Be Semiconductor Industries N.v. · EURONEXT:BESI
Be Semiconductor Industries — Besi — Investor Presentation (November 2020)
59 slides from Be Semiconductor Industries's investor presentation, November 2020
Slide 1: Investor Presentation November 2020
INVESTOR PRESENTATION November 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 November 2020 3
Slide 4: I. Company Overview
I. COMPANY OVERVIEW November 2020 4
Slide 5: Besi Overview
Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. 32% addressable market share • Broad portfolio: die attach, packaging and plating Corporate Profile • Strategic positioning in substrate and wafer level packaging • ~75% of systems used for advanced packagin
Slide 6: Company History
Company History Die Attach Acquisitions 70.0% € 416.3 400 • 65.0% 60.0% Product Strategy 59.2% 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 September 30, 2020 Europe/NA Asia
Slide 11: Summary Financials
Summary Financials Year Ended December 31, (€ millions, ex share data) 2017 2018 2019 YTD-19 YTD-20 Long term, step function growth in cyclical business Revenue 592.8 525.3 356.2 263.8 323.9 • Last revenue peak of € 592.8 million reached in 2017 • Increased profitability per cycle % seq. change 58%
Slide 12: Increased Profitability vs. Last Industry Cycle
Increased Profitability vs. Last Industry Cycle Trough Post Trough € millions 2015 2019 € millions 2016 2020E* 450 200 140 180 350 424.2 +2.0% 356.2 +13.0% 349.2 120 400 160 33.9% 140 100 375.4 143.8 25.8% Operating Income Operating Income 350 120 91.9 +91.2% Revenue 300 Revenue 80 +58.7% 100 16.6%
Slide 13: Besi's Long Term Revenue Trends Suggest Renewed Cycle With Increased Profitability
Besi’s Long Term Revenue Trends Suggest Renewed Cycle With Increased Profitability € millions Revenue Gross Margin Gross Margin 700 70% 59.8% 600 60% 56.8% 593 55.8% 51.1% 500 -32% 50% 424 +19% 400 39.5% 424 40% 34.1% 379 356 300 302 30% 4 year 351 averages 200 20% 164 191 100 10% 0 0% 2006 2007 200
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 November 2020 14
Slide 15: Capital Allocation Trends
Capital Allocation Trends € millions 209.5 200 35.5 Dividends 167.1 Share Repurchases 150 • Mix skewed to dividends 44.7 • € 480.6 million paid out over past five years • Dividend pay out ratio 95%+ (5 year avg.) 100 88.8 • Stock repurchases increasing as % of mix 83.0 174.0 • € 76.5 million bought
Slide 16: II. Market
II. MARKET November 2020 16
Slide 17: What Drives Besi's Business?
What Drives Besi’s Business? Timing of customer IDM customer and roadmaps and Macro GDP trends supply chain capital spending choice programs Tech capabilities Competitive cycle for 24/7 production times and environment scalability November 2020 17
Slide 18: VLSI Forecasts Renewed Assembly Equipment Growth Cycle
VLSI Forecasts Renewed Assembly Equipment Growth Cycle Assembly Equipment Market Market Size YoY Growth Rate 5.0 4.5 4.3 4.4 50% 4.0 4.0 3.5 3.1 3.4 30% US$ billions 3.1 3.0 3.0 25.8% 16.4% 10% 12.5% 10.2% 10.6% 4.5% 2.0 -2.5% -10% -15.9% 1.0 -30% -31.5% 0.0 -50% 2015 2016 2017 2018 2019 2020E 2021E
Slide 19: Chip Making Climate Index Has Risen Significantly Since 2019 Trough
Chip Making Climate Index Has Risen Significantly Since 2019 Trough. Upward Trajectory Interrupted by COVID-19 Pandemic Source: VLSI October 13, 2020 November 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 November 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 55 50% • Assembly process step now important gating item 43% 40% 41% • Specifications more like front-end 45 39% 37% 38% 40% 36% 34% • 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 Wire Bond (1975) Flip Chip (1995) TCB Bonding (2012) HD Fan Out (2015) Hybrid Bonding (2018) Heat compression force Contact: Contact: Contact: Via RDL or Contact: Cu to Density: 5-10/mm² Contact: wire Density: 25-400/mm² Solder ball/Cu pillar De
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 installed base of 700-1,400 systems by 2030
Slide 34: Joint Development Agreement With Applied Materials
Joint Development Agreement With Applied Materials Industry Shifting Towards Smaller, Integrated, Heterogeneous Chip Designs For Leading-edge 5G, AI, HPC, Data Storage, And Auto Applications Industry’s First Complete, One-Stop Solution Create Best Hybrid Bonding Process Suite Front & Back End Proces
Slide 35: 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 36: III. Strategy
III. STRATEGY November 2020 36
Slide 37: 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 38: Current Technology Roadmap
Current Technology Roadmap 2020 Development Activities • IDMs investing in • Shipped first nano-accurate hybrid die Customers next generation bonding system devices 5G Applications • Ongoing development of MicroLED Artificial Intelligence applications Cloud Infrastructure Advanced Logic and • Next g
Slide 39: 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 40: 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 41: 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 42: 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% 120 117 108 € millions Gross Margin % 100 100 93 93 92 70% 90 91 81 62.0% 60.8% 80 58.0% 59.0% 56.5% 56.5% 56.4% 55.9% 56.0% 56.3% 56.7% 60% 5
Slide 43: 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 1,600 1,529 1,522 1,513 • Headcount adjusted in 2018/2019 downturn: 80% 1,400 • 25.3% reduction from Q1-18 peak to Q4-19 Headcount 71% 73% 70% 70% 70% 70% 70% 1,200 • Asian HC ratio
Slide 44: Structural, Through Cycle Outperformance Achieved vs. Peers
Structural, Through Cycle Outperformance Achieved vs. Peers Return on Average Equity* Gross Margin 45.0 Δ Besi 2016 2017 2018 2019 YTD-20 2016/ 40.0 Besi’s margins and ROE have 2020 exceeded direct peers through 35.0 cycles: Besi 51.0% 57.1% 56.8% 55.8% 60.0% +9.0% 30.0 ASM PT • Investment in busine
Slide 45: 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 46: 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 47: IV. Financial Update and Summary
IV. FINANCIAL UPDATE AND SUMMARY November 2020 47
Slide 48: Strong Quarterly and Year to Date Growth
Strong Quarterly and Year to Date Growth Q3-19/Q3-20 YTD-19/YTD-20 Revenue Net Margin Revenue Net Margin 120 360 € 108.3 € 323.9 + 20.7% 320 + 22.8% 100 100% 100% € 89.7 € 263.8 280 Gross Margin Gross Margin 55.1% + 5.7 points 60.8% 55.7% + 4.4 points 60.1% 80 240 OPEX OPEX 75% 75% Revenue (€ millio
Slide 49: Liquidity Expanded
Liquidity Expanded Cash and Deposits Net Cash 600 Q3-20 vs. Q2-20 564.5 • Cash and deposits increased € 197.9 million: 527.8 • Includes net proceeds from 2027 Convertible Note € 73.5 MM 500 475.5 Dividend issuance in August 2019 • As well as significant free cash flow from operations 427.6 408.4 400
Slide 50: Guidance Q4 and Full Year 2020
Guidance Q4 and Full Year 2020 € in millions Q3-20 Q4-20 2019 2020E 0% +17% Revenue € 108.3 - € 356.2 - -15% +21% Gross Margin 60.8% 58% - 60% 55.8% ~60% 0% +2% Operating Expenses € 23.9 - € 106.9 - +5% -15% +3% November 2020 50
Slide 51: 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 52: V. Appendix
V. APPENDIX November 2020 52
Slide 53: Orders: Return to More Typical IDM/Subcontractor Mix
Return to More Typical IDM/Subcontractor Mix Post Large IDM Investment in Last Cycle € millions 800 IDMs Subcontractors 700 680.9 600 35% 483.1 500 415.0 Orders 400 373.8 32% 348.3 348.7 300 53% 49% 39% 49% 68% 200 65% 61% 100 47% 51% 51% - 2015 2016 2017 2018 2019 TTM* * Trailing twelve months (TTM
Slide 54: Overhead Remains Under Control
Overhead Remains Under Control Baseline Opex Other Opex* Baseline Opex % of Revenue 60.0% 33.0 30.7 50.0% 30.0 28.6 Operating Expenses (€ millions) 9.1 26.8 7.4 40.0% 25.2 24.2 5.9 3.3 23.9 1.8 3.0 2.8 30.0% 28.7% 25.3% 26.1% 25.0% 20.0 24.0% 18.2% 19.5% 20.0% 23.3 23.5 23.9 22.4 22.2 22.6 21.1 10.0
Slide 55: Net Income Trends
Net Income Trends Net Income Variable Compensation (a) Net Margin 60% 50 45.0 50% 6.1 40 37.5 38.2 4.2 40% 3.8 36.5% € millions 30 32.0% 26.2 31.3% 30% 3.5 22.4 22.3 22.3 24.5% 3.5 3.1 20 38.9 15.9 20.4% 21.4% 8.4 20% 33.7 34.0 6.4 15.2% 22.7 10 11.7% 19.2 18.9 10% 13.9 9.5 0 0% Q4-18 Q1-19 Q2-19 Q3
Slide 56: Strong Cash Flow Generation Helps Fund Capital Allocation Program
Strong Cash Flow Generation Helps Fund Capital Allocation Program € millions Total Cash Flow from Operations As % of Revenue % of Revenue 200 184.1 180 168.2 160 146.6 140 120.1 120 98.7 35.0% 35.2% 100 33.7% 86.5 28.4% 80 26.3% 24.8% 60 40 20 0 2015 2016 2017 2018 2019 TTM* * Trailing twelve months
Slide 57: 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 58: Share Repurchase Activity
Share Repurchase Activity 50 40.0 44.6 45 € 35.15 35.0 40 35.5 30.0 35 Avg Cost per Share € 24.31 25.0 30 € 23.74 € millions € 21.86 25 22.4 22.8 20.0 20 15.0 15 € 12.44 9.5 10.0 € 8.93 10 4.0 5.0 5 0 0.0 2015 2016 2017 2018 2019 2020* Share Repurchases Average Cost per Share • 7.4 million treasury
Slide 59: 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