Kulicke & Soffa Industries, Inc. ((KLIC)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Kulicke & Soffa Industries, Inc. recently held its earnings call, revealing a mixed sentiment among stakeholders. The company showed robust performance in advanced packaging and thermal compression technologies, alongside positive developments in their share repurchase programs. However, they are also grappling with challenges in the semiconductor market, primarily due to capacity digestion and global dynamics affecting customer investments. Despite these hurdles, there is optimism for growth in the latter half of fiscal 2025.
Revenue and Gross Margin
Kulicke & Soffa reported impressive financial results for the December quarter, with revenue reaching $166.1 million and a strong gross margin of 52.4%. This achievement was partly fueled by the recognition of revenue from systems shipped in prior periods, highlighting operational efficiency and strategic foresight.
Advanced Packaging and Thermal Compression Progress
In a significant technological advancement, the company shipped its latest Flexlex thermal compression system in a new dual-head configuration to a key foundry customer. This new system nearly doubles the throughput of existing models. Kulicke & Soffa anticipates that revenue from thermal compression packaging will surpass $300 million in 2024, with a compound annual growth rate of 20% to 25%.
Share Repurchase Program
Kulicke & Soffa successfully completed their previous share repurchase program and initiated a new $300 million program. This move reduced the number of outstanding shares by nearly 800,000 in the first quarter, demonstrating a strong commitment to returning value to shareholders.
Capacity Digestion in Semiconductor Market
The semiconductor market is currently experiencing a phase of capacity digestion, impacting the company’s ball bonder revenue, which saw a sequential decline from September. This trend aligns with expectations and reflects the ongoing adjustments within the industry.
Challenges in Q2 Due to Global Dynamics
Global political dynamics have led to delayed investment decisions by some customers until after the Chinese New Year. This situation presents a temporary challenge for Kulicke & Soffa as they navigate these geopolitical uncertainties.
Reduced Revenue Forecast for March Quarter
For the March quarter, Kulicke & Soffa projects revenue to be approximately $165 million, plus or minus $10 million, which is slightly below the December quarter’s figures. This forecast reflects the current market conditions and the ongoing adjustments within the semiconductor industry.
Forward-Looking Guidance
Looking ahead, Kulicke & Soffa provided guidance that includes expectations for a broader cyclical recovery in their core markets, particularly in ball and wedge bonding. The company is optimistic about improvements in the general semiconductor and automotive sectors. They forecast significant growth in the advanced packaging market, projecting revenue between $275 million and $300 million in 2025. Additionally, they foresee a compound annual growth rate of 20% to 25% for the thermal compression packaging market, with the frictionless thermal compression segment expected to grow even faster.
In summary, Kulicke & Soffa Industries, Inc. presented a cautiously optimistic outlook during their recent earnings call. While they face challenges in the semiconductor market due to capacity digestion and geopolitical factors, their advancements in technology and commitment to shareholder value through share repurchase programs are commendable. The company remains focused on growth, with promising projections for the advanced packaging and thermal compression markets in the coming years.
