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Investor Presentation March Quarter 2013

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Page 1: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Investor PresentationMarch Quarter 2013

Page 2: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Safe Harbor Statement

2

In addition to historical statements, this presentation and oral statements made in connection with it maycontain statements relating to future events and our future results. These statements are “forward-looking”statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but arenot limited to, statements that relate to our future revenue and statements under the sub-headings “Vision”and “Mission” on slide 6 of this presentation. While these forward-looking statements represent ourjudgments and current expectations concerning our business, a number of risks, uncertainties and otherimportant factors could cause actual developments and results to differ materially from our expectations.

These factors include, but are not limited to: the risk that customer orders already received may bepostponed or canceled, generally without charges; the risk that anticipated customer orders may notmaterialize; the risk that our suppliers may not be able to meet our demands on a timely basis; 3rd partymarket forecasts don’t materialize and the risk that replacement and incremental demand drivers do notincrease demand for our products; the risks of a slowdown of transition from gold to copper Wire Bondingby our customers and the industry, the volatility in the demand for semiconductors and our products andservices; volatile global economic conditions, which could result in, among other things, sharply lowerdemand for products containing semiconductors and for the Company’s products, and disruption of capitaland credit markets; the risk of failure to successfully manage our operations; acts of terrorism and violence;risks, such as changes in trade regulations, currency fluctuations, political instability and war, which may beassociated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturingoperations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2012 Annual Report onForm 10-K and our other filings with the Securities and Exchange Commission.

Kulicke & Soffa Industries, Inc is under no obligation to (and expressly disclaims any obligation to) updateor alter its forward-looking statements whether as a result of new information, future events or otherwise.

Page 3: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Agenda

Company Overview

• Geographic Footprint

• Product Portfolio

Core Market Overview

• End-Applications Served

• Incremental & Replacement Demand Drivers

• Market Outlook

Ongoing Shareholder Value Creation

• Competitive Growth Advantages

• Strategic Business Development

Financial Performance & Summary

• March Quarter Financial Results

3

Page 4: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Company Overview

Page 5: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

About Kulicke & Soffa (K&S)

5

Kulicke & Soffa is the Global Technology & Market L eader in Semiconductor Packaging & Assembly Equipment

Rich history of technology leadership & innovation | Founded in 1951 – publicly traded since 1961 |

Listed on NASDAQ: KLIC | Leadership positions in markets served | Strong global presence with

88% of sales in Asia | 2,328 Employees as of April 30, 2013 | K&S continues to serve critical role in

major industry innovations & transitions

Page 6: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Vision, Mission & Core Values

VisionTo be the leading technology provider of comprehensive interconnect solutions for the microelectronics industry

Mission• Grow our leadership position in Wire Bonding and Expendable Tools, and lead the industry in

transitioning to copper Wire Bonding• Broaden our product portfolio by leveraging our core competencies to accelerate our

revenue growth• Consistently deliver superior financial performance to maximize shareholder values• Be at the forefront of technology by leveraging strategic partnerships with customers, suppliers

and research institutes • Foster a positive work environment by weaving our core values into the fabric of our organization

ONE K&S Core Values• Delight Our Customers• People Matter• Learn, Grow, Excel• Innovate for Success• Make a Difference

6

Page 7: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Global Presence

7

Page 8: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Market Driven Products

8

Capillaries

Dicing Blades

3700 Plus3600 Plus

ATPremierPlus

iBond50004700452245244526

Microelectronics Equipment

Wedge Bonder

Ball Bonder

Service

Software

IConn ConnX ConnX-LED IConn ProCuConnX-VLEDConnX Plus

PowerFusion

Page 9: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Leadership Positions

9

K&S Market Leading Solutions

Market Technical Advantages Market Share Ranking

Ball Bond• Best in class accuracy, up to +/- 2.0µm • Ultra fine pitch (35µm) Wire Bonding capability

#1

Wedge Bond• Highest production (units per hour)• Single & multi-head machine configurations

#1

Stud Bump• Unique, wafer level packaging • Expanding application opportunities

#1

Capillaries • Highly customized application specific #1

Page 10: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Core Market Overview

Page 11: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

End-Applications Served

11

Markets Served

� Consumer Devices

� Communications

� Data Processing

� Automotive

� Industrial

� Aerospace

IC End-Applications

� Smartphones, Tablets, Laptops,

Flash Memory, Computers,

Cameras, Television Sets

� Pacemakers, Hearing Aids

� Safety Equipment, Sensors,

Vehicle Electronics, Engine

Control Systems, Security

Systems

� Servers, Controllers, Routers

LED End-Applications

� Back Lighting & General

Lighting

� Indicator & High Bright

� Surface & Vertical Mount

Page 12: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Semiconductor Unit Growth

12

Source(s): Gartner, Dec 2012

2012-2016

CAGR Projections

Unit Revenue

Automotive 17% 8%

Communications 7% 6%

Consumer 12% 1%

Data Processing 8% 7%

Industrial 19% 9%

Aerospace 2% 3%

Total Market 11% 6%

Consumer demand accounted for 25% of the overall Semiconductor market in 2012 | The 5% gap

between Unit & Revenue CAGR’s suggests cost will remain a significant value driver for the

Semiconductor industry

Semiconductor Units Expected to Grow Faster than Revenue

Automotive

33

Communications

173

Consumer

170

Data Processing

162Industrial

88

Aerospace

12

2012 Global Semiconductor Demand by Application (Billions of Units)

Page 13: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

19800

5

10

15

20

25

Calendar Year

Semiconductor Lead-Count Continues to Accelerate

(Trillions of Leads)

>500 Lead256-500 Lead128-256 Lead<128 Lead

13

Source(s): VLSI Research, March 2013; Prismark August 2013

Each I/O (Lead/Pin) requires an interconnect | Market research forecasts 82% of Integrated Circuit (IC)

packages will be Wire Bonded and 18% Advanced Interconnect by 2016 | LED lead-count demand is

incremental to semiconductor lead-count & should be considered separately

20162012

For

ecas

t

Lead/Pin Count Growth Drives Incremental Equipment Demand

CAGR 2012-2016

8%13%12%7%

Page 14: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

14

Roughly 30% of bonders currently in production are copper capable | K&S expects 70%+ of total Wire

Bonder’s in production to convert to copper | Wire Bonding has & is expected to continue enabling new

technology trends

Technology Shifts Drive Replacement Market

Source(s): K&S Estimates, Apr 2013

Copper Wire Bonding

Package on Package

Stacked-Die

Ultra Low Loop

Low-K Bonding

Advances in Wire Bonding

Node Shrink93

81 78 76 73 71 69

2437 46 57 71 79 90

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

120

140

160

180

2011 2012 2013 2014 2015 2016 2017

% C

op

pe

r C

ap

ab

le

Ba

ll B

on

de

rs in

Pro

du

ctio

n (

Th

ou

san

ds)

Fiscal Year

Copper Bonder Unit Growth

Cu BB (K Units)

Au BB (K Units)

% Copper Capable

Page 15: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Leading the Wire Bonder Equipment Market

15

Source(s): VLSI Research, April 2013

K&S has established a dominant

market share through technology &

strategic R&D investment over the

past 5 years | Wire Bonder

Equipment market is forecasted to

represent an average size of $900M

over the next 4 years | LED Bonder

Market is incremental & is not

represented in forecast

Market Forecast

Page 16: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Ongoing Shareholder Value Creation

Page 17: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

• Multi-sourced mitigates risk & reduces costs

• Supplier deliveries tied directly to factories daily build rate

Supply Chain Leverage

Flexible Manufacturing Model

Extensive Sales, Service & Support

Network

Optimized Operating Model

17

Fine-Tuned Operating Model Drives Significant Cost Advantages & Leverage Capabilities

• 4x workforce flexibility

• Global operations are based on Lean Production principles

• Efficient internal & external distribution channels

• Global team of 300+ Sales, Service & Support staff localized in key markets

Page 18: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Creating an Unfair Advantage

• 450+ Engineers• K&S hires the best talent

from leading International Universities

• 80% of Engineering group focused on new product development

Knowledge Driven Product Development Structure

• Competency roadmaps are grouped in lanes that represent “Golden Arrows”

• This Golden Arrow approach fosters collaboration & knowledge sharing across product lines

Market Leading Innovation

• Innovations are rapidly commercialized by pulling from Golden Arrow competency lanes

• Competency lanes can be leveraged into New Growth Opportunities

Innovation Through Engineering Excellence

18

Motion Systems

Vision Systems

UltrasonicsMaterials Handling

Process Development

Page 19: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Cu Bonders

Kits

2008 2009 2010 2011 2012

Installed Base of K&S Copper Wire Bonders

Transformative Business Development Group

19

Business development group consists of senior cross-functional leaders | Long-term strategic action planimproves growth initiatives, evaluation, prioritization & execution | K&S is currently developing a nextgeneration Thermo-Compression Bonder to serve the emerging Advanced Packaging Market

MEMS

10%2012-’16 Market CAGR

Source(s): Gartner, Aug 2012; Yole Development, Aug 2012, Internal Estimates, Apr 2013

Advanced Packaging

$400M2016 Market Opportunity

LED

21%2012-’16 Unit CAGR

Page 20: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Financial Performance & Summary

Page 21: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Continued Through-Cycle Financial Performance

21

$106.1M of Revenue & $7.3M of Net

Income earned over prior quarter |

Product differentiation through continuous

R&D commitment | Company-wide cost

containment program improves variable

cost base

154

221

259

149

207

294

180

120146

256269

114 106

Mar

'10

Jun

'10

Sep

'10

Dec

'10

Mar

'11

Jun

'11

Sep

'11

Dec

'11

Mar

'12

Jun

'12

Sep

'12

Dec

'12

Mar

'13

Revenue ($M)

15.2%

22.6% 21.9%

14.8%

21.1%

27.7%

12.6%10.3%

13.8%

29.9%

26.1%

3.7%

7.7%

Mar

'10

Jun

'10

Sep

'10

Dec

'10

Mar

'11

Jun

'11

Sep

'11

Dec

'11

Mar

'12

Jun

'12

Sep

'12

Dec

'12

Mar

'13

Operating Margin

14.014.7 14.8

15.2

16.5 16.6 16.8

14.1

15.9 16.0

17.4

18.3

12.2

Mar

'10

Jun

'10

Sep

'10

Dec

'10

Mar

'11

Jun

'11

Sep

'11

Dec

'11

Mar

'12

Jun

'12

Sep

'12

Dec

'12

Mar

'13

R&D ($M)

*

*Due to ongoing cost-containment & favorable $3.0M Dec RISC grant adjustment

Page 22: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

Strong Balance Sheet & Cash Position

22

$136.4MWorking Capital* as of Q2 FY’13

Q2 FY 2013

Days SalesOutstanding

99 days

Days Sales of Inventory

72 days

Accounts Payable Days

41 days

Cash Conversion 130 days

*Defined as: Accounts Receivable plus Inventory less Accounts Payable

Debt free as of June 2012 | $6.51 cash per share & $8.64 of book value per diluted share as of March

30, 2013 | ROIC centric organization driven towards ongoing operational efficiency

95

157170

186

145

181

385

440

494 499

280

195

251 247

159

110 110

0 0 0

2005 2006 2007 2008 2009 2010 2011 2012 Q1

2013

Q2

2013

$0

$100

$200

$300

$400

$500

$600

Fiscal Year

Total Cash & Debt Balance($M)

Total Cash & Short Term Investments

Total Debt

Page 23: 1030 T G1 Kulicke - Jefferies Group · Kulicke & Soffa is the Global Technology & Market Leader in Semiconductor Packaging & Assembly Equipment ... Surface & Vertical Mount. Semiconductor

23

Structured for Growth

Core-Market Leadership

Dominating Copper

Growing LED Market Share

Expanding Wafer Level Stud Bump into New Markets

Maintaining Wedge Bonder Market Leadership

Incremental Growth Opportunities

Entering the Emerging Advanced Packaging Market

Examining Organic & Inorganic Growth Opportunities

Optimized Operating Model

Innovative Technology Development

Core Financial Strength

• Flexible & Lean model• 300 Localized Sales,

Service & Support Staff• Scale through high-

volume business

• Highly talented Engineering group

• Structured and proven development process

• $499M of cash• No-Debt

Str

ateg

ic B

usin

ess

Dev

elop

men

t