Q1 2023 Kulicke and Soffa Industries Inc Earnings Call
Hello, and welcome to the Kulicke and solved for 2023 first quarter results conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
My pleasure to turn the call over to Joe <unk> Senior director of Investor Relations. Please go ahead Joe.
Thank you welcome.
Welcome everyone to Culiacan Softwares fiscal first quarter 2023 conference call.
Susan Chen President and Chief Executive Officer, and Luster Wong Chief Financial Officer are joining us on today's call.
non-GAAP metrics will be referenced throughout today's call. The non-GAAP financial measures should be considered in addition to not as a substitute for or in isolation from our GAAP financial information.
GAAP to non-GAAP reconciliation tables are available within the earnings release filed yesterday as well as the earnings presentation, which may be found on the Investor Relations section of our website at Investor Dotcom Dotcom.
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, our actual results and financial condition may differ materially from what is indicated in those forward looking statements.
For complete discussion of the risks associated with dual can suffer that could affect our future results and financial condition. Please refer to our recent SEC filings specifically the 10-K for the year ended October one 2022, and the 8-K filed yesterday.
With that said I would now like to turn the call over to Susan Chen for the business overview. Please go ahead Susan.
Thank you Joel.
Over the past quarter, we continued to execute on all its been in the plan and the customer engagements supporting secular trend.
Automotive semiconductor.
This display market and also our technical margin optimization and our market share against strategy with the higher volume wire bonding and also electronics Assembly market.
Discussing this specific opportunity in more detail shortly.
Over the same period, we have been monitoring and the internally penetration. The reason how did your Pittsburgh Colby we didn't try to.
Over the last few months as we experienced a rapid increase in Palo Covid cases within our Suzhou facility.
Why is this is deep Ito impact.
All production capabilities unions of the quarters.
It's a wave of Kobe in China is broadly impacting the relational capacity all customer weed in China.
We currently anticipate these effects.
This past year.
And then well have a slight impact on our near term outlook I don't know, what lucky support, particularly by China.
China GDP forecasts have recently inflow.
We also anticipate this how does this shift dramatically reducing the potential for regional Lockdowns, which have had both supply chain and the implications for all the players.
In addition to the potential for sweeter Nikola recovery in China.
The consumer electronics show, which took place last month helped to provide a glimpse into the future of what's existing and the new applications such as electric vehicles.
Certain pages, when a boat and the display technology.
Our business continues to be better.
These long term trends and we look forward to supporting them.
Over the coming years.
Collectively our.
Industrial outlook remains cautious.
We currently anticipate semiconductor unit growth, excluding <unk> well.
Turning to a more normal growth rate in Canada, while continuously and then nearly 10% unit growth in Canada on a handful.
In addition to a more stable growth, Florida now.
Semiconductor market.
I expect it to grow at a 19% CAGR rubbish.
You don't even need.
Annuity.
Calendar 'twenty 'twenty, if I suppose.
And Michael.
<unk>.
Also of note our book to Bill ratio exceeding one for the first time.
Oh pardon the pun you want.
Why don't you get the inventory digestion in the May call. It improvement unnecessary to support industry calls yesterday at that point, but additional confidence to our outlook.
I need to have a similar result, we generated $176 $2 million.
And the 37 cents.
EPS coming in at all but just your thoughts.
Talk with us.
Yeah.
Our total revenue was $135 $4 million in the December quarter with a majority of something is stemming from general semiconductor as anticipated.
Why did you notice any contract.
There is typically driven by capacity needs they.
We are growing into the larger change, which umpqua might be additional stress.
We Oh I want in the wire bonding market.
Assembly complexity continue to lose more equipment capabilities.
This capability now.
To enhance our margin profile.
This will provide some additional information.
<unk> focus should be.
The next is within the power semiconductor market, which is a group of lending in general semi and also automotive and industrial end market.
To evolve with the growth in most traditional and the emerging compound semiconductor applications.
It's Paul Sidney under the China have supported multiple record revenue quarter for which bonding in fiscal 2022.
And allow us to reach a new Mako revenue even in the December quarter.
Okay.
Yeah.
All the time and they don't these types of pollution within the traditional which bonder market. We also addressed our in the compound semiconductor capabilities, including.
Our pitch.
Your bogie of area and then Lisa just a bundling approach.
Emerging compound semi devices, using indium nitride and that's pretty uncommon support fast growing applications, such as high speed vehicle, we're talking right.
<unk> base station.
Does your energy and the higher powered server, we wont provide additional update on these emerging opportunities over the coming quarters.
Additionally.
We are pleased to report that we call them continue to see very strong demand for our robust so more comprehensive solution.
Which simple with a bunch of logic application and a video or not least emerging chip chat.
Oh ever engaged with a broad group of companies over the recent quarter have been very beneficial and to have position us for additional sure again in that large market.
And at this point, we are increasingly optimistic on the future of similar competition and are growing our engagement with key customers.
Several new customer have requested system alone and then there is the French and limited Omar.
The near term.
I'll teach you meet him he's looking aggressively to support multiple customer engagement in peril.
Additionally, we have previously spent 10, Michael pizza limitations with ECB.
We now see the potential to extend this technology to be known.
I'm on page <unk>.
Okay majority expand the size and the long term potential for our company TCE portfolio.
Finally.
Because it seems to be I'm pleased to report that we have received customer acceptance of our.
First she she was substrates GCB system.
And they have shipped.
Well, firstly this chip to wafer PCB system.
He said what he follow right.
It's just a few minutes.
Hum.
As we highlighted over the counter cyclical we continue to expect the majority of the heterogeneous assembly needs can be addressed with our growing portfolio of GCB solutions.
Moving to the energy market, we remain engaged in supporting multiple customers with multiple antibodies display solution, we continue to make progress across several different initiatives.
The biopsy square.
I'm very pleased to highlight that we have recognized revenue of <unk>.
I'll first really next system over the coming quarters, we had on shipping additional system and the <unk>.
Purchase order for two minutes, which support may 19th obligation and the large format.
Applications.
Additionally, we have received interest from utilizing these high throughput system in more traditional semiconductor assembly market.
In terms of growing the fastest.
By the end of fiscal 2020 city. We also expect to receive acceptance on the next phase of our customers' specific goodbye this display solution, which we all refer asset bucket.
Sure.
He meant 40 such system is expected to accelerate into preschool funding.
We didnt automotive.
The old boy injection vacation.
This transition will continue to benefit our business overall.
All of a sudden conductor and the compound semi trend benefiting our automotive customers.
Addition to some general semiconductor customers.
The consumer electronics show us.
New electric vehicle from established and emerging automotive companies, which continue to drive innovation.
And all cost in the broadband market adoption.
We are currently preparing to launch our next great rebounded for nodule phone Victor use them most electro ultrasonic.
Hudson Sonic.
And then data interconnect solutions. In addition to supporting the production of eventful, because and also long haul trucks.
Memory remains tough over the near term, although we continue to anticipate a slight pick up in the second half.
In addition to apparel customer engagement and it's dependent.
We remain on track to close the pending expense exploration expense.
As a reminder, this strategic accretion, but if you had access to adjacent expansion opportunity in most cities and electronics Assembly.
Collectively these two areas represent a $2 billion addressable market and to provide a new set of long term opportunity.
In addition to continuing all our prudent M&A pass.
We are also very focused on scaling our own.
Manufacturing capabilities, you've thrown out.
Fiscal 2023.
Many of our prior fiscal year, we increased our capital equipment manufacturing footprint by 148000 square feet or 48, 44% to 485 solid square feet and they're very focused who view this as a footprint issue one of the policy.
Oh, yes.
And the original tonnage over the past few years, we have consistently execute and has fundamentally expanded our long term opportunity.
They said no shortage.
And I'll go more Kim evergreen, they're very focused on supporting our customers by delivering the solution and that's driving acceptance.
Why a consumer driven itself is anticipated to create Oh boy.
For our high volume product line over the near term.
We remain very optimistic and continue to anticipate assistant not recover.
Uh Huh, followed by Robert capacity, and a technological growth and physical appliances.
With that I will now hand, the call over to unless the board discuss our financial performance and the outlook.
Hey, Scott.
Thank you for my remarks today will refer to GAAP results unless noted.
Outside of the recent and near term expectations surrounding China, Covid policy pivot, our broad demand expectations for the year remain largely unchanged from last quarter.
Our efforts are focused on driving customer acceptance of our growing portfolio of solutions and growing our manufacturing and development capabilities with our ongoing capital expenditure programs.
During the December quarter, we generated $176 2 million of revenue, 53% gross margin and 37 cents of non-GAAP EPS.
Gross margins were better than expected due to cost control efforts product and feature mix supply rebates and lower depreciation due to capital expenditure shifts from December into the March quarter.
As Suzanne mentioned, we have taken a long term and strategic view and optimizing the gross margin of our ball bonding business and remain focused on further enhancing our corporate gross margins over the long term.
Operating expenses came in slightly higher than anticipated due to a foreign exchange loss.
Finally tax expense for the quarter came in at $3 $8 million due to a higher mix of interest income. In addition to the mandatory capitalization of R&D expenses under section 174, which began in our fiscal 2023 years.
We anticipate maintaining a similar effective tax rate throughout the current fiscal year.
Turning to the balance sheet working capital days increased to 536 days in the December quarter, primarily due to a sequential reduction in revenue in.
In addition, net cash increased by $48 million and inventory increased by $27 million sequentially to support our longer lead time products over the coming quarters.
We continue to deploy capital to shareholders via our opportunistic repurchase program as well as our recently increased quarterly dividend payments.
During the December quarter, we deployed $45 $4 million to repurchase just over 1 million shares.
Looking ahead to the March quarter, we anticipate revenue of approximately $170 million with gross margins of 46%.
Gross margins are anticipated to gradually improve to a blend at 47% for the fiscal year as we continue to ramp our capital expenditure programs.
non-GAAP operating expenses are anticipated to be approximately $68 million plus or minus 2% due to an ongoing expansion efforts employee merit increases and inflation.
We remain very focused on controlling and limiting any noncritical activities and have recently initiated a hiring freeze.
And placed limitations on non essential travel and Noncritical project expenses.
non-GAAP net income is expected to be approximately 14 million with non-GAAP earnings per share of approximately 25 sites.
It remains an exciting time I can't S. As we continue to execute and increase our participation across several long term fundamental trends well then the semiconductor advanced display electronics Assembly and automotive markets.
As we look into 2024, we remain optimistic on broader macro demand trends and remain extremely focused to support the technology needs of our customers.
This concludes our prepared comments operator, please open the call for questions certainly.
Certainly, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing star one one moment. Please while we poll for questions. Our first question today is coming from Krish Shankar from Cowen. Your line is now live.
Yeah.
Yeah, Hi, Thanks for taking my question I had a couple of them number one our foods in a lesser.
In the past you've mentioned FY 'twenty, two could be roughly around $900 million in revenues eight can you underwrite that our revenue expectation.
Expectation and do you think March quarters, the trough from a quarterly standpoint.
Yeah.
Okay actually a Christmas seem more precisely I think are the last cycle pick what's the 2018 revenue $819 million.
So that was the number you just mentioned and the current consensus for FY 'twenty is when your revenue is it the $840 million the average of all of the Internet.
So there's a little bit of change.
Last December .
Covid situation in China create it could be some additional subsidies in our FY2023.
But same time same quarter, we see a book to bill ratio over one and which are pointing to potential trough if why Q2.
And at this moment, we expect our second half will be better than the first half.
So overall I think at this moment, we are comfortable at the consensus revenue of $840 million.
You too.
China Covid situation that really head, but some softness in our 20th Street article impact you said in Q2, and Oh, we expect maybe extend a little bit longer into Q3.
So that's my by my answer.
Got it got it no that's really helpful. Susan and then I just had two other questions.
On the book to Bill improvement Am I understanding coming off a lower revenue base.
What is that auto implement driven by one specific customer one specific product or was it across the board and then I had a follow up for a live sir.
So the book to Bill for the last couple of quarters have been about a 0.8 right now it's gone up to about 1.3, and I think it's a lot of Oh backlog actually is in ball bonder and most of it will be recognized.
We recognized within FY2023 are close to 60% of it well you're right to ask FY2023 so there's not one specific customer is ball bonder and also our advanced packaging and and also wedge bonder. So our I think the the backlog because it's across several business units.
Got it got it and then lastly, just a quick follow up on the days of inventory and inventory days payables. Both are pretty high so I'm kind of curious what's going on is it just purely wire bonder, that's kind of been accumulated on what's going on with that high number relative to the past and what is your lead time today for why we wanted to thank you.
So the lead time today for why bond theirs is about for ball Bonder is about eight to 12 weeks for wedge Bonder is about 16 weeks.
As far as the inventory is concerned.
Some of it is a result of again because of supply chain issues are about you know in the past, we actually bought a lot of items to make sure that we will not be short term no.
Apply chain issues going forward plus we also increased inventory because we actually did also by some long lead items for for Appeals that we see that's falling into the latter part of 'twenty three and the beginning of 'twenty. Four for example, and in advanced packaging as well as in our wedge bonding.
Thank goodness to thank Susan.
Thank you. Our next question is coming from Craig Ellis from B Riley. Your line is now live.
Yeah, Thanks for taking the questions and all the color. So far guys. So I wanted to follow up on a few of Christmas point. So lesser can you provide some additional color on order improvement you gave us a good sense by product, but can you talk about what the order activity looked like on <unk> versus Oems.
And then any color on end markets would be helpful as well.
Craig you mean for Q1.
Yep.
So for Q1 actually.
It's as as I indicated in my remarks on gross margin actually.
The majority of our ball Bonder is who actually purchased by IBM, rather than <unk>, which is unusual and has not happened for many many quarters.
And so as far as.
So it was the second question.
Okay.
It was colored by OEM versus how sad and Oh, yeah, Yeah, no that's right.
Oh is that yeah, and then end market automotive end market actually improved significantly at AR grew 41% quarter by quarter and as Suzanne mentioned, a general semi fell significantly about 61% quarter by quarter.
And also memory do no one's surprise also fell significantly about 80% so for the quarter.
Automotive comprised about 40% of our capital equipment.
Which is very very high and generally general semi is about 50%.
And then lastly on the order line of inquiry Lester.
What's happened quarter to date are you seeing that same level of strength, but I bet gave you. The 1.3 book to bill in the prior quarter continuous it accelerate it or or what's going on especially now that we're on the other side that blend or New York.
Well I think we continue to see a lot of inbound inquiries, particularly from China as you put it from after lunar new year. It's just obviously, it's just a week after the lunar new year, we as Susan indicated we do anticipate a much stronger second half of FY2023 so we do see orders continue to come in.
Yep and that's very helpful. So I want to move on to gross margin. So the the company's execution on gross margins has been really stellar them for the last five quarters I think they're averaging 50%. So can we just take a different look at the guidance for the current quarter, which I think you said was.
It was 46% why would gross margins be 400 basis points lower than the trailing.
Four to five quarter average and then you mentioned capacity I take it you're saying, there's some incremental depreciation that's coming in but given the strength you've had in gross margin why wouldnt, we see gross margins pushing above the 47% you mentioned as we move through the year.
Well I think as we move through the year, we're still aiming for a overall gross margin around 47% for the fiscal year, but obviously, Craig as you know, Florida quota changes I mean Q1, the gross margin was a huge benefit in terms of both customer makes us less product mix I mentioned are idms.
It was more than a majority of our ball bonding customers in Q1, we don't see that maybe continuing in terms of the customer mix I think as you also and as he also mentioned we right now are we can continue to invest in our some of our you know our growth vectors.
Particularly in advanced display and advanced packaging, so as Susan mentioned in his remarks, we're expanding our manufacturing capacity by quite a lot. So in addition to depreciation I think also you know there's all the operating cost of those facilities and right now those facilities those products. So those are the city.
This will really start to ramp in the second half of 'twenty three 'twenty four not so much right now so that those operating cost goes into the old cards, which also affects the gross margin overall.
That's real helpful. And then lastly for me before I get back in the queue are really helpful to get all the order color. The question is this is as we go back if houston's comments that you're not specific guidance, but seemingly comfort around an 840 million revenue level to share how does the company current currently see linearity in the back half of it.
Or do you see growth being fairly equal was represented by current consensus at around 30% per quarter or would the growth and the revenue levels be more either front end or backend loaded any color helpful. Guys. Thank you very much.
Yeah. So I think she was already mentioned with the Covid pivot right. It doesn't affect our Q2 and may affect a little bit into Q3 right. However, the COVID-19 pivot also may drive much stronger I guess, a quick recovery, but that probably more in Q4. So if I think to give some color I would say that probably Q.
Three would be weaker.
Weaker than Q4, so in terms of what the consensus I don't think there'll be equal I think Q3 will be maybe a little weaker than was thought before for Q4 will be stronger.
Great. Thanks, so much guys.
Thank you. Your next question is coming from Charles <unk> from Needham <unk> Company. Your line is now live.
Hey, thank.
Thank you for taking my question I have a few I'll be mindful of what all of my airtime, Inc. A U K style, you'll answer it takes longer.
So we need to go going back to the question about your full year outlook Q3, you said, it's a little bit weaker than you expected a quarter ago, but Q4 may be stronger but.
But that does still imply a quite a very strong uptake in Q4, I'm I'm thinking if you are sticking to let's say 850 million for the full year, let's say the June quarter, and maybe you are getting 200 million, but you have to make a 300 million quarterly revenue in Q4.
Sure.
Are you comfortable with that kind of what you see actually into the second half of the year. That's my first question. Thank you.
So I think the really if I'm allowed to have a mess okay with you.
So let's do this I think a 175 for the first quarter.
The second quarter at 170.
That would be 370.
So D C D 45 right.
So 345.
So it's oh.
Charlie I see are we talking about if you're not if you're right. If all right. So if I assume we're talking about another 60 or so.
460, <unk>, even I used the 230.
So even.
Uh huh.
It's a 200 in Q3, we are talking about 260, plus you get onto it.
I wish all my congrats James or I don't have a picture of it.
So Charles I mean, we believe that it is achievable in the second half right I mean, it may slip a little bit either way right, there's a push and pull that right, but we think you know we do see a path there, particularly with the backlog as well as the increased order coming in so we didn't say it will be 200 and in Q3 right I just thought it would be a little bit.
Softer, but again you know it has all been volatile out there, but we do feel comfortable at 840.
In terms of for the year.
Yeah.
Yeah, Yeah. So maybe let me ask the same question from a different angle I think four years ago are around the same time.
That wasn't right that at the beginning of 2019, a downturn are you also expressed a sort of like optimism about the fiscal second half being higher than fiscal first half but that.
The actual result was actually your fiscal second half was lower in.
In 2019, Bangalore fiscal first half.
I mean by many metrics. So we looked at the 2023 downturn, it's probably worse not better than 2019 downturn.
My question, maybe from a high level, what gives you the confidence that that you're going to do a lot bad here in this downturn for half over half perspective than 2019 I know this is the same question, but hopefully we can get some color from different angle. Thank you.
Okay.
So I think our company.
A lot of trends.
Compared to a 2019.
Actually I've seen the same yeah.
Compared to our previous cycle is about 50% larger so.
So if we look at it I think advanced display.
Thank you Jim.
And together I think compared.
Compared to previous cycle.
Yes.
Uh huh.
Belinda compared to previous cycles, I think Oh gross margin about three 4%.
Right. So not only of the prospective trends are really prudent for example, what is the overall evolution transfusion to autonomous and quite beneficial to us.
We believe that the bus.
It's great to hear.
And compared to your previous cycle, we don't have it.
Yeah, I think we have protection.
Right.
So in.
In previous cycle.
No actually our past two years, we Oh audition margin actually is.
Iowa.
30%.
$1.5 billion to yes, we generally probably I've seen them maybe.
Uh huh.
About $700 million to $800 million.
The cash and we buy back stock. So I think two compared to the previous cycle, we have a much bigger market and I think it would be weird.
Yeah.
We can discuss more on this offline I really wanted to ask the next question on T C B.
I think of last year, there are quite a couple of our products released by Apple M. D. For example, they are already at the U S.
Pocket, our interconnect pitch somewhere around 25 to 35 Micron I believe the Apple M. <unk> Ultra is already been package by TSMC with its flip chip technology at quantifying micron pitch AMD Rdna's three GPU I believe it's already packaging had a 35 micron pitch with a bang.
With technology, and I know a S E probably developing 20 micron wafer level fan out really without bumps and that they are working on hybrid bonding that's that public technology roadmap, So where does the PCB technology fit and yeah I worry it's.
It's not quite on the the the technology roadmap of the two leading companies.
That ends up being our entire only technology or what gives you the confidence that that there will be more adoption outside of Intel. Thank you.
Okay. So.
So I think a company you mentioned, we actually yeah my script I.
I say it we actually took numerous offer best company all of the major I shouldn't go we actually disclose it.
So we actually my computer.
The PCB I think AR is going to have a huge growths for the next couple of years.
The company you mentioned I think we also.
Until then and Oh, we should not have a surprise.
Got it so maybe last question on Microalgae deal so I'm totally.
Let me answer with a CMO questions are we are not dependent on one customer I think that numerous customers are very optimistic waiting a police show system for us I'd say, what we discussed in last quarter and I think we discussed it seems acutely oh for 'twenty, two and we're just going to queue.
For.
Q1, I think our next couple of quarters.
Thanks, Bruce I really wanted to ask on my last question on Microalgae D. So can you kind of quantify to us what's the Tam opportunity for project W and that when do you expect a volume ramp it because when I look at your.
Many of our E project Pizza locks, which is also a customer specific project.
The product came out in spring 'twenty 'twenty. One are you saw the I actually saw the volume ramp in the fall 'twenty 'twenty, which is roughly two quarters two to three quarters I head up the product release, So project, probably by I guess, it right what that product and product is it's probably a spring 'twenty one you're fine.
Product release, you probably going to see the volume ramping for 'twenty 'twenty four am I thinking of timeline correctly.
But that's the question the second part of the question. So two questions. One is how do we quantify the Tam size for a project probably around but you had a full point yet plentiful ramp are about right from your perspective. Thank you.
So Charles we don't talk about specific terms of specific customer projects. We just don't comment on that but we do think it'll be material in terms of our advanced display revenue and as far as timing Youre right I think it'll be the latter part of 'twenty three and then there'll be a significant ramp in 'twenty four onwards.
I'm, sorry, I I I think.
I'm thinking about volume ramp is probably latter part of 'twenty four not 'twenty three but I do think it's a one year earlier than what I think is that I understand I said most of it well I spent most of it will be in 'twenty four but it will start in 'twenty three as well.
Yeah. Thanks for the clarification lastly, we get our manufacturing investment you're making here Oh I, if I understand correctly. Your wire bonding manufacturing is largely outsourced that to somebody else not not you because actually build internally can you give us some rationale or some sense of.
<unk> display and advanced packaging, you wanted to build internally and that 44% capacity increase.
Include that does not include a ton of capacity wire bonder. So that that's a pure internal capacity. Thank you. That's my last question. Thank you.
Charles I think you are mistaken we built our wire bonder is internally here in Singapore, both ball Bonder and wedge Bonder is so we don't outsource that so as far as the additional capacity is like we said, it's all for advanced packaging and advanced display.
Thank you. Thank you Lester I appreciate the color.
Yeah.
Thank you. Our next question today is coming from David Duley from Steelhead Securities. Your line is now live.
Oh, yeah, thanks for taking my questions.
The first one was you mentioned in your prepared remarks about how you're continuing to see wire bonder intensity increase and I was wondering if you could just comment you know I think in the past you've said, it's increased like 10 or 15% would you expect that intensity to continue to increase going forward.
Okay.
Well.
I think intensity increase is our average cycle right, yeah, but we do believe complexity actually.
It's become more complex, we do expect.
Intensity actually.
Okay and then.
Regarding gross margins and wire bonder.
I think in the past you've talked about you.
You know how you improve the gross margins and on this call to how you've improved the gross margins of the core wire Bonder business.
And I think you have a new wire bonder that should come out with better margins.
In the roadmap is that going to hit in this fiscal year or when would be the timing of let's say a wire bonder, that's got lower costs associated with it.
Well, David you're right, we constantly look at improving our margins and and all products, but particularly our core products our high volume products light wire bonding right. So well continue working on cost control, but I think as far as timing is concerned I think we will be introducing a new suite of why.
The bond or the latter part of FY 'twenty, three and the beginning of FY 'twenty four so we should see a.
Margin jumped around that point as well.
Okay, and as far as the thermal compression bonding business could you just highlight again.
What size opportunity you think this can be for the overall market and you know I.
I think you're probably shooting for 50% market share.
<unk> help us understand what your targets are there.
Okay. So Dave I think if you remember I think a Q3 or what caused us to be talking about a big loss of $18 million. So at least $80 million a maturity or what did you say 80 minutes that'll move a shift within the 20th Street and.
Last quarter Q4, 'twenty three we mentioned that we identified for the next couple of years, we probably have a hole.
No.
So we're talking to a customer so a total of about $300 million.
A few 25.
So these are our three.
The $100 million maturity will be shifted in the 'twenty four.
So we expect probably.
When we exit 25, you know these are.
PCB and all of a dedicated AP.
But it will only be about $20 million, Ohio.
So Paul I use a different kind of angle to answer your questions.
I'm, sorry, I didn't $20 million.
Is that a quarterly run rate of I didn't quite hear what you said there no I mean, I mean $200 million.
For our dedicated advanced speakers.
Okay.
Okay.
Oh right.
And then a final question for me and I think Mike maybe Charles was.
I was talking about that.
Talking about this but you mentioned.
A new application for your alumina next.
And I'm, assuming that's outside of mini or micro OLED or could you just elaborate a little bit about what the application is.
So looming next actually Lisa the bunch of these waves of laser based transfer technology.
We actually are these payables.
Many in the microwave.
We also are involved in both the big lighting things like that that really miserable patient.
Okay. Thank you.
Yeah.
Thank you next question today is coming from Hans Chung from D. A Davidson your line is now bye.
Oh, Thank you for taking my questions. So first I wanted to clarify.
The changes in terms of the FY 'twenty revenue and.
So.
Here, we have some impact from China Colby. So now we kind of comfort that won't with 840, <unk> media revenue versus a 90 last.
The last quarter. So that's 20 million gap is that purely driven by just because of the Kobe C. J.
I think a majority you know you see even in the Covid most.
Most of what they see.
They may be partial people go back to work.
You reduce some projects being delayed so.
We expect beauty impact.
In Q2, and then maybe the partial over two feet. So a majority of X reasonable boundary related.
Got it and so there demand wise.
Clean there is no change in terms of the demand.
Uh huh.
But I think it's fair to say these are Kobe Costar show with him you know we can use in a long time you know.
Fair to say it probably would be up so you know 24. So this is like the governor I think are there new forecast actually.
He was twenty-three by extra that'd be about 24 is a bigger year.
Got it Okay and then.
Okay.
Elaborate.
More on that strength in the wage funding business and.
The.
How big that I mean, how does that purple.
So where does that come from the EV or just overall or the more marquee and how's that trending I mean in the near future even.
We have seen some weakness in the evening marquee demand right.
But I think he is one of them and they in general I think on wish bone is a fall of Hyatt colon.
Goodbye.
So.
The no longer is a loan for that so there's a lot of like a poll semi.
And the E V I think the big although contribution so compared to like a previous cycle I think it's always going to come back.
The cycle actually when you reach a record high.
In 2022.
Uh huh, even up to a place where there is a moment of skip it is strong.
Okay got it and then.
And last one just regarding the capacity for advanced display and packaging and.
We're gonna have don't add more much more than 20 C. So.
So.
Yes.
Any.
Color around how how nice revenue that's the capacity new capacity will support and wasn't in vacation to the gross margin and then and now.
Also on the Opex I mean afterward, I assume we're gonna have put the neighbor in place right. So just any color around that.
New capacity for their advanced packaging and display.
Well I think as I indicated in an earlier response the revenue.
That will be generated from this additional capacity in advanced packaging and advanced display will probably be more significant in 'twenty four right and we are incurring but in order to prepare for that in 'twenty. Four we are now expanding our production to Pat Oh facilities as well as you know.
All getting ready the tooling as well as you know training and running getting them ready to ramp so that has a negative impact in FY2023 because it doesn't match up with the revenue, but as the revenue comes in from those products. The margin will then obviously go back up.
Okay.
Okay. So so our so our hour.
Gross margin of 47% or 20 feet, that's already factored in.
The rents in a new capacity for advanced packaging.
So 40 times that includes yes, the manufacturing costs that I was talking about that one brought the margin down so margin will increase into 'twenty four.
Got it okay.
Thank you.
Thank you we reached end of our question and answer session I would like to turn the floor back over for any further or closing comments.
Thank you Kevin and thank you all for joining today's call over the coming months, we will be presenting at several investor conferences hosted by Susquehanna Financial Group B Riley Securities at Craig Hallum.
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