Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments.
Could you provide a quick overview of what you announced in your Q4 results and what it means for your company positioning?
In our Q4 call, we highlighted some key milestones. One of the most exciting is our win with a major foundry in advanced packaging. This partnership took nearly two years to develop, and the process requirements were incredibly stringent. It is a big step forward for us to support in the area of AI, GPU and high-performance computing and positions us for long-term growth in this space. We also discussed innovations in hybrid bonding, which tackle the challenges that emerged with the slowdown of Moore’s Law. As transistor density on single [semiconductor] dies became harder to achieve, the industry shifted toward multi-die integration, or chiplets, which allow for better functionality at a lower cost. It is exciting because this shift plays to our strengths in advanced packaging, where we’re focused on enabling these next-generation solutions.
Your Fluxless Thermo Compression Bonding (TCB) technology is central to this shift. Could you explain its significance and how it stands out?
TCB is absolutely critical for advanced packaging. It solves some of the key challenges we have faced in the industry, like warpage and flux-related defects during soldering. A few years ago, there were doubts about whether TCB could scale beyond a 30-micron pitch, but we have proven that it can—and now we have pushed it down to 10 microns, with plans to go even smaller. This is a significant achievement, thanks to our partnerships and collaborative R&D efforts. What is particularly exciting is that our fluxless TCB solution also supports hybrid bonding without the need for an excessive cleanroom environment, which dramatically reduces costs compared to current hybrid bonding methods. This means we are not just solving problems but making these advanced solutions more accessible for applications in AI, GPUs, and high-performance computing.
The industry leading 2.5D integration process, a pivotal platform for integrating large AI accelerators, utilizes our fluxless TCB technology This positions us as a key player in advanced packaging as the adoption of 2.5D and 3D integration scales to meet surging AI demands.
You recently announced $300 million in share repurchases alongside a dividend increase. What does this say about your confidence in the company’s future?
It shows we believe deeply in our future. Over the past few years, we have repurchased nearly $800 million worth of shares, and this additional $300 million reflects our ongoing confidence. We see our stock as undervalued and are putting our money where our mouth is. This financial strategy validates our investments in advanced packaging and core technologies, which are critical to areas like AI and high-power computing. It is about ensuring we have the runway to grow while also sending a strong signal to the market that we’re committed to delivering long-term value.
What are some key applications of your technology, particularly in AI and the automotive sector?
Our TCB technology is driving advancements in both AI and automotive. In AI, it is enabling high-performance computing for generative AI and GPU integration, which are at the forefront of data processing and decision-making. It is a transformative time, and we are proud to be contributing to the industry’s evolution. In automotive, TCB supports high-power computing for critical functions like sensor integration and real-time calculations in autonomous vehicles. We are also leaders in wedge bonding for battery packaging used in electric vehicles, holding a dominant position in the global market. These are just a few examples of how our platform is making an impact across multiple industries.
When you look at your crystal ball, what are those inflection points that you think will fast-track your solutions into the market and why?
The semiconductor industry is at a pivotal moment. Shrinking transistors on a single die has become prohibitively expensive, so the focus has shifted to integrating multiple dies through advanced packaging.
This approach not only improves yields but also extends Moore’s Law in a cost-effective way. For us, this is a huge opportunity. We are positioned at the intersection of cost and performance, offering solutions that work for both cutting-edge and cost-sensitive markets. As demand for AI, high-performance computing, and low-latency solutions grows, we are positioned to meet these needs and play a key role in driving the industry forward.
As a company with a global footprint, how are geopolitical tensions between the U.S. and China affecting your operations?
There are definitely some sensitivity given the current climate, but for now, the impact on us has been minimal. We’re the leader in wire bonding, with about 70% of the market share, and our tools support over a trillion devices annually. That kind of scale provides a level of stability, even amid shifting policies. That said, we are actively monitoring the situation and maintaining close communication with U.S. authorities. Export restrictions could potentially impact certain customer relationships, but we’re prepared to adapt as needed. For now, our profitability and market position remain strong in both regions.
As a 70-year-old company in this space, you have had to keep innovating for a very long time. With that in mind, what currently keeps you up at night?
Talent is a big one. Our industry is evolving so quickly, and we need specialized expertise to stay ahead. We have developed strong succession plans, global internship programs, and partnerships with STEM organizations to build a pipeline of future talent. It is critical to ensure we have the right people to tackle tomorrow’s challenges. Another concern is staying ahead of market trends. For example, in automotive, we work closely with over 1,000 customers to understand their needs and feed that insight back into our R&D. Balancing immediate operational demands with long-term innovation is a constant challenge, especially in such a dynamic environment.
What markets are you most excited about that you think we'll see an uptick as well over the next few years?
AI, without a doubt. It is not just about language models anymore—applications are expanding into biotech, robotics, and more. For instance, AI could revolutionize medicine, helping to develop treatments faster and more efficiently, especially if faced with future pandemics. Beyond AI, I am intrigued by how the industry will challenge GPU dominance. With innovative designs and a competitive landscape, we’ll see new players emerge, pushing the boundaries of what is possible. These are exciting times, and we’re well positioned to continue supporting the evolution.
