Q3 2025 Kulicke & Soffa Industries Inc Earnings Call
Greetings and welcome to the Q3 2025 quarter results. At this time, all participants are in a listen-only mode. A question and answer session will follow the form of presentation. If anyone should require operator assistance, 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. Eleni, thank you. You may begin
Welcome everyone to C's office. Fiscal third quarter 2025 conference call who's in Chad President and chief executive officer in luster Wong Chief Financial Officer are also joining on 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.
Gaap to non-gaap reconciliation tables, or included within the latest Rings release and earnings presentation. Both are available at investor.substack.co
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 our subject to risks and uncertainties, that may cause our actual results and financial condition to differ materially from the statements made today.
For complete discussion of the risks associated with Google consulta, that could affect our future results in financial condition. Please refer to our latest form 10K and upcoming SEC filings for additional information. With that said, I'd now like to turn the call over to fusenet for the business overview. Please. Go ahead, Susan. Good job.
Good morning everyone, over the coming quarters we dismiss focus on extending our Market access through ongoing technology transition. And then we continue to be encouraged by gradual Co Market improvements.
As discussed it last quarters.
Also that the long global trade has clouded neoton industry with disability, although we continue to see steady call Market Improvement as expected.
We do not expect new trade Dynamic to materially affect our Global business operation. Hello, they do create additional uncertainty in customers and neot, time capacity, planning decisions.
Despite this new time heaven, we continue to remain cautiously optimistic as we continue to see more bound evaluation improved in key regions.
We also continue to work very closely with customers to support technology transition within Advanced dispense vertical wire and a thermal compression bonding or TCB, which I will provide an update on shortly.
14 quarters.
We generated revenue of 148.4 million, get lost per share or 6 cents and a non Gap.
Earning per share of 7 cents, our focus on efficiency customer engagement and the execution has allowed us to exist expectation.
That will provide an update on financial performance and the outlook shortly.
As expected, the sequential Revenue reduction, intelligence quarter was largely driven by other hesitation within the automotive and the industrial Market.
We mentioned last quarter. This was a focus uniquely with a certain customer's production facility in Southeast Asia, and we anticipate that it will persist through the September quarters.
We anticipate. This softness is largely driven by trade uncertainty.
Is broadly affecting Global Automotive and the industrial supply chain. And the well create a slight headwind, over the coming quarters. Regardless, this key Market is supported by ongoing technology transition and above average growth rate.
Despite the near terms, Automotive driven, technology, transition provide a long-term set of growing opportunity.
For example, if we charging infrastructure is driving, new equipment opportunity and we anticipate charging related infrastructures. Well, exceeded, uh, 20% kegger over the next 5 years.
Additionally, this ongoing growth is also driving the need for smarter and more efficient policy. Semiconductor applications, which we are enhancing with a growing base of advanced packaging, are a key focus.
Automotive and Industrial, but less pronounced.
Order has station was also apparent within the general assembly conductor in market. Do you need the CH quarters more recently? We are encouraged by seasonal and cyclical dynamics, which are improving more than the evaluation improvement. Winning coal region, we anticipate both leading and high volume market to improve through the September quarters.
We remain very focused on both coal Market recovery, and also new product momentum.
We also experience strong sequential demand increase in memory and are encouraged by improving conditions. Recent price Dynamics, and the emerging package in format.
We continue to be focused on driving share again and the expanding our reach into different applications by enabling new packaging for capabilities in high volume with our vertical, W solution and the weed in Leading Edge application in future version of hbm. Next
I would like to provide a brief status update on broader technology. Transition, we are a traditional through our Advanced dispense vertical wire and the TCB portfolio.
Trust with Advanced dispense, We are continuing to sit opportunity across key customers and markets. While maintaining an aggressive product development pipeline,
we have received initial POS from an automotive, OEM several IBM and the multiple offset, which highlight the brother
diversity of our Solutions.
The need for higher appreciation and the more capable dispensers in Market. We look forward to expanding our portfolio to support this need, and we plan to introduce new, Advanced dispense, capabilities in September at semicon. Taiwan
Next.
Wire Market expectations, remain on track, we continue to plan for initial higher, volume Productions, to begin in physical 2026 driven initially by an exciting technology. Transition within the memory Market.
Emerging on device, AI application are demanding a higher bandwidth. This Market need is driving demand.
4, transistor dense. Vertically stack, low power, dynamic, memory,
We have observed multi reference, such as a mobile HPM energy, efficient HPM or low power wide IO Dean applications which describe this new opportunity.
This new format of low power hbm, is anticipated to increase bandwidth by 3 to 4 times, over existing low power demand.
But vertical wire in the conduct are in a and alternative more cost effective production process for Los lower power HBO application.
As a reminder.
Higher power data. Center hbm, utilize more costly through silicon via and the thermal compression based assemblies.
We anticipate this new vertical wire based hbm will be adopt in broader different application and eventually support higher transistor. Density requirements across broader general of semiconductor applications
Finally, we didn't we continue to focus on many different applications for both larger and the networking.
We have recently, demonstrated, Neo, physical, and chemical based in 9 material, preparation capabilities. Once you further extend, our leading FTC process,
We are very proud of how our existing chemical based solution have performed which have enabled us to lead the initial Market transition to flex.
This solution.
Has allowed us to be first to high volume production and we are currently supporting multiple logical customer in mass production.
With that said, we are not pleased to offer a tailored mix.
Process.
Initial customer feedback has been positive and we expect this new capability to be a market in everyone which low barrier to entries as customer emission new production or expand their FTC capabilities.
in addition to this new FTC solution, we have also met progress within the high power hbm Market
We now expect to ship an initial FTC system by the end of the year 2025 to support the anticipated fless transition within the hbm space.
As we increase focus on emerging memory opportunity, we are confident our proven leadership in driving FTC.
Adoption within leading geological application. Provide a unique Advantage pitch to support, leading memory application as they transition to final pitch FTC based assembly.
We are confident.
We have the most robust and capable solution for Leading Edge thermal compression application, and the remain positive on our engagement, recent progress and long-term loan. Map of this highly capable technology.
We expect FTC solution will all pass over all TCB growth allowing us to extend our market shares over the coming years, within both memory and the larger market.
In summary, we continue to expand our Market presence on multiple front.
and the remain cautiously optimistic as key region and the Air Market show signs of cical improvement
while Automotive he win.
R anticipated to linger in the September quarters General, Sim conductor capacity, digestion and the expansion given by China and the Taiwan, as well as a memory, technology transition, and the price Improvement are increasing our confidence in the Arab.
It continued to be a unique time in semiconductor assembly.
With a wide set of opportunity to be addressed.
I look forward to updating our progress over the coming quarters and will now turn it over to the list to discuss the financial outlook.
Thank you for my remarks. Today, I will refer to Gap results. Unless noted otherwise, despite uncertainty regarding macro dynamics, we delivered revenue above guidance. We continue to execute on those customer engagements and maintain an ongoing focus on cost control.
Gross margin came in at 46.7%, and we delivered $0.07 of non-GAAP earnings per share.
Total operating expense came in at 75.3% and 68 million on a non-gaap basis.
Tax expense came in at $3.2 million, and we continue to anticipate our effective tax rate will remain above 20% over the near term.
We are also positive on recent us tax law changes and are in the process of evaluating the future impact on our tax rate.
we have continued to opportunistically, reduce shares outstanding by repurchasing, approximately 668,000 shares, equivalent to 1.3% of diluted shares during the June quarter since the first fiscal quarter of 2024, we have taken a more aggressive approach to delivering shareholder, value directly,
Over the this 74 quarter period. We deployed over 270 million dollars in dividend bill payments and open market repurchase activities.
This has allowed us to repurchase over 5 million shares, nearly 10% of shares outstanding, and currently offer a best-in-class dividend yield above 2%.
Looking ahead, as fluent mentioned, we are more positive on key and Market improvements in general, semiconductor and memory supported by Regional utilization and pricing improvements.
Automotive and Industrial, headwinds will likely persist over the coming months. Although we anticipate this softness to be short term,
For the September quarter revenue is expected to increase by approximately. 15% sequentially to 170 million with gross. Margins at 47%,
Non-gaap operating, expenses are expected to be 68 million with gaap earnings per share. Targeted to be 8 cents and non-gaap earnings per share of 22 cents.
We are very focused to exit from this extended period, a leaner and more growth oriented organization.
Every key Market serve.
We continue to ensure our highest potential opportunities are adequately resourced, and our customer development efforts are on a positive trajectory.
although we remain cautiously optimistic, as we look into fiscal 2026 and Market visibility remains unclear,
We continue to anticipate gradual recovery with some potential minor seasonality anticipated in the December quarter.
We look forward to demonstrating programs on vertical wire, Advanced, dispense, and thermal compression opportunities. As we prepare for the broader core Market recovery.
K&S is very focused on executing a strategic priorities. We are a constant with our capabilities and Technology leadership and we remain well prepared to navigate the near-term macro environment.
This concludes our prepare comments.
Operator. Please open the call for questions.
Thank you. We will not be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tool will indicate your line is in the question queue. You may press *2 to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.
1 moment, please while we pull for questions.
Our first question comes from the line of career sang car. With TD Cowen, please proceed with your question.
Hi. Thanks for taking my question and nice to see sequential Revenue Improvement. I had 3 questions fools on a lesser. Number 1, I think you kind of mentioned about Phi 26, gradual recovery minus seasonality. So is it fit as you December quarter, revenues have to be down sequentially and then they grow from there. But are we going to be bouncing around these 170 million levels for a few quarters or how do you think about it?
Okay, so usually question. So we do it 1 by 1, right? So first question is
I think at this moment, the industry utilization rate is quite healthy. Actually, it’s a benefit. Improvement in the 2007 conductor and the memory, I think, is also quite strong. But with the deal innovation, the ongoing heavy demand in the automotive sector...
uh the Q3 Revenue, we just uh, published and we got 170 million dollar for uh Q4
And uh, in our, you know, uh, review, we do believe.
H probably tear 1 of 26. Uh, you know first first half always is a weaker. Uh, but because we are high iteration right now we
Feel, I think a Q1 or for '26.
will be flat fresh like I hope uh, answer your questions and for the 26
Again, this is we do believe uh it's in the better cyclical position with a potential significant improved in the industry, iteration rate and affordable. Bonder uh we also have uh,
New product, uh, three of new product. Uh, for example, uh, clip attached a way around the P, whether this is for which Bond family.
Uh,
For hypo semiconductor. Uh, we also improvement over Advanced dispense political wire and TV growth. Uh, TCB growth were due to Industry fraudulence technology transition.
and uh, uh,
uh, potential. I think we in the hbm.
So, we to believe, probably.
First half of 26.
Will be uh, flat.
To Q4 of our uh, 25. And uh, uh this industry already have a downtown session of quarter. So we do believe a Q3 and Q4 I will be up. So I hope I I answer your questions.
Yeah, that was really helpful for us. And so on 170 million for the next couple of quarters. Um, I took a quick question. Uh, the second 1 is, uh, just kind of curious how to think about the impact of Intel capex Cuts, uh, because you do have some pretty good flux position there some of the corporate to Copper, uh, Etc. So I'm just wondering um, is that a headwind or have you seen any progress there, or do you think that potential opportunity in the future for SDC is probably minimize with Intel and then add 1 last follow up.
Will be done. So that's all I can say.
About it. But another last final question, you said, you're going to be shipping. Um,
Uh, TCB for HVM at the end of this calendar year. Is this for HVM 4? Or is this just one customer, or how should we think about it? Thank you.
Okay, so, uh, we do believe, uh, the next version of hvn is going to be a, uh, fraudulent or very, very important though. So, uh, currently I think, uh, we have uh, uh, 2 customer. We are working with, but uh, 1 of customer. I think we will intend to ship a system. Uh, end of calendar year, you know,
Thank you very much, Susan. Appreciate that.
Okay, thank you. Thank you. Bye.
Thank you.
Our next question comes from the line of Tom uh, this week with da Davidson please proceed with your question.
Yes.
Uh, thank you for taking the questions. I'm curious. You know what are the utilization rates? Um, this quarter at your kind of core customers and then what are the areas? That's driving this incremental growth quarter over quarter, uh, here in the fiscal fourth quarter.
Hi Tom. Its Leicester. Uh, so utilization rate overall is about 81%. Uh, I think, uh, in the end markets, uh, General semi, uh, is uh, around 83%, uh, memories about 80%, uh, we see growth, uh, utilization in, um, all the major end markets, uh, even Auto even though Otto still quite soft. Utilization is below 70 there. Uh, but as far as what's driving, it is basically General semi as well as memory, uh, they've shown some, uh, their, the highest, uh, Rising utilization rate. So, I think that's basically, uh, is driving, uh, a particular General. Semi our, uh, you know, uh, sequential growth in the revenues.
Great, thank you. And then uh, fuson. I was hoping you could just dig a little deeper into the um,
Thermal compression business. You know how big was it historically uh with flex less and going into memory going forward? How big could it be uh, you know, a year or 2 down the road?
Okay. So actually I would repeat a few times already. Uh this year uh previous quarter, you know, we target about 25, you know, as a a shipping, you know, we are talking about, you know, 62 or 70 and uh our next next year, I think originally we target 100 million dollars but with a fraction is transitioning and uh uh we really work hard on uh, hvm, you know, we believe we will have some
I'm sorry, but as uh, the monkey grow, our Target, actually, the memory Market actually is, uh, is higher, uh, bigger than logic right now. We intend, you know, uh, 20,
We think the market will reach about $1 billion. We actually, uh, actually, uh, brand. You know, we have a plan and target about $250 to $300 million by 2028. We believe a lot of time the market...
You know, I will have sites about 900 to 1 million dollars.
Okay. And is it um is the main advantage here on the cost side? You mentioned that obviously you don't do the 3 silicone is it really um for a lower cost applications where you are? Benefiting the customer? Is there a technology Advantage as well?
I I I think no, no, I think it's really uh technology. You know. Uh,
We actually start with uh uh you know, chemical based. They are 2 technology and we are the leader actually I we can tell you uh
At this moment, all the high volume production, you know, uh, you know, uh, production high volume. Actually we are the only technology in the high volume production. So, uh, and uh, uh, as you mentioned, as I mentioned in my script, we are adding a more capability. So we are quite positive about the transition to our foxes. We are number 1 and we intend to capture big market and uh, after focus is not logic. Uh, we will focus it. Oh, as well as the hbm from here.
Great. I appreciate the extra color.
Thank you.
Thank you.
All right, next question comes from the line of Charles. She would need him in Company. Please receive with your question.
Um, your your soft guidance. Um, December quarter. I mean you don't have an official guide but you did provide the direction. Um,
So, the December quarter. Uh, how do I think about, uh, that the let lock confidence level, you have? Um, like is it the you're basically guiding, uh, December. Maybe flattish. Is it a big stop orders on hand or or how should I is it the based on forecasts to make maybe you don't have all the orders on hand, but the things may be coming along nicely. Uh, I want to gauge a little bit of your confidence there. Thank you.
Hi Charles, this is Lester. So it's a combination of the the things you mentioned, right? I mean, uh, Susan, and I already mentioned earlier about the utilization rates being quite high, right? And I think over the last couple of quarters, we've seen realization rate at a healthy level and it's increasing, uh, obviously in uh, normalized times. Uh, you know, there would have been a ramp already, but again, as we've mentioned several times, the tariffs are kind of, uh, creating a little bit. Hesitation in our customers supply chain, uh, as far as our confidence on on why we think that again, we're not guiding, but as Susan said, we think December quarter will be flat, uh, to our Q4 which are the 10th quarter. Uh, the reason is yes, we do see, uh, higher ordered intake coming in. Uh, we do see a lot more increase from customers. Uh, and you know, we're seeing again, recovery in, uh, both end markets as well as regions that were, uh, you know, a little
Over the last couple of quarters, right? So I think a combination of all those things makes us think that even with, you know, again usually the December quarter, we have a little bit of seasonality, but we believe that, you know, with all these factors, it should be relatively flat from the September quarter.
Excellent. Uh, give me a second question. Uh, want to ask a little bit more about the PCB. Um, maybe this is more about technology. So, uh, fusa. I think you mentioned about preparation, um, physical or chemical preparation but kind of want to ask you what that means, um, is it, uh, is it issue? Preparation or it's, uh, it's a separate tool and I think a related to that. Uh, there has been a debate, um, on PCB. Uh, the 2 approaches the chemical approach which is that the approach you you guys have and the plasma approach. So are you by saying physical preparation? Are you talking more about the plasma approach you're developing or or what what is that? And uh on hbm, a high bandwidth memory which uh which technology you are you are you are proposing or you are going to evaluate with customers. Thank you.
okay, so Charles as I mentioned, uh, the industry, you know, uh, we have uh, uh 8 customers and uh, they are all in a production and
The whole industry, the only technology in high-volume production actually is a chemical-based.
Right. So, uh, actually, uh, we are very proud. You know? All the customer side. We have. The Mis production actually is a chemical
so uh, the ACT to answer your question actually is
Uh, we are also developing, you know, uh, physical. Uh,
Uh, preparation technology. This is really, really old technology. Uh, probably tens of years of prior art in a semiconductor effect.
But actually both technology actually have a a merry I give you an example. I think for the physical 1 uh you need to train like a solder oxide. Actually have a faster rate but for a chemical we are very confident. I think uh
For the surface preparation is especially interface. Interface Integrity. Quality is the most important for the year. Uh, we are strongly confident. I think, uh, the chemical 1 is the best. So right now to answer your question we have a capability actually, we have done it and a demonstrated and get the feedback is positive is actually we doing Institute all together integrate all, uh, this uh capability.
City together in a system. So we doing that actually, you know, our customer is so convenient to, uh, easily integrate their integration and, uh, in our us
To actually fight for the market shares in various kind of cheap on wafer on substrate. And also maybe in the future are also hbm.
Over and see your questions.
Thank you. That's all from me. Thank you.
Our next question comes from the line of Christian. Why with Craig, hm, please proceed with your question.
Great. Thanks for taking my question.
At the end of the prepared, comments, you talked about being well, positioned, uh, taking market share, um, can you elaborate on? You know what, uh, you know, products, you know, that you plan on gaining market, share Auto industrial, you know, memory, Etc. Just give a a more clear, uh, answer to that please.
Okay. So our first 1, I mentioned actually is a clip attached and also pin whether this is in our westbound, our family. This is a specialty for high power semiconductor products, right? Uh, this will be very, very important. Uh, high power semiconductor will be very, very important. Uh, to, uh, to show the significant growth in the next many, many, many years.
So the second 1 is Advanced, dispense is dispense solution. Dispense, actually is quite a big Market. Uh, it's like a, a billion to 2 billion and we are focused on appreciation. You know, uh, dispense actually, uh, 3 years ago, we acquired a company and uh, we do believe uh, technology is differentiated and has a micro dispensing capability with the
Hi. Inspection and also have a good availability, right? And we put this one, actually, in the common platform of our company, the common platform. So we do believe our cost is very competitive and we have differential products, and we will show actually the growth next year. Uh, uh, over here.
And then, uh, a political while. I think we talked about political, uh, actually probably close to 56 quarters. I think I finally, this will take off, uh, when I mentioned, I mentioned this product will be implemented into a ddr5, you know, speaking again. But uh, when people do this and a lot of people is encouraged because it's a, a St, you know, uh die and uh, the bandwidth is actually not like a high power, you know, hvn. I have a much wider bandwidth, but this 1 can, uh, actually, uh, provide 3 to 4X of bandwidth increase compared to, uh, uh, uh, current DDM DDR
And you know the last 1 I mentioned I think my TCB I think a lot a lot of discussion and then we are quite focused. And we do believe uh uh we can uh we can make a check in on the TCP.
Great. Uh, fantastic. Thank you know, other questions.
Thank you.
And we have reached the end of the question and answer session. Therefore I'll turn the call Floor back to uh Joe Lindy for closing remarks.
Thank you Shamaley and thank you all for joining. Today's call over at the coming quarter. We'll be presenting at several conferences. As always, please feel free to follow up directly with any additional questions. This concludes today's call have a great day, everyone.