Q3 2024 Kulicke and Soffa Industries Inc Earnings Call

Speaker Change: Greetings and welcome to the Kulicke and Soffa 2024 third quarter results.

Operator: 24, 3rd quarter results. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

Speaker Change: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Elgindy, Director of Investor Relations. Thank you, Joe. You may begin.

Operator: As a reminder, this conference is being recorded.

Joe Elgindy: It is now my pleasure to introduce your host, Joe Elgindy, Director of Invest Relations.

Operator: Thank you, Joe.

Operator: You may begin. Thank you.

Operator: for the third quarter results.

Joe Elgindy: Welcome, everyone, to Kulicke and Soffa's fiscal 3rd quarter 2020 for conference call. Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are also joining us for today's call. Non-GAAP financial measures reference today should be considered in addition to, not as a substitute for or in isolation from our GAAP financial information. GAP to non-GAP reconciliation tables are included within our latest earnings release and earnings presentation. Both are available at investor.kns.com, along with prepared remarks for today's call. In addition to historical statements, today's remarks will contain statements relating to future events and our future results.

Speaker Change: Thank you. Welcome, everyone, to Kulicke and Soffa's Fiscal Third Order 2024 Conference Call. Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are also joining on today's call.

Operator: Thank you. I welcome everyone to Kulicke and Soffa's Fiscal 3rd Order 2024 conference call. Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are also joining us on today's call.

Speaker Change: non-GAAP financial measures referenced today should be considered in addition to, not as a substitute for, or in isolation from our GAAP financial information.

Speaker Change: Gap to non-gap reconciliation tables are included within our latest earnings release and earnings presentation. Both are available at investor.kns.com along with prepared remarks for today's call.

Speaker Change: In addition to historical statements, today's remarks will contain statements relating to future events and our future results.

Joe Elgindy: These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that may cause our actual results in financial condition to differ materially from the statements made today. For complete discussion of the risks associated with Kulicke and Soffa, that could affect our future results. In financial condition, please refer to our recent and upcoming SEC filings, specifically our latest form 10-K, as well as the 8-K filed today.

Speaker Change: These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that may cause our actual results and financial condition to differ materially from the statements made today.

Speaker Change: For a complete discussion of the risks associated with Kulicke and Soffa that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest Form 10-K as well as the 8-K filed today.

Fusen Chen: With that said, I'll now turn the call over to Fusen Chen for the business overview.

Fusen Chen: With that said, I'll now turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

Joe Elgindy: Please go ahead. Thank you, Joe.

Fusen Chen: Good afternoon, everyone. Throughout all the past quarters, we continue to ask you on several growth initiatives, including driving critical progress in advance packaging and the advanced defense qualification, enjoying the broadening adoption of our renewable mundane solutions, while we also observe ongoing utilization improvement across several of our GAP market.

Fusen Chen: Thank you, Joe. Good afternoon, everyone.

Fusen Chen: Throughout the past quarters, we continue to execute on several growth initiatives, including driving critical progress in advanced packaging and advanced dispense qualification.

Fusen Chen: enjoying broadening adoption of our new ball-bounding solution while we also observe ongoing utilization improvement across several of our key end markets.

Fusen Chen: Before reviewing our quarterly results and performance, I would like to mention a few points on the recent industry momentum within summer compression.

Speaker Change: Before reviewing our quarterly results and performance, I would like to mention a few points on the recent industry momentum within thermal compression.

Fusen Chen: They have been three key milestones, which we are excited to express. Further, the formation of, as well as our membership in the U.S. Joint semiconductor consortium was announced last month. Resonect Holding Corporation, leading provider of global semiconductor materials, formed this consortium to support industry collaboration and the market adoption of new advanced packaging production solutions. Up to joint and the joint to all created in Japan, the U.S. joint consortium will present the third joint consortium globally and the first in the United States. A combination of 10 leading equipment materials and the process company based in the U.S.

Fusen Chen: Last month, there were three key milestones which we are excited to announce. First, the formation of, as well as our membership in the U.S. Joint Semiconductor Consortium, was announced last month. Resonex Holdings Corporation, a leading provider of global semiconductor materials, formed this consortium to support industry collaboration and market adoption of new advanced packaging production solutions. Our second TCP milestone is associated with a collaboration with a subsidiary of a large semiconductor conglomerate. This innovative TCB enables high-resolution target chip-to-wafer applications for deployment in high-volume consumer and compute markets by offering a lower capital-intensive path to hybrid-based chip assembly.

Fusen Chen: They have been three key milestones which we are excited to expand.

Fusen Chen: First, the formation of, as well as our membership in the U.S. Joint Semiconductor Consortium was announced last month.

Speaker Change: Resonex Holdings Corporation, leading provider of global semiconductor materials, formed this consortium to support industry collaboration and market adoption of new advanced packaging production solutions.

Speaker Change: After joint and joint two were created in Japan, the U.S. joint consortium represents the third joint consortium globally and the first in the United States.

Speaker Change: A combination of 10 leading equipment materials and a process company based in the U.S. and Japan represent the U.S. joint forming members who have the near-term goal to establish a U.S.-based R&D facility with advanced packaging capability.

Fusen Chen: and Japan will present the U.S. joint for many members who have the near-term goal to experience a U.S. based R and D facility, which are the most tech-eating capability. Construction for the U.S. based on the facility will begin in the current calendar year and at the completion will provide access for critical industry-leading advanced technology technologies, material and processes which are not readily available locally to many of our U.S. based customers. Our second ECB master is associated with a collaboration with a subsidiary of a large center company, Kong Gromaret, who has sustainably demonstrated our leading flux-less thermal compression, or FTC system, which is capable of direct copper to copper bonding. As a center of features, it can also enable an exciting new shift to wafer hybrid bonding process.

Speaker Change: Construction for the U.S.-based R&D facility will begin in the current calendar year, and at completion, will provide access for critical industry-leading advanced packaging technologies.

Speaker Change: materials and processes which are not readily available locally to many of our U.S.-based customers.

Speaker Change: Our second TCP milestone is associated with a collaboration with a subsidiary of a large semiconductor conglomerate who has successfully demonstrated our leading flux-less thermal compression, or FTC, system.

Speaker Change: which is capable of direct copper-to-copper bonding as a standard feature. It can also enable an exciting new chip-to-wafer hybrid bonding process.

Fusen Chen: Heavy bonding involved making both conductive and a dielectric bounce provides specific benefit for select and market. With a lower requirement for capital intensive firm and investment, relative to existing shift to wafer hybrid solutions, we expect this boundless FTC process to further expand our long-term to bad at heterogeneous opportunities. As explained by industry headlight, there are many hybrid bonding processes, including wafer to wafer, as well as a chip to wafer. This innovative DCB enable hybrid solution target chip to wafer application for deployment in high volume consumer and the compute market by opening a lower capital intensive path to hybrid-based chip-less assembly.

Speaker Change: Heavy bonding involves making both conductive and dielectric bonds, providing specific benefits for select end-market.

Speaker Change: With a lower requirement for capital-intensive funds and investment relative to existing chip-to-wafer hybrid solutions, we expect this boundless FTC process to further expand our long-term chip-back and heterogeneous opportunities.

Speaker Change: As explained by industry headlines, there are many hybrid bonding processes including wafer-to-wafer as well as chip-to-wafer.

Speaker Change: This innovative TCB enables high-resolution target chip-to-wafer applications for deployment in high-volume consumer and compute markets by offering a lower capital-intensive path to hybrid-based chip-to-wafer assembly.

Fusen Chen: At a higher level, adopting chip-less-based packaging can reduce product development time, allow for multitasking design costs over brother and market, and is critically important in extending most low. With that said, our existing FTC system, which can allow copper to copper in the company as a center of features, can provide a more direct pass way to chip-less-based production. For many customers, those who seeking chip to wafer hybrid, option now has an additional account of FTC. As an industry accelerate, the adoption of summer comparison, we continue to enjoy growing commercial success and the brother and market access to our investment and expanding customer engagement.

Speaker Change: At a higher level, adopting triplet-based packaging can reduce product development time, allow for amortizing design costs over a broader end market, and is critically important in extending more slow.

Speaker Change: With that said, our existing FTC system, which can bound copper-to-copper interconnect as a standard feature, can provide a more direct pathway to chip-based production. For many customers, those who...

Speaker Change: Seeking chip-to-wafer hybrid option now has an additional alternative.

Fusen Chen: As the industry accelerates, the adoption of thermal compression, Over the past four years, on a trading basis, our TCB business has grown by 10 times, and we are still in the early stage. This was accomplished through new access to silicon photonics, 3D sensing, and the leading-edge market, including our first mobile production in fluxless TCB at a leading IBM customer. A new technology win with a leading customer requires a lengthy and collaborative engagement process and significant patience. This recent win and the evaluation progress have solidified our TCE process as a long-term solution to support the growing adoption of tubeless-based architectures.

Speaker Change: As an industry authority, the adoption of thermal compression.

Speaker Change: We continue to enjoy growing commercial success and broadening market access through our intimate and expanding customer engagement.

Fusen Chen: Over the past four years, on a training basis, our PCB business has grown by ten times, and we are still in the early stage. This was accomplished through new access to silicon photonics, 3D sensing, and the leading edge market, including our first mover position, infrastructure as PCB, at a leading IDM customer. We have continued to drop industry adoption and have announced several wins in the assembly and the test space earlier today, highlighting these repeatedly growing opportunities. Also, we continue to make progress in our factory engagements and remain very optimistic that we can unlock an additional leading edge customers overall near time.

Speaker Change: Over the past four years, on a trading basis,

Speaker Change: Our TCB business has grown by 10 times, and we are still in the early stage. This was accomplished through new access to silicon photonics.

Speaker Change: 3D Sensing, and the leading edge market, including our first mobile position in fluxless PCB at a leading IDM customers.

Speaker Change: We have continued to drive industry adoption and have announced several wins in the assembly and test space earlier today, highlighting these rapidly growing opportunities.

Speaker Change: Also, we continue to make progress in our foundry engagements and remain very optimistic that we can unlock additional leading-edge customers over the near term.

Fusen Chen: He will choose our initial ID and customer engagement, which began in 2020. New technology win with a leading customer required a lengthy and collaborative engagement process and a significant patient. This recent win and the evaluation process has solidified our TCE process as a long-term solution to support the growing adoption of triplet-based architectures. While they are several different technology and the process to support the diverse need of the future triplet market, we are well prepared to support the industry with our leading solution. We are clearly excited as we are securing pollution in the new market supporting AI, HPC, and mobility.

Speaker Change: Similar to our initial IBM customer engagement, which began in 2020.

Speaker Change: New technology win with a leading customer requires a lengthy and collaborative engagement process and a significant patience.

Speaker Change: This recent win and evaluation progress have solidified our TCE process as a long-term solution to support the growing adoption of triplet-based architectures.

Speaker Change: While there are several different technologies and processes to support the diverse needs of the future chip market, we are well prepared to support the industry with our leading solutions.

Speaker Change: We are clearly excited as we are securing production in a new market supporting AI, HPC and mobility, which has historically not included food.

Fusen Chen: We have historically not included in from our self-market. This win provides confidence in our leadership as well as a long-term potential for fraxless adoption. Due to some of the competition's adoptability, our own box coupled to coupled capability and the broader customer set is providing lower value to entries for mass market-to-bet adoption. Some of the competition remains an emerging technology with a long technology life ahead to support this growing market need. Even in the current technology, it can be challenging for NRS and the investor to forecast, although I would like to remind investor to not overly focus on one specific in the current technology.

Speaker Change: from our surf market. This win provides confidence in our leadership as well as long-term potentials for flux-less adoption.

Speaker Change: Due to thermal composition adaptability, out-of-box couple-to-couple capability and broader customer set, it provides lower barrier to entries for mass market chiplet adoption.

Speaker Change: Summer competition demands an emerging technology with a long technology life ahead to support this growing market need.

Fusen Chen: Different interconnect technologies can be challenging for analysts and investors to focus on, although I would like to remind investors to not overly focus on one specific interconnect technology. There are many packaging transitions across our end market, with a growing number of trade-offs, largely between cost and performance, but also production capability and system level requirements, such as vertical wires, and remain independent from many of today's TCB and hybrid focus markets. We are pleased with our new market footing and the access we have demonstrated.

Speaker Change: Even intercontinental technology can be challenging.

Speaker Change: for analysts and investors to forecast, although I would like to remind investors to not overly focus on one specific interconnected technology.

Fusen Chen: There are many packaging transitions across our end market with a growing number of trials of largely between cost and performance, but also production capability and the system label requirement. It is quickly important to recognize that the high-quality, cost-sensitive portion of the semiconductor assembly market will also need a stack-dye solution over the long term. These very market needs are becoming more evident every quarter as we are actually developing several multi-dye and a stack-dye solution, which are being evaluated across our customer base. Many of these higher volume opportunities will likely demand more cost-effective process, such as vertical wire and the remand independent from many of today's PCB and the hybrid-focused market.

Speaker Change: There are many packaging transitions across our air market, with a growing number of trade-offs, largely between cost and performance, but also production capability and the system level requirements.

Speaker Change: is quickquly important to recommend that the high volume cost sensitive pion over a semiconductor assembodyy market will also need a stagnized solution over the long term

Speaker Change: These various market needs are becoming more evident every quarter as we are actively developing several multi-die and stack-die solutions, which are being evaluated across our customer base. Many of these higher-volume opportunities will likely demand more cost-effective processes.

Speaker Change: such aseverybody go while and the remain independent from many of today's tcb and the hybridfoused market

Fusen Chen: From our humble wire bonding output, we are faced with our new market footing and access we have demonstrated. Recent customer adoption come by with ongoing innovation, provide a strong foundation to support long-term advanced packaging adoption.

Speaker Change: from our Hamo Wire Binding Route.

Speaker Change: We are pleased with our new market footing and the access we have demonstrated.

Speaker Change: Recent customer adoption combined with ongoing innovation provides a strong foundation to support long-term advanced packaging adoption. I am very proud of our team for developing and driving the recent customer success across the portfolio.

Fusen Chen: I am very proud of our team for developing and that driving the recent customer success across the portfolio.

Fusen Chen: Turning to a dream for the business result, we were able to achieve our guidance at the point while generating slightly more non-depth EPS than anticipated due to our operational focus. In high-level, we expect most of our M market have already experienced 12 label of demand over the past 80 months. Over this time, certain markets began showing signs of improvement. While other markets faced hailing, let me see our corporate label performance. For example, our global boundary revenue over a year to their basis has improved by 42%. Despite its relatively meaningful label of improvement, we also experienced offset due to wear long automotive and industrial hailing, which reduced which demand earlier this year.

Fusen Chen: Tending to a June quarter business result, we were able to achieve our guidance mid-point while generating slightly more non-GAP EPS than anticipated due to our operational focus. For example, our global bounding revenue on a year-to-day basis has improved by 42%. Despite this relatively meaningful level of improvement, we also experienced offset due to well-known automotive and industrial headwinds, which reduced wage demand earlier this year.

Speaker Change: Tending to a June quarter business result, we were able to achieve our guidance mid-point while generating slightly more non-GAP EPS than anticipated due to our operational focus.

Speaker Change: At a high level, we expect most of our end markets have already experienced a trough level of demand over the past 18 months. Over this time, certain markets began showing signs of improvement, while other markets faced headwinds that restricted our corporate level performance.

Speaker Change: For example, our gold bounding revenue on a year-to-date basis has improved by 42%.

Speaker Change: Despite this relatively meaningful level of improvement, we also experienced upsets due to well-known automotive and industrial headwinds, which reduced wage demand earlier this year.

Fusen Chen: At this point, we are pleased to begin seeing signs of multiple end-market are improving regularly, a lot in better coordination, and we demand optimistic. While the market environment has become more positive, we expect our high-volume solution are still well below the normal demand level we would consider sustainable for the broader industry. Our global and rich businesses have room to grow. Looking at our market more specifically, we continue to see iteration improvement in general semiconductor, target of demand improvement in early automotive and industrial, regions in APS and ongoing recovery in memory. We in general semiconductor, UTI region layer, full low-bounding have continued improve significantly, a low-half year, reached the critical tipping point, expected to try high-volume customer to broadly require capacity addition.

Fusen Chen: At this point, we are pleased to begin seeing the size of multiple end markets improving gradually, allowing better coordination, and we remain optimistic. In addition to the improving general semiconductor dynamics, we also booked approximately $20 million in thermal compression revenue during the June quarter, such as our recent High Power Interconnect or HPI solution within which boundary. They are being deployed in high volume battery production, as well as for more efficient power conversion required for charging and sustainable energy applications.

Speaker Change: At this point, we are pleased to begin seeing signs of multiple end markets are improving gradually, along with better coordination, and we remain optimistic.

Speaker Change: While the market environment has become more positive, we expect our high-volume solutions are still well below the normal demand level we would consider sustainable for the broader industry. Our coal-bored and wet businesses have room to grow.

Speaker Change: Looking at our end market more specifically, we continue to see generation improvement in General Semiconductor, target of demand improvement in LED, Automotive and Industrial, resilience in APS and ongoing recovery in memory.

General Semiconductor: We in General Semiconductor

General Semiconductor: Utilization rate for wall-bounding have continued improved gradually. A lot have yet reached the critical tipping point. Expected to try high volume customer to broadly require capacity addition.

Fusen Chen: These are all the activities that have centered along high-volume region where UTI region rate has averaged over 80% for the past two quarters. At the same time, the risk of the war has to take slightly, but is continuing to improve. As expected, global low-bounding iteration rates have exceeded 75% last quarter and are anticipated to be in a high 70% range within the fourth fiscal quarters. Looking at our industry growth in 2020, we continue to anticipate certain semiconductor unit growth expectations will support additional step-up in demand for our high-volume solution. We also anticipate ongoing industry growth will continue into calendar 2020, based on market forecast, but also due to ongoing global front-end related investment.

Speaker Change: These are all the activities centered around high-volume regions, where inflation rate has averaged over 80% for the past two quarters.

Speaker Change: At the same time, the rest of the wall has leaked slightly.

Speaker Change: but it's continuing to improve.

Speaker Change: As expected, global global boundary inflation rates have exceeded 75% last quarter and are anticipated to be in the high 70% range during the fourth fiscal quarter.

Speaker Change: Looking out into fiscal 2025, we continue to anticipate semiconductor unit growth expectations will support an additional step-up in demand for our high-volume solution.

Speaker Change: We also anticipate ongoing industry growth will continue into calendar 2025 based on market forecast, but also due to ongoing global front-end related investment.

Fusen Chen: In addition to improving general semiconductor dynamic, we also book approximately 20 million dollars in summer competition revenue during the June quarter. We include our recognition of an additional FTC system, which supports a recent TCP-in-able hybrid development milestone. With automotive industry, we have also seen improvement in demand, as our semiconductor leadership position is actively supporting emerging process if it utilizes efficient power storage, power delivery, and power control for electric vehicle, charging infrastructure, industrial application, and a sustainable energy generation. We continue to see many innovations affecting power semiconductor assembly, which are driving the need for more low-boss interconnect technologies, such as our recent high power interconnect or HPI solution within which bondage.

Speaker Change: In addition to improving general semiconductor dynamics, we also booked approximately $20 million in thermal compression revenue during June quarter.

Speaker Change: which includes our recognition of an additional FTC system which supports the recent TCP-enabled hybrid development milestone.

Speaker Change: we are automotive in the industryal we have also seen improvement imdemment as our in the come leadership produution is actively supporting emerging process if it utilizede in efficient power storage

Paul Delibere: Paul Delibere, and the Power Control for Electric Vehicles, Charging Infrastructures, Industrial Applications, and Sustainable Energy Generation.

Speaker Change: We continue to see many innovations affecting power semiconductor assembly, which are driving the need for more robust interconnect technologies.

Speaker Change: such as our recent High Power Interconnect or HPI solution within which bonding.

Fusen Chen: HPI being deployed in high-volume battery production as well as for more efficient power. We remain directly involved with several global events captured. The broader power-setting component technology transitions, as well as leaders in the dynamic battery market. Although none of these borders, we continue to support an exciting dispense opportunity, recently deployed with a leading solid state battery company.

Speaker Change: HPI

Speaker Change: Being deployed in high-volume battery production as well as for more efficient power converging required for charging and sustainable energy applications.

Speaker Change: We remain directly involved with several global EV manufacturers, the broader power semiconductor technology transitions, as well as the leaders in the dynamic battery market.

Speaker Change: Overnight this quarter, we continue to support an exciting dispense opportunity recently deployed with a leading solid-state battery company.

Fusen Chen: What is the market of automotive and the industrial main sphere be purchased in capacity? We expect ongoing improvement to continue through our physical 2025. We remember it. We should customer investing in new capacity and technology. One is supporting the net market and again in support for new state-owned solutions in the large and established LOP DVR market. One is arguably the largest stack-dye market in the semiconductor market, relying nearly exclusively on wire-bounding technology. We expect highly-volunteering to transition to 3D packaging format over the coming years. Several important leaders in the memory market are expected to assess development and the pre-production activity over the coming borders.

Fusen Chen: Whilst the market for automotive and industrial may still be digesting capacity, we expect ongoing improvement to continue throughout fiscal 2025. Wirenet is arguably the largest stack-dye market in the semiconductor market, relying nearly exclusively on wire-bounding technology. We expect high volume DRAM to transition to 3D packaging format over the coming years. Our thermal combination and vertical wire solutions are anticipated to more effectively meet the mass market's performance, manufacturability, and cost requirements, thus emerging technologies such as chip-labeled hybrid bonding that can be prohibitively expensive due to the requirement for front-end capability as well as a no-year challenge.

Speaker Change: Whilst the market of automotive and the industrial may still be digesting capacity, we expect ongoing improvement to continue throughout fiscal 2025.

Speaker Change: Within memory, we see customers investing in new capacity and technology, which is supporting the net market and gaining support for new stack-dive solutions in the large and established LOPDDR market.

Speaker Change: Wirenet is arguably the largest stack-dye market in the semiconductor market, relying nearly exclusively on wirebounding technology.

Speaker Change: We expect high volume DRAM to transition to 3D packaging format over the coming years.

Speaker Change: Several important leaders in the memory market are expected to accelerate development and pre-production activities over the coming quarters.

Fusen Chen: With higher volume production to begin in late calendar 2025 or early 2026. Similar to growing leading age and high volume assembly need for triplet-based architectures, the memory market continued to seek a new way to leverage packaging technology to drive greater transistor density per areas. Our summer conversion and the political wire solutions are anticipated to more effectively meet the main market's performance. Manufacturability and cost-requirement, thus emerging technology such as trip-level hybrid-bounding, that can proactively expensive-due-to-requirement forefront and capability as well as a non-year challenge. We remember in a very unique industry position and everything in our leadership enabling critical technology transition, such as direct cover-to-cover and fraudulent adoption.

Speaker Change: with higher volume production to begin in late calendar 2025 or early 2026.

Speaker Change: Similar to growing leading-edge and high-volume assembly need for chip-based architectures, the memory market continues to seek out new ways to leverage packaging technology to drive greater transistor density per area.

Speaker Change: Our thermal combination and vertical wire solutions are anticipated to more effectively meet the mass market's performance.

Speaker Change: manufactbility and the cost requirement does emerging technology such as a chief label highy bonding that can prohibit expensive due to a ondent forefront and capability as well as a nor your challenge

Fusen Chen: We remain in a very unique industry position, and this is evident in our leadership enabling critical technology transitions, such as direct cover-to-cover and flux-less adoption. High Power Interconnect Solution for Automotive and Industrial Applications and Vertical Wire Solution for High Volume Consumer-Oriented Markets. This emerging solution supplements our existing broad portfolio of interconnect solutions.

Speaker Change: We remain in a very unique industry position and evident in our leadership enabling critical technology transition, such as direct copper-to-copper and flux-less adoption.

Fusen Chen: For leading age applications, high power in the complex solution for automotive and industrial application, and the vertical wire solutions for higher-voltage consumer-oriented market. This emerging solution supplement our extension brought portfolio of interconnect solution. We are aware of solutions to support customer's need while delivering significant long-term value to investor.

Speaker Change: for leading-edge applications.

Speaker Change: High Power Interconnect Solution for Automotive and Industry Applications Vertical Wire Solution for High Volume Consumer-Oriented Markets

Speaker Change: This emerging solution supplements our existing broad portfolio of interconnect solutions. We are well positioned to support customers' needs while delivering significant long-term value to investors.

Fusen Chen: In question, after nearly two years of capacity purchasing, we have reached to continue seeing regular size of brother-based security recovery across multiple end-market. That's in a recent 20th century project, a 17% semiconductor-driven industry growth rate through calendar year 2025. This growth expectation seems very reasonable considering ongoing global front-end investment and is expected to be later primarily by AI, automotive, and general semiconductor. When we expect more directly, benefit the company and the industry investors. Global intervision rate, we are moving to the highest 70% range, also increased confidence for a more low-boss 2025 recovery.

Fusen Chen: In closing, after nearly two years of capacitive adjustments, we are pleased to continue seeing gradual signs of further-based cyclical recovery. We project a 17% Semiconductor Revenue Industry Growth Rate through calendar year 2025. This growth expectation seems very reasonable considering ongoing global front-end investment and is expected to be led primarily by AI, automotive, and general semiconductor, which we expect will directly benefit the company and its investors. I will now turn the call over to Lester for the financial review update.

Speaker Change: In closing, after nearly two years of capacitive digestion, we are pleased to continue seeing gradual signs of broader-based cyclical recovery.

Speaker Change: across multiple markets. Recently,

Speaker Change: Project a 17% Semiconductor Revenue Industry Growth Rate through calendar year 2025.

Speaker Change: This growth expectation seems very reasonable.

Conchita Lina: Conchita Lina

Speaker Change: ongoing global front-end investment and is expected to be led primarily by AI, automotive and the general semiconductor, which we expect will directly benefit the company and its investors.

Speaker Change: Global integration rate, we are moving to the higher 70% range. Also increase confidence for a more robust 2025 recovery.

Lester Wong: I will now attend a call over to list the for-the-financial review update. Thank you, Fusen. My remarks today will refer to gap results unless noted. While there continues to be headwinds across specific end markets, it remains a transformative time for the company. As Fusen mentioned, multiple end markets are showing signs of improvement, represented in utilization rates as well as growth expectations into next year, while momentum and our portfolio of advanced action solutions is accelerating through both our direct customer qualifications and broadening industry adoption. During the June quarter, we generated $181.7 million for revenue and a 46.6% growth margin.

Speaker Change: I will now turn the call over to Lester for the financial review update.

Speaker Change: Thank you, Fusen. My remarks today will refer to GAAP results unless noted. While there continues to be headwinds across specific end markets, it remains a transformative time for the company.

Lester Wong: As Fusen mentioned, multiple end markets are showing signs of improvement represented in utilization rates as well as growth expectations into next year, while momentum in our portfolio of advanced packaging solutions is accelerating through both our direct customer qualifications and broadening industry adoption. Operating expenses came in slightly lower than expected, as we have maintained a significant focus on operational efficiency as our development teams remain nimble and were effectively reallocated to support in-demand projects over the past quarter. Staff tax expense came in at $4.1 million during the June quarter.

Lester Wong: As Fusen mentioned, multiple end markets are showing signs of improvement represented in utilization rates as well as growth expectations into next year, while momentum in our portfolio of advanced taxing solutions is accelerating through both our direct customer qualifications and broadening industry adoption.

Speaker Change: During the June quarter, we generated $181.7 million of revenue and a 46.6% gross margin.

Lester Wong: Growth margin were largely affected by product and customer mix. Operating expenses came in slightly lower than expected as we have maintained a significant focus on operational efficiency, as our development teams remain nimble and were effectively reallocated to support in-demand projects over the past quarter. DAPTAC expense came in at $4.19 million during the June quarter. We continued to anticipate an effective tax rate of about 20% through the remainder of fiscal year 2024, largely related to our R&D tax treatment under Section 174. Our repurchase program remains opportunistic, and we have again increased our repurchase activity sequentially. During the June quarter, we put $44 million of open market repurchase activity, which represents a sequential increase of nearly 18% and a 64% increase over the previous December quarter.

Speaker Change: Growth margins were largely affected by product and customer mix.

Speaker Change: Operating expenses came in slightly lower than expected as we have maintained a significant focus on operational efficiency as our development teams remain nimble and were effectively reallocated to support in-demand projects over the past quarter.

Speaker Change: DAPT tax expense came in at $4.1 million during the June quarter. We continue to anticipate an effective tax rate above 20% through the remainder of fiscal year 2024, largely related to our R&D tax treatment under Section 174.

Lester Wong: We continue to anticipate an effective tax rate above 20% through the remainder of fiscal year 2024, largely related to our R&D tax treatment under Section 174. Our repurchase program remains opportunistic, and we have again increased our repurchase activity sequentially. During the June quarter, we booked $44 million of open market repurchase activity, which represents a sequential increase of nearly 18% and a 64% increase over the previous December quarter. As a reference point, we have repurchased $728.5 million through both open market and accelerated repurchase activity under the existing repurchase program since August of 2017.

Speaker Change: Our repurchase program remains opportunistic and we have again increased our repurchase activity sequentially.

Speaker Change: During the June quarter, we booked $44 million of open market repurchase activity, which represents a sequential increase of nearly 18% and a 64% increase over the previous December quarter.

Lester Wong: As a reference point, we repurchased $728.5 million through both open market and accelerated repurchase activity under the existing repurchase program since August of 2017. At the end of the June quarter, we had approximately $73 million remaining on this existing share repurchase authorization. In addition to the long-term nature of our share repurchase program, we continue to support an industry-leading dividend program as we continue to execute our new long-term growth opportunities. As seems clearly explained, we remain very optimistic in a broader multi-market recovery over the coming quarters. Although we may not be at the tipping point yet, we anticipate meaningful capacity demand improvements for our high-volume markets over the near-term.

Speaker Change: As a reference point, we repurchased $728.5 million through both open market and accelerated repurchase activity under the existing repurchase program since August of 2017.

Speaker Change: At the end of the June quarter, we had approximately $73 million remaining on this existing share repurchase authorization.

Speaker Change: In addition to the long-term nature of our share repurchase program, we continue to support an industry-leading dividend program as we continue to execute our new long-term growth opportunities.

Lester Wong: As Fusen clearly explained, we remain very optimistic about a broader multi-market recovery over the coming quarters. Although we may not be at the tipping point yet, we anticipate meaningful capacity demand improvements for our high-volume market over the near term. For the September quarter, we expect revenue of approximately $180 million, plus or minus $10 million, with gross margins of 47%. Non-GAAP operating expenses are anticipated to be $69 million, plus or minus 2%.

Speaker Change: As Fusen clearly explained, we remain very optimistic in a broader multi-market recovery over the coming quarters.

Fusen Chen: Although we may not be at the tipping point yet, we anticipate meaningful capacity demand improvements for our high-volume market over the near term.

Lester Wong: For the September quarter, we expect revenue of approximately $180 million plus or minus $10 million, with gross margins of 47%. Non-GAAP operating expenses are anticipated to be $69 million plus or minus 2%. Collectively, for the September quarter, we expect GAAP EPS of 22 cents per share and non-GAAP EPS of 35 cents per share. Looking ahead, we remain very focused on our close customer engagement and look forward to providing additional details to the technology transitions we are involved in that are supporting new technology and adoption milestones, which will help build a foundation in memory, dispense, and thermal compression growth prospects over the coming years.

Speaker Change: For the September quarter, we expect revenue of approximately $180 million, plus or minus $10 million, with gross margins of 47%.

Speaker Change: non-GAAP operating expenses are anticipated to be $69 million plus or minus 2%. Collectively, for the September quarter, we expect GAAP EPS of $0.22 per share and non-GAAP EPS of $0.35 per share.

Lester Wong: Collectively, for the September quarter, we expect GAAP EPS of $0.22 per share and non-GAAP EPS of $0.35 per share. Looking ahead, we remain very focused on our close customer engagement and look forward to providing additional details on the technology transitions we are involved in that are supporting new technology and adoption milestones, which will help build a foundation for memory, suspense, and thermal compression growth prospects over the coming years.

Speaker Change: Looking ahead, we remain very focused on our close customer engagement and look forward to providing additional details to the technology transitions we are involved in that are supporting new technology and adoption milestones which will help build a foundation in memory, dispense and thermal compression growth prospects over the coming years.

Lester Wong: This concludes our prepared comments.

Operator: Operators, please open the call for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you.

Speaker Change: This concludes our prepared comments. Operator, please open the call for questions.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: You may press star 2 if you would like to remove your question from the queue.

Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Craig Ellis: Our first question comes from the line of Craig Ellis with the Riley Securities. Please proceed with your question. Thanks for taking the question. Thank you for all the help with the new product information. I wanted to inquire on your term item first and look a little bit beyond the September quarter. As you look at the gifts and takes for the fiscal first quarter, with the broad based or coordinated, I guess coordinated recovery you talked about. How do you think about the impact of what you're seeing with some improving in markets or portions of end markets versus just still relatively low utilization levels in most of industry.

Speaker Change: Thank you. Our first question comes from the line of Craig Ellis with B. Riley Securities. Please proceed with your question.

Craig Ellis: Yeah, thanks for taking the question, and Fusen, thank you for all the help with the new product information. I wanted to inquire on a near-term item first and look a little bit beyond the September quarter.

Craig Ellis: Yeah, thanks for taking the question, and Fusen, thank you for all the help with the new product information. I wanted to inquire about a near-term item first and look a little bit beyond the September quarter. So, as you look at the Gibson takes for the fiscal first quarter with the broad-based or coordinated, I guess, coordinated recovery you talked about, Fusen, how do you think about the impact of what you're seeing with some improving end markets or portions of end markets versus just still relatively low utilization levels in most of the industry?

Speaker Change: As you look at the gives and takes for the fiscal first quarter,

Speaker Change: With the broad-based or coordinated, I guess, coordinated recovery you talked about, Fusen, how do you think about the impact of what you're seeing with some improving end markets or portions of end markets versus just still

Fusen Chen: Thank you.

Speaker Change: relatively low utilization levels in most of industry. Thank you.

Fusen Chen: So, Craig, you are asking about Q4 FY? Calendar of course, yes. Okay, so last quarter, I think we expect a greater recovery with a slightly improvement into September. You know, a low utilization rate went up, but that's not high enough to trigger, you know, broader recovery. So at this moment, actually, I think we are seeing, you know, Q4 actually is a threat, you know, a community of Q3.

Fusen Chen: So, Craig, you are asking about Q4 FY24, right? Calendar for Q, yeah. Yeah.

Fusen Chen: So, Craig, you are asking about Q4 FY20, right? Calendar for Q, yeah. Okay, so last quarter, I think we expect a gradual recovery with a slight improvement into September .

Fusen Chen: Okay, so last quarter, I think we expected a gradual recovery with a slight improvement into September. The low solar inhalation rate went up, but still not high enough to trigger a broader recovery. So at this moment, actually, I think we are seeing Q4 actually flat compared to Q3.

Speaker Change: A lot of the solar inhalation rate went up, but it's still not high enough to trigger broader recovery. So at this moment, I think we are seeing Q4 flat compared to Q3.

Craig Ellis: That's helpful. And then if you look out further at using, and this is more about question about what your customers are telling you and how they're telling you to get the business ready. Or what should be some seasonal acceleration in the business? Can you just talk about how you envision the slope of recovery playing out? It seems like we've got very uneven demand dynamics across in markets. Indeed, some are recovering; some seem to be still trying to find the bottom, like industrial. What does that mean for how the business might perform as we think about calendar 1Q through 3Q next year?

Fusen Chen: That's helpful. And then, as you look out further, Fusen, and this is more of a question about what your customers are telling you and how they're telling you to get the business ready for what should be some seasonal acceleration in the business. Can you just talk about how you envision the slope of recovery playing out? It seems like we've got very uneven demand dynamics across end markets. Indeed, some are recovering, some seem to be still trying to find the bottom, like industrial. What does that mean for how the business might perform as we think about calendar 1Q through 3Q next year?

Fusen Chen: That's helpful. And then as you look out further, Fusen, and this is more of a question about what your customers are telling you and how they're...

Fusen Chen: telling you to get the business ready for what should be some seasonal acceleration in the business.

Speaker Change: Can you just talk about how you envision the slope of recovery playing out? It seems like we've got very uneven demand dynamics across end markets. Indeed, some are recovering, some seem to be still trying to find the bottom like industrial.

Speaker Change: What does that mean for how the business might perform as we think about calendar 1Q through 3Q next year?

Fusen Chen: Okay. So, uh, Craig, you see, you know, past about 6 quarters. Our revenue, basically, is quite flat. And, uh, but at each moment, you know, it's our feeling. This is the first time in a part of the quarter, which is multiple and market improvement in our coordination. For example, I think early 23, the moment actually, you know, up to enough a lot in the meantime, the which boundary, which was impacted by industrial, you know, and also auto. So, that's why I think, you know, we actually almost have a category; you know, six months of quite flat.

Fusen Chen: So, Craig and Yu Shi, in the past about six quarters, our revenue, relatively, has been quite flat. So if you are asking about 2025, I think that many people have an optimistic view about 2025. With a government of 75%, this will actually trigger a broader, you know, recovery in many markets. So if you ask about sustainability, this is our view. You know, we probably can see growth into Q1 because of our iteration rate.

Speaker Change: OK.

Speaker Change: So, Craig and Yu Shi, in the past about six quarters, our revenue, relatively, is quite flat.

Speaker Change: But at this moment, you know, it's our feeling, this is the first time in the past quarter we see multiple market improvement in coordination.

Speaker Change: For example, I think in early 20th century, the bond market was picking up a lot. In the meantime, the wage market was impacted by industrial and also auto. So that's why I think, you know, we actually almost have a connectivity.

Speaker Change: You know, six months of quite flat.

Fusen Chen: But all we have seen, you know, from feedback, we've seen, you know, auto will be coming back. We, uh, the QCG4, we also get a quite good order for a big, you know, EV company for which matters, and the memory is supposed to pick it up. So, if you are asking about 25, I think that many people have an optimistic view about 25. Uh, with a gastronomy of 75%. These, uh, will actually trigger brother, you know, our recovery and in our, uh, many market. So, you can ask about different energy. This is the audio. Uh, these, uh...

Speaker Change: But what we are seeing, you know, from our feedback, we are seeing, you know, auto really coming back. We are, the Q3, Q4, we also get quite good order from a big, you know, EV company for the wage bouncer, and the memory is also picking up.

Speaker Change: So if you are asking about 25, I think many people have an optimistic view about 25.

Speaker Change: With a Gartner 50-75%, this will actually trigger a broader recovery in our many A-markets. So if you ask about sustainability, this is our view.

Fusen Chen: You know, we probably can see a growth into the Q1 because about the average rate is an inch in up close to 80%, but also I think that it's not impossible if we see flood to slightly very big minor sustainability over Q1 and Q2 with a stronger recovery in the Q2 for 25.

Speaker Change: You know, we probably can't see.

Speaker Change: a growth into the Q1.

Fusen Chen: It's inching up close to 80%. But also, I think it's not impossible if we see flux to slightly, very, very minor systematic over Q1 and Q2 with a stronger recovery in Q3, Q4, and Q25. Hope I answered your question. That's really helpful, Fusen.

Speaker Change: Because of our iteration rate, it's inching up close to 80%.

Speaker Change: But also I think it is not impossible if we see a flag to slightly, very very minor systematic over Q1 and Q2 which are stronger recovery in the Q3, Q4, Q25. Hope I answered your questions.

Craig Ellis: How about I answer your questions? That's really helpful, Susan. Thanks for taking the questions.

Craig Ellis: That's really helpful, Fusen. Thanks for taking the questions.

Speaker Change: That's really helpful, Fusen. Thanks for taking the questions.

Krish Sankar: Thank you. Our next question comes from the line of Krish Sankar and TD Cowan. Please proceed with your question. Hi, thanks for taking my question. I have a few of them. First of all, foods in the clarification. Then you said December quarter flat. What is September? Was it for revenues or utilization rate? Actually, for us, because we also guys, we also guys, you know, 180 for Q4, right? And actually Q3, we said the finish, we said 181, so I think flat is a revenue. By utilization, we are actually seeing continues to inch in up. Some area already over 80% for Q4, and every Q2 right now, I think it's 75.

Operator: Our next question comes from the line of Krish Sankar with TD Cowan. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Krish Sankar, TD Cowan. Please proceed with your question.

Chris Sankar: Hi, thanks for taking my question. I have a few of them. First, I'll put in a clarification. When you said December quarter flat versus September , was it for revenues or utilization rates?

Fraga: or actually Fraga

Speaker Change: because we also guide, we also guide, you know, 180 for Q4, right?

Speaker Change: And actually Q3 we just finished with 181, so I mean flat, it's a revenue.

Speaker Change: By iteration, we are actually seeing continued to inching up.

Speaker Change: Some areas are already over 80% for two quarters, and the average right now I think is 75%. We do expect in Q4 it will go to higher 70%.

Fusen Chen: We do expect in Q4 will go to higher 70, but still not touch 80% yet.

Fusen Chen: So that's why I answered if I asked Susan 90, it's hard to get, you know, because we are already expected by our gardener. We will have chance to maybe go up in Q1, but it's also not impossible, which is flat, also actually very, very minor, you know, Susan 90, supported by our second half based zone of recovery. Got it, got it, and then just on that point, Susan, you know, historically, you know, OSAT had an appetite to add capacity when the utilization rate is about 90%. Given the meantime, we're not that long. So is that a fair assumption?

Speaker Change: but still not touch 80% yet.

Speaker Change: So that's why I answered if asked seasonality.

Speaker Change: It's hard to guess, you know, because of the recovery expected by Gartner, we will have a chance, maybe go up in Q1, but it's also not impossible we see a flat, or actually very, very minor.

Speaker Change: Energy, supported by a second half based on a recovery.

Fusen Chen: Got it, got it. And just on that point, Fusen, you know, historically, you know, OSAT...

Speaker Change: had an appetite to add capacity when utilization rate is about 90% given the lead times are not that long. So is that a fair assumption? In that case, maybe the recovery is truly later sometime next year till we get to 90% or do you think there's an appetite to add capacity even below 90%?

Fusen Chen: In that case, maybe the recovery is truly latest sometime next year, till we get to 90%, or do you think that's an appetite to add capacity even below 90? Well, I think it's 80%, you know, a trigger additional, additional buy. Actually, we did see, we did see, you know, OSAT start to contribute in. We actually start from our Q3, and the Q4 also from our channel. We also have memory OSAT, also start to have a buy, so we feel OSAT is the thing; it is really in the capacity now.

Fusen Chen: Well, I think it's 80 percent, you know, trigger additional, additional buys. Actually, we did see, we did see, offset start to contribute. We actually started from Q3 and Q4, also from China. We also have memory offset, also starting to have a buy. So, we feel offset is really making capacity now.

Speaker Change: Well, I think it's 80%, you know, trigger additional

Speaker Change: Additional by, actually we did see, we did see, you know, all sets start to contribute in.

Speaker Change: We actually start from Q3 and Q4, also from China, we also have memory OSA, also start to have a buy. So we feel OSA is really missing capacity now.

Krish Sankar: Got it, got it. Then two quick questions on advanced packaging. One is, can you talk a little bit about the status of the TCD quality of the Taiwan boundary? What is going on there? Okay, so Chris, I think we actually have engagement and the qualification, actually a multiple project, you know, over there, and this press is, we believe it's going to be a growth for us in the future. The qualification is a full product list and this is for the high end, you know, you know, the products and is a product list and full of products we are only one in the mass production, you know, fully industry and the qualification actually take a long time.

Fusen Chen: Got it, got it. And then there are two quick questions on advanced packaging. One is, can you talk a little bit about the status of the TCV Coal at the Taiwan Foundry? What is going on there?

Speaker Change: Got it, got it. And then two quick questions on advanced packaging. One is, can you talk a little bit about the status of the TCV Coal at the Taiwan Foundry? What is going on there?

Fusen Chen: Okay, so Krish, I think we actually have an engagement and a qualification. Actually, we have multiple projects over there, and this place is, we believe, is going to be a growth market for us in the future.

Speaker Change: The qualification is for the fructose-less, and this is for the high-end, you know, the products, and it's fructose-less. And for the fructose-less, we are the only one in the mass production, you know, for the industry.

Fusen Chen: The previous IBM company, we took across two years, two finishes, but so far in our opinion, we believe all of these come out positive and we have an early production for the first customer is intended for first half of the 25. We feel positive and that we have an initial discussion, you know, about capacity, you know, and also to give a schedule at the early stage.

Speaker Change: And the qualification actually takes a long time. The previous IEM company...

Speaker Change: We took close to two years to finish it.

Speaker Change: But so far, in our opinion, we believe all the results come out positive.

Speaker Change: and we have already the production for the first customer is intended for...

Speaker Change: In the first half of 2025, we feel positive and we have an initial discussion.

Speaker Change: about capacity and also delivery schedule at the early stage. So we expect to reach a near-term milestone and we will be able to update everyone.

Krish Sankar: And so we expect to reach a new near the milestone, and we will be able to update everyone, maybe now on December 4th, or November 4th. Go ahead and then final question, I think in the last time you, including you mentioned, quite 25 advanced packaging, dedicated 80s, I think it could be 200 million. Are you still speaking with that number, or do you think it might be lower than that? Chris, could you repeat? I think last quarter you said in fiscal 25 advanced packaging revenues could be 200 million, dedicated AP. Is that for the case?

Speaker Change: maybe now additional co all the memho

Speaker Change: And then final question, I think in the last time you and Fusen, you mentioned FI25 Advanced Packaging dedicated AP revenue to be 200 million. Are you still sticking with that number or do you think it might be lower than that? Krish, could you repeat?

Speaker Change: I think last quarter you said in fiscal 25 advanced packaging revenues could be...

Fusen Chen: Yeah, so this is our forecast. For TCB alone, in the last quarter, we forecast about 100 million dollars. But for a dedicated, for a dedicated, you know, the advanced packaging, this including TCB, also including a particular wire, and also including a system in packaging, So all these adding together were close to 200 million dollars.

Krish: $200 million.

Fusen Chen: Yeah, so this is our forecast, our GCB along in 25 last quarter we forecast about 100 minutes. But for the dedicated, for the dedicated, you know, the advanced packaging is included in GCB, also included in a particular wire, and also included a system in packaging. So all is added together across to a 200 million dollars. And you know, since we add in a more engagement in our site, we are doing a long term forecast at this moment.

Speaker Change: dedicated AP. Is that the case? Yeah, so this is our forecast. Our GCP alone in 2025, last quarter, we forecast about 100 million.

Speaker Change: But fully dedicated, fully dedicated, you know, the advanced packaging, this including PCB, also including a particular wire, and also including a system in packaging. So all these adding together were close to $200 million.

Speaker Change: And, you know, since we are adding more engagement in our site, we are doing a long-term forecast at this moment. We probably will be able to share with you in the next couple of quarters.

Krish Sankar: Thank you very much, Susan. Thanks.

Speaker Change: Fusen Chen, Lester Wong, Joseph Elgindy

Speaker Change: thank you very much is things

Tom Dillfleet: Thank you. Our next question comes from the line of Tom Dillfleet with DA Davidson. Please proceed with your question. Yeah, good afternoon. I appreciate the question.

Operator: Thank you. Our next question comes from the line of Tom Dillfleet with D.A. Davidson. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Tom Dillfleet with D.A. Davidson. Please proceed with your question.

Fusen Chen: When I look at the guidance for flat next quarter at 180 million, is there any kind of shift between end markets or products, or is it going to be fairly similar to what you had this quarter? It's quite similar, you know, compared to efficiency. Okay.

Tom Diffely: When I look at the guidance for flat next quarter at $180 million, is there any kind of a shift between end markets or products, or is it going to be fairly similar to what you had this quarter?

Tom Dillfleet: Yeah, good afternoon. I appreciate the question. When I look at the guidance for flat next quarter at $180 million, is there any kind of a shift between end markets or products or is it going to be a fairly similar to what you had this quarter?

Speaker Change: So actually it's quite similar, you know, compared to Q3.

Lester Wong: And then, Susan, when you looked at the slides you produced, and you gave a five-year average for the different segments, when you look over the next five years, do you think that those are pretty good numbers? Or do you think some of those markets were overstated with the big upturn, or understated because of growth drivers? Tom, can you talk in about one-sheet number? Yeah, on your slide you had a five-year average for the different segments. And wondering if those five-year averages are good, you know, on a go-forward basis, or if you think they're over understated for the next five years?

Speaker Change: Okay and then Fusen, when you looked at the slides you produced and you gave a five-year average for the different segments, when you look over the next five years do you think that those are pretty good numbers or do you think some of those markets were overstated with the big upturn or understated because of growth drivers?

Speaker Change: Tom, could you talk about which number... Yeah, on your slide you had a five year average for the different segments.

Speaker Change: And I was wondering if those five-year averages are good on a go-forward basis, or if you think they're over- or understated for the next five years.

Lester Wong: So yeah, so Thomas Lester, so we believe that those numbers are good going forward on a five-year basis as a projection going forward. There might even be a little bit of an upside going forward. Okay, great.

Speaker Change: yeah

Speaker Change: So yeah, so Tom and Lester, we believe that those numbers are good going forward on a five-year basis. As a projection going forward, there might even be a little bit of an upside going forward.

Lester Wong: And then finally, Lester, when you look at the project W that was cancelled last quarter, what was the cost associated with that, and have those expenses or costs been reallocated? So, I think for project W, there's minimal cost associated with Q3 and Q4 going forward. And we have reallocated those resources. I think in my remarks, I mentioned that we kept off that sound because we reallocated those resources in an efficient manner to project that was more in demand for the quarter and going forward. Great.

Speaker Change: Okay, great. And then finally, Lester, when you look at the Project W that was cancelled last quarter, what was the cost associated with that and have those expenses or costs been reallocated?

Lester Wong: So, I think for Project W, there's minimal cost associated with Q3 and Q4 going forward. And we have reallocated those resources. I think in my remarks I mentioned that we kept OPEX down because we reallocated those resources in an efficient manner to projects that was more in demand for the quarter and going forward.

Lester Wong: Thank you.

Operator: Thank you. Our next question comes from the line of Dave Duley with Steelhead Securities. Please proceed with your question.

Dave Duley: Our next question comes from the line of Dave Duley with Steelhead Securities. Please proceed with their question. Thanks for taking my questions.

Speaker Change: Thank you. Our next question comes from the line of Dave Duley with Steelhead Securities. Please proceed with your question.

Dave Duley: A couple of Let's start on advanced packaging. I was wondering if you could just help us understand the applications that you have thus far kind of captured in order to produce this 10x growth in your thermal capacity. Compression bonding. And just digging into that puzzle just a little bit further, you know, I think we all recollect your first customer here was a big IBM CPU provider. You could kind of just help us understand at that big customer, what are you doing: chip on wafer or chip on substrate. And, you know, how does that help you win business at the big foundry?

Dave Duley: Thanks for taking my questions. A couple. Let's start on advanced packaging.

Dave Duley: I was wondering if you could just help us understand the applications that you have thus far kind of captured.

Speaker Change: in order to produce this 10x growth in your thermal compression bonding.

Speaker Change: And just digging into that puzzle just a little bit further, you know, I think we all recollect your first customer here was a big IDM CPU provider.

Speaker Change: If you could kind of just help us understand, at that big customer, what are you doing, chip on wafer or chip on substrate, and, you know, how does that help you win business at the big foundry?

David Duley: So, David, I think we start to get more significant revenue in 2021, so it's about, you know, less than $10 million. So within four years, I think, you know, first, I think we start with the OSEC. You know, of OSEC, we are working with IBM Company, and we have developed actually a chipless substrate. And in the meantime, I think, you know, when we work with OSEC, we are also working with customers who focus on silicon photonics and also like 3D sensing, you know. So right now, I think we have, you know, a special market for silicon photonics, silicon sensing, and also have actually more important heterogeneous integration. So, I think last year, we, what's the, 2013, what's the...

Fusen Chen: So Dave, I think we start to get a more significant revenue in that 21. So it's about, you know, less than 10 million dollars. So within four years, I think, you know, first, I think we start with the old set, you know, up the old set, we are working with an IBM company. And we develop actually a chip of substrate at the end of the internet. I think, you know, when we were with old set, we also working with, you know, the customers who focus on silicon photonics and also like a 3D sensing, you know, so right now, I think we have, you know, in a special market, silicon photonics, silicon sensing, and also have actually more important energy as integration.

Speaker Change: So, uh...

Speaker Change: d i think what we start with careid are more significant regator thats forty one so it's about you lesscent million dollars

Speaker Change: So, within four years, I think...

Speaker Change: You know, first, I think we start with the OSAT.

Speaker Change: We are working with IBM company and we develop extra chips to substrate. In the meantime, I think when we work with OSET, we are also working with the customers who focus on...

Speaker Change: Silicon Photonics, and also 3D Sensing.

Speaker Change: So right now, I think we have a special market, silicon photonics, silicon sensing, and also have a more important heterogeneous integration.

Fusen Chen: So I think not here, we was a 23 was 76 to 80 million dollars. So we actually start to focus; we believe in the future. They are few bigger area for us. One of the old set, we actually feel very comfortable. We continue to get more revenue and more applications are over there. And the number two is a chip to substrate. I think we are doing very well.

Speaker Change: So, I think last year, we, was the 23rd, was the...

Speaker Change: $76 to $80 million

Speaker Change: So, we actually start to focus...

David Duley: We believe in the future there are a few bigger areas for us. One is that we actually feel very comfortable. We continue to get more revenue and more applications over there. And number two is the church substrate. I think we are doing very well.

Fusen Chen: What we are focusing on right now actually is going to be a chip to wherever we believe this is a huge market as well as a foundry. So this is a two area; I think we probably will feel our growth for next couple. And that's the outsourcing of part of the co-auth process to the OSATs, and I think that's the OS part, the chip on substrate.

Speaker Change: What we are focusing on right now actually is going to be a shift to wafer. We believe this is a huge market as well as a foundry, right? So with these two areas, I think we probably will fuel our growth for the next couple of years.

Fusen Chen: And does the outsourcing of part of the co-op process to the OSATs, and I think that's the OS part, the chip on substrate, is that a beneficial trend for you guys given that you already have relationships with these OSATs and they're using your equipment, or do you have to go in and kind of prove yourself completely new there?

Speaker Change: And that's the outsourcing of part of the co-op process to the OSAPs.

Speaker Change: and i think that's the o s part the shipip on substrate is that a beneficial trend for you guys given that you already have relationships with these o sats and 're using your equip or if you have to go and kind of yourself completely new there yeah ' a b tration to us

Fusen Chen: Is that a beneficial trend for you guys, given that you already have relationships with these OSATs and they're using your equipment, or do you have to go in and kind of move yourself completely new there? Yeah, it's beneficial to us. I'm sorry, didn't hear that. It is beneficial to us. Okay.

Fusen Chen: Yeah, he's beneficial to us.

Speaker Change: I'm sorry, you didn't hear that? It's beneficial to us. Okay.

David Duley: Okay, find a question from me is just on the core business. You know, a couple years ago was obviously running at much, much higher levels. And I'm just kind of curious, is there any reason that you can see that that core business wouldn't achieve peak levels of revenue again, like it was a few years ago, given the appropriate circumstances in the end markets? Well, so David, you are asking for a few things, right? So actually, the year 2022, 2021, I think we actually went up from 500 something, you know, to about 1.5. This is 2.6 growth, 2.6X, right?

Speaker Change: Okay, final question from me is just on the core business.

Speaker Change: You know, a couple years ago, it was obviously running at much, much higher levels. And I'm just kind of curious, is there any reason that you can see that that core business wouldn't achieve peak levels of revenue again like it was a few years ago, given the appropriate circumstances in the end markets?

David Duley: peak levels of revenue again like it was a few years ago given the appropriate circumstances in Myanmar.

Fusen Chen: So, David, you are asking about the whole business, right? So, actually, the year 2020 to 2021, I think we actually went up from like 500, you know, to about 1.5. It's a 2.6 growth, 2.6X, right? That's very, very significant.

Speaker Change: Well, uh...

Speaker Change: So, David, you are asking about the whole business, right? So, actually, the year 2020 to 2021, I think we actually went up from like 500 something, you know, to about 1.5. This is 2.6 growth, 2.6X, right? That's very, very significant.

Fusen Chen: That's a very, very significant. So that's why I think at 21, 22, 1.5. I think a lot of customers, they're over by a lot of core business. Therefore, I think we are down to this level. But if you look at it, if a growth and a prediction is correct, the 70% unit growth, just assume, you know, half a lot, if they say a, every day, you know, whatever, even like a percent, right? What sugar, a lot of capacity buy for our core business. I give you an average of a normal, below the business, like even before COVID is about 100 to 600 million dollars.

Fusen Chen: So that's why I think 21, 22, 1.5. I think a lot of customers overbuy a lot of core business. Therefore, I think we are down to this level. But if you look at it, if the Gardner prediction is correct, the 17% unit growth, just assume half of that is, say, AI-related or whatever, even like 8%, will trigger a lot of capacity buys for our core business. I give you an average of a normal 400 business, even before COVID, it's about $500 to $600 million.

Speaker Change: So, that's why I think 21, 22, 1.5, I think a lot of customers, they overbuy a lot of co-business. Therefore, I think it's a...

Speaker Change: We are down to this level.

Speaker Change: But if you look at it...

Speaker Change: evenground and a prediction is a correct the seventeen percent ungo just assumed you know how whole life is a

Speaker Change: Say AI related or whatever, even like 8% right, will trigger a lot of capacity buying for our core business

Speaker Change: I give you an average of a normal four-bounder business.

Fusen Chen: So we, you know, are triggered capacity buy. I think you can calculate, you know, we are still, this year, still less than 400 million dollars for both of them. So we believe that we have a huge, we have a huge, you know, opportunity in core business. Also, you know, our new technology as a value for the future, you know, both of them, including VFO and also in the which of them over HPI. So, we do believe, if a single downtown normally, no more than six quarters, we already have a quarter, like including this quarter, maybe nine quarters.

Speaker Change: Like, even before COVID, it's about $100 to $600 million.

Fusen Chen: So with a trigger capacity buy, I think you can calculate that we are still, this year, still less than $400 million for 400. So we believe we have a huge opportunity in core business. Also, you know, our new technology is a value for the future, both on the VFO and also in the weight of our HPI. So we do believe the semi-conductor downturn will normally last no more than six quarters. We already have a quarter, right, including this quarter, maybe nine quarters. So the longer the downturn, actually, we believe the upturn in some way will be stronger and stronger, you know, stuff from there. Yeah, the longer you stay under the...

Speaker Change: So, with a trigger capacity, I think you can calculate, you know, we are still, this year still.

Speaker Change: less than point i in a dollar able longer so we believe we have a huge we have a huge in our opportunity in cobusiness

Speaker Change: also you know our new technology as a value for the future you know longer including pol level and that also in a wage among the over hp i so we need do believe second other the bountain

Speaker Change: Normally, no more than 6 quarters. We already have 8 quarters, including this quarter, maybe 9 quarters. So the longer the downturn, actually, we believe, upturn in some way, that will be stronger, and a strong start from there.

Fusen Chen: So longer, the downtown, actually, we believe up in somewhere that would be stronger and a strong, you know, up from there. Yeah, the longest thing under the curve, the bigger, you know, be over the part of the part of the curve and the things get better, right? You know, everything got evens out that way.

Speaker Change: Yeah, the longer you stay under the curve, the bigger you'll be over the part of the curve when things get better, right?

Fusen Chen: Okay, thank you.

Speaker Change: You know, everything kind of evens out that way. Okay, thank you.

Operator: Thank you.

Operator: Thank you. Our next question comes from the line of Ross Cole with NIDA.

Ross Cole: Our next question comes from the line of Ross Cole with Needham and Company. Please proceed with your question. Hi, thank you for taking my question. I noticed that you mentioned you expect the December quarter to be flat compared to the September quarter. And you're expecting gross margin to remain roughly the same area for the two corges as well. Thank you.

Speaker Change: thank you our next question comes on a line of ross coal with needum and company please proceed with your question

Ross Cole: All right, thank you for taking my question.

Ross Cole: I noticed that you mentioned that you expect the December quarter to be flat compared to the September quarter.

Speaker Change: and you're expecting gross margin to remain roughly the same area for the two quarters as well

Lester Wong: So actually, I think maybe that was a high classism in some extent. I don't think we guided to the December quarter. I think what Putin said was actually the September quarter, which we just guided to, is flat to the third quarter. He did mention for the December quarter, which is our first fiscal quarter for 25. There is some update, but then there also be some seasonality in there, so I think right now it's Diffless Day. As far as gross margin is concerned, I think we believe that gross margin will probably stay around the 47% level through the rest of the calendar year.

Lester Wong: So actually, I think maybe that was a high since Lester's misunderstanding. I don't think we got into the December quarter. I think what Fusen said was actually the September quarter, which we just got into, is flat to the third quarter. He did mention the December quarter, which is our first fiscal quarter for 2025, there is some uptake, but there may also be some seasonality in there. So I think right now that it's a bit per se.

Speaker Change: Thank you.

Lester Wong: So actually, I think maybe that was a high since Lester's misunderstanding. I don't think we got into the December quarter. I think what Fusen said was actually the September quarter, which we just got into, is flat to the third quarter. He did mention for the December quarter, which is our first fiscal quarter for 2025, you know, there is some uptake, but there may also be some seasonality in there. So I think right now, it's a bit per se. As far as gross margin is concerned, yeah, I think we believe the gross margin will probably stay around the 47% level through the rest of the calendar year. But then we'll pick up in the calendar year 2025 as some of our cost reduction issues kicked in, as well as some of our newer products, which suddenly get traction, but will have a lot more traction in 2025. And those are much higher margin products.

Lester Wong: As far as gross margin is concerned, yeah, I think we believe gross margin will probably stay around the 47% level through the rest of the calendar year. But then it'll pick up in the calendar year 2025 as some of our cost reduction issues kick in, as well as some of our newer products, which are starting to get traction, but will have a lot more traction in 2025. And those are much higher-margin products. So we are still aiming for a 50% gross margin on a corporate-wide basis.

Lester Wong: But then we'll pick up in the calendar year 25 as some of our cost reduction issues kicked in, as well as some of our newer products which are suddenly getting traction. But we'll have a lot more traction in 25, and those are much higher margin products. So we still are aiming towards the 50% gross margin on a proper y basis. Great. Thank you for the clarification and the answer. Thank you.

Lester Wong: So we still are aiming towards a 50% gross margin on a corporate-wide basis.

Speaker Change: good d you for the clarification in the answer

Christian Schwab: Our next question comes from the line of Christian Swab with Craig Hall and Capitol Group. Please proceed with your question. Great.

Lester Wong: Thank you. Our next question comes from the line of Christian Schwab with Craig Hallam Capital Group.

Operator: Please proceed with your question.

Fusen Chen: Fusen, you know, other than Gartner's enthusiasm for revenue growth or semiconductor unit growth, is any of your dialogue with any of your customers suggesting that, in the first half of calendar 25, they plan on giving you a bunch of orders?

Fusen Chen: Please proceed with your question.

Christian Schwab: Just a person, you know, other than Gartner, you know, Susie has them for, you know, relative growth or semiconductor unit growth. Is any of your dialogue with any of your customers suggesting that the first half of calendar 25 that they plan on giving you a bunch of orders? I think everybody we talk up in this day on 25. The calendar has been very long. Actually, you know, the short time, you know, we have been in this chart for 6 to 8. Like if you look at it and that history, but we don't see this. That means our market is stabilized, and in the future we have a new product offer.

Fusen Chen: Fusen, you know, other than Gartner, you know, enthusiasm for, you know, revenue growth or semiconductor unit growth, is any of your dialogue with any of your customers suggesting that the first half of calendar 25, that they plan on giving you a bunch of orders?

Fusen Chen: I think everybody we talk up in the stage, all 25, because it has been a very long time.

Fusen Chen: Actually, you know, the short-term, you know, we have been in this chart for 6 to 8 quarters already, right, if you look at it. And historically, we don't see this.

Fusen Chen: Actually, you know the short term

Fusen Chen: You know, we have been in this chart for six to eight quarters already, right, if you look at it. And historically we don't see this.

Fusen Chen: That means our market is stabilized, and in the future, we have a new product to offer. But the short term, I think, is really hard to judge. You know, in the meantime, the integration rate is inching to 80%, right? You know, 75. We do believe that finishing Q4 will be a high 78. And, you know, that's why it didn't trigger capacity buys. Maybe customers still have a little budget concern, you know, and the macro, all this.

Fusen Chen: That means our market is stabilized and in the future we have a new product to offer.

Fusen Chen: But the short time, I think, is really hard to judge. You know, in the meantime, the iteration rate is an inch into 80%. Like, you know, 75, we do be there for finished Q4 would be a high 78. And, you know, that's why it's still a different trigger capacity by maybe customers still have a little budget concern.

Fusen Chen: But the short term, I think, is really hard to judge. You know, in the meantime, the utilization rate is inching to 80%, right? You know, 75%, we do believe Finnish Q4 will be a high 78%.

Fusen Chen: And, you know, that's why it didn't trigger capacity buy, maybe customers still have a little bit of project concern, you know, and the MAKO audits.

Fusen Chen: And, you know, and the main goal is, so if you're asking me about Q1 and Q2, this can go up, but this can also be flat. Also be, if so, she's a 90; we don't expect a major one. But actually, we have high voltage. So there's many customers we talk to 25, you know, we agree.

Fusen Chen: So if you're asking me about Q1 and Q2, this can go up, but this can also be flat, or if it's just a 90, we don't expect a major one. But actually, we are quite bullish. So as many customers as we talk about 25, you know, it will be a good year.

Fusen Chen: so if you' askkinggive me about a q one and q two this can go up but this can also be flat also be is if we don't expect a major one but actually we have high bullish so there's many customer we talked to qualify

Fusen Chen: And then just for the clarity, what type of applications are at markets are people most excited about a recovery in 25 then. You know, I don't know if it does feel, etc. Okay, I can tell you, of course, we look at, you know, our advanced packaging. And we also look at the, you know, the which boundary is a lot of auto industrial. And many are both boundary. So, the boundary actually, you know, the customer is in general semi. And it's also auto and also in AI. So, I think the application is quite broad.

Fusen Chen: you know we a we year

Speaker Change: And then, just for the clarity, what type of applications or ad markets are people most excited about a recovery in 25N?

Operator: Automotive, industrial, etc.

Operator: automotive, industrial, etc.

Operator: Okay, I can tell you, of course we look at our advanced packaging.

Operator: and we also look at which funder is a lot of auto, industrial, and many is a bull funder.

Operator: More on the, actually, you know, the customer is in General Semi and is also Auto and also in AI. So, I think the application is quite broad.

Fusen Chen: And, you know, I mentioned the age, no more year over more than should be 500 to 600, even before COVID. And we have been not in a prolonged downtem, and we do believe a little bit of broader recovery. I think we probably will be the first one to see that recovery. Okay, great, no other questions, thank you. Thank you, there are no further questions at this time, I'd like to turn the floor back over to Joe for closing comments. Thank you, Alicia, and thank you all for joining today's call.

Speaker Change: ter you know uh i mentioned the aage

Speaker Change: no more year over go longer should be five hundred to six hundred your life even a before covid and that we have been ied in the pollong down and and that we do believe a bit of brotherer recovery i 't we play would be the first one ish e the republic

Speaker Change: Okay, great. No other questions. Thank you.

Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Joe for closing comments.

Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Joe for closing comments.

Joe Elgindy: Over the coming quarter, we'll be presenting at several conferences and road shows. As always, please feel free to follow up directly with any additional questions.

Joe Elgindy: This concludes today's call.

Have a great day, everyone.