Q1 2025 Kulicke and Soffa Industries Inc Earnings Call
Speaker Change: Greetings and welcome to the Kula Kinsalpa Q1 2025 conference call and webcast. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad.
Speaker Change: If anyone would like to require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Speaker Change: It's now my pleasure to turn the call over to Senior Director of Investor Relations, Joel Elgindy. Please go ahead, Joel.
Speaker Change: Welcome everyone to CULICAN's office fiscal first quarter 2025 conference call. Fusen 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. GAAP to non-GAAP reconciliation tables are included within the 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. 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 Culicansopha 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.
Speaker Change: Good morning, everyone. Over the past several quarters, our General Semiconductor and Automotive Air Market have shown signs of inventory and capacity digestions.
Speaker Change: And we continue to anticipate a gradual improvement in fiscal 2025. In parallel, we have continued to demonstrate technology leadership position within the growing thermal compression and advanced dispense.
Speaker Change: Visibility within our higher volume bull and the which market is typically limited this time of the year. Regardless, our core business remains in the late stage of a market downturn.
Speaker Change: While we continue to anticipate a return to broader capacity addition within
Speaker Change: the Cobalt, H and APS businesses through Fiscal 2025 due to improved re-utilization rate.
Speaker Change: Market Trends and Reasonable Industry Growth Expectations. We remain focused on what is within our control, primarily ongoing development, customer qualification and market adoption of our newest system.
Speaker Change: Additionally, industry momentum within thermal completion technology continues to broaden and we are extending our leadership through new offerings and customer engagements.
Approximately three weeks ago, we shipped our latest FluxList.
Speaker Change: thermal compression or FTC system in the new dual head configuration to a key foundry customer.
Speaker Change: This system provides nearly twice the throughput as our existing production-proven FTC system, which was already qualified and already provides an additional value population for advanced logic customers within its single head configuration.
Speaker Change: These new dual-head configurations will further extend value for advanced logic customers and also provide access into high bandwidth memory markets.
Speaker Change: Of note, we are pleased to extend our FTC customer engagement, which now includes a leading memory customer in addition to our existing base of leading IDM, Foundry, and Allstate customers.
Speaker Change: This new memory engagement is a supporting process development for future generation HBM applications, leveraging our FTC leadership.
FTC is positioned to enhance the
providing critical performance.
Speaker Change: form factor and efficiency enhancements by significantly reducing pitch and increasing I.O. density for future AI and cloud computing workloads.
Speaker Change: Last, the copper-to-copper TCB process is continuing to pick up momentum and is currently being reviewed by a leading IDM customer in addition to our previously announced customers.
Speaker Change: Our copper first solution provides hybrid benefits such as a zero-die gap.
Speaker Change: Ultra-fine pitch and direct copper-to-copper interconnect without licensing fees, front-end production requirements, or ear issues, which are associated with the initial hybrid bonding technologies.
Speaker Change: These benefits are available today through our brotherly FTC portfolio, which is well-positioned to provide additional value for emerging advanced logic and advanced memory applications.
Speaker Change: This technology leadership in FTC is enhancing our positions within the broader TCB market as well.
Speaker Change: We recently accepted orders from two new advanced packaging customers for several new Aptura systems.
Speaker Change: We estimate the TAM4TCV in calendar year 2024 has exceeded $300 million, which represents a key market milestone for two significant reasons.
Speaker Change: First, its high-life PCB is compatible in annual revenue to the mature 3-chip mesh-reflow equivalent market.
Considering free chip has been in high
This milestone has reached relatively quickly for thermal compressions.
Speaker Change: Second, TCB adds significant incremental value beyond traditional packaging technique due to its ability to efficiently stack by.
Increase package-level transistor density and simplify the wafer fabrication process.
Speaker Change: TCB technology has a long life ahead and is anticipated to grow significantly over the long term.
Speaker Change: Over the coming years, we anticipate the broad TCP market to grow at a compound annual growth rate of 20-25%, with FTC growth expected to grow materially faster over the coming years.
Speaker Change: During the fiscal 2025, we anticipate additional customers to move into higher volume FPC production.
Speaker Change: The need for more and more related packaging solutions are emerging rapidly and we are excited to be leading this transition with our market-related FTC solution.
Speaker Change: still in an early stage, and is anticipated to play out over the long term, driven by emerging artificial intelligence.
Cloud Computing and Edge Device Requirements
Speaker Change: As explained over the recent quarters, we have secured a clear leadership position in fractalized thermal compression, which will play an increasingly important role within future heterogeneous and triplet-based applications.
Currently,
Speaker Change: Most advanced logic applications are dependent on agent-free chip technology, which we anticipate will continue to transition to traditional TCB or flux-less thermal compression applications.
Thank you.
Speaker Change: We continue to demonstrate consistent progress to expand our TCP portfolio, customer base and market access. This highlights our ongoing leadership, industry focus and the long-term potential of this emerging technology.
Speaker Change: Turning to our financial result, for the December quarter, we delivered $166.1 million of revenue.
52.4% gross margin and the non-GAAP EPS of 37 cents
Speaker Change: Get EPS of $1.51 was largely supported by customer reimbursement associated with our fiscal second quarter 2024 impairment charge over Project W.
Lester will provide additional details
Speaker Change: From an end-market standpoint, the December quarter is generally driven by systematic within the general semiconductor market.
Speaker Change: Below, we continue to anticipate broader industry growth and the demand for our core solution within Fiscal 2025.
Speaker Change: The general selling condition of the market continues to be largely in a state of capacity digestion.
Speaker Change: With the low-boundary revenue sequentially lower from September as expected, we continue to expect we are in a late recovery stage and remain positive on broader recovery through fiscal 2025.
Speaker Change: Our board-bounded team remains very active in developing new features and platforms to support the evolving high-volume assembly market.
Speaker Change: We look forward to sharing more information and broadening the Ball Bounder Portfolio later in Fiscal 2025.
Speaker Change: We in automotive and industrial, we have seen a demand improve over the same quarter last year, related to EV and also power semiconductor demand.
Speaker Change: During the December quarter, we shipped several sets of battery assembly systems to several customers, including a leading EV company and a promising solid-state battery manufacturer.
Speaker Change: We continue to anticipate additional recovery in the power semiconductor market over the coming quarters.
similar to general semiconductor for
Speaker Change: Auto and industrial is our primary market for wage bonding and similar to both, our wage team is aggressively developing new system to expand our dominantly heavy wire wage position.
Speaker Change: into single wire, pin welder, and also clip-attached market, which will help us better support the rapid evolution of emerging automotive and the power semiconductor needs.
Speaker Change: This transition is being driven by growing global demand for more efficient power delivery and storage.
Speaker Change: We are playing a critical role leading the transition from lower conductivity aluminum interconnect, which we are the standard in the power semiconductor applications.
to Copper Interconnect.
Speaker Change: As we are currently demonstrating within the FTC copper to copper TCP process and have also lead the transition from gold to copper in the high volume ball bounding market over 10 years ago. We have inherent competency in copper bounding.
Speaker Change: in which the benefits of more expensive materials like copper are significant as it supports more efficient charging, energy generation, and high power applications such as AI and cloud computing.
Speaker Change: We are excited to support customers through this potentially significant long-term wage transition and will provide additional information on this emerging opportunity over the coming quarters.
Speaker Change: Finally, within memory, we remain focused on driving vertical wire adoption for emergent applications within both DRAM and NAND.
Separately.
Speaker Change: Vertical Wire continues to be another emerging memory solution for several global memory customers who are either requesting information, developing their process, and or beginning to produce a sample to drive market adoption for future stack DRAM applications.
Speaker Change: As explained last quarter, vertical wire-based assembly is positioned to support future high-volume stack memory applications, but also significant potential to enable future high-volume stack logic applications.
Speaker Change: Similar to TCB, we have a significant technology leadership position with a growing base of engaged customers who are developing new vertical wire package.
Our process and development engagement have recently increased.
Speaker Change: We are currently working with leading memory customers in Korea, the U.S., and China.
Speaker Change: Over the coming year, vertical wire-connected memory applications are anticipated to move into higher-volume production. In the longer term, we expect this enabling technology to extend into higher-volume general semiconductor markets.
Speaker Change: As explained earlier, in addition to Vertical Wire, we are also supporting a major memory customers who is examining flux-less HBM alternatives in coordination with our highly capable FTC process development team.
Speaker Change: The company continued to be at a unique period of time.
Speaker Change: We are well positioned for several promising high-growth opportunities that are supporting long-term critical technology transition in both the leading edge and the high-volume semiconductor assembly.
Speaker Change: While we have already experienced cold market improvement, we continue to anticipate both ball and wedge will reach more normalized level of demand within fiscal 2025.
Speaker Change: A law we anticipate is brought and coordinates recovery to be imminent.
We demand focus on what is within our control.
Speaker Change: Our priorities are to maintain our aggressive cadence of development across all supermarkets while we continue driving customer acceptance for our new product and service.
Lester Wong: I will now turn the call over to Lester for the financial update.
Lester Wong: Thank you, Fusen. My remarks today will refer to GAP results unless noted.
Lester Wong: As Fusen explained, we continue to anticipate a broader cyclical recovery for our ball and wedge businesses driven by coordinated improvements within general semiconductor and auto, industrial, and markets.
Lester Wong: We remain very focused to support multiple development programs, product releases, timelines, and customer qualifications.
Lester Wong: Looking back at our December quarter results, we generated $166.1 million of revenue and 52.4% gross margin.
Lester Wong: The strong gross margin performance was partially related to revenue recognized in the December quarter for systems expense in prior periods.
Lester Wong: During the December quarter, we also recorded a gain of $71 million due to customer settlement associated with our fiscal second quarter 2024 impairment charge.
Lester Wong: Non-GAAP operating expenses, which exclude this item, were $68.6 million. This was below prior expectations due to a favorable foreign exchange gain, as well as an ongoing focus on operational and development efficiency.
Lester Wong: During the December quarter, we booked gap tax expenses of $11.3 million primarily related to the customer settlement benefit, but also related to our mix of profit and loss across entities during the quarter.
Lester Wong: We continue to anticipate our effective tax rate will remain above 20% per quarter through fiscal 2025.
Lester Wong: As announced on December 2nd, 2024, we also completed our previous repurchase program and began our new $300 million share repurchase program.
Lester Wong: Repurchases for the first quarter represented activity from both programs and totaled $36.9 million, reducing share outstanding by nearly 800,000 shares.
Lester Wong: Turning to the outlook for the March quarter, we expect revenue of approximately $165 million plus or minus $10 million, with gross margins of 47%.
Lester Wong: Non-GAAP operating expenses are anticipated to be $70.5 million, plus or minus 2%, and we expect GAAP EPS of $0.03 per share and non-GAAP EPS of $0.19 per share.
Lester Wong: As we await broader core market recovery, we remain very focused on key development, qualification, and market adoption across our growing portfolio of solutions.
Lester Wong: We look forward to announcing additional success with these efforts over the coming quarters.
Lester Wong: This concludes our prepared comments. Operator, please open the call for questions.
Lester Wong: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Lester Wong: You may press star 2 if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment, please, while we poll for questions.
Our first question is coming from...
Chris Sankar: I'm Chris Sankar from TD County and the line is now live.
Speaker Change: Hi, thanks for taking my question. I actually had three of them. Number one, Fusen, you kind of said that March quarter general revenue should grow. Is it fair to assume that sequentially into June and September your bond revenue should grow sequentially?
Thank you.
Yeah.
Okay, so...
Semiconductor FY25
goes from a 17 to a 13 percent.
Speaker Change: And we also see our Q2, actually, due to Chinese New Year.
and also Global Political Dynamics, some of our customers.
actually delayed their investment decision up to Chinese New Year.
you know, our business.
Speaker Change: and the downturn typically takes around six to seven quarters and we are approaching ten quarters.
Speaker Change: So we believe we are in the late stage of the downturn. So I wish I answered your question. And we still anticipate the transition.
Speaker Change: you know, to be below normal, you know, below normal, more normal as a labor of the Boban Dien later this year. So, I hope I answer your question, please.
Speaker Change: Just to follow up on that point, normalized level for Fiscal 25, is that a $550 million run rate or how do you think about what is normalized core demand?
Okay, okay, so please let me answer this way.
Speaker Change: So typically, our second half is always stronger than the first half.
Speaker Change: So, and we expect the novelized, you know, label probably will reach probably later part end of, you know.
you know, like our FI25.
Speaker Change: So, it is not unreasonable to expect our second half will be 20, 30, or even 50.
are more than 30% higher than one-eighth, first half.
And give me your example, 20%...
Speaker Change: will lead to about $730, and 30% will lead to $760, right, just for the revenue. So, how I define the normalized, I'll give you an example.
Speaker Change: At the peak cycle, our ball rounder revenue is at 1 billion, but average of FY23-24, actually we only see just over $300 million. So we believe our normal year, just ball rounder revenue itself.
Speaker Change: That's really our expectation. You know, industry probably will enter normalized level, maybe end of our fiscal 25, and when we enter 26, we expect probably full year will be a normalized year.
Speaker Change: Got it. Got it. Very helpful. And then just a quick follow-up for Lester. The December quarter margin strength, you said, REVREC on systems that are shipped before. Were these TCB and how many tools were there?
Speaker Change: No, so Krish, these are tools that are associated with Project W. The customer ordered these tools prior to the cancellation of the project.
Speaker Change: As part of the impairment, which we took in Q2F by 24, the cost of these tools were included in the impairment.
Speaker Change: Now that we have settled with the customer on Project W, these machines have been recognized in the quarter, which obviously helps strengthen the gross margin.
Got it, got it. Awesome. Thanks, Lester. Thanks, Fusen.
Speaker Change: Great, thank you. Thank you. Thank you. Next question is coming from Craig Ellis from B Riley Security, your line is now live.
Craig Ellis: Yeah, thanks for taking the questions, guys, and congratulations on ...
Business Revenues and Fallen Wedge Bonding, but...
Craig Ellis: from all the observable data points, I think we and others see.
Craig Ellis: you know, PC, smartphone, other high volume demand and an auto industrial is really very anemic and and clearly there's some good company-specific things going on in ANI right now, but what are your customers telling you about?
Craig Ellis: their need for incremental capacity as they move into that second half fiscal period for you and need to add capacity to meet demand which seems more bouncing along the bottom than anything else.
Craig Ellis: actually pushed out after, you know, that decision will be delayed until Chinese New Year. And also because of
You know, they're concerned about the global...
Benny Mink
Craig Ellis: But the Q second half, you know, typically is really our stronger half, right?
Craig Ellis: So, as I mentioned, I think our downturn already takes about, you know,
ah... then one
rather than traditional like a six-quarter, so we do believe
You know, there will be also some...
Craig Ellis: investment, I think a mature node, a mature node capacity will come up, particularly in China, for 28 nanometers and above.
So, we are actually at this moment, it's quite...
you know, are still quite bullish about our second half.
Craig Ellis: Also, when we enter the later part of the second half and enter 26.
Craig Ellis: You know, so we believe the long way for the border can reach to 500 to 600. 500 actually is not high. The peak level actually is 1 billion.
Craig Ellis: And, you know, at this moment, it's only 300 million, right? So 100 million is just, you know, go back to pre-COVID.
Craig Ellis: you know, label. And the whole industry actually, semiconductor content continue to increase. And the downturn take a very long and we do believe it's a very less stage of a downturn, right? So when we enter our 26th.
Craig Ellis: I think we also, not only BoBounder, have a good potential. We also see which Bounder we can take market shares from our new products.
Speaker Change: That's really helpful, Culler, Fusen, thank you. The next question I had was a follow-up on deck slide number three. Very intriguing point made with a growing pool of high growth.
Speaker Change: AI-related opportunities for the company. The question is, can you quantify what the value of those is now, either
Speaker Change: in the recently recorded first quarter, what you would expect in the first quarter. And as we go through 25 and 26, how big can those opportunities become for the business?
A question, you were talking about our AP, PCB.
Thank you very much.
Speaker Change: Yes, and just the products that were referred to in deck slide number three, lower right, when you talked about a number of AI related opportunities.
Okay, so
Speaker Change: So I will give you, so this is our forecast, we haven't changed it, you know, but we believe we still have
Speaker Change: I think this year, when we define, you know, advanced packaging,
and David Niu.
for Advanced Packaging, Total Packaging.
Speaker Change: You know, including a multi-die chiplet, SIP, vertical wire, and TCD, right?
Speaker Change: Right, so we do believe, you know, the next couple months, you know, we might add a little bit more strong TCD forecast, you know, up to, you know, long term forecast we will receive from some other customers.
Speaker Change: Got it. That's helpful. Thanks for the color on this item, Fusen. I'll get back in the queue.
Thank you.
Moderator: Thank you. Next question today is coming from David Dewey from Steelhead Security. Your line is now live.
David Dewey: Yeah, thanks for taking my questions. I got a couple. Could you just talk a little bit more about...
David Dewey: you know help us understand how many customers now are using your thermal compression bonding tool you've listed I think.
David Dewey: an OSAD, an IDM, a Foundry. I wasn't able to collect all the information so if you could just review that again and kind of let us know which ones will be the biggest growth drivers in the near term.
Okay, actually, we actually have multiple customers.
David Dewey: You know, we have Fungi, we also have IDM, I think we are in all of that.
Thank you.
David Dewey: Actually, I don't have a total number. I think it would be quite significant.
Lester Wong: So, I think, Dave, this is Lester, I think between customers who are using it in high volume production, who's about to use it in volume production, plus qualifying, I think would be close to 8 to 10 customers who are looking at it or who will soon receive shipments of our TCB bonders.
Lester Wong: That was part of this $220 million going to $275 to $300 million, I think. Could you maybe just break out the pieces of that $275 to $300 million amongst your advanced packaging pieces?
Speaker Change: Okay, actually I don't think I have a breakdown over here. This including, as I mentioned, this is like a multi-deck chiplet.
Lester Wong: SIP, you know, this free tube, vertical wire, and a PCB.
Lester Wong: But TCB alone, I think I mentioned last call, I think our 24 is 55 and this quarter I think we are aiming at 75 to 100.
Lester Wong: And the total TCB market, I think this year, for total TCB is about 300 million, 300 million.
Lester Wong: So what we are probably this year we are aiming lovely lovely probably about 30% of our total market shares and we do believe we can grow market shares from here
Okay, thank you, and then, excuse me.
Lester Wong: As far as the vertical wire solution, would you expect to see revenue from that in 2025? And maybe help us understand if you do have revenue from how many customers?
Lester Wong: Okay, so I think we are very excited. You know, almost every memory customer we are working with, also recently including China.
So, oral, arc-arc.
is Korean.
Lester Wong: and also a major, you know, U.S. IDM. We do believe this is very beneficial. A lot of first application is going to follow LP-DDR5.
Lester Wong: This is for the sale, but in the future, we believe this vertical wire, not only DRAM, we are also working with a NAND customer and funding actually a lot of new applications. In the future, we'll also go to a logic, so we are quite excited.
Lester Wong: So in terms of customer, you know, working with the customer.
Lester Wong: With the revenue, I would say three at this moment. This is the initial production. We do believe 25 will be our initial production. Some of them just start to run their process.
Lester Wong: And so, including Nan, including this, I think we are working probably with seven or eight customers.
Lester Wong: Right? So we believe 25, we have a low revenue, maybe I would say below 20.
Lester Wong: and we are looking forward for 2026 to be bigger and 2027, I think, will take off to be much, much bigger. So, 2026, if you want me to pick a number, I can give you a number roughly, say, $50 million.
Lester Wong: 26 and this year probably below 20 and hopefully this will take off after that and we do have a strong
Lester Wong: And I believe this will be a game-changer for the next couple of years.
Lester Wong: tool for the HBM market. I think you've made mention in the past that you know you need to have a higher throughput tool in this market to to win business and maybe help us understand you know what your
Lester Wong: throughput advantages are versus the competition or you know, what are some of the parameters or key metrics that will determine your success in winning business with an HBM customer?
Well, I think the HBM does take two prospects.
I think we are engaging to the next generation. Bye.
Lester Wong: And so the process, I think, is very, very important. We do believe we are able to create a copper-to-copper and you have so many layers. I think we will provide, you know, very good electrical performance.
Lester Wong: And then, I think, you know, it's going to be the throughput.
Lester Wong: and productivity. We do believe our tool, you know, with the Twinhead, will have advantage or slightly better than the current competition, I think, at this moment.
Lester Wong: But we do believe the performance and, you know, reliability is what we are aiming at and with better productivity compared to competitors.
Thank you.
Thank you. Bye-bye.
Speaker Change: Thank you. Next question is coming from Charles Sheehan, Eastern Company. Your line is now live.
Thank you. Thank you.
This dual-head system versus single-head, you already shaped them.
Speaker Change: I wonder when this customer goes into volume production, do you expect the volume production tool to be single head or dual head or it's going to be a mix? And maybe a related part of this question is...
Speaker Change: This shipment of the dual head system sounds like it's an evaluation system, and if that's the case, when do you think you can get the qualification of this tool?
Uh, so, uh, you know, we...
Thank you. Bye-bye.
Charlie: So, Charlie, you asked if this is an evaluation system. No, this is not an evaluation system. This is in one of the PO.
Speaker Change: So the tool right now is used for pilot production and also for a new customer, you know, qualification.
Speaker Change: And, you know, after maybe learning a couple of months, I would say maybe three months, along that we hope to receive a long-term just outlook, you know, business outlook just from customers.
For more information, visit www.FEMA.gov
Speaker Change: Do you think the volume production tool will be dual head or single head? Yeah, yes, that's correct. That's correct. I think it's going to be dual head.
We'll be due ahead. Okay. Thanks
Maybe the
Speaker Change: Second question, also on Fluxless, TCB, I think you mentioned about engagement with a leading memory customer on HBM. Can you provide a little bit of details on what's the engagement right now, what will be the next milestones, et cetera?
Okay, so, uh, I think, uh,
Speaker Change: You know, the first, you know, two years we actually very focused in the logic, right?
Speaker Change: So I can tell you it's really for the next generation, you know, HBM.
Speaker Change: And we do believe we did a successful demo and, you know, our goal is really to ship the system by the end of the year.
Speaker Change: Hopefully, if everything is successful, we can catch high volume production probably within 18 to 24 months.
That's a video, I'll go.
Speaker Change: Okay. So, lastly, a question about the VSO, thanks for the color you provided, too.
Speaker Change: I want to ask you, since DRAM-WIRE bonding, I think traditionally it's not your market, it's a Japanese competitor.
Speaker Change: who had that market. So for the top DRAM customers, what's your expected market share in VFL? Because I would assume that the incumbent will also have some solutions. And what would you?
Speaker Change: I believe, from where you stand today, the potential market share in VFO could be.
Speaker Change: So, Chua, I don't know why you make a comment about Japanese. I think the total, the market shares
Speaker Change: Just all Bobongdae, I think we have close to 75 to 80 percent.
So, the name, I think we probably...
have 90-some percent market shares.
Speaker Change: and for the DRAM. I think DRAM in terms of a ball boundary, okay, DRAM I think at this moment like a DDR.
Speaker Change: I would say maybe 60% is a free trip, and then probably
Speaker Change: traditional ball bounder actually you know I would say maybe 30-40% I think we still have a very very high market share we are still number one not only in the net also in the DRAM
Speaker Change: And, you know, it's a kind of a repressed, like, a TSV process, right, with a better processing year performance, you know, and also cost. I hope I answered your questions.
Speaker Change: Yeah, I mean, do you expect to have a VFO position at all three leading DRAM customers a few years down the road? That's actually my question, yeah. Oh, yeah, yeah, yeah. Okay, yes, the answer is yes, we do expect that.
Okay.
Thanks. We'll see.
Yeah, thank you. Thank you, Charles.
Speaker Change: Thank you. Next question is coming from Tom Diffrey from D.A. Davidson. Your line is now live.
Tom Diffrey: Okay, thank you. I appreciate the chance to ask a couple questions here.
Tom Diffrey: Fusen, just maybe some questions about the general semi-market or the core market.
Tom Diffrey: What are the end markets where you're seeing the most excess capacity, or maybe said a different way, which of the end markets do you think will recover first from a ball bonder utilization rate point of view?
What?
Tom Diffrey: I think, you know, actually the recovery in my mind right now is both auto and also general semiconductor is leading by China.
Tom Diffrey: Right, so we, you know, like a front-end wafer equipment, I think it's always in past couple years, always at a quite high level.
and we to be different next couple years
you know, forcibly.
Tom Diffrey: I think the back-end investment will be needed. So, the investment of back-end and the front-end non-nationally is going very, very well. But I can... Actually, we can tell you, I think, at this moment, what are really leading general semi, and also, you know...
Speaker Change: including Bo Wangde and also Wei Zhibong, actually it's happening in China.
Speaker Change: Okay, maybe just to dig in on one piece of the market. So a few of the other players in the semi-cap world have talked about some NAN strength recently.
Speaker Change: It sounds like it's more just kind of on the technology side. Curious if you think you're going to get a boost from that on your NAND business, or do you have to wait for true capacity buys, excess capacity, or incremental capacity to come back into the marketplace before you see a pickup in that business?
Speaker Change: Okay, so what I can tell you is, I think NEN, you know, pretty much is, really is a ball bounder. And for NEN, actually we have, if not above, also 90% of market shares for NEN.
Speaker Change: Yes, I'm wondering about the health of that and if you're going to see an uptick in that over the next couple quarters, like guys like Lamar on the equipment side, or if it's going to be kind of a delayed recovery for you versus those peers.
Speaker Change: You know, sometimes I think the investment is probably not in a well-coordinated line.
I actually didn't know which customer you referred to.
I think it was named.
Yeah.
Speaker Change: You know, for example, if the H company, you know, the name, you know, many more layers, probably H.
You know, H.
Speaker Change: development and capacity is more important, right? And for us, when you finish a product, and then it's a stick die, actually we can connect a stick die, so what I can tell you is when this is finished, you know, building in the front end, I think we will be benefited.
Speaker Change: Yeah, because the name, you know, the name is quite simple.
Yep.
Speaker Change: Okay, thanks for that. And then maybe just a quick follow-up for Lester.
Speaker Change: Lester, when you see the core markets come back in 2026 and kind of get back to that normalized level...
What does that do to the margin structure, if anything?
I assume that those...
Speaker Change: Traditional core markets might be a little lower margin than some of your newer stuff So I was curious if there's anything we need to think about from a gross margin point of view
Hello, everyone.
Speaker Change: Tom, from a gross margin standpoint, we're still aiming towards 50%, right? And we think, as we head to 26, even our traditional core products, like ball and wedge, we are introducing, you know, new products which gives us higher margins for both ball and wedge.
our faculty utilization goes up. Great. Okay. Thanks. Appreciate it.
Speaker Change: Thank you. Next question is a follow-up from Craig Ellis from B-Riley. Your line is now live.
Craig Ellis: Yeah, thanks for sneaking in the follow-up question. Fusen, I wanted to go back to some commentary around Charles's question around when we get the the volume shipment intercept with high bandwidth memory on fluxless TCB. I think you said
Speaker Change: at the end of this year, that's possible. And so the question is, is the...
Speaker Change: enabling development, the industry's transition to HBM4, is it as industry goes to higher stack band, likely more volume 16 stack at that time, or something else that's creating that window of opportunity for you? Thank you.
Speaker Change: Before us, trying to penetrate through a different market, there's already a machine provider from Korea, and also a lot of other customers.
Speaker Change: So this one, I think, when we say we worship a system...
Speaker Change: This will be, actually, after customer have confidence, you know, the...
Speaker Change: After the demonstration is good, we actually intend to shift the system, maybe later part of the year.
Speaker Change: and I still need to go through a lot of development, right? So to really win the high volume production, I think, you know, probably successful, you know, qualify probably this already big milestone. We are targeting about 18 months.
Bye.
Speaker Change: Okay, got it. So commercial revenue really would be sometime in calendar 26 rather than something that would be exiting 25.
That is quite correct, yes.
Speaker Change: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.
Thank you.
Speaker Change: Thank you, Kevin. Thank you all for joining today's call. Over the coming quarter, we'll be presenting at several conferences and roadshows. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.