Be Semiconductor Industries N.v. · EURONEXT:BESI
Be Semiconductor Industries — Investor Presentation (August 2020)
58 slides from Be Semiconductor Industries's investor presentation, August 2020
Slide 1: Investor Presentation August 2020
INVESTOR PRESENTATION August 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the presentation, including, but not limited to, statements relating to exp
Slide 3: Agenda
Agenda I. Company Overview II. Market III. Strategy IV. Financial Update and Summary V. Appendix August 2020 3
Slide 4: I. Company Overview
I. COMPANY OVERVIEW August 2020 4
Slide 5: Besi Overview
Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. 32% addressable market share Corporate Profile • Broad portfolio: die attach, packaging and plating • Strategic positioning in substrate and wafer level packaging • Global operations in 6 countries; 1,691 em
Slide 6: Company History
Company History Die Attach Acquisitions 70.0% € 397.7 65.0% 400 • 60.0% Product Strategy 57.9% 55.0% 300 • Expanded advanced packaging leadership into die attach area Revenue (€ millions) • Gained market share organically and via acquisitions 50.0% • Gained mindshare with key industry leaders • Grow
Slide 7: Best in Class Product Portfolio
Best in Class Product Portfolio Die Attach Die Bonding Multi Module Attach Flip Chip Large Panel Size Die Sorting Die Lid Attach • 2100 xP plus / hS • 2009 SSI • 2200 evo • 8800 CHAMEO advanced New • 8800 CHAMEO PLP • DLA • WTT • 2100 sD plus / PPP plus • 2100 SSI New • 8800 TCB advanced New New • D
Slide 8: Customer Ecosystem
Customer Ecosystem Customers OEMs End Products IDMs Subcontractors • Diversified, blue chip customer base, top 10 = 44% of 2019 revenue • Leading IDMs and subcontractors. 61%/39% split in 2019 • Also supply leading fabless companies: Qualcomm, Broadcom, MediaTek via subcontractors • Long term relati
Slide 9: Product Positioning
Product Positioning Semiconductor Manufacturing Equipment (2019: $61.7B)* Front end: $53.2B Assembly: $3.0B Test: $5.5B (86.2%) (4.8%) (8.9%) Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging** Plating Leadframe Assembly Substrate Wire Bond Assembly Substrate Flip Chip Assembly/TC
Slide 10: Operational Profile
Operational Profile Duiven & Drunen, (The Netherlands) Steinhausen, Radfeld, (Austria) (Switzerland) Chandler Suzhou Chengdu Korea Shanghai Leshan Taiwan Shenzhen Sales Office Thailand Philippines Malaysia Production Site Singapore Sales, Production and R&D Site LTM June 30, 2020 Europe/NA Asia • De
Slide 11: Summary Financials
Summary Financials Year Ended December 31, (€ millions, except share data) 2017 2018 2019 H1-19 H1-20 Long term, step function revenue growth in cyclical business Revenue 592.8 525.3 356.2 174.1 215.6 • Last peak reached in 2017 at € 592.8 million % seq. change 58% -11% -32% +24% H1-20 business pros
Slide 12: Increased Profitability vs. Last Industry Cycle
Increased Profitability vs. Last Industry Cycle Trough Post Trough € millions € millions 2015 2019 Nine Months 2016 Nine Months 2020E* 350 160 140 140 350 +2.0% 356.2 349.2 120 318.1 120 +12.7% 32.3% 25.8% 100 300 Operating Income Operating Income 100 102.7 300 91.9 Revenue 80 Revenue +58.7% 282.3 +
Slide 13: Revenue and Gross Margin Cycles Since 2006
Revenue and Gross Margin Cycles Since 2006 € millions Revenue Gross Margin Gross Margin 700 70% 600 59.5% 60% 593 56.8% 55.8% 51.1% 500 50% 424 -40.0% 400 39.5% 40% 34.1% 379 +20.6% 356 300 302 30% 4 year 351 318 averages 264 200 20% 164 191 100 10% 0 0% * Nine months assuming midpoint of Q3-20 guid
Slide 14: Business Model Objectives
Business Model Objectives Objectives Revenue € 800MM Addressable 40%+ Market Share Gross Margin 55-60% Net Margin 30-35% Headcount 80% Asia/20% Euro Split August 2020 14
Slide 15: Capital Allocation Trends
Capital Allocation Trends € millions 209.5 200 35.5 Dividends 167.1 Share Repurchases • € 732.6 million distributions since 2011: 150 • € 79.7 million YTD including May dividend 44.7 • € 73.3 million shares repurchased under current € 75 million authorization 100 88.8 • Average price of € 22.58 174.
Slide 16: II. Market
II. MARKET August 2020 16
Slide 17: What Drives Besi's Business?
What Drives Besi’s Business? IDM customer and Tech capabilities in Macro GDP trends supply chain 24/7 production choice environment Timing of customer Competitive cycle roadmaps and times and capital spending scalability programs August 2020 17
Slide 18: Assembly Equipment Market Trends
Assembly Equipment Market Trends Assembly Equipment Market Market Size YoY Growth Rate 5.0 4.5 4.3 4.6 50% 4.2 4.0 3.3 3.6 30% 3.5 US$ billions 3.1 3.0 3.0 25.8% 15.6% 10% 11.3% 9.5% 9.7% 12.5% 2.0 -2.5% -10% -15.9% 1.0 -30% -31.5% 0.0 -50% 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E Source: VL
Slide 19: Semi Equipment Climate Index Changed Significantly in H1-20
Semi Equipment Climate Index Changed Significantly in H1-20 Source: VLSI June 24, 2020 August 2020 19
Slide 20: Assembly Equipment Market Composition
Assembly Equipment Market Composition Assembly Equipment Market * Besi Addressable Market * (2019: $3.0 billion) (2019: $1.2 billion) Plating Lead Trim & Form 1.7% 4.8% Other Wire Bonding Assembly 18.7% (Inspection, Dicing) Molds & 33.4% Presses 25.1% Die Bonding 49.9% Die Attach 64% Packaging Plati
Slide 21: Besi Market Share Trends
Besi Market Share Trends 2015 2016 2017 2018 2019 Total Assembly Market ($MM) $3,148 $3,541 $4,453 $4,343 $2,974 Besi Market Share 12.3% 11.8% 15.0% 13.8% 13.4% Addressable Market ($MM) $1,271 $1,506 $1,940 $1,848 $ 1,247 Besi Market Share 29.9% 27.6% 34.2% 32.4% 32.0% Die Attach 35.5% 34.2% 42.0% 3
Slide 22: Move to Digital Society Helps Drive Advanced Packaging Growth
Move to Digital Society Helps Drive Advanced Packaging Growth August 2020 22
Slide 23: Advanced Packaging Critical to Next Generation Applications
Advanced Packaging Critical to Next Generation Applications Greater Mobile Revolution Miniaturization • Mobile internet • Messaging • Social media • Shared economy Higher Greater • Gaming Accuracy Complexity • Geo-location • Audio/video • Auto electronics Die Bond Packaging Datacon 8800 TC Fico AMS-
Slide 24: Requiring Increased Density, Higher Accuracy and Smaller Form Factors
Requiring Increased Density, Higher Accuracy and Smaller Form Factors for Next Generation Devices 100 NM Front End 10 • Transistor scaling 1 • Lithography 0.1 • New structures 3D 2010 2015 2020 2025 2030 Logic Metal Pitch Edge Placement Accuracy Node Name Source: Samsung Source: ASML 3D Conference 2
Slide 25: Advanced Packaging Unit Volume and Market Share Are Increasing
Advanced Packaging Unit Volume and Market Share Are Increasing Advanced Packaging Silicon Demand Growth & Market Share 2011 - 2023 • Assembly process step now important 55 50% gating item 41% 43% • Specifications more like front-end 45 40% 39% 37% 38% 40% 34% 36% • Advanced packaging applications ha
Slide 26: Besi Portfolio Well Positioned by Node Size and Accuracy
Besi Portfolio Well Positioned by Node Size and Accuracy Estimated % of 2019 Revenue Typical Application Besi Equipment Accuracy Size 100% Micron NM Die Attach 90% 10+ 28+ Automotive, SiP 25% Packaging Power 80% Plating 70% Die Attach 20% IOT 60% 10 28 Packaging General ICs Plating 50% 40% Computer,
Slide 27: Besi End User Markets
Besi End User Markets 2019 % of Revenue • Mobile Internet, Computing and Automotive are largest end markets • Estimated 71% of revenue in 2019 • Percentages vary p.a. based on customer Ind’l/LED roadmaps 9% Automotive Mobile Internet • Mobile is largest market Devices 17% 32% • % varies based on tim
Slide 28: Key End User Market Growth Drivers
Key End User Market Growth Drivers Mobile Internet Computing Automotive 5G Ramp Underway Digital Society Accelerating Development Continues Despite Increasing Mobile Content & Features Near-Term Weakness Cloud Infrastructure Autonomous Driving HPC/Vision Lidar 5G subscriptions expected to reach 2.5
Slide 29: Besi Addressable Market Share of Mobile Increasing
Besi Addressable Market Share of Mobile Increasing. Can Support Virtually All Device Platforms in Latest Generation Phones 2018 Generation 2012 Manufacturer IDM/OSAT Besi System Utilized iPhone XS Processor X Apple TSMC ->TSMC 8800CHM, MMS-LM DRAM Memory X X Hynix/Micron/Samsung Hynix/Micron/Hanamic
Slide 30: Computing: Advanced Computing & HPC Another Area of Growth
Computing: Advanced Computing & HPC Another Area of Growth Data Volumes Keep Growing Exponentially Advanced Computing Proliferation In Largest Sections of the Economy Cloud Computing Automotive Manufacturing Healthcare Gaming $ 230B $ 10T $ 14T $ 7T $ 150B • 150 B IoT Devices by 2025 • 59 ZB in 2020
Slide 31: Automotive: Progress Continues in EV and Autonomous Driving Development
Automotive: Progress Continues in EV and Autonomous Driving Development Electric car sales growing strongly Increase in EV volume will generate Autonomous driving will require development of substantial growth in semi power devices more powerful processors as well as a multitude of advanced sensors
Slide 32: Hybrid Die Bonding: Next Generation Bonding Technology
Hybrid Die Bonding: Next Generation Bonding Technology Higher accuracy, more dense contact technology WIRE BOND FLIP CHIP FAN OUT and WLCSP TCB BONDING HYBRID BONDING 1975 1995 2010 2012 2018 NEW DtW 100-55 µm sides only Pitch 150-80 µm Pitch 80-25 µm Pitch < 20µm Source:Amkor Source:Amkor Source: I
Slide 33: Hybrid Die Bonding: Significant Total Market Potential
Hybrid Die Bonding: Significant Total Market Potential Besi Has Leading Position Hybrid Bonding / Bonding Equipment Market Key Advantages Hybrid Bonding Die to Wafer / Die to Die Very high density contacts possible > 1 Mio/Sq Mm with no solder Estimated 700-1,400 systems by 2030 process (no solder
Slide 34: MicroLED: Another Emerging Growth Opportunity
MicroLED: Another Emerging Growth Opportunity Watches and Phones, Automotive IT VR and AR Applications Larger Size TV and TV+ Mass Transfer Of Individual MicroLEDs Monolithic Based MicroLEDs Solutions Very precise placement over wide area Utilizing Besi’s next generation TCB or Hybrid Bonding Sy
Slide 35: III. Strategy
III. STRATEGY August 2020 35
Slide 36: Summary Strategy
Summary Strategy Maintain best in class technology leadership Increase Reward market shareholders presence in via capital addressable allocation policy markets Strategic Objectives Acquire Enhance companies with scalability. complementary Reduce technologies structural costs and products Balance bus
Slide 37: Current Technology Roadmap
Current Technology Roadmap 2020 Development Activities • IDMs investing in • Shipped first nano-accurate hybrid die Customers next generation bonding system with excellent initial devices results 5G Applications Artificial Intelligence • Ongoing development of MicroLED Cloud Infrastructure applicati
Slide 38: Revenue Initiatives
Revenue Initiatives • Expand partnership with next-gen leaders to gain share • Exploit opportunities for hybrid bonding, micro LED, 5G features, Customer memory/TCB, solar plating • Increase mainstream penetration with high quality mid range systems • Expand presence and share of wallet in China • S
Slide 39: Cost Initiatives: €10 Million Target Reduction
Cost Initiatives: € 10 Million Target Reduction • Increased production/supply chain flexibility: MY, CHN, SGP Supply Chain • Vendor consolidation and volume discounts • Cost reduction with each new generation • Reduce number of platforms Product Design • Increase standardization • Reduce cycle times
Slide 40: Asian Production Transfer Has Reduced Break Even Revenue Levels
Asian Production Transfer Has Reduced Break Even Revenue Levels and Improved Cash Generation Asian Production Has Significantly Leading to Lower Fixed European And Reduced Break Even Improved Cash Generation Expanded + NA Headcount Revenue Levels Shipments Headcount € millions € millions 2,000 150 3
Slide 41: Flexible Production Model Has Generated Consistent Gross Margins
Flexible Production Model Has Generated Consistent Gross Margins in Market Cycles Revenue Gross Margin 180 100% 161 Downturn COVID-19 160 155 90% 140 124 80% 120 117 € millions Gross Margin % 103 100 93 93 92 70% 90 91 81 62.0% 80 58.0% 59.0% 56.5% 56.5% 56.4% 55.9% 56.0% 56.3% 56.7% 60% 55.1% 60 50
Slide 42: Flexible Asian Workforce Has Significantly Enhanced Scalability
Flexible Asian Workforce Has Significantly Enhanced Scalability Fixed Headcount 2,000 100% 1,724 1,692 1,800 90% 1,534 1,529 1,522 1,600 80% 1,400 Headcount 71% 73% 70% 70% 70% 70% 1,200 • Headcount adjusted in 2018/2019 downturn: 1,000 60% 800 • 25.3% reduction from Q1-18 peak to Q4-19 50% 600 • As
Slide 43: And Helped Increase Through Cycle Margin Variance vs. Peers
And Helped Increase Through Cycle Margin Variance vs. Peers Gross Margin Return on Average Equity Variance 50.0% 2016 2017 2018 2019 YTD 2016/ 2020 Besi 51.0% 57.1% 56.8% 55.8% 59.7% +8.7% 40.0% ASMPT 43.4% 47.9% 45.9% 41.1% 42.2% -1.2% Besi (Backend) 30.0% K&S* 44.8% 47.2% 46.1% 47.1% 46.0% +1.2% 2
Slide 44: Besi Strategic CSR Objectives
Besi Strategic CSR Objectives Safeguard safe and healthy working conditions Maintain best Responsible practices tax practices environmental in all and ethical jurisdictions behavior Reduce Reduce packaging, waste, CSR environmental impact of transportation and energy Objectives products and operatio
Slide 45: Progress on CSR Agenda
Progress on CSR Agenda CSR Highlights 2019 Reduced packaging, energy, waste, and water Energy Usage Waste Usage Water Usage usage 18 200 35 17.7 Installed solar panels at Malaysia facility 32. 6 Environmental Developed system to better assess Footprint sustainability in product design 183 (15.
Slide 46: IV. Financial Update and Summary
IV. FINANCIAL UPDATE AND SUMMARY August 2020 46
Slide 47: Strong Quarterly and Half Year Growth
Strong Quarterly and Half Year Growth Q2-19/Q2-20 HY1-19/HY1-20 Revenue Net Margin Revenue Net Margin 140 240 € 124.3 220 € 215.6 + 34.1% + 23.8% 120 100% 200 100% € 174.1 € 92.7 Gross Margin 180 Gross Margin 100 + 3.8 points 56.0% + 6.0 points 62.0% 55.9% 59.7% OPEX 160 OPEX 75% 75% Revenue (€ mill
Slide 48: Solid Liquidity Position to Help Navigate Uncertain Environment
Solid Liquidity Position to Help Navigate Uncertain Environment Cash and Deposits Net Cash Q2-20 vs. Q1-20 • Net cash decreased by € 54.7 million (-36.9%) 600 to € 93.6 million • Principally due to: 527.8 507.5 € 122.4 MM € 73.5 MM • - € 73.5 million dividends paid Dividend Dividend 500 475.5 2018 2
Slide 49: Guidance Q3-20
Guidance Q3-20 € in millions Q2-20 Q3-20 Seasonal Revenue Trends Q3E/Q2Δ -10% Average decline (-16.3%) Revenue € 124.3 - -25% -17.5% -3.2% -27.6% -6.3% Gross Margin 62.0% 58% - 60% -13.5% -30.8% • Besi quarterly revenue development influenced by -10% seasonal trends € 28.6 - • Orders typically ramp
Slide 50: Summary
Summary Assembly market Long term secular Disciplined Market presence ever more critical trends drive strategic focus has grown via key in semiconductor advanced has created an IDM customers value chain packaging growth industry leader and supply chains Tech leadership Asian production and scalable
Slide 51: V. Appendix
V. APPENDIX August 2020 51
Slide 52: IDM/Subcontractor Order Trends
IDM/Subcontractor Order Trends € millions 800 700 680.9 600 35% 483.1 500 Orders 402.6 400 373.8 32% 348.3 348.7 300 52% 49% 39% 49% 65% 200 68% 100 51% 51% 61% 48% - 2015 2016 2017 2018 2019 LTM* IDMs Subcontractors * Through June 30, 2020 August 2020 52
Slide 53: Baseline Operating Expense Trends
Baseline Operating Expense Trends 33.0 Baseline Opex Other Opex* 30.7 30 28.6 7.0 Operating Expenses (€ millions) 5.4 26.8 3.3 25.2 2.1 24.2 1.5 0.9 20 25.3 26.0 25.3 24.7 23.7 23.3 10 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 * Other Opex includes both short term and long-term incentive comp, forex effec
Slide 54: Net Income Trends
Net Income Trends Net Income Variable Compensation (a) Net Margin 60% 50 50% 6.1 40 37.5 40% 3.8 36.5% € millions 29.3 30 3.1 26.2 32.0% 30% 3.5 22.4 22.3 25.1% 24.5% 3.5 3.1 20 38.9 15.9 20.4% 21.4% 8.4 20% 33.7 26.2 6.4 15.2% 22.7 10 11.7% 19.2 18.9 10% 13.9 9.5 0 0% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19
Slide 55: Cash Generation Trends
Cash Generation Trends € millions % of Revenue 200 184.1 180 168.2 160 140 124.5 120.1 120 98.7 35.0% 100 33.7% 86.5 31.3% 28.4% 80 26.3% 24.8% 60 40 20 0 2015 2016 2017 2018 2019 LTM Total Cash Flow from Operations As % of Revenue August 2020 55
Slide 56: Dividend Trends
Dividend Trends Dividend (€) Dividend Yield 3.00 Cumulative dividends of € 578.3M since 2011, or € 7.74 per share* 120% 115% 2.50 2.32 110% 2.00 107% 105% 1.67 1.50 100% 100% 1.01 95% 1.00 93% 0.87 91% 0.60 90% 90% 0.50 85% 0.00 80% 2015 2016 2017 2018 2019 Dividend Dividend Payout Ratio* * Calculat
Slide 57: Share Repurchase Activity
Share Repurchase Activity 50 35.0 € 33.58 44.6 45 30.0 40 35.5 35 € 24.31 25.0 € 23.74 Avg Cost per Share € 21.86 30 20.0 € millions 25 22.4 22.8 15.0 20 € 12.44 15 10.0 € 8.93 10 6.2 5.0 5 4.0 0 0.0 2015 2016 2017 2018 2019 2020* Share Repurchases Average Cost per Share • 7.3 million treasury share
Slide 58: Shareholder Base Expanded
Shareholder Base Expanded Symbol/ • BESI Avg. Daily Volume & Liquidity Index • Euronext Midcap AMX Avg Vol * Avg Price (€ thousands) 1000 25,000 Volume (thousands) 800 20,000 Market Market • € 2.8 billion 600 15,000 Cap* ($ 3.3 billion) Profile 400 10,000 200 5,000 Dividend • Pay out 40-100% of net
BE Semiconductor Industries N.V. (Besi) — Investor Presentation (August 2020) on 6ix