would say more flip chip demand for doing this so the advanced packaging actually.
Is it is the wide range of applications.
Great. Thank you.
Okay.
We now have a follow up question from Charles <unk> from Needham Charles Please go ahead.
Hi, Thanks for taking my follow up just the really following up on Patrick's question.
<unk> packaging.
Definitely you guys still seeing technology.
Technology upgrades of trans Trans transitions from wire bound to flip chip copper pillar or fan out HBM I wonder in your very.
A strong first half guidance for the especially for the advanced packaging part.
How can how do you quantify.
How much of that strength is driven by <unk>.
By the technology upgrades of the advanced packaging or how much of that is really driven by the natural unit demand growth, which the news about automotive.
Seeing shortages and the ASC has been saying that a day they still see that the capacity constrained through the year I Wonder if you kind of try and help us out.
How the differences here of what's really driving your team man.
I mean do you want to answer.
I think of.
What's driving the demand or the application.
And first of all is the pricing probes I mean, youre talking about Franklin with many of the slide pin codes and those phones.
<unk> aero or are using and low to more advanced packaging day in day for the phones. So that I would say the biggest application out there.
The main I would say after that as I mentioned before you will see the high performance computing, which is utilizing the locomotive advanced packaging than before.
I think these of two major drivers.
And then all of the applications of the panel.
What's making the fan out even stronger nowadays is the true to the gene substrates and as you know.
Then I'll do not require an substrates and this further enhances the the demand.
Between these three trends.
The reason.
All right.
Seeing a lot more demand on the advent of speculative now. Furthermore.
And Rob you mentioned the viability.
The wire bonding is.
Coming down the non speculative in general it's volume by about 8%, 8% near term.
And this means that the I would say in general you'll see less and less waterflood and the reason for lateral lengths of wire bonding.
The process.
I think it will take a few years.
But the reason that it's coming down is primarily the.
The bandwidth and the power consumption and.
And in order to meet the requirements of mobile phones or the the power requirements. There is no need there is no other weighted or just to move from wire bonding to advance the equity and I think we will see the streamed over the next spike the team nears from wire bonding with just.
I would say go down or finally disappear.
The trend it will take you through of years net in parallel or the trains that are moving fast with our primarily day producing the great shape the high bandwidth memory and the fan out applications that are growing very fast I will say this issue of short explanation of the market correctly.
Okay.
Thank you Karen.
Okay. Thanks, Thanks Charles.
Next question is the follow up question from Shahar Cohen Shahar. Please go ahead, yes. Thank you guys and one follow up the competition, we have seen one of your key competitor all in the past.
<unk> announced the periods.
Cash for the coming year.
Can you speak about market share dynamics, where do you think you're taking market share in which the end of segments of customers.
And to what extent do you believe that from continued this year.
Thank you.
Well you know us.
Chile.
The fruit few players.
And it may be the most of you are not familiar with local player. The Japanese player one U S company player so the more than one.
In the.
I cannot mention any specifically gaining market share.
From specific vendor.
I assume that the by the way it's happened to us as well the some low end application, we prove we prefer not the not compete because maybe the lower.
And the SP. So we said, okay. We are not there and we try to select.
The most the.
The complex and the most I end application as we can.
The the semi believes that some competitors prefer maybe to go and to put more focus on the front end rather than to go to other applications.
The market is not stable, yet, but we definitely can say that the.
In sum I would say I end application the <unk>.
Eventually customer prefer a leading company of rather than the local companies. So so he changed from territory to territory from case to case.
Okay. Thanks.
Okay.
That ends our question and answer session before I hand over to wrap day I would like to let you all know that in the coming out of as we went up by the recording of this conference call to the Investor Relations section of <unk> website at Www Dot AMETEK Dot com.
I'd also like to thank all of you for joining the skull and we would appreciate any feedback you have with regard to this new format.
And now I'd like to hand over to Rafi the.
Closing statement Rafi. Please go ahead.
Okay. Thank you Kenny I would like to thank you all for your continued interest in our business again I would like to thank all of you of all of our employees and my management team for their tremendous performance in 2020, and we look forward to continuing into 2000.
'twenty one.
[noise] tour Investor I think Q4 long term support I look forward to talking with you again next quarter, Thank you and goodbye.
Yes.
Goodbye.