Kulicke & Soffa Indus Q3 2026 Earnings Call: Complete Transcript

On Thursday, Kulicke & Soffa Indus (NASDAQ: KLIC ) discussed third-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Kulicke & Soffa Indus reported a 36% sequential revenue increase in Q3 2026, driven by strong demand in semiconductor and memory applications, with significant contributions from AI-led data center expansion.

The company's Advanced Solutions segment saw a record revenue increase of 20%, and Kulicke & Soffa Indus maintains a target of over $100 million in segment revenue for fiscal 2026, with expectations for further growth in fiscal 2027. 5% sequentially to $375 million, with gross margins of 48% and a strong demand forecast extending into fiscal 2027. Operational highlights include the on-track expansion of production capacity in Singapore and a significant increase in production capacity for traditional wire bonding business.

Management highlighted the impact of AI applications on data center demand and the ongoing adoption of advanced packaging solutions, along with strategic investments in panel and hybrid bonding technologies. Full Transcript OPERATOR Greetings, and welcome to Kulicke & Soffa Indus third quarter 2026 conference call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to Joe Elgindy, Senior Director, Investor Relations. Thank you.

You may begin. Joe Elgindy, Senior Director, Investor Relations Thank you. Welcome, everyone, to Kulicke & Soffa Indus fiscal third quarter 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. 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. For a complete discussion of the risks associated with Kulicke & Soffa Indus 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 would now like to turn the call over to Lester Wong for the business, market, and financial overview. Lester Wong, Interim CEO and CFO Please go ahead.

Lester, thank you. Joe, good morning, everyone. Demand continues to improve at a faster pace than previously expected, and our operational teams are aggressively ramping production to support customer capacity and technology requirements. Our own capacity expansion plan here in Singapore also remains on track.

This new production space will support the growth of our Advanced Solutions segment over the coming years. We were able to support our customers' near-term needs by ramping our flexible production capacity and driving a 36% sequential revenue increase during the fiscal third quarter. Overall market strength continues to be led by general semiconductor and memory applications, although we are pleased to note that utilization rates have improved sequentially in all regions and in all end markets. Growth in artificial intelligence applications remains the driving factor behind data center expansion.

This growing data center opportunity in turn drives meaningful increases in demand for both our thermal compression and wire bonding solutions. It is increasingly evident that the most performance-oriented logic and memory applications will continue to adopt more complex heterogeneous integration approaches. Adoption of more complex assembly approaches directly benefits our current thermal compression business and steers our investments in R&D and production capacity.

While emerging AI applications are a clear catalyst to accelerate high-volume growth of new advanced packaging and heterogeneous assembly approaches, we expect we're still in the early stages of this much longer-term technology transition. We continue to anticipate this More-than-Moore-driven, technology-centric transition will continue to advance semiconductor assembly and benefit KNS well beyond this current cycle. In addition to the needs of the most performance-oriented applications, data center expansion also requires new and increased capacity for established assembly technologies which support networking, communications, power management, and storage requirements.

We estimate that the data center market relies on wire bonding technology at least as much as, if not more than, traditional semiconductor markets such as smartphones and PCs. As the leader in wire bonding technology, we are primed to support this growth. In addition to our involvement to support data center-related technology and capacity needs, we are also encouraged to see positive momentum continuing within the automotive and industrial markets, which has recently increased demand for our wedge products as well. 2% sequentially through focused global coordination and operations execution.

While we are not immune from global supply chain constraints and macroeconomic conditions, we again exceeded expectations as we ramped production aggressively this quarter. Revenue recognized for our Advanced Solutions segment, which includes our leading Fluxys thermal compression solutions, has exceeded last quarter's record revenue by 20%. In addition to supporting customers' emerging production requirements, our Advanced Solutions teams remain focused on driving innovation in both panel-level and hybrid bonding platforms.

With a heightened emphasis on increasing our production capacity for Advanced Solution offerings, we are maintaining our target of over $100 million in Advanced Solutions segment revenue for fiscal 2026 and continue to prepare for significant sequential growth in fiscal 2027. This growth is supported by performance and process readiness of our flexible, highly capable thermal compression platform provided to customers. We remain closely engaged with a broad base of IDM, OSAT, and foundry customers as heterogeneous packaging approaches become mainstream.

While AI applications are accelerating the transition to more complex assembly today, we're still relatively early stages of this advanced packaging transition. Today, emerging packaging solutions such as TCB, vertical wire, direct copper-to-copper, hybrid, and panel-based architectures will be critically necessary for a much wider array of semiconductor production over the coming years. Through our technical leadership, ongoing investment, R&D, and manufacturing expansion plan, we continue to build a strong foundation that directly supports these new advanced packaging approaches.

Our capital expansion initiative here in Singapore is progressing well and remains on track. This new production space will allow us to support the growing capacity and technology needs of customers over the long term. We continue to target completion by the first fiscal half of 2027. Our close engagement, technology leadership, and growing production footprint all enable us to contribute to a higher level of process value across served markets.

Our wire bonding teams in both ball and wedge are also aggressively scaling production to meet strong customer demand and continue to develop and release new packaging solutions to a wide base of memory and power semiconductor customers. 2 million, driven by higher capacity and technology requirements for both ball bonding and Advanced Solutions segments. While AI and data center has been the major driver, we are now seeing broader base recovery in traditional markets as well. 8% sequentially to $34 million after strong sequential growth in the second fiscal quarter.

Our memory business is currently focused on delivering NAND technology and capacity requirements. Based on our market understanding, data center is now currently the largest end application across global NAND production. Beyond NAND, our vertical wire team continues to work closely with memory customers as they develop new forms of stacked DRAM applications. 2 million after strong improvement last quarter.

We continue to see robust demand for high I/O and high-volume power and mixed signal packaging, which tends to track for general semiconductor. Additionally, during our fiscal third quarter, demand for our high-current wedge solutions also increased. As many of you know, our wedge bonding suite is a critical part of our automotive and industrial offering. This market has faced industry-level headwinds for the past several years.

Over this time, we continue to expand our portfolio and look forward to continued recovery. We are pleased to see this sequential improvement and remain well positioned to benefit from long-term share growth in battery and plug-in hybrids, which require new power semiconductor technology and capacity requirements over the long term. Aftermarket products and services also increased sequentially due to the higher level of production across our installed base. It remains an interesting and exciting time at the company and for our industry.

We recently celebrated KNS' 75th anniversary and are proud of our legacy as a global leader and pioneer in semiconductor interconnect solutions for three quarters of a century. Our success has been grounded in the trust and strong partnership we have developed with customers, suppliers, and business partners around the world. Looking ahead, we remain confident in our ability to extend our platform through ongoing investments in innovation to support the next generation of advanced packaging solutions. With that said, I will now provide a brief financial update.

My remarks today refer to GAAP results unless noted. We again delivered revenue above guidance and continued to execute an aggressive production ramp through served markets during the June quarter. Overall revenue increased by 123% over the same period last year. Close coordination by our business segments, R&D, and supply chain teams remains essential to support our customers' immediate needs and also their future production requirements.

20 of non-GAAP earnings. 6 million on a non-GAAP basis. As explained last quarter, this sequential increase was anticipated and largely related to the increase in variable incentive compensation accruals throughout our second fiscal half. This variable expense was the primary driver, although we have also increased some fixed resources which support our growing base of opportunities.

3 million, and we anticipate our effective tax rate will remain slightly above 20% over the near term. 5% sequentially to $375 million with gross margins of 48%. 5 million. This sequential increase is temporary for the September quarter and is largely associated with the performance-oriented nature and quarterly accrual of our variable incentive compensation plan.

42 for the fourth fiscal quarter. At this point we remain opportunistic on both near-term and longer-term opportunities, and we continue to anticipate above-average demand will continue in fiscal 2027. This concludes our prepared comments. Operator, please open the call for questions.

OPERATOR Thank you. If you would like to ask a question, please press star-one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star-two if you would like to remove your question from the queue.

And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Krish Sankar with TD Cowen. Please proceed. Krish Sankar, Analyst at TD Cowen Yeah, hi, thanks for taking my question, and congrats on the really strong results and guidance.

Lester, I had three quick questions. I'm just trying to wonder, given the strong growth in September, are you seeing it across the board, like mid-teens growth for semi, memory, and auto industrial, or is one better than the other? Lester Wong, Interim CEO and CFO Well, Krish, I think as we said, general semi and memory are leading the way. I think automotive and industrial has improved.

You know, as you know, they faced quite a lot of headwinds over the last couple quarters, but they're picking up a little bit. But still, it's generally, you know, general semi and memory that's driving the ramp. Krish Sankar, Analyst at TD Cowen Got it, got it. And then I think you also mentioned in the slide that the strength is expected to last into fiscal first half.

I'm kind of curious, like, you know, as you get more data center, how should you think about December and March quarter? In other words, should we see seasonality in March, or do you think there won't be seasonality this time? Lester Wong, Interim CEO and CFO Well, Krish, you know, our business is always a little bit of seasonality in our Q1, right, which is the December quarter. But I think, you know, based on what we see right now, you know, both the utilization rates are extremely high.

In China it's over 95%. End markets, both memory and general semi, is around 90%. We are also seeing a lot of inbound POs even extending into Q2. Usually that doesn't happen for us.

You usually don't have POs that go out that far. And also in conversations and visits with customers, particularly in China, we are seeing them continue to, you know, build factories. So I think based on all those factors, we feel pretty confident that, you know, the strength in the business, in the traditional business, is going to continue into the first half of fiscal '27. In addition, for our Advanced Solution business, you know, we're engaged with foundries, OSATs, and IDMs.

So again, we feel pretty confident we can take advantage of a lot of those opportunities, particularly in heterogeneous integration around logic for our Fluxys TCB. Krish Sankar, Analyst at TD Cowen Gotcha. Very helpful. And a quick follow-up, Lester, just from the Advanced Solutions, the TCB business, you know, you said like over 100 million this year, fiscal year, which is end of this quarter.

If I just take what you did last quarter, annualize that, that kind of implies like close to 120 million next year, at least 20% growth. Is that the right way to think about it, or do you think that actually accelerates next year? Lester Wong, Interim CEO and CFO You mean what do I think TCB is going to do next year? Krish?

Yeah, I think actually TCB will grow significantly next year. A sequential basis. I think we're, as I said, we're—for this year, we think we're going to beat $100 million. I think for FY27, I think for TCB we are looking at somewhere in the region of $150 to $200 million.

Krish Sankar, Analyst at TD Cowen Great. Thank you very much, Lester. Lester Wong, Interim CEO and CFO Appreciate it. Thanks, Krish.

OPERATOR Our next question is from Charles Shi with Needham & Company. Please proceed. Charles Shi, Analyst at Needham & Company Hey Lester, congrats on the nice results, I think. Yeah, one thing you said in the prepared remarks kind of sounds very interesting.

You said the data center relies on wire bonding as much as the phones and the PCs. This is a part, I think we may have discussed this in the past, but can you kind of elaborate a little bit what kind of wire bonding packaging you are seeing the most in data center applications? And one thing in particular I do want to ask is we would think there is a little bit more of the power devices there that could probably drive wedge bonding. But the wedge bonding looks like it's more still relying on the traditional industry and you are seeing some sequential improvement.

But a lot of where you consider data center demand seems to be driving ball bonding. So it's a little bit of, a little bit of an interesting comment there and I wonder if you can provide a little bit more color. Thank you. Lester Wong, Interim CEO and CFO Thank you, Joe.

Sure, Charles. So wire bonding in data center basically is—in fact, more than a majority of chips in the data center is actually traditionally packaged using wire bonding. I mean, these are for applications like general infrastructure, networking, communication, power, and storage. And also in storage is basically memory.

And I think as I said in the remarks, as you know, we're focused on NAND for now, and 40% of the NAND market now goes towards data center. So obviously we have exposure there as well. As far as wedge bonder in data center, you're correct.