Revenue: $162 million for the March quarter. Gross Margin: 24.9%, including EA-related inventory and supply chain charges of $38.6 million. Operating Expenses: $125.1 million, including restructuring charges of $8.8 million and impairment charges of $39.8 million. EA-related Charges: Total of $86.6 million for the wind-down, primarily related to inventory write-down, supply chain, asset impairment, and restructuring-related charges. Tax Expense: $5.4 million, with an anticipated effective tax rate above 20% over the coming year. Share Repurchase: Over 500,000 shares repurchased for $21.3 million during the second fiscal quarter. Revenue Outlook for June Quarter: $145 million, plus or minus $10 million. Gross Margin Outlook for June Quarter: 46.5%. Non-GAAP Operating Expenses Outlook for June Quarter: $68 million, plus or minus 2%. GAAP EPS Outlook for June Quarter: Loss of $0.09 per share. Non-GAAP EPS Outlook for June Quarter: Gain of $0.05 per share.

Warning! GuruFocus has detected 3 Warning Signs with KLIC.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Kulicke & Soffa Industries Inc (NASDAQ:KLIC) announced the launch of their latest Wafer-Level-Packaging solution, ATPremier MEM Plus, optimized for stacked DRAM opportunities, which is generating significant interest. The company is seeing improved utilization rates in China and Taiwan, indicating potential for increased capacity buys in these regions. Kulicke & Soffa Industries Inc (NASDAQ:KLIC) is focusing on high-growth areas such as Vertical Wire, Advanced Dispense, and Thermo-Compression, which are expected to drive future growth. The company has a strong market position in Power Semiconductor applications, with new product launches expected to contribute to revenue in 2026. Kulicke & Soffa Industries Inc (NASDAQ:KLIC) remains the only Fluxless TCB supplier qualified for high-volume manufacturing with leading semiconductor companies, indicating a strong competitive position.

Negative Points

The decision to discontinue the Electronics Assembly (EA) equipment business will result in significant restructuring charges and a reduction in revenue. The ongoing trade situation and tariff uncertainties are causing hesitation and a more defensive capacity planning approach among customers, particularly in Southeast Asia. The company reported a sequential revenue decline, with a guidance of $145 million for the June quarter, down from $162 million in the March quarter. Kulicke & Soffa Industries Inc (NASDAQ:KLIC) is experiencing a slowdown in the Southeast Asia automotive and industrial market, which is impacting overall performance. The company is facing capacity constraints in its Thermo-Compression Bonding (TCB) operations, limiting its ability to meet demand fully.

Story Continues

Q & A Highlights

Q: Can you provide some color on the June quarter dynamics and expectations beyond June? A: The Q3 slowdown is most pronounced in Southeast Asia, primarily due to concerns about potential tariff impacts on the auto and industrial sectors. This region accounts for the majority of the sequential revenue decline from Q2 to Q3. However, utilization rates are improving in Taiwan and China, suggesting potential capacity additions. We expect Q4 to be better, contingent on macroeconomic factors and tariff clarity. (Fusen Chen, CEO)

Q: What is the revenue run rate of the EA business you are exiting, and what are the associated metrics? A: The EA business had a revenue run rate of $25 million to $30 million annually, with gross profit between $7 million and $11 million, and operating expenses of $20 million to $25 million. (Lester Wong, CFO)

Q: Can you discuss the dynamics in the Power Semiconductor market? A: The Power Semiconductor market is growing rapidly, with significant investments from European and Chinese companies. We maintain a high market share and are introducing new products like the Sonotrode-enabled pin welding system and AVALINE, which are expected to contribute to revenue in 2026. (Fusen Chen, CEO)

Q: Why is there a difference in order activity between Taiwan and Southeast Asia, given similar tariff dynamics? A: Southeast Asia's utilization rates are lower, and the region has significant exposure to the auto industry, which is heavily impacted by tariff concerns. Taiwan, on the other hand, has higher utilization rates, potentially triggering capacity additions. (Fusen Chen, CEO)

Q: What are the impacts of tariffs on your operations and costs? A: Our manufacturing in Singapore allows us to ship to China without triggering tariffs. However, the broader trade dynamics create uncertainty, leading to conservative supply chain management by our customers. While there are no direct cost impacts, tariffs generally increase costs across the board. (Lester Wong, CFO)

Q: Can you provide an update on your TCB exposure and progress in the memory market? A: We initially focused on logic for TCB and are now making efforts in the memory market, expecting to ship additional systems by the end of the year. We are confident in our technology and anticipate results in 2026, particularly in HBM. (Fusen Chen, CEO)

Q: What are your IC unit volume assumptions for calendar 2025 and 2026? A: We expect semiconductor revenue growth of about 10% or slightly more in calendar 2025. (Lester Wong, CFO)

Q: What is your strategy for entering the DRAM and HBM markets? A: We are focusing on HBM, with efforts to work closely with key customers. We expect the first production ramp in the first half of 2026, with Vertical Wire technology playing a significant role in reducing form factors and supporting various applications. (Fusen Chen, CEO)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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