Kulicke & Soffa Industries, Inc. (KLIC)
F3Q10 (Qtr End 07/03/10) Earnings Call Transcript
August 5, 2010 9:00 am ET
Joseph Elgindy – Manager, IR
Scott Kulicke – CEO
Mike Morris – CFO
Krish Sankar – Bank of America/Merrill Lynch
Gary Hsueh – Oppenheimer & Company
David Duley – Steelhead Securities
Tom Diffely – D.A. Davidson
Andy Schopick – Nutmeg Securities
Lee Simpson – Jefferies
David Wu – GC Research
Satya Kumar – Credit Suisse
Previous Statements by KLIC
» Kulicke & Soffa Industries, Inc. F2Q10 (Qtr End 04/03/10) Earnings Call Transcript
» Kulicke & Soffa Industries, Inc. F1Q10 (Qtr End 01/02/10) Earnings Call Transcript
» Kulicke & Soffa Industries, Inc. F4Q09 (Qtr End 10/03/09) Earnings Call Transcript
Greetings and welcome to the Kulicke & Soffa third fiscal quarter results call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Manager of Investor Relations for Kulicke & Soffa. Thank you, Mr. Elgindy. You may begin.
Thanks, Katie. Good morning, everyone, and welcome to Kulicke & Soffa's third quarter fiscal 2010 conference call. For those of you who have not seen the results announced last night, they are available in the Investor Relations section of our website at www.kns.com. An audio recording of this entire conference call, including any questions or comments that participants may contribute, may be accessed from the Kulicke & Soffa website for a limited period of time.
The content of this conference call is owned by Kulicke & Soffa Industries and is protected by US Copyright Law and international treaties. You may not make any recordings or copies of this conference call, and you may not reproduce, distribute, adapt, transmit, display, or perform the content of this conference call in whole or in part without the written permission of K&S.
Today's remarks are governed by the Safe Harbor provisions of the 1995 Private Securities Litigation Reform Act. Actual results may turn out significantly better or worse than indicated by any forward-looking statements that we may make this morning. For a complete discussion of the risks associated with operations of Kulicke & Soffa, please refer to our SEC filings, particularly the 10-K for the year ended October 3, 2009, and our other recent SEC filings.
It's now my pleasure to introduce the host for today’s call, Scott Kulicke, CEO. Scott?
Thanks, Joe. Good morning and welcome to this conference call, the purpose of which is to discuss K&S' June quarter financial results, which were announced last night, and what a great quarter it was. Before Mike Morris, our CFO, takes you through the financial details of the quarter, I thought I’d describe our view of the industry and trends driving K&S. After Mike is done, I’ll talk a little more about how we see the future.
Global electronics demand continued to be strong and is in turn driving IC unit shipments at record level. This is reflected in our customers’ capacity utilization rates, which as we measure them continued to run in the 85% to 90% range or about 5 points higher than previous peak cyclical levels. Our customers are busy, and they are continuing to expand their capacity by volume, among other things, lots of wire bonders – lots and lots of wire bonders.
Those of you who follow K&S has the strong wave of demand started in January and looks to continue at least through the rest of this year. That wave of demand has been most pronounced at the big Taiwanese subcontract houses, ASE and SPIL, as they race for leadership in the industry's conversion from gold to copper wire.
While these two customers combined accounted for about 36% of our sales in the June quarter, our extraordinary level of shipments isn’t just in ASE and SPIL stories. We ship ball bonders to about 100 other customers as well. We should see demand from IDMs as well as subcontractors and from all application spaces. Especially important is the LED space where demand continues to grow in the memory sector, including those DRAM and Flash, which has finally come alive.
Another way to look at the ball bonder space is in terms of the copper wire transition. In the quarter, about 60% of our ball bonders shipped configured for copper wire as the industry continues to convert to copper for cost reduction. K&S has the most robust fine copper wire process running today, and we are winning a lion’s share of orders for copper configured bonders.
In the face of this unprecedented wave of demand, our immediate task has been to increase our own production rates. We have been capacity limited since the winter. June quarter ball bonder volumes were about 48% above the March quarter and 80% above the December quarter, reflecting the excellence of our manufacturing organization. That team, including our network of suppliers and subcontractors, doesn’t normally get much mention in these calls. But I want to acknowledge their contribution to K&S’s success, and also to remind that I expect even more this quarter.
So far, I’ve only talked about ball bonders. We see a similar pattern in our wedge bonder business with strong demand from all sectors and the company rapidly increasing shipments in response to an overflow in order book. In both the ball and wedge bonder market spaces, K&S is the supplier of choice, with the best products and the most responsive manufacturing organization. We believe our market share is continuing to grow.
As for the financial implications of these successes, let me turn the call over to Mike.