Kulicke and Soffa Industries, Inc. Q1 FY2026 earnings call

• Demand is improving faster than expected with strengthened customer sentiment and favorable utilization in key markets.
• Generated revenue and earnings above expectations in the first fiscal quarter and focused on ramping production.
• General semiconductor and memory end markets show robust demand; automotive and industrial end markets had slight sequential revenue improvement.
• Progress in advanced packaging, advanced dispense, and power semiconductor; advanced packaging solutions like TCB and vertical wire have positive trends.
• Focus on cost control and operational efficiency while supporting growing opportunities.

General semiconductor: Revenue increased 27% sequentially and over 90% from the same period last year, with utilization levels over 80%. Memory: Demand sequentially declined due to product and customer mix, but ball bonding utilization rates exceed 85% for the memory market. Automotive and industrial: Experienced a 15% sequential revenue improvement in the December quarter, though near-term headwinds persist. Aftermarket products and services: Increased 14% from the same period last year. Advanced packaging: Demand for advanced packaging solutions, including Fluxless thermocompression bonding tools, remains robust; shipped first HBM system to a large memory customer, and vertical wire solutions show positive customer feedback. Advanced dispense: Introduced ACELON dispense system in November, with positive customer feedback. Power semiconductor: Has market-leading solutions and is expanding its portfolio to support power efficiency needs.

• For the March quarter, expect revenue to increase 15% sequentially to $230 million, gross margin of 49%, non-GAAP operating expenses of $73 million, GAAP earnings per share targeted to be $0.53, and non-GAAP earnings per share of $0.67.
• Second half of FY '26 should be about 15% to 20% better than the first half.
• TCB revenues expected to be over $100 million in FY '26.

• Residual headwinds in the automotive market may persist near term.
• Uncertainties in macros that could affect actual results differing from forward-looking statements.
• Potential delays in the commercialization of high-bandwidth flash technology.

Q: Yu Shi asked about characterizing the remainder of FY '26 in terms of overall demand and top line growth, and elaborating on high-bandwidth flash and its relation to K&S.

A: Lester Wong said they have better visibility into FY '26, Q3 will be better than Q2, second half should be 15%-20% better than first half; HBF is a TCB play, currently in early stages with exploration with a few customers.

Q: Krish Sankar asked about clarifying the second half growth and conservatism, and quantifying TCB plus FTC revenues and FTC qualification.

A: Lester Wong said 15%-20% is the visibility today with potential upside; TCB revenues will be over $100M in FY '26, formic acid FTC is qualified, plasma FTC is in qualification process.

Q: Craig Ellis asked about the commercialization timeline for high-bandwidth flash and timeline from HBM tool shipment to volume production, and vertical wire adoption.

A: Lester Wong said HBF technology is early days, likely CY '27 play; HBM volume production in FY '27; vertical wire adoption may have some in latter half of FY '26, expand more in FY '27.

Q: David Duley asked about data center revenues in general semi bucket, utilization rates in key regions, and gross margins throughout 2026.

A: Lester Wong said data center is a central driver, applications include general infrastructure, networking, etc.; utilization rates: China over 90%, rest of Asia around 80%, Southeast Asia 70% but increasing, North America over 80%; gross margin for rest of FY '26 expected to be around 49%-50%.