Q4 2024 Kulicke and Soffa Industries Inc Earnings Call
Yes.
Speaker Change: Greetings and welcome to Kulicke and cellphone 2020 for fourth quarter results earnings call at.
At this time all participants are in a listen only mode.
Speaker Change: <unk> and answer session will follow the formal presentation. If anyone requires operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Joe <unk> Senior director of Investor Relations. Thank you you may begin.
Speaker Change: Thank you.
Speaker Change: Welcome everyone to kill can solve this fiscal fourth quarter 2024 conference call Susan.
Speaker Change: Susan Chen President and Chief Executive Officer, and Lester Wong Chief Financial Officer are also joining 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: The non-GAAP reconciliation tables are included within the latest earnings release and earnings presentation. Both are available on Investor Doc can S. Dot 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. These statements are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Speaker Change: 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 complete discussion of the risks associated with Gilligan software that could affect our future results and financial condition. Please refer to our recent and upcoming SEC filings specifically the latest Form 10-K as well as the 8-K filed today with that said I will now turn the call over to Susan Chen for the business overview. Please go ahead.
Speaker Change:
Susan Chen: Thank you Joe.
Susan Chen: Afternoon, everyone.
Susan Chen: Although some of our coal market remain you know stay off that just yet we continue to anticipate a repetitive capacity grow in a KOL Bowl H and the Aps segment sure all fiscal 'twenty or 'twenty five.
Susan Chen: As we continue to expand shows strong technology transitions, the best packaging and that expense.
Susan Chen: Yesterday, we made several positive announcements regarding our high potential foundry win.
A couple of first hybrid bonding process, which we expect will reach so he might compete and also an expansion of shareholder return.
Susan Chen: Yes.
Speaker Change: Oh I didn't hear you nephrotic base similar compression if he she continues to grow.
Speaker Change: The correct, you're able to buy all the bunch solution, Tim and then excuse me are causing many apparel customer depending on program.
Speaker Change: Allow us to drive market adoption of this innovative process.
Speaker Change: Recent wins represent a significant milestone which highlight the market potentials.
Speaker Change: Just unable competitiveness and also the brother reach that Tibet and advanced packaging can have high volume more material portion of semiconductor packaging.
Speaker Change: First this is a milestone highlight that F. D. C is a very competitive and a compelling industry solution. Once you get it capable of directly supporting many different sic type applications, including the wars, most or otherwise the logic and the memory production.
Speaker Change: But also we didn't all the high volume logic market, which are transitioning from the mature free chip process.
Speaker Change: We are very proud of our innovative innovations, we didnt distribute technology and also our stone.
Speaker Change: Foundational base of leading customers, which illustrates the current market need and the longer term potential of this competitive technology.
Speaker Change: Secondly, all couldn't win.
Speaker Change: The innovation highlights our leadership position in a technology transition.
Speaker Change: This is the first and the only provider of Fox <unk> system, which are proven in the production environment.
We have a global GCB installed base of over 100 systems and approaching $200 million of accumulative tissue Vcs.
Speaker Change: Oh for Disney installed base approaching mentally assembly system, along an FTC either development or production environment across five major IDM all set in the foundry customers.
Speaker Change: Maintaining this label support across different emerging application and the customer location kind of needed to be accomplished by all of that because the bulk so isn't it Tim.
Speaker Change: Close customer you can get you that.
Speaker Change: Have been essential at the development of our FTC Praful up Tula.
The critical market insights, which enable us to develop a very flexible and capable system architectures, which can support a broad range of new packaging format.
Speaker Change: Why are there are many different marketing equinix used to explain the growing mix of advanced packaging overnight.
S waiver on substrate or interpose, Oh I see.
Speaker Change: We have U S system, which supports a wide variety of material handling congregation and there is a very capable of supporting the most of the balance he should be requirement wait.
Speaker Change: The chip to chip or chip to wafer.
Speaker Change: It's a need for the bus white Peach Mtc and copper for hybrid.
Speaker Change: We expect our competitive policing what continue to improve across high performance applications.
Speaker Change: Finally.
Speaker Change: These announcements.
Speaker Change: So.
Speaker Change: That's the future of semiconductor assembly will require new and the increasingly more complex assembly solution that can provide greater transistor density.
Speaker Change: Each enable.
Speaker Change: This growing need extend where young but most of advanced process node.
Speaker Change: Emerging packaging technology provide a new table.
Speaker Change: That is increasingly necessary to offset the limitation of two dimensional nor shrink.
Speaker Change: Okay.
Good day.
Speaker Change: Our new product portfolio, including political while.
Speaker Change: H P I F T C and the copper first.
Speaker Change: Goodbye capable solution way of Parisian to support package that they both times. She does density across end market.
We have been focusing extensively on this transition for years I'm pleased with our recent progress and look forward to additional adoption.
Speaker Change: Turning to the fourth quarter as a result, we delivered revenue of $181 million and the non-GAAP EPS of <unk> 34 cents.
Speaker Change: And end market standpoint, he portion of general semiconductor automotive industrial and the memory half improve as anticipated. It why it only did demand remains very stuff.
Speaker Change: We continue to anticipate coordinates recovery of our two most significant end market.
Speaker Change: General semiconductor and the automotive industrial through fiscal 2025.
Speaker Change: For the September quarter, as general semiconductor reduced sequentially primarily.
Speaker Change: Due to strong June quarter, TCE revenues stemming from shipment schedules and the revenue recognition timeline, which create quarter to quarter variability.
Speaker Change: Excluding tissue B general semiconductor increased by 11% sequentially driven by capacity addition, and the return in demand from global all set as anticipated.
Speaker Change: Although the December quarter trends to be seasonally suffer averaging 10% sequential reduction over the prior three years, we are confident brother ball bonding demand.
Speaker Change: For the sort of physical accounting 75 used to using level unit growth combined with higher figure you'd had original date.
Speaker Change: For automotive and the industrial we are seeing demand improvement after a challenging year.
Speaker Change: I explained at last year last quarter.
Women in general semiconductor, Japan by ball bonding work completed the upset by the challenge within automotive and the industrial during fiscal 2024.
Speaker Change: But at this point we have.
Speaker Change: We believe most critical market.
Speaker Change: Tough and they expect coal demand recovery to a cigarette in physical with hundreds of new hires.
Despite these recent bureau capacity attrition will continue to participate in emerging transition.
Speaker Change: Driven by secular growth in electronics, and electrical vehicle and the sustainability trends.
Speaker Change: We have a strong network of global customers, who are critical to enabling this transition as well.
Speaker Change: We continue to support.
Speaker Change: Over the past four years. Many countries. In addition to European Union have implement August or policies.
Speaker Change: Incentivize EV adoptions, just lots of months the international Energy Agency I E reported seven unit you'd be also globally in the first half of Canada Thompson default.
Speaker Change: And in 25% year over year increase.
Speaker Change: While our coal, which SMT and the battery Assembly solution are directly enabling this critical transition within the automotive market.
Speaker Change: Yeah.
Speaker Change: We continue to seek out their solution, which can expand our market access during the recent September quarters, we recognized revenue for the bus dispensing system positioned to support our Saudi stay EV battery manufacturer.
Speaker Change: Yes.
Speaker Change: A new market for all of the bands the expensive business also diversify our growing base of that'll be related opportunities in the U S Europe and Asia.
Speaker Change: And they should pay follow up orders in the coming quarters to support these customers in production.
Speaker Change: It OLED overall remains soft we didnt ball bonding and there continues to be in a state of digestion closer to traditional wire bonded hi, Brite 19 market.
Speaker Change: Why is this current level of demand will likely persist over the coming quarters. We remain focused on driving adoption of our ruling next nasal Beth Mooney O D placements.
Speaker Change: Pressman systems, which is a petition for a direct initiative and big.
Speaker Change: Big lighting adoption over the coming quarters.
During the September quarters, we book revenue for one <unk> system, which is it less states development and the production readiness we.
Speaker Change: We look forward to qualifying additional customers, who are sick archrock fourth E D placements through 2025.
Speaker Change: Lottery, we see ongoing strength related to both capacity addition in that technology change when the memory market. In addition to the improving capacity need for traditional stick men application. We are working with our key memory customers to leverage political wide application in next generation low power.
Speaker Change: Even package as previously explained.
Speaker Change: But also we didn't narrow application.
Initial political wire L P.
Speaker Change: Edr solution, leveraging our vertical and I'll come to you guys. You are currently running at the two key memory customers, which we anticipate will move into low volume production environment next year.
L. P. DDR memory customers are also seeking new stack packaging format for NAND memory, which also use that utilize our unique set of political while solutions.
Speaker Change: Most approach over a smaller package your footprint and the performance of benefit related to.
Speaker Change: Oh, the whole pillar civic capacitance and also lower Pelosity take the resistance.
Speaker Change: Yes, a unique political was solution a compelling example of how new packaging format mitigating node shrink challenges, we expect she'd been our approach to extend beyond memory into higher volume general semiconductor applications overcoming yes.
Speaker Change: We are pleased with our recent progress and the emerging peripheral supporting advanced packaging application, serving the computer market. This leading edge market is now being enabled by <unk> and <unk>.
Speaker Change: <unk> genius packaging technique and was previously excluded from our served market is part of our dominate bolt and phoned in shifts and there has been a key target of our advanced solutions strategy.
Speaker Change: We are proud to demonstrate our strength progress and our potential with these long term advanced solution strategy.
Speaker Change: Technologic change I'll provide you an opportunity in several other areas as well.
Speaker Change: Why are the current issue be a windfall foundry IDM and also customers, who also booking median age applications expanding overall market potentials, we won't do it he might be Mr. Not leading edge application not the only opportunity for advanced packaging.
Speaker Change: Besides copper first hybrid and the FTC all production ready assembly techniques, including political while.
Speaker Change: Providing new solutions for memory and the high volume of general semiconductor.
Speaker Change: Additionally, high power interconnect HP is enhancing power semiconductor and the battery Assembly approach.
Speaker Change: These all represent creek coal technology transition, which are enhancing the value of our respective assembly processes.
Speaker Change: We are well prepared for this transition and I have multiple market ready solution to support our extensive customer base.
Speaker Change: Consortium participation lottery market engagement key customer adoption and a comprehensive set of advanced packaging solution.
Speaker Change: Our preparedness.
To address next set of industry challenges.
Speaker Change: After an extended period of capacity digestion. We also expect ongoing improvement in the cyclical recovery across key end market, most notably general semiconductor automotive and the industrial.
Speaker Change: Looking into fiscal 2025, we remain optimistic due to the reason to come out to win but also due to underlying market conditions.
Speaker Change: Hi, Global ball bonding utilization rate come out with a reasonable semiconductor unit growth is expected to trigger additional growth in our core market during fiscal 2025.
Speaker Change: In addition, the expectation of a broader automotive and the industrial recovery are also supported with our resolve this with us.
Speaker Change: Finally, rather medical economic improvement are also expected to stimulate global semiconductor unit growth through fiscal 2025.
Speaker Change: I will now turn the call over to list for the financial update.
Speaker Change: Uh huh.
Speaker Change: Thank you Susan My remarks today will refer to GAAP results unless noted.
Speaker Change: As we anticipate a broader cyclical recovery for all ball and wedge businesses, we remain focused on supporting many different customer engagements and new technology requirements to expand market access further into fiscal 2025.
Speaker Change: We continue to execute our broad growth strategy intended to expand our market competencies and market share in support of emerging technology trends dessert.
Speaker Change: This too.
Speaker Change: It's been demonstrated in many different markets and applications over the years, including stack wire bonding battery assembly display and most notably pluses thermal compression today.
Speaker Change: The success of this strategy relies on our technology strength close customer collaboration and also our ability to hedge customer and project related risk where possible.
Speaker Change: Considering the extent of the project W related charges booked during the March quarter of our fiscal 2024, we are pleased to announce we reach a customer agreement for reimbursement of a significant portion of our product impairment charges, we intend to book the benefit within the current December quarter.
Speaker Change: Looking back at our September quarter results, we generated $181 $3 million of revenue and a 48, 3% gross margin largely due to an improving mix of higher performance ball and wedge systems.
Speaker Change: non-GAAP operating expenses came in above our expectations due primarily to foreign exchange and ended the year accrual adjustments.
Speaker Change: During the September quarter, we booked a net income tax benefit of $2 million, primarily due to a $6 $5 million tax benefit from a U S tax court case, which produced a one time transition tax.
Prior to today's call, we also announced several updates to our capital allocation programs.
First we received approval for a fifth consecutive dividend raise we continue to appraise.
Speaker Change: I appreciate the consistency and continuity of the dividend program, which allows us to provide a long term holders will have a competitive dividend yield and income stream for their support.
Speaker Change: Secondly, we announced the authorization of a new repurchase program, which we anticipate will seamlessly transition as we complete the existing program.
Speaker Change: Finally, we want to remind investors, we have repurchased 10 3 million shares over the prior three fiscal years and continue to maintain a consistent and fairly aggressive repurchase cadence over.
Speaker Change: Over the long term growing our market access through the organic and inorganic activities remain our priority. Although we expect to further enhance long term EPS growth for investors by continuing our proven repurchase strategy.
Speaker Change: For the December quarter, we expect revenues of approximately $165 million, plus or minus $10 million with gross margin of 47%.
Speaker Change: non-GAAP operating expenses are anticipated to be $70 5 million plus or minus 2%.
Speaker Change: Collectively we expect GAAP EPS of $1 45 per share and non-GAAP EPS of 28 cents per share.
This outlook include customer reimbursement associated with the March 11th 2020 for cancellation of project W.
Speaker Change: As Susan mentioned, we remain very focused on many different customer engagements and also very focused to drive market adoption of our growing portfolio of solutions. We look forward to announcing additional product successes as we prepare for the broader core market recovery in fiscal 2025.
Speaker Change: This concludes our prepared comments operator, please open the call for questions.
Speaker Change: Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment, it may be necessary to pick up the handset.
Speaker Change: Before pressing the star Keys again, Thats Star one to register a question at this time.
Speaker Change: Today's first question is coming from Christian Carr of TD Cowen. Please go ahead.
Speaker Change: Oh, hi, thanks, so much for taking my questions. This is Steven calling on behalf of Krish.
Speaker Change: I guess first one not for Fujian in terms of your general semiconductor end market.
Speaker Change: Is it like a C D sequential growth during the September quarter, but just kind of curious like if we would have taken a little bit further in terms of the.
Speaker Change: I guess if utilization rates at your <unk> customers I think last quarter. You mentioned you would have it will be reaching the high 70% range. During September quarter did it reached that or exceed that and I'm just kind of curious like do you still think 80% annualize.
Speaker Change: Rates are still the right threshold to think about for when your customers will.
Speaker Change: Add capacity or just the more historic 90% utilization rates still debate.
Speaker Change: It's sort of a threshold.
Speaker Change: So Stephen it's less so let me let me answer the question on utilization So I think.
Speaker Change: For the September quarter that utilization.
Speaker Change: In differs in different regions right as well as in different end markets. So for example in China utilization rate is over 80% while for the rest of the world is probably in the mid seventies, but it is Oh every last couple of quarters, it's been going up so I think so generally sent me utilization rate.
Speaker Change: He is also going out and I think 80% is sort of the threshold, we've always said where people start doing more capacity buys.
Speaker Change: Okay, great. Thank you for that.
Speaker Change: And then just for my follow up in regards to the the foundry customer win for the TCP up to virtual congratulations on that announcement I'm just kind of curious like is that.
Speaker Change: At a major Taiwan foundry and also can you give us a sense for the longer term.
Speaker Change: Or the opportunity for for GAAP tourist sales next year.
And longer term for the time horizon for that.
Speaker Change: Okay.
Speaker Change: The recent wins are.
Speaker Change: Actually it was a multiple system appeal. This is for the near term production.
Speaker Change: While we believe we actually have a upside you know.
Speaker Change: Our next next year and the one wall extra we have not you know we keep a long term forecast.
Speaker Change: But we do believe it can be a skinny if you can for the for the futures. So we probably will give you more update early next year.
But I think this is a concrete you know I'll ever actually it wasn't sustainable to.
Speaker Change: To qualify our products and we believe our long term will be good.
Speaker Change: So short term I think we probably will update you in the next couple of quarters.
Speaker Change: And Susan just a quick follow up to that and that's for sure that FTC. When are you guys. The sole.
Speaker Change: So supplier for that solution or are you sharing that business with another industry player.
Speaker Change: Well I think that there is a move and you know we we are the.
Speaker Change: One two we should be at we don't come in in the future any possibility, but we are quite confident our capability and also come with the opportunity. We have for the next couple of years or something.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: Okay.
Speaker Change: Thank you. The next question is coming from Tom definitely of D. A Davidson. Please go ahead.
Speaker Change: Oh, yes.
Speaker Change: Yes, good morning, and thanks for the question I'm curious just on the general semi business how much did that recovered during your fiscal 'twenty four and then what are your projections for fiscal 'twenty. Five maybe you can put it in context of where that market is kind of on a normal basis.
Okay.
Speaker Change: General semiconductor. So are you talking about you know I'd like to have no general semiconductor.
Speaker Change: In FY 'twenty five yeah, just kind of where we are in the cycle. I mean, obviously two years ago. Okay trough and then it keeps came up a bit last year and then you've got a graph like again this year.
Speaker Change: Okay. So maybe I can just the overview.
Speaker Change: To tell you how our market forecast you know from industrial forecaster and also overview.
Speaker Change: Uh huh.
Speaker Change: The Q1 actual week Guy 165, I think you know.
Speaker Change: Industry attrition looks like us.
Speaker Change: Longer.
Speaker Change: But we do see Oh Q2, you know actually will be a big thing.
Speaker Change: Our Q1.
Speaker Change: And the industry forecasts are actually.
Speaker Change: I believe next year unit growth will be about 7% to 8%.
Speaker Change: Approaching literally about 14% and our revenue right diesel from Gartner.
Speaker Change: And the girls are in semiconductor Libyan driven.
By number one is that a number that you are used to automotive and a lot of people would be deemed automotive maybe already plus a trough. The so maybe I answer your question is a general semi.
Speaker Change: In general semi I think in 'twenty pie the growth will be in the Iot and.
Speaker Change: And also our E I H devices, which is the communication.
Speaker Change: Devices with AI like.
Speaker Change: Yeah capable PC and the smartphone right.
Speaker Change: So a nice a few items.
You know people believe it's going to be a 14% for the semiconductor revenue.
Speaker Change: So from our point of view.
Speaker Change: You know we got at 165, and we do believe about you it will be better.
Speaker Change: So your question to you list the current regime.
Speaker Change: We look at about 77% really not far away from 80%, which is a figure a capacity addition.
So talking about Oh products.
Speaker Change: Are you talking about both on the first.
Oh, both on the kick it to about $1 billion in FY 'twenty one.
But as you mentioned I think a recovery, we do see a recovery in the 24 compared to our 23 by the Y O Y O Y O y.
Speaker Change: Right Oh by actually the auto weakness right.
Speaker Change: But you know our ball Bonder in 'twenty one.
Polyester <unk> and 'twenty four X what is the only a beach.
Speaker Change: $300 million give or take so we believe Oh boy they have a lot of room to go. So we do expect second half 'twenty five normally is the use of our strong second half. We expect you know pre Covid Oh boy the long very long in about 500 to 600.
Speaker Change: We do believe all from a second half over 25, we should learning toward is a lumber.
Speaker Change: So let us start with show that we'd be doing a bond that will be up.
Speaker Change: Most significantly in second half.
Speaker Change: Mainly driven by <unk>.
The mature node capacity addition is a 28 nanometer above Shanghai instead of a lot of capacity coming out and also southeast Asia.
Speaker Change: Particularly in Russia.
Speaker Change: Some demand will come to bear to Marcia.
Speaker Change: Is full of China, plus one strategy right. So most of them do.
Speaker Change: We believe <unk> will be up and of which Bonder. We discussed probably puzzled trough you know we are actually quite optimistic.
Speaker Change: <unk> or older.
Speaker Change: Recent quarters, and we believe our TCP and piece of it is it was a go off right. So that's the that's a give and take of Oh view and industry.
Speaker Change: Forecast to be about FY 'twenty five.
Speaker Change: No I appreciate the color that's very very helpful. And then as a follow up left here. If you could just talk a little bit about the recovery from project Devil, you you're getting them in the first fiscal quarter here and how that compares to what the total charge off was that would be helpful.
Speaker Change: Sure sure as you recall in.
Speaker Change: Q2 <unk>.
Speaker Change: <unk> W was canceled by the customer and we took an impairment in Q2, so as we indicated.
Speaker Change: In our remarks I'm very pleased that we've reached an agreement.
Speaker Change: With the customer for the customer to reimburse a significant part of our impairment charges as reimbursement for our costs.
Speaker Change: No.
This reimbursement will be.
Speaker Change: Recognized in Q1, and it's already in our current GAAP and non-GAAP guidance are so are we.
Speaker Change: We provide in our earnings release, a ton at the back there's a table.
Speaker Change: That shows our anticipated non-GAAP items included in the outlook and there's a 75 million item related to discontinue business claims and proceeds in that table, which is overwhelmingly related to project W.
Okay, Great you can just remind us what the.
Speaker Change: Little impairment charge was in the second quarter.
Speaker Change: 105.
Speaker Change: Okay very helpful. Thank you very much.
Speaker Change: Thank you. The next question is coming from Dave Duley of Steelhead Securities. Please go ahead.
Oh, Thanks for taking my questions and congratulations on.
The nice T C. B when I was curious you mentioned several applications I think in the press release, but as far as your initial read on the situation do you think youre going to be is it is this.
Speaker Change: When at the foundry going to be more for a trip on wafer or the wafer on the substrate I think that chip on the wafer is the kind of the higher value added steps I was just kind of curious if you've got one or two of these steps.
Speaker Change: Yeah actually to.
To answer your question ensured that the application is a photo of frustrates qualification, but is it the chip to wafer level.
Speaker Change: And this is a most other banks you know probably.
Speaker Change: Chip to wafer application that use all frac fleets and the old property, that's actually quantified at all our processes. The way it was a chip to substrate and chip to wafer.
Speaker Change: For this case I think.
Speaker Change: So we use a chip to wafer to qualify for eclipse I think are they will be a numerous of opportunity and then you must project.
Speaker Change: Okay.
Speaker Change: And as far as.
Speaker Change: Would these be for mobile applications or do you think these here and it'll be for high performance compute AI applications.
Speaker Change: Uh huh.
Speaker Change: So I actually mentioned I shouldn't be surprised that most of the other banks.
Speaker Change: T C b.
As you know for the.
Speaker Change: For live video are high end products.
Speaker Change: Okay and then.
Speaker Change: I was curious you know you've made several comments during your prepared remarks and in the press release about a coordinated recovery in the general semiconductor market.
Speaker Change: Right.
Speaker Change: So you're obviously your utilization rates have improved have you started or are the customers coming in and asking for you know slots or you know asking about availability for large larger.
Speaker Change: Larger orders what are the signs are you seeing in the general semi business that gives you confidence that there's a a recovery underway.
Speaker Change: Okay.
Speaker Change: Well, Dave I mean, it one you've mentioned one right utilization rates are.
Speaker Change: Across the board and the high Seventy's Ah in most end markets and then on a regional basis, it's up over 80 already in China, and it's a again growing in the rest of the World China has been strong actually over the last couple of quarters and we believe that now the rest of world is starting to catch up.
I think they are starting to.
Speaker Change: For all the reasons that suits instead right in terms of in China. There's they are there's a lot of fabs coming online, which will fit wafers, which obviously needs to be packaged and again why bonding and so the cheapest way of interconnect I think Ah. In addition, we also are seeing a you know.
Speaker Change: Macro recovery a little bit in the economy are obviously theres still a little bit of volatility out there so but all in all I think we are seeing a lot more customer interest both inside and outside of China.
Speaker Change: Okay, Great and one more question for me is you had a very robust gross margin in the quarter I think it was just over 48% and I was kind of curious I've asked this question on previous conference calls you've introduced a bunch of new products in the core wedge and wire bonder business that have higher margin profiles I'm wondering.
Speaker Change: As we move into next year, what can we expect for the gross margin gross margin profile for the wire and wedge Bonder business. Thank you.
Speaker Change: Yeah. So for the first for the overall corporate margin I mean, we are still aiming towards 50% right and then you're right. We have started introducing higher gross margin product in both a ball and wedge bonder businesses and now they're getting qualified and I think theyre, becoming a high end high percentage of our overall ball and wedge.
Speaker Change: So I think as we move further into fiscal year 'twenty five I think the margin will start expanding and also as we've mentioned many times before system is very focused on cost reduction efforts, which is still ongoing.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question is coming from New York Potpourri of B Riley Securities. Please go ahead.
Speaker Change: Hi, Yes, I'm actually calling on behalf of Craig Alice.
Speaker Change: And I wanted to ask you about something that you said to Tom earlier, which is that you kind of expect a stronger Q2 than Q1 that sort of kind of been a theme across the board with the semi season are there any dynamics that you see that lead you to believe that Q1 might be somewhat depressed unusually.
Speaker Change: Well Q1, nobody most of our weakest ones.
Speaker Change: It's a protein so Q1 is.
Speaker Change: Normally I think Ah seasonality happens in the Q1 and the puzzles for years is about 10% so.
Speaker Change: These are it looks like a weed.
We start Q.
Speaker Change: Q2 actually.
Speaker Change: We do have a few customer actually you know because they were scared to me because scheduled reason I think <unk> already have a slot you know over there. So we do a media about Q2 will be better than Q1.
Speaker Change: The number we are seeing right now.
Speaker Change: Okay. Thank you yeah that makes sense and then so another thing I mean, obviously the audio industrial has been picking up for I guess three consecutive quarters now.
Speaker Change: Do you kind of expect that linearity to continue into the next year and do you think we've sort of seen the trough of the cycle and now we're entering into a more sustainable fashion.
Speaker Change: Well I think in pay us the most are in the auto there are two programs one is a ball bonder.
Speaker Change: Once of which bond to so Oh, we can tell you. So we have.
Speaker Change: Actually our belief the winch bonga or is it recovering and so it is a ball bonder. So in terms of it being the oddity.
Speaker Change: Sunbelt, which bonds or equity.
Speaker Change: You actually have a big customer are both in the U S and also in China that to customer.
Speaker Change: Uh huh.
Speaker Change: The appeal come actually you know can be can be big and so to assure the linearity you're probably not.
Speaker Change: But we do believe which bonder and the auto industry will be will be what we'll be doing will you know for the 25.
Speaker Change: Okay, Great and then just one last question congrats.
Speaker Change: Congrats on the TCP plus with wins in the way that I'm kind of thinking about it is that it might relate to these leading edge advanced packaging users and I think about this the right way and what sort of end markets are carrying this order pickup.
Speaker Change: Well the end market I E.
Speaker Change: You know I had thought.
Speaker Change: Speak about.
Speaker Change: Customers are at all.
Speaker Change: A critical information, but we believe this is so critical is our most our appreciation and reliability is a very important and you know would be you know there is a woman.
Speaker Change: Yeah.
Speaker Change: <unk> is actually is a.
Can.
Speaker Change: Can be for many multiple industry lie if it can be for Thomas in the futures can be full of high end or a high power computing.
Speaker Change: Computing, so we we'd be doing this as a video a typical application and once quantified. These wardrobe many many years.
Speaker Change: Okay.
Speaker Change: Yeah, Okay. That's all I have thank you so much.
Speaker Change: Okay. Thank you thanks.
Speaker Change: Thank you once again, ladies and gentlemen, if you do have a question. Please press star one on your telephone keypad at this time.
Speaker Change: Next question is coming from Charles <unk> of Needham. Please go ahead.
Speaker Change: Evening out Fusin and Lester Ah Congrats on the on the PCB announcement I do have a follow up to follow up on that first it sounds like you are characterizing the order as a production order or can you kind of confirm that.
Speaker Change: And the second I do want to ask upfront from the technical perspective.
Speaker Change: The.
Kind of speak to a wider customer is transitioning to TCP because everybody heard about that the story about the shrinking pitch.
Speaker Change: Smaller and smaller bumps.
Speaker Change: But I do think that maybe there is something there regarding the large die.
Speaker Change: Assembly that may require a T C. Because you kind of speak to that and especially on the large side angle is that is that is it a part of the reason is why why you won't go tools are getting adopted attacks.
Okay. I think that's partly because you had mentioned a full of fluctuate.
Speaker Change: So frustrating for us even though they are to a technology.
Speaker Change: We actually believe we're talking about very strong direction.
Speaker Change: And actually.
Speaker Change: You know where those are they just saw the process. There's a we'd also the process.
But anyway. It you really got to go make a good contact we know any outside right.
Speaker Change: So you know are we believe are all process for Atlas is it you've seen.
Actually local whereas TD body from U S E vapor.
Speaker Change: Took cleaner Sophie is you know it is a bundle stage. We believe this is the right approach. This a noteworthy institute clean and we could be there for the service the bonding between a cover to cover is really really good and the other one actually.
Speaker Change: Actually ease of use.
Speaker Change: <unk> is a use of prosper.
Speaker Change: So and of course.
Speaker Change: Laughter die is always it in or Allomap right and we.
Speaker Change: We believe we can handle a very very large.
Speaker Change: Alright.
Speaker Change: Because right now as you know that that gives them a much bigger and the whole wafer maybe only a couple of bags right. So he is a critical one so I just wanted to let you know we have a capability for a large die and we are really confident on.
Speaker Change: Our technology provider.
Speaker Change: Yes, that's the reason I think you know.
Speaker Change: Yes to answer your question, Yes. This is for production.
Speaker Change: Got it so if the current order is it mostly the you said that the two technologies like that to Hawaii.
Speaker Change: You were seeing possibility either one.
Speaker Change: Sounds like that.
Speaker Change: <unk> technology, which one is shipping today.
Speaker Change: Oh, okay. Okay. So we got to see where no. One we all know once Japan and you know we use a you know a chemical clean so for me I guess.
Speaker Change: Got it thank you very much.
Maybe the other question regarding high bandwidth memory any any progress you can update us on the TCP for for that particular market.
Speaker Change: Sure. So oh actually we are quite excited.
Speaker Change: You know for the memory this is going to be our focus.
Speaker Change: We got about two paths focusing in our memory one you saw a political while.
Speaker Change: And as we mentioned this will afford the first one is going to fall on a low power <unk> and customer indication.
Speaker Change: Preliminary in a low volume production that will happen probably end of this year I'm sorry, the annual 25, and we said political while phenol process you actually can stream you know about 75%.
Speaker Change: Over the phone factor. So we are quite excited that this one actually is H b M.
Speaker Change: We actually are actually quite a lot of effort engaging our memory customers and most of you know.
Speaker Change: Oh capability.
Speaker Change: So this is going to be Oh priority in FY 'twenty.
Speaker Change: Pardon me.
Speaker Change: Another quarter or two we can give you up there, but I would tell you I think we are quite confident our technical superiority.
Speaker Change: And we are going to put whatever and though we have a lot of work to Ah study already and probably give you more update next one or two quarters.
Speaker Change: Alright.
Speaker Change: Yeah, Okay. Thank you very much Josh.
Thank you at this time I'd like to turn the floor back over to Mr. Alexander for closing comments.
Mr. Alexander: Thank you Don and thank you all for joining today's call over the coming quarter will be presenting at several conferences and road shows as always please feel free to follow up directly with any additional questions. This concludes today's call have a great day everyone.
Mr. Alexander: Okay.
Yeah.
Mr. Alexander: [music].
Okay.
Mr. Alexander: [music].