Kulicke and Soffa Industries, Inc. · NASDAQ:KLIC
Kulicke and Soffa Industries — Investor Presentation (July 2006)
49 slides from Kulicke and Soffa Industries's investor presentation, Jul 12, 2006
Slide 1: K&S Corporate Overview
K&S Corporate Overview C. Scott Kulicke July 12, 2006
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements, including forecasts of future demand and future Company performance. These statements are subject to risks and uncertainties that could cause actual results to materially differ from those projected. Further discussions of
Slide 3: Corporate Strategies
Corporate Strategies Growth through Market Share Gains Profitability throughout Semiconductor Cycles Technology Leader & Low Cost Provider 3
Slide 4: Corporate Growth
Corporate Growth
Slide 5: Wire Bond Organic Growth
Wire Bond Organic Growth 14 12 Trillions of Leads 10 8 6 4 Wire Bonding CAGR 1994-2004 = 10.5% 2 2005-2010 = 12% 0 1994 1996 1998 2000 2002 2004 2006 2008 2010 Wire Bonded Leads Flip Chip Leads Data Source: FC Source: vs WB I/O: VLSI VLSI Research, Research,12/05Jan 2006 5
Slide 6: Ball Bonder Equipment Forecast
Ball Bonder Equipment Forecast 2005-2011: 5.4%CAGR 900 800 700 600 $ Millions 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 Automatic Ball Bonders Source: VLSI Research – June 2006 6
Slide 7: Sales from Continuing Operations: 10 Years
Sales from Continuing Operations : 10 Years $ M illions Acquired Test $300 Products $250 $200 * $150 $100 $50 $- 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Pac
Slide 8: Corporate Growth
Corporate Growth Wire Bonding and Flip Chip Packaging are both growing. Little migration from one method to the other. Growth from Market Share Gains in Equipment and Materials Exploring other Equipment/Business opportunities 8
Slide 9: Corporate Earnings
Corporate Earnings a Kulicke & Soffa,
Slide 10: Operating Profit from Continuing Businesses
$10 $20 $30 $40 $50 $60 $70 $- $(30) $(20) $(10) Millions $ 1Q96 2Q96 3Q96 4Q96 1Q97 2Q97 3Q97 4Q97 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 Packaging Materials OP 4Q00 10 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 Equipment OP 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1
Slide 11: Peer Analysis - Valuation Ratios
Peer Analysis*- Valuation Ratios The overall valuation for K&S is the lowest in the peer group. The stock is Undervalued compared to all peers. Sold Flip Chip Products Market Value/ Market Value/ Market Value/ Revenue (P/S) Revenue (P/S) Earnings (P/E) (Last 12 Months) (Next 12 Months) (Next 12 Mont
Slide 12: Corporate Earnings & Valuation
Corporate Earnings & Valuation K&S continuing operations were profitable for the past 3 Years K&S valuation for continuing operations is very low, compared to peers 12
Slide 13: Products & Technology
Products & Technology
Slide 14: Maxum Ultra Wire Bonder
Maxum Ultra Wire Bonder • Maxum Ultra is the preferred bonder in high-end packaging market (~50% market share) • Maxum Ultra: highest wire bonder ASP’s • Sales growth driven by: • Telecomm • DSP’s • PC’s • Flash • New factories in China 14
Slide 15: Maxum Elite Wire Bonder
Maxum Elite Wire Bonder • Low Pin-count packaging requires wire bonders with specialized handling technology • New customer base is growing: China, Malaysia, Thailand • New marketing emphasis for customers packaging: • LEDs • SOTs, Discretes, etc. 15
Slide 16: AT-Premier Wafer Bumping
AT-Premier Wafer Bumping Flip Chip Packages with gold/copper bumps Camera Sensors and SAW Filters are predominant market today Cost Effective Bumping process: 36 Bumps per Second Next Generation Memory is potential future market 16
Slide 17: Consumable Bonding Tools & Bonding Wire
Consumable Bonding Tools & Bonding Wire K&S Materials Enhance Wire Bonder Performance 17
Slide 18: Product & Technology Highlights
Product & Technology Highlights Maxum Ultra wire bonder represents highest throughput, most advanced technology, highest ASPs Maxum Elite wire bonder represents opportunity for new, Low Pin-Count Market (China, Malaysia, Thailand) Wire development & manufacturing in Singapore Gaining Market Sh
Slide 19: Product Marketing Strategies
Product Marketing Strategies Christian Rheault VP Wire Bonder Business Unit Jack Belani VP Packaging Materials Business Unit
Slide 20: K&S Equipment Division
K&S Equipment Division a Kulicke & Soffa,
Slide 21: Packaging Technology Drives K&S Development
Packaging Technology Drives K&S Development Equipment and Materials are both Technology Enablers Communications Customers need leading-edge processes 21
Slide 22: Communications Driving Demand – courtesy of Texas Instruments
Communications Driving Demand – courtesy of Texas Instruments PDA Cable Modem 2G/2.5G 3G Cellular I-Video IP Cellular Phone Phone Phone Phone Bluetooth Enabled Products Digital Still Digital PDA Network Still Camera Camcorder Camera Camera Home Networking DAB Digital Internet Digital Video Radio TV
Slide 23: Integration of Functions/Features
Integration of Functions/Features - Courtesy of Texas Instruments System on chip ? or Both? Integrating more Miniaturization System in Package ? 23
Slide 24: SoC and SiP – Functionality
SoC and SiP – courtesy of Texas Instruments Integrated DSP Network Interfaces Subsystem DSP Core M IPS Su bsystem complete SoC DSL PLL Su bsystem SAR Eth ern et Phy CODEC DIGIT AL 12 V Top EQUALIZER PL L VC X O T X L PF D AC HPF Powe r M gmnt . Ref. S ys D C XO Lin e AD C D rive r Embedded SiP Modul
Slide 25: Convergence of Packages/Systems
Convergence of Packages/Systems Motorola’s E1000 3G Handset: 4 die SiP: baseband processor + 2 x NOR flash + DRAM 3 die Module: transceiver + receiver + RF synthesizer + 50 passives SiP: 1 die + SAW filter + RF passives Power management low I/O IC SiP mixed-technology power amplifier modul
Slide 26: Packaging R&D Gap
Packaging R&D Gap K&S is uniquely positioned with Equipment, Tools and Wire knowledge to develop complete process solutions to Fill the R&D Gap K&S works with key customers to develop the processes for next generation semiconductor packaging Bond-Over-Active-Circuitry, Stacked Die, System-in-P
Slide 27: New IC’s Drive K&S Technology
New IC’s Drive K&S Technology New Packages – driven by portable devices Multi-Chip Packages Stacked die System-in-Package New Performance Demands – driven by more complexity, convergence Die Shrinks Increasing I/O, wiring density New Materials – driven by increased device performance
Slide 28: Multi-Tier Package: Looping Challenges
Multi -Tier Package: Looping Challenges Looping Complexity is Increasing 28
Slide 29: Stacked Die Overhang Bonding, Ultra Low Looping
Stacked Die Overhang Bonding Ultra Low Looping K&S is usually first to market with packaging solutions for customers. 29
Slide 30: Technology & Performance Leadership
Technology & Performance Leadership New Product Every 18 Months Highest Speed & Throughput Extremely Low & Long Looping Next Fine Pitch Leadership Generation Bonder 120 ed → 270 e Units Per Hour (SPEED) 105 Sp 220 90 (microns) Pad Pitch 8020 Maxµm 170 75 8028S 8028PPS plus 1488 1488plus 60 t
Slide 31: Ball Bonder Market Share Growth
Ball Bonder Market Share Growth K&S: $196 Million K&S: $253 Million Other Other ESEC 6% 14% ESEC 8% 4% K&S K&S 39% 44% ASM PT ASM PT 20% 21% SHINKAWA SHINKAWA 23% 21% 2003 Total Available Market 2005 Total Available Market = $507M = $576 Million Source: VLSI Research – April 2004, 2006 31
Slide 32: Growth Strategies
Growth Strategies Expand in Specific Sub-Markets with Targeted Capabilities High Performance Requirements Cost Performance / Low Pin Count Market Specific Growth Market Segments Market Share Growth Plan Develop Regional plans Increase our share at current customers Penetrate new customer
Slide 33: Growing the Customer Base
Growing the Customer Base FY 2000 FY 2005 Approximately the Equivalent Number of Bonder Shipments # of Customers 56 # of Customers 81 # of Sites 93 # of Sites 146 45% more customers 33
Slide 34: Supply Chain Management & Cost Control
Supply Chain Management & Cost Control Supply Chain Supply Chain Team in place in China since last year China Content per product continuously increasing Cost Control Have developed a Cost Reduction Roadmap Implemented Design for Manufacturing strategy (DFM) Review Costs in every Design Re
Slide 35: Highest Performance at Lowest Cost
Highest Performance at Lowest Cost Next Generation Bonder 90% 80% 70% Productivity 60% Maxµm 50% Maxµm plus 90 % 40% Increase in 30% 8028 PPS Productivity 20% 8028 10% 8020 Baseline - 10% - 20% COGS 56 % - 30% Decrease in - 40% COGS - 50% Asia Supply Chain and Production - 60% 1996 2000 2005 2008 35
Slide 36: Ball Bonder Conclusions
Ball Bonder Conclusions Continue R&D Programs – Maintain Technology Leadership Expand Market Share Leadership – Implement Growth Plans Continue Cost Reduction Activities – Execute the Roadmap Provide Best Technology at Best Price for Customers 36
Slide 37: Packaging Materials Division
Packaging Materials Division
Slide 38: Packaging Technology Trends
POWER Packaging Technology Trends SIZE P-DIP PLCC COST – courtesy of Texas Instruments QFP •Integration drives cost reduction TQFP Scaling - die/wafer : smaller, cheaper, faster (2x/area. 40% die, 2x/4 yr) PBGA System on Chip : digital, analog, RF u*BGA™ System in Package : logic and memory integrat
Slide 39: Growth of IC Units Drives our Business
Growth of IC Units Drives our Business Quarterly IC Units New trend since 2001: 11% CAGR 35 30 25 Historical trend: Billions of Units 9% CAGR 20 15 10 5 0 93Q1 93Q4 94Q3 95Q2 96Q1 96Q4 97Q3 98Q2 99Q1 99Q4 00Q3 01Q2 02Q1 02Q4 03Q3 04Q2 05Q1 05Q4 Source: WSTS IC Unit Report 39
Slide 40: Bonding Tools & Wire: A Perspective
Bonding Tools & Wire: A Perspective Product Scale: Bonding Tool and Wire Compared to Sewing Needle Tip & Eye 40
Slide 41: Packaging Materials TAM
Packaging Materials TAM CAGR 2006 – 2010 Wire: 6.3% Tools: 4.3% Impact of Long Life Cap 20,000 fully phased in 15,000 10,000 5,000 - 2004 2005 2006 2007 2008 2009 2010 Gold Wire - millions of meters Bonding Tools - millions of units Source: Wire forecast – SEMI Jan 2006 Tools forecast – K&S data & a
Slide 42: Bonding Tools Market
Bonding Tools Market K&S is the Long-term, Dominant Supplier of Bonding Tools Others Others Gaiser 5% 8% Gaiser 9% 8% Peco Peco 13% K&S K&S 12% 51% 51% SPT SPT 22% 21% CY 2003 Total Available Market CY 2005 Total Available Market = $80 Million = $98 Million Source: Company Data Dominant supplier def
Slide 43: Manufacturing Leadership
Manufacturing Leadership h 2 sites h Israel facility – Design Center & Manufacturing Service / Flexibility h China facility – High Volume Manufacturing Multiple Factories h China plant: finest capillary production line in the industry 43
Slide 44: Bonding Tools Manufacturing Leadership
Bonding Tools Manufacturing Leadership Capillary COGs % Change from 2000 Baseline COGs 20.0% 10.0% 0.0% 2000 2001 2002 2003 2004 2005 2006 -10.0% -20.0% 35% -30.0% -40.0% 44
Slide 45: Packaging Materials Division – Bonding Wire
Packaging Materials Division – Bonding Wire “We are shipping 104 MPH of gold wire.”
Slide 46: Gold Wire Market Share Growth
Gold Wire Market Share Growth 2003-2005 TAM Increased 33%(Including 22% Gold Price Increase), K&S Revenue Increased 84% K&S: $128 Million K&S: $235 Million Others 3% Others K&S Heraeus K&S 6% 11% 11% 15% Heraeus MKE 15% 12% Tanaka 27% Tanaka 25% Nippon Nippon Micro-metal Micro-metal 11% 15% Sumitomo
Slide 47: Gold Wire Manufacturing Leadership
Gold Wire Manufacturing Leadership Gold Wire COGs % Change from 2000 Baseline COGs 15.0% 5.0% -5.0% 2000 2001 2002 2003 2004 2005 2006 -15.0% -25.0% 50% -35.0% -45.0% -55.0% 47
Slide 48: Package Materials - Summary
Package Materials- Summary Proliferation of Packages Application-Specific New Product Opportunities Technology Leadership Uniquely positioned with Wire Bonders Extremely Low & Long Looping Fine-Pitch Leadership Nano-composites - teaming with Technion (Israeli Institute of Technology) Manufac
Slide 49: Investor Overview
Investor Overview K&S is Providing Customers: Technology Leadership Low Cost Solutions K&S is Providing Shareholders: Profitability throughout the Semiconductor Growth Cycle Growth through share gain, new applications/factories 49
Kulicke & Soffa Industries — Investor Presentation (July 2006) on 6ix