Q1 2026 Kulicke & Soffa Industries Inc Earnings Call

February 5, 2026

Speaker #1: Greetings, and welcome to the Kulicke and Soffa first quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

Operator: Greetings, and welcome to the Kulicke & Soffa Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require 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 Elgindy, Senior Director, Investor Relations. Thank you, sir. You may begin.

Speaker #1: require operators' assistance during the conference, please press star If anyone should zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: It is now my pleasure to introduce your host, Joe Elgindy, Senior Director, Investor Relations. Thank you, sir. You may begin.

Speaker #2: Thank you. Welcome, everyone, to Kulicke and Soffa's fiscal first quarter 2026 conference call. Lester Wong, Interim Chief Executive Officer and Chief Financial Officer, also joins me on today's call.

Joe Elgindy: Thank you. Welcome, everyone, to Kulicke & Soffa's fiscal Q1 2026 conference call. Lester Wong, Interim Chief Executive Officer and Chief Financial Officer, also joins me on today's call. 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 our latest earnings release and earnings presentation. Both are available at investor.kns.com, along with prepared remarks for today's call. In addition to historical statements, today's discussion contains forward-looking statements regarding our future performance and outlook. These statements are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that may cause actual results to differ materially.

Joe Elgindy: Thank you. Welcome, everyone, to Kulicke & Soffa's Fiscal Q1 2026 conference call. Lester Wong, Interim Chief Executive Officer and Chief Financial Officer, also joins me on today's call. 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 our latest earnings release and earnings presentation. Both are available at investor.kns.com, along with prepared remarks for today's call. In addition to historical statements, today's discussion contains forward-looking statements regarding our future performance and outlook. These statements are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that may cause actual results to differ materially.

Speaker #2: 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 our latest earnings release and earnings presentation. Both are available at investor.kns.com, along with prepared remarks for today's call.

Speaker #2: In addition to historical statements, today's discussion contains forward-looking statements regarding our future performance and outlook. These statements are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties that may be material.

Speaker #2: For a complete discussion of the risks associated with Kulicke and Soffa that could affect our future results in financial cause actual results to differ condition, please refer to our latest form 10-K and upcoming SEC filings for additional information.

Joe Elgindy: For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our latest Form 10-K and upcoming SEC filings for additional information. With that said, I will now turn the call over to Lester Wong for the business, market, and financial overview. Please go ahead, Lester.

Speaker #2: With that said, I will now turn the call over to Lester Wong for the business, market, and financial overview. Please go ahead,

Speaker #2: With that said, I will now turn the call over to Lester Wong for the business, market, and financial overview. Please go ahead, Lester. Thank you, Joe.

Lester Wong: Thank you, Joe. Good morning, everyone. We are pleased to report that demand is improving at a faster and stronger pace than previously expected. Customer sentiment has strengthened meaningfully, and utilization across the most significant markets and regions remains favorable. While residual headwinds in the automotive market may persist near term, generally, general semiconductor and memory markets continue to demonstrate robust demand, supported by broadening technology improvements and renewed production activity across multiple regions. Turning to recent business results, we continue to see improving order activity with additional visibility through fiscal 2026, which is supported by favorable utilization trend in general semiconductor and memory end markets.... Separately, demand for our portfolio of advanced packaging solutions, including our fluxless thermal compression bonding tools, remains robust, and we continue to anticipate a strong growth year for our advanced packaging opportunities.

Speaker #3: Good morning, everyone. We are pleased to report that demand is improving at a faster and stronger pace than previously expected. meaningfully, and utilization across Customer sentiment has strengthened our most significant markets and regions remains favorable.

Speaker #3: Residual headwinds in the automobile market may persist in the near term. Generally, semiconductor and memory markets continue to demonstrate robust demand, supported by broadening technology improvements and renewed production activity across multiple regions.

Speaker #3: Turning to recent business results, we continue to see improving order activity, with additional visibility through fiscal 2026, which is supported by favorable utilization trends in general semiconductor and memory end markets separately.

Speaker #3: Demand for our portfolio of advanced packaging solutions, including our FLUXUS thermal compression bonding tools, remains robust, and we continue to anticipate a strong growth year for our advanced packaging opportunities.

Speaker #3: For the first fiscal quarter, we generated revenue and earnings above expectations and remain focused on ramping production to support strong customer demand, in addition to driving parallel technological transitions within advanced packaging, advanced dispense, and power semiconductor.

Lester Wong: For Q1, we generated revenue and earnings above expectations and remain focused on ramping production to support strong customer demand, in addition to driving parallel technological transitions within advanced packaging, Advanced Dispense, and Power Semiconductor. Dynamics within the high-volume general semiconductor and memory end markets remain favorable, while we also experienced a slight sequential revenue improvement within the automotive and industrial end market. In Q1, general semiconductor revenue increased by 27% sequentially and over 90% from the same period last year, driven by both technology and capacity needs of our customers. Across our portfolio solutions, all reportable segments recognized sequential increases within general semiconductor this past quarter. We estimate utilization levels remain over 80% for this key end market. Turning to memory, after a 60% increase last quarter, demand sequentially declined due to product and customer mix.

Speaker #3: Dynamics within the high-volume general semiconductor and memory end markets remain favorable, while we also experience a slight sequential revenue improvement within the automotive and industrial end market.

Speaker #3: In the first fiscal quarter, sales increased by 27% sequentially and over 90% from the same period last year, driven by both technology and capacity needs of our customers.

Speaker #3: Across our portfolio solutions, all reportable segments recognized sequential increases within general semiconductor this past quarter. We estimate, this quarter, general semiconductor revenue increased. Utilization levels remain over 80% for this key end market.

Speaker #3: Turning to memory, after a 60% increase last quarter, demand sequentially declined due to product and customer mix. While the concentration of memory customers can create demand variability quarter to quarter, we have observed ball bonding utilization rates which exceed 85% for the memory market, up from the mid-70% range last year.

Lester Wong: While the concentration of memory customer can create demand variability quarter to quarter, we have observed ball bonding utilization rates, which exceed 85% for the memory market, up from the mid-70 range last year. This indicates a healthy capacity environment for our NAND assembly solutions. While AI-related workloads are driving capacity tightness across the memory market, they are also driving new packaging solutions for cost-effective stack DRAM, in addition to emerging requirements for High Bandwidth Flash, or HBF. I will provide a brief update to our memory opportunities shortly. Within automotive and industrial, we experienced a 15% sequential revenue improvement in the December quarter, although continue to anticipate industry headwinds to linger through fiscal 2026. Despite these near-term headwinds, we remain positive on long-term automotive and industrial trends, anticipate semiconductor content per vehicle, supported by ADAS requirements, to double over the coming 10 years.

Speaker #3: This indicates a healthy capacity environment for our NAND assembly solutions. While AI-related workloads are driving capacity tightness across the memory market, they're also driving new packaging solutions for cost-effective stack DRAM, in addition to emerging requirements for high-bandwidth flash, or HBF.

Speaker #3: I will provide a brief update to our memory opportunities shortly. Within automotive and industrial, we experienced a in the December quarter, although continued anticipate industry headwinds to linger through fiscal 2026.

Speaker #3: Despite these near-term headwinds, we remain positive on long-term automotive and industrial trends and anticipate semiconductor content per vehicle, supported by ADAS requirements, to double over the coming 10 years.

Speaker #3: We also remain well-positioned to continue benefiting from gradual long-term share growth in battery and plug-in hybrids as we deliver new power semiconductor technology and capacity requirements.

Lester Wong: We also remain well positioned to continue benefiting from gradual long-term share growth in battery and plug-in hybrids, as we deliver new power semiconductor technology and capacity requirements. Lastly, aftermarket products and services increased by 14% from the same period last year, reflecting increased production activity and improved utilization across our high-volume install base. We are optimistic about fiscal 2026 based on current demand levels and utilization level improvements, and remain focused on ramping production to meet high-volume demand. Also, our traction within advanced packaging, advanced dispense, and across power semiconductor opportunities continues to be encouraging. Within advanced packaging, transition of both vertical wire and thermal compression remains on track. We continue to anticipate that the advanced solutions segment will strongly grow this year as advanced TCB capacity is in demand throughout our customer base.

Speaker #3: increased by 14% from the same period last year, reflecting increased production activity and improved utilization across our high-volume install base. We are optimistic about fiscal 2026 based on current demand levels and utilization level improvements, and remain focused on ramping production to meet high-volume Lastly, aftermarket products and services demand.

Speaker #3: Also, our traction within advanced packaging, advanced dispense, and across power semiconductor opportunities continues to be encouraging. Within advanced packaging, transitions of both vertical wire and thermal compression remain on track.

Speaker #3: We continue to anticipate that the advanced solution segment will strongly grow this year, as advanced PCB capacity is in demand throughout our customer base.

Speaker #3: Over the years, we have created a competitive portfolio of PCB solutions supporting a wide range of leading-edge logic applications, and are pleased to also extend our footprint into high-bandwidth memory, which is extremely important for AI, as HBMs provide fast, high-performance memory which AI accelerators need to efficiently process massive amounts of data.

Lester Wong: Over the years, we have created a competitive portfolio of TCB solutions, supporting a wide range of leading-edge logic applications, and are pleased to also extend our footprint into High Bandwidth Memory, which is extremely important for AI, as HBMs provide fast, high-performance memory, which AI accelerators need to efficiently process massive amount of data. In this regard, we are pleased to have shipped our first HBM system to a large memory customer during the December quarter. We continue to anticipate fluxless thermo-compression remain a strong alternative to hybrid bonding for the next generation HBM needs. Our other DRAM opportunity stems from vertical wire, which provides a high potential alternative for cost-effective bandwidth through die stacking. We have already seen positive customer feedback on our vertical wire solutions and continue to anticipate strong sequential growth in both TCB and vertical wire over the coming years.

Speaker #3: In this regard, we are pleased to have shipped our first HBM system to a large memory customer during the December quarter. We continue to anticipate Fluxus thermal compression remain a strong alternative to hybrid bonding for the next generation HBM needs.

Speaker #3: Stems from vertical wire, which provides a high-potential alternative for cost-effective bandwidth through die stacking. We have already seen positive customer feedback on our other DRAM opportunity, vertical wire.

Speaker #3: Solutions and continue to anticipate strong sequential growth in both PCB and vertical wire over the coming years. Advanced dispense also continues to progress as planned.

Lester Wong: Advanced Dispense also continue to progress as planned. We introduced our latest SL Series dispense system in November at Productronica. Feedback from customers has been positive, with multiple customers engaged. We continue to prepare several systems to support this initial customer interest. Last, within Power Semiconductor, we have market-leading solutions and continue to expand our portfolio. In support of growing power efficiency requirements across automotive, mobility, and data centers, Power Semiconductor applications are rapidly evolving. This transition is demanding more efficient materials, more complex assembly techniques, and more capable equipment solutions, which we are well positioned to support. Over the past three years, we have navigated a challenging demand period for our core products while we invest in several areas to expand our market access.

Speaker #3: We introduced our latest Epsilon dispense system in November at Protectronica. Feedback from customers has been positive, with multiple customers preparing several systems to support this initial customer interest.

Speaker #3: Last, within power semiconductor, we have market-leading solutions and continue to expand our portfolio. In support of growing power efficiency requirements across automotive, mobility, and data centers, power semiconductors applications are rapidly evolving.

Speaker #3: This transition is demanding more efficient materials, more complex assembly techniques, and more capable equipment solutions, which we are well-positioned to support. Over the past three years, we have navigated a challenging demand period for our core products while we invest in several areas to expand our market access.

Speaker #3: As we now move beyond this period of soft core market demand, we are optimistic and remain well-positioned to capitalize on a wide set of opportunities across our serve markets.

Lester Wong: As we now move beyond this period of soft core market demand, we are optimistic and remain well positioned to capitalize on a wide set of opportunities across our served markets. With that said, I will now provide a brief financial update. My remarks today will refer to GAAP results, unless noted. We delivered revenue above guidance, continued to execute on close customer engagements, and maintain an ongoing focus on cost control. Gross margins came in at 49.6%, and we delivered $0.32 of GAAP earnings and $0.44 of non-GAAP earnings. Gross margins improved sequentially due to customer and product mix, as well as revenue recognized from systems which were previously expensed. This was largely related to prior impairment charges, as well as previously expensed R&D systems....

Speaker #3: With that said, I will now provide a brief financial update. My remarks today refer to GAAP results unless noted. We delivered revenue above guidance, continue to execute on close customer engagements, and maintain an ongoing focus on cost control.

Speaker #3: Gross margins came in at 49.6%, and we delivered $0.32 of GAAP earnings and $0.44 of non-GAAP earnings. Gross margins improved sequentially due to customer and product mix, as well as revenue recognized from systems which were previously expensed.

Speaker #3: This was largely related to prior impairment charges as well as previously expensed R&D systems. Total operating expense came in at $81.1 million on a GAAP basis and $74.2 million on a non-GAAP basis.

Lester Wong: Totally, operating expense came in at $81.1 million on a GAAP basis and $74.2 million on a non-GAAP basis. We continue to remain focused on operational efficiency while we support a growing set of opportunities. Tax expense came in at $5.7 million, and we continue to anticipate our effective tax rate will remain above 20% over the near term. Over the coming quarters, general semiconductor and memory end markets are expected to continue driving strong demand for our solutions. For the March quarter, we expect revenue to increase by 15% sequentially to $230 million, with gross margins of 49%. Non-GAAP operating expenses are expected to be $73 million, with GAAP earnings per share targeted to be $0.53 and our non-GAAP earnings per share of $0.67.

Speaker #3: We continue to remain focused on operational efficiency while we support a growing set of opportunities. Tax expense came in at 5.7 million, and we continue to anticipate our effective tax rate will remain above 20% over the near term.

Speaker #3: Over the coming quarters, general semiconductor and memory end markets are expected to continue driving strong demand for our solutions. For the March quarter, we expect revenue to increase by 15% sequentially to 230 million dollars, with gross margin of 49%.

Speaker #3: Non-gap operating expenses are expected to be 73 million, with gap earnings per share targeted to be 53 cents and our non-gap earnings per share of 67 cents.

Speaker #3: Looking ahead, we continue to focus on ramping production as we continue to execute multiple quarters. This is an interesting time at the company. We're either a dominant incumbent leader or aggressively taking share in all key serves.

Lester Wong: Looking ahead, we continue to focus on ramping production as we continue to execute multiple growth strategies across key markets. As mentioned last quarter, this is an interesting time at the company. We're either a dominant incumbent leader or are aggressively taking share in all key markets we serve. We look forward to ongoing execution and progress in advanced packaging, advanced dispense, and power semiconductor opportunities as we prepare for broadening core market recovery. In closing, we remain focused on executing our strategic priorities, are confident in our capabilities and technology leadership, and look forward to demonstrating our operational leverage over the coming quarters. This concludes the prepared comments. Operator, please open the call for questions.

Speaker #3: We look forward to ongoing execution and progress in advanced packaging, advanced dispense, and power semiconductor opportunities as we prepare for a broadening core market recovery.

Speaker #3: In closing, we remain focused on executing our strategic priorities, our confident and leadership, and look forward to demonstrating our operational leverage over the coming quarters.

Speaker #3: This concludes our prepared comments. Operator, please open the call for

Speaker #3: questions. Thank you.

Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Charles Shi with Needham & Company. Please proceed with your question.

Speaker #2: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #2: A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #2: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker #2: Our first question comes from Charles Sheet with Needham and Company. Please proceed with your question.

Speaker #3: Hi. Last, thanks for taking my question. Maybe the first one, it looks like you are indeed entering an upcycle here based on your results, based on your guidance for next quarter.

Charles Shi: Hi, Lester. Thanks for taking my question. Maybe the first one, looks like you are indeed entering an upcycle here, based on your results, based on your guidance for next quarter. Can you help us characterize what do you see for the remainder of the fiscal or calendar year, whichever you feel more comfortable at this point? What do you see for the remainder of the year, in terms of overall demand, overall top-line growth? Thank you.

Speaker #3: Can you help us characterize what do you see for the remainder of the fiscal or calendar year, whichever you feel more comfortable at this point?

Speaker #3: What do you see for the remainder of the year in terms of overall demand and overall pipeline growth? Thank you.

Speaker #4: Hi, Charles. Thanks for the question. Better visibility into—so I think we're getting the remainder of our FY26. Based on the very high utilization rates, as well as our discussions with customers—I was just in Taiwan and China the last couple of weeks talking to customers.

Lester Wong: Hi, Charles. Thanks for the question. So I think we're getting better visibility into the remainder of our FY 2026. Based on the very high utilization rates, as well as our discussions with customers, I was just in Taiwan and China the last couple weeks talking to customers. We think Q3 definitely will be sequentially better than Q2. I think the second half of FY 2026 should be about 15 to 20% better than the first half.

Speaker #4: We think Q3 is definitely going to be sequentially better than Q2. I think the second half will be about 15 to 20 percent better than the first.

Speaker #4: half. Thanks.

Charles Shi: Thanks. That's great color. Then, regarding some of the new opportunities you mentioned, I believe you somewhere in the prepared remarks, you talked about High Bandwidth Flash, but you didn't really provide more details than that. Just a little bit of context why I ask this question, 'cause I thought the High Bandwidth Flash is a TSV micro-bump-based technology. But, sounds like you're alluding to maybe it's not, quite, more of a TCB driver, maybe it's a vertical wire driver. So mind if you elaborate a little bit, 'cause it wasn't clear w- how HBF can benefit, or create, op- opportunity for, for KMS. Thanks.

Speaker #3: That's a great color. Then, regarding some of the new opportunities you mentioned, I believe you're somewhere in the preparing marks. You talked about high-bandwidth flash, but you didn't really provide more details than that.

Speaker #3: Just a little bit of context while I ask this question, because I thought the high bandwidth flash is a TSP microphone-based technology.

Speaker #3: But it sounds like you're alluding to maybe it's not quite more of a TCB driver. Maybe it's a vertical wire driver. So, do you mind if you elaborate a little bit? Because it wasn't clear how HBF can benefit or create opportunity for K&S.

Speaker #3: Thanks.

Speaker #4: Sure, Charles. Actually, it is a TCB play and not for vertical wire. As you know, HBF is designed to merge NAND level capacity with HBM class performance, right?

Lester Wong: Sure, Charles. Actually, it is a TCB play and not for vertical wire. You know, as you know, HBF is designed to merge NAND-level capacity with, you know, HBM class performance, right? And the potential benefits is obviously unlocking bottlenecks in AI workloads, right? So HBF targets to, you know, match HBM bandwidth to 8 to 16 times the capacity. At this point, HBF is still in the early stages. We anticipate multiple packaging technologies can be used to assemble these packages, including TCB. So right now, we're currently exploring this technology with a few customers. So it is gonna be our TCB, probably our Aptora, that will be used for HBF.

Speaker #4: And the potential benefit is obviously unlocking bottlenecks in AI workloads, right? So HBF targets to match HBM bandwidth to eight to sixteen times the capacity.

Speaker #4: At this point, HBF is still in early stages. We anticipate multiple packaging technologies can be used to assemble these packages, including TCB. So right now, we're currently exploring this technology with a few customers.

Speaker #4: So it is going to be our TCB probably up to that will be used for

Speaker #4: HBF. Okay.

Charles Shi: Okay. So, you do have a TCB tool, which you just shipped it to one of the top three memory customers. But, yeah, so it sounds like that is for HBM qualification. So what would be the next milestone, like, for TCB and HBF? Like, do you expect to ship another tool? Is that the milestone that we should all be looking forward to?

Speaker #3: So you do have a TCB tool which you just shipped to one of the top but yes, it sounds like that is for HBM three, memory customers, qualification.

Speaker #3: What would be the next milestone, like for TCB and HBF? Do you expect to ship, so, another tool? Is that the milestone that we should all be looking forward to?

Speaker #4: Sorry, Charles. You mean the next milestone for HBM or HBF? HBM,

Lester Wong: Sorry, Charles, you mean the next milestone for HBM or HBF? HBM, right?

Speaker #4: right? High bandwidth

Charles Shi: HBF, the high bandwidth flash. Sorry, I meant high bandwidth-

Speaker #3: Flash. Sorry, I meant high bandwidth.

Lester Wong: Okay.

Speaker #3: flash. Yeah. Okay.

Charles Shi: -flash. Yeah.

Speaker #4: Okay. So I think the milestone, like I said, right now we're in early stages of discussing with some customers. I think probably the next milestone would be probably shipping a system or probably shipping a system before appeal.

Lester Wong: Okay. So I think the milestone, like I said, right now, we're in early stages of discussing with, you know, some customers. I think probably the next milestone would be probably shipping a system or probably shipping a system before PO, so at this point.

Speaker #4: So at this point.

Speaker #3: Okay, so a system should—okay, the next milestone is another qualification system shipment. Okay, got it. Thank you.

Charles Shi: Okay. The next milestone is another qualification system shipment. Okay, got it. Thank you.

Speaker #3: you.

Speaker #4: Thanks,

Lester Wong: Thanks, Charles.

Speaker #2: Our next question comes from Chris Sankar with Cohen. Please proceed with your question.

Operator: Our next question comes from Krish Sankar with TD Cowen. Please proceed with your question.

Speaker #5: Yeah, that was a good question. Let's say congrats on the results and guidance. Kind of interesting to see the cyclical recovery here in play.

Krish Sankar: Yeah, thanks for taking my question, and Lester, congrats on the results and guidance. Kind of interesting to see the cyclical recovery here in play. I just kind of want to just clarify, you said second half, fiscal second half, raised by 15 to 20 percent. Is that just conservative? Because I would say that if you try to strip it down by quarters, it seems like the growth rate is low sequentially, the high single digits versus low double digits the last two quarters. But I would think that it should be better than that, given a cyclical uplift. So is this more conservative, some of the fact that, you know, this is the visibility you have today, things could end up being better than expected?

Speaker #5: I just kind of want to just clarify. You said second half fiscal, second half graded by 15 to 20 percent. Is that just conservatism?

Speaker #5: Because I would say that if you try to strip it down by quarters, it seems like the growth rate slow sequentially to high single digits versus low double digits the last two quarters.

Speaker #5: But I would think that it should be better than that given a cyclical uplift. So is this more conservatism or the fact that this is the visibility you have today things could end up being better than

Speaker #5: expected? So thanks,

Lester Wong: So thanks, Krish. I mean, that's, that's the visibility we have today, right? Again, you know, there, while visibility is better, as I said, and utilization rate is very high at 85%, over close to 90% in China, there is still a lot of uncertainty in terms of some of the macros, right? Things we've been talking over the last couple of quarters. But at this point, we think, you know, from all my discussion with customers is it's getting much more solid. So 15 and 20% is what we see at this point. There could be potential upside on top of that, but at, for now, I think it's 15 to 20%.

Speaker #4: Chris. I mean, that's the visibility we have today, right? Again, while visibility is better, as I said, and utilization rate is very high at 85% over close to 90% in China, there is still a lot of uncertainty in terms of some of the macros, right?

Speaker #4: Things we've been talking over the last couple of quarters. But at this point, we think, from all my discussions with customers, it's getting much more solid.

Speaker #4: So 15 and 20 percent is what we see at this point. There could be potential upside on top of that. But for now, I think it's 15 to 20 percent.

Krish Sankar: Fair enough. Fair enough. And then, just to follow up on the strong growth here for advanced packaging, I'm just curious, is there a way to quantify how much you get TCB plus FTC revenues would be? Is it close to $100 million this fiscal year? And also, on the FTC side, have you been -- has your plasma solution been qualified at the bigger foundry, or not yet?

Speaker #5: Enough. And then, just to follow up on the strong growth here for advanced packaging, I'm just curious, is there a way to quantify how much of your TCB plus FTC revenues would be?

Speaker #5: Is it close to 100 million? This is still here and also on the FTC side, have you plasma solution been qualified at the bigger foundry or not

Speaker #5: yet?

Lester Wong: Are you saying, have our TCB been qualified at the foundry?

Speaker #4: FTC been qualified at the—so are you saying our foundry?

Speaker #5: The plasma solution, not the formic.

Krish Sankar: The plasma solution, not the formic acid.

Speaker #5: acid. Right now, we're working on

Lester Wong: Right now, we are -- we're working on the qualification for the plasma. As you mentioned, the formic acid has already been qualified. It's in high volume production. Again, I don't want to speak specific about individual customers, but we're working very closely with the customer on that. I think for our TCB, we obviously, as you know, Krish, we started with, you know, IDM in the US, and we've moved on to foundry. Now, we're also seeing, you know, quite a lot of demand from OSAT. We have 120 TCBs in the field, and half of those are fluxless. So, we feel pretty good about our TCB system. We think it's best in class. It's got great material handling capabilities, which allow for, you know, customers to do different processes.

Speaker #4: The qualification for the plasma—as you mentioned, the formic acid array didn't qualify. It's in high-volume production. Again, I don't want to speak specifically about individual customers, but we're working very closely with the customer on that.

Speaker #4: I think for our TCB, we also obviously, as you know, Chris, we started with IDM in the US, and we've moved on to foundry.

Speaker #4: Now we're also seeing quite a lot of demand from OSATs. We have 120 TCBs in the field and half of those are fluxless. So we feel pretty good about our TCB system.

Speaker #4: We think it's best in class. It's got great material handling capabilities, which allow for customers to do different processes. So I think we definitely think both plasma and formic acid were best in class on

Lester Wong: So I think we definitely think both plasma and formic acid were best in class on TCB.

Speaker #4: FTC. And

Krish Sankar: Got it. And, Lester, just any kind of quantification on TCB revenues this fiscal year?

Speaker #5: On TCB revenues, this is—let's just, any kind of quantification—

Speaker #4: Well, I think

Lester Wong: Well, I think for this year, for TCB, it will be over $100 million.

Speaker #4: For this year, for TCB, it will be over, clear? 100.

Speaker #4: million. Over 100 million.

Krish Sankar: Over $100 million. Okay, awesome. Thank you very much.

Speaker #5: Okay. Awesome. Thank you very much.

Speaker #4: Thanks,

Speaker #4: Chris. As

Lester Wong: Thanks, Krish.

Speaker #2: a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from Craig Ellis with B Riley Securities.

Operator: As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from Craig Ellis with B. Riley Securities. Please proceed with your question.

Speaker #2: Please proceed with your

Speaker #2: question. Yeah.

Speaker #6: Thanks for taking the question. And Lester, congratulations on the nice execution. I wanted to start just by going back to the thread that Charles was on with high bandwidth flash.

Craig Ellis: Yeah, thanks for taking the question, and Lester, congratulations on the nice execution. I, I wanted to start just by going back to the thread that Charles was on with high-bandwidth flash. The question, though, is, as you engage with multiple customers on high-bandwidth flash, what's their expectation for when this can commercialize? Obviously, new standards have to go through JEDEC, but on the other hand, you've probably got NVIDIA pushing really hard, and they've been very successful at accelerated technology adoption. So when are these customers thinking this can come out in volume?

Speaker #6: The question, though, is, as you engage with multiple customers on high bandwidth flash, what's their expectation commercialize? Obviously, new standards, have to go through JDEC, but on the other hand, you've probably got for when this can at accelerated technology adoption.

Speaker #6: volume?

Lester Wong: Well, Craig, as I said, I think it's early days yet for the technology. As you put it, you know, I think it will take a while for qualifications. There's a lot of different standards we're talking about. I think this will probably be more of a CY 27 play.

Speaker #4: think it's early days yet for the technology. As you put it, I think

Speaker #4: publications. There's a lot of different So when are these customers standards we're talking about. I think this will probably be more of a CY27 play.

Speaker #6: Got it. Thank you. And then, going back to your comments on the initial shipment to a customer for high bandwidth memory, can you just walk through the timeline for when we go from that tool, which looks like an evaluation order, to volume production?

Craig Ellis: Got it. Thank you. And then, going back to your comments on the initial shipment to a customer for high-bandwidth memory, can you just walk through the timeline for when we go from that tool, which looks like an evaluation order, to volume production? Can that happen in fiscal 26, or is volume production really fiscal 27?

Speaker #6: Can that happen in fiscal 26 or is volume production really fiscal

Speaker #6: 27? I think volume production will be

Lester Wong: I think volume production will be fiscal 2027. I think right now we've shipped the system to their facility in the US. It's undergoing qualification. I think the next milestone will probably be, hopefully, another system being shipped. There may be POs within FY 2026, but I think actual production would be more FY 2027.

Speaker #4: Fiscal '27. I think right now we've shipped the system to their facility in the US. It's undergoing qualification. I think the next milestone will probably be, hopefully, another system being shipped.

Speaker #4: There may be POs within FY26, but I think actual production would be more FY27.

Speaker #6: Okay. And we'll look for progress on that. Lastly, for me, vertical wire, since it could work in low-power DRAM and mobile-related applications—typically, the early technology adopter releases product in the third quarter of the year. I think we can hit that in the calendar year.

Craig Ellis: Okay, and we'll look for progress on that. Lastly, for me, vertical wire, since this is something that could work in low-power DRAM and mobile-related applications, typically, the early technology adopter releases product in Q3 of the calendar year. Do you think we can hit that in the second half of 2026, or is this something that really goes up in significant volume in the second half of 2027, or do you see initial adoption coming out of the Android community, and when would that be?

Speaker #6: Second half of 2026, or do you—is this something that really goes up in significant volume in the second half of '27, or do you see initial adoption coming out of the Android community, and when would that be?

Speaker #4: I think there will be more, it's gaining traction, but I think this is more maybe the latter half of FY26 there'll be some. But I think actually expand much more in FY27.

Lester Wong: I think there will be, you know, more. It's gaining traction, but I think this is more maybe the latter half of FY 2026, there'll be some. But I think it will actually expand much more in FY 2027. We're currently working with 8 customers in Korea, China, and the US on this. So again, we pioneered the technology, vertical wire, so we're, we're pretty excited about it. This, in addition to the HVM system that we shipped to the leading memory maker, is our sort of play into DRAM. Craig, as you know, our memory business has been, you know, traditionally very heavily into NAND, which is still growing, as I said.

Speaker #4: We're currently working with eight customers in Korea, China, and the US on this. So again, we've pioneered the technology vertical wire, so we're pretty excited about it.

Speaker #4: This addition to the HBM system that we shipped to the leading memory maker is our sort of play into DRAM. Craig, as you know, our memory business has been traditionally very heavily into NAND, which is still growing, as I said.

Speaker #4: But I think this is, again, more opportunities for us in memory because we think memory actually is going to be pretty robust going

Lester Wong: But, I think this is, you know, again, more opportunities for us in memory, and 'cause we think memory actually is gonna be pretty robust going forward.

Speaker #4: forward. Sure looks like it.

Joe Elgindy: It sure looks like it. Thanks, Lester.

Craig Ellis: It sure looks like it. Thanks, Lester.

Speaker #6: Thanks,

Speaker #4: Craig.

Lester Wong: Thanks, Craig.

Operator: Our next question comes from Dave Duley with Steelhead Securities. Please proceed with your question.

Speaker #2: Dave Dooley with Steelhead Securities. Our next question comes from—please proceed with your question.

Speaker #2: question.

Speaker #7: Yeah. Thanks for

Dave Duley: Yeah, thanks for taking my question. It's nice to see a recovery in the business. One of the comments I think you, you made in your, in your slide deck is you're seeing the data center revenues increase in the general semi bucket. I was just wondering if you could talk a little bit about what those applications are. You know, 'cause it's real interesting that you're seeing a significant recovery when the outlook for PCs and handsets are actually down sequentially in units in 2026.

Speaker #7: taking my question. And it's nice to see the recovery in the business. One of the comments I think you made in your slide deck is you're seeing the data center revenues increase in the general semi bucket.

Speaker #7: I was just wondering if you could talk a little bit about what those applications are. Because it's real interesting that you're seeing a significant recovery when the outlook for PCs and handsets are actually down sequentially in units in

Speaker #7: '26. Thanks, Dave.

Lester Wong: Thanks, Dave. Great question. You know, as I said earlier, over the last couple of weeks, I personally had a lot of conversation with customers in Taiwan and China, and data center is basically the central driver for this cycle. So we support data center in many ways. We have a very strong AP portfolio. It's the best in class for chiplet and heterogeneous logic applications. We've actually been taking share in leading-edge logic for data centers over the last couple of years already, and we're already in production for some of the most advanced heterogeneous logic applications. We're also positioning ourselves for future growth. We're in the process of expanding our facility here in Singapore to increase our fluxless thermo-compression production capacity by 3x. So in addition to AP, we also support data center, memory and general semiconductor solutions.

Speaker #4: Great question. As I said earlier, over the last couple of weeks, I personally had a lot of conversation with customers in Taiwan and China.

Speaker #4: And data center is basically the central driver for this cycle. So we support strong AP portfolio. It's the data center in many ways. We have a very best in class for chiplet and heterogeneous logic applications.

Speaker #4: We actually have been taking share in leading-edge logic for data centers over the last couple of years already. And we're already in production for some of the most advanced heterogeneous logic applications.

Speaker #4: We're also positioning ourselves for future growth. We're in the process of expanding our facility here in Singapore to increase our fluxus thermal compression production capacity by 3X.

Speaker #4: So in addition to AP, we also support data center memory and general applications in data center, like general infrastructure, networking, communication, power, and storage, it relies on more high volume traditional assembly technologies like ball bonder, basically, our core products.

Lester Wong: So many applications in data center, like general infrastructure, networking, communication, power, and storage, it relies on more high-volume traditional assembly technologies, like ball bonder, basically, our core products. For memory, as I think I said earlier, in response to Craig's question, we're mostly in NAND, even though we're moving into DRAM, and we're seeing actually a lot of enterprise SSD being increasingly used in data centers now, and that also helps drive our memory business, and that's another way we play in the data center.

Speaker #4: And for memory, as I think I said earlier, in response to Craig's question, we're mostly in NAND, even though we're moving into DRAM. And we're seeing semiconductor solutions.

Speaker #4: being increasingly used in data centers now. And that also helps drive our memory business. And that's another way we plan the data center.

Speaker #7: Okay. Excuse me. Could you just remind us what the utilization rates are in your key regions? I think you mentioned one in your commentary, but if you could just kind of run down the key regions for us, that would be

Dave Duley: Okay. Excuse me. Could you just remind us what the utilization rates are in your key regions? I think you mentioned one in your commentary, but if you could just kind of run down the key regions for us, that would be great.

Speaker #4: Sure. China is over 90%. It's been in the high 80s and 90s for a while now. We see so many—it's continuing. The rest of Asia is around 80%, which has come up now.

Lester Wong: Sure. China is over 90%. It's been in the high 80s and 90s for a while now. We see it continuing. The rest of Asia is around 80%, which has come up now. Southeast Asia, which was a laggard, is now coming back. It's still only in the 70%, but it's been increasing over the last couple of quarters. Then North America is also over 80%. North America and Europe, we look at it together, is about 80%. So almost everybody is near 80%, and China is at 90%.

Speaker #4: Southeast Asia, which was a laggard, is now coming back. It's still only in the 70%, but it's been increasing over the last couple of quarters.

Speaker #4: And then North America is also over 80%. And North America and Europe, if we look at them together, are about 80%. So almost everybody is near 80%, and China is at

Speaker #7: Okay. And then the gross margins during the March quarter, or excuse me, the December quarter, were close to

Dave Duley: Okay. And then, the gross margins during the March quarter, or excuse me, the December quarter, were close to 50%, and you mentioned that there was some benefit from some previously written-off inventory, but then I think you guided gross margins to almost the same level again in the March quarter. So could you just talk about gross margins throughout calendar 2026 as we grow the revenue and what your expectations are there?

Speaker #7: benefit from some previously written off inventory. But then I think you guided gross margins to almost the same level again in the March quarter.

Speaker #7: So could you just talk about gross margins throughout calendar 2026 as we grow the revenue and 90. what your expectations are there?

Speaker #4: Sure. Sure, Dave. I think for the rest, gross margins should be around 49 to 50%. I think what we're seeing now in our core business—ball bonder—is that there's a lot more demand for our high-performance ball bonders, which have much better margins, much better than our LED, for example.

Lester Wong: Sure. Sure, Dave. I think for the rest of FY 2026, gross margin should be around 49% to 50%. I think what we're seeing now in our core business, ball bonder, is that there's a lot more demand for our high-performance ball bonders, which is much better margins, much better than our, you know, LED, for example. So, a lot in high-performance bonders. Second thing is, obviously, increase in volume helps with absorption, which helps the gross margin. And finally, you know, we've always been very, very focused on cost control, and we'll continue to do that even during a ramp.

Speaker #4: So, a lot in high-performance bonders. Second thing is, obviously, increase in volume helps with absorption, which helps the gross margin. And finally, we've always been very, very focused on cost control, and we'll continue to do that even during a

Speaker #4: ramp. Can we expect gross

Dave Duley: Can we expect gross margins to continue to go higher as revenue ramps?

Speaker #7: higher as revenue margins continue to ramp?

Speaker #4: Well, like I said, it's going to be around 40 to 50%, which has always been our target.

Lester Wong: Well, like I said, it's gonna be around 40 to 50%, which it's always been our target is 50%.

Speaker #4: 50%. Okay.

Speaker #7: Thank

Speaker #7: you. We have reached the

Dave Duley: Okay, thank you.

Operator: We have reached the end of our question and answer session. I would now like to turn the floor back over to Joe Elgindy for closing comments.

Speaker #2: end of our question and answer session. I would now like to turn the floor back over to Joe Elgeney for a closing comment.

Speaker #8: Thank you, Maria, and thank you all for joining today's call. As always, please feel free to follow up directly with any additional questions. This concludes today's call.

Joe Elgindy: Thank you, Maria, and thank you all for joining today's call. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a wonderful day, everyone.

Speaker #8: Have a wonderful day, everyone.

Operator: You may disconnect your lines at this time. Thank you for your participation.

Q1 2026 Kulicke & Soffa Industries Inc Earnings Call

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