Be Semiconductor Industries N.v. · EURONEXT:BESI
Be Semiconductor Industries — Investor Presentation (October 2022)
66 slides from Be Semiconductor Industries's investor presentation, October 2022
Slide 1: Investor Presentation October 2022
INVESTOR PRESENTATION October 2022
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 Overview III. End User Market Trends IV. Strategy V. Financial Update and Summary VI. Appendix October 2022 3
Slide 4: I. Company Overview
I. COMPANY OVERVIEW October 2022 4
Slide 5: Besi Overview
Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. ~30%+ 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 packag
Slide 6: Company History
Company History 900 70% Consistent Focus on Advanced Packaging Has Created an Industry Leader 65% 800 •Focus on most rapidly growing segments of assembly market € 756.9 •Growth organically and via acquisitions •Expanded share of wallet with key industry leaders each cycle 60% 700 •Expansion of custo
Slide 7: History of Superior Long-Term Value Creation
History of Superior Long-Term Value Creation Capital Allocation Strategic/Financial Shareholder Return Disciplined execution has Superior Total Returns **: Attractive capital created leader in allocation program 113% (3 year) advanced packaging 124% (5 year) € 1.3 billion of dividends Best in class
Slide 8: Industry Leading Equipment Portfolio
Industry Leading Equipment Portfolio Die Attach (82% of 2021 Revenue) Direct Lid Embedded Thermo Hybrid Multi-Module Attach Epoxy / Soft Solder Flip-chip Attach Bridge Attach Compression Bonding • 2200 evo • 2100 hS • 2009 SSI • 8800 CHAMEO advanced / PLP • 2200 evo plus • 2100 hS i • 2100 SSI Q2-22
Slide 9: Customer Ecosystem
Customer Ecosystem Customers OEMs End Products IDMs Subcontractors • Diversified, blue chip customer base, top 10 = ~53% of 2021 revenue • Leading IDMs and subcontractors. 55%/45% order split in 2021 • Also supply leading fabless companies: Qualcomm, AMD, Broadcom, MediaTek via subcontractors • Long
Slide 10: From Processed Wafer to Assembled Chip
From Processed Wafer to Assembled Chip Semiconductor Manufacturing Equipment 2021: $104.1B* Front end: $89.0B Assembly: $6.5B Test: $8.6B (86%) (6%) (8%) Assembly Process Dicing Die Attach Wire Bond Packaging Plating Leadframe Wire Bond - - Substrate Wire bond - - - Substrate Flip chip/TCB - - - Waf
Slide 11: Current Operational Profile
Current Operational Profile (NL) Duiven and ‘s-Hertogenbosch Steinhausen, Radfeld, (AT) (CH) Chandler Suzhou Chengdu Korea Shanghai Leshan Taiwan Shenzhen Sales Office Thailand Philippines Malaysia Production Site Singapore Sales and R&D Site LTM September 30, 2022 Europe/NA/RoW Asia • Development a
Slide 12: Summary Financials
Summary Financials Year Ended December 31, Long term, step function growth in cyclical business 2019 2020 2021 YTD-21 YTD-22 (€ millions, ex share data) • Increased revenue, profitability and market share per cycle Revenue 356.2 433.6 749.3 577.6 585.1 Strong upturn in 2021 despite supply chain disr
Slide 13: Through Cycle Revenue and Gross Margin Trends
Through Cycle Revenue and Gross Margin Trends € millions Revenue Gross Margin Gross Margin 800 70% 700 60% 58.0% 600 51.1% 749 720 50% 500 516 593 39.5% 40% 424 400 34.1% 379 30% 300 302 4 year 351 averages 20% 200 164 191 10% 100 0 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 14: Business Model Objectives
Business Model Objectives Revenue € 1 billion++ Addressable Market Share 40%+ Gross Margin 58-62% Net Margin 35-40+% Headcount Split 80% Asia/20% Europe/NA Scope 1 and 2 Emissions 60% reduction Global Energy Needs 65% from renewable sources October 2022 14
Slide 15: Capital Allocation Trends
Capital Allocation Trends 400 € 1.3 Billion Distributions Since 2011* 351.3 350 Dividends Share Repurchases 81.8 300 • Record € 351.3 million distributed YTD-22 250 209.5 € millions • € 185 million share repurchase 200 179.5 program completed: 35.5 167.1 • From July 2018-2022 150 50.1 • 5.1MM shares
Slide 16: II. Market Overview
II. MARKET OVERVIEW October 2022 16
Slide 17: What Drives Besi's Business?
What Drives Besi’s Business? Selection of Timing of Macro GDP IDM and supply customer trends chain partners roadmaps Meeting Performance in Competitive demanding 24/7 production cycle times and technical specs environments scalability October 2022 17
Slide 18: Assembly Equipment Market Composition
Assembly Equipment Market Composition Assembly Equipment Market (2021) Besi Addressable Market (2021) Plating Wire 1% Inspection, Bonding Dicing,Other 26% Packaging 30% 32% $6.5 billion $2.8 billion Plating 0% Die Attach 67% Packaging 14% Die Attach 29% Source: TechInsights, October 2022 October 202
Slide 19: Market Conditions Have Weakened Significantly Since Q2-22
Market Conditions Have Weakened Significantly Since Q2-22 Source: TechInsights, October 2022 October 2022 19
Slide 20: Assembly Forecast Also Revised Downwards for 2022 and 2023
Assembly Forecast Also Revised Downwards for 2022 and 2023 68.9% 80% 7.0 6.5 6.2 Market Size YoY Growth Rate 5.8 60% 6.0 5.0 Tech Insights forecasts $ 5.8 billion 5.0 4.6 4.5 40% market in 2022 (-10.6%) US$ billions 4.0 29.6% 3.8 23.0% • Growth rates for 2022 and 2023 3.2 20% 20.6% adjusted downward
Slide 21: Industry Inventory Correction Underway
Industry Inventory Correction Underway. Besi Downcycle Began in Q2-22 Many Headwinds Affect Near Term Orders: • Decelerating GDP growth/inflation-higher interest rates • Digestion capacity post 2020/2021 build • Weaker high-end mobile demand • Decelerating growth and Covid lockdowns in China • Slowi
Slide 22: Besi Addressable Market Share Increasing
Besi Addressable Market Share Increasing Particularly in Key Die Attach Markets 2016 2017 2018 2019 2020 2021 ∆ ‘21/‘20 ∆ ‘21/’16 Assembly Market ($MM) 3,587 4,648 4,546 3,186 3,843 6,522 +69.7% +81.8% Besi Market Share 9.9% 12.7% 11.2% 10.1% 10.7% 11.9% +1.2pts +2.0pts Addressable Market ($MM) 1,50
Slide 23: Leader in Addressable Market, Die Attach and Advanced Die Placement
Leader in Addressable Market, Die Attach Market and Advanced Die Placement Die Attach Advanced (82% of Revenue) Die Placement** Other 27% Besi 2021 Addressable Market* $1.6 Billion 41% $400 Other Million 59% Besi 73% Besi 33% $2.4 Billion Packaging & Plating (18% of Revenue) Other Besi 67% 14% $800
Slide 24: Growth Expected to Favor Besi's Product Portfolio
Growth Expected to Favor Besi’s Product Portfolio, Particularly Die Attach 7,000 CAGR (2020-2024) 6,490 Die Attach 18.2% 6,162 6,000 Packaging & Plating 11.8% 5,805 Other Assembly 10.1% 1,566 5,009 1,776 Besi 5,000 Total 12.4% 1,455 Addressable 799 Market 3,863 1,424 4,000 $ millions 716 768 911 624
Slide 25: Digital Society Drives Greater Computing and Data Needs
Digital Society Drives Greater Computing and Data Needs Technology Drivers 5G AI IoT On the road to augmented intelligence Imaging HD voice Augmented Driverless human processing Audio Motion sensing Olfactometry Disruptive technology Next gen Robot Hyper data Holographic assistant home interaction c
Slide 26: Semiconductor Growth Accelerating
Semiconductor Growth Accelerating $500 B sales over past ~50 years → $1.4T sales over next 10 years 1400 2030 Semi revenue > Projected Growth 2020-2030E 1200 $1 trillion 2020 2030 CAGR 1000 2018 Non- Machine generated data > $235B $678B 11.2% Memory human generated data 800 Semi revenue = $469 bn Me
Slide 27: Advanced Packaging Critical to Next Generation Applications
Advanced Packaging Critical to Next Generation Applications Growth Drivers Enablers Greater Mobile Revolution miniaturization • Mobile internet • Messaging • Social media Higher Greater • Shared economy accuracy complexity • Gaming • Geo-location • Audio/video Die Bonding and • Auto electronics Pack
Slide 28: Requiring Increased Density, Higher Accuracy and Smaller Form Factors
Requiring Increased Density, Higher Accuracy and Smaller Form Factors for Next Generation Devices Front-End Wafer Fab • Transistor scaling • Lithography • New 3D structures Source: Samsung Source: ASML 2021 Back-End Assembly • More contacts • Smaller pitches • Thinner, denser and more complex packag
Slide 29: Besi Portfolio Well Positioned by Node Size and Accuracy
Besi Portfolio Well Positioned by Node Size and Accuracy Estimated % of 2021 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 30: Why is Hybrid Bonding Important?
Why is Hybrid Bonding Important? Direct Cu-Cu Interconnect Ultra-High Bandwidth & Speed Eliminates need for interposer Results in smaller, thinner form factor Contact density increased by factor of 1000x by eliminating solder balls, & solder balls to design more complex devices reducing distance bet
Slide 31: Applications Driving Hybrid Bonding Growth
Applications Driving Hybrid Bonding Growth Logic Memory Sensors & Display Mobile October 2022 31
Slide 32: Slowing of Moore's Law Drives Adoption of Chiplet Architectures
Slowing of Moore’s Law Drives Adoption of Chiplet Architectures and New Assembly Solutions Problem Solution • Moore’s Law is slowing • Split the SoC into multiple, smaller chiplets • Some functions don’t shrink as node sizes reduce • Optimize scale per function • Connect chiplets within the package
Slide 33: New 3D Chiplet Structures Use Variety of Advanced Assembly Processes
New 3D Chiplet Structures Use Variety of Advanced Assembly Processes 1 2 3 3D Chiplet 5 Chiplet 4 Hybrid Bond Chiplet Bridge Die Interposer 6 Bridge Die Package Substrate 1 2 3 4 5 6 Chip to Wafer TCB Hybrid Bonding High Bandwidth Embedded Bridge Wafer Level HD Interposer to Memory Stacking Die Atta
Slide 34: New Chiplet Architectures Increase Process Steps/Capital Intensity
New Chiplet Architectures Increase Process Steps/Capital Intensity 2017 2019 2022 1st Gen EPYC 2nd Gen EPYC 3rd Gen EPYC 4 flip-chip placement steps 9 flip-chip placement steps > 30 die placement steps including hybrid and flip-chip Besi Process Solution: Source: AMD 8800 FC Quantum 8800 Ultra Accur
Slide 35: Estimated Timetable Per Application
Estimated Timetable Per Application 2022 2023 2024 2025 2026 2027 2028 Computing Consumer Servers Datacenters Memory/Mobile PC High performance Laptop Auto/Industrial computing High bandwidth memory Gaming High-end smartphone Artificial Intelligence Autonomous driving Entertainment Smart watch Vehic
Slide 36: Hybrid Bonding Adoption Gaining Traction
Hybrid Bonding Adoption Gaining Traction Hybrid Bonding Equipment Market Estimated 700 – 1,800 systems by 2030 Total # of installed back-end machines for hybrid bonding 2000 1800 High case • Hybrid now on radar of all major semi OSATS likely Cumulative Total: € 3.0B 1600 to follow when producers tec
Slide 37: III. End User Market Trends
III. END USER MARKET TRENDS October 2022 37
Slide 38: Besi End-User Markets
Besi End-User Markets Other Other 12% 10% Mobile Internet 39% Mobile Internet Spares/Service Spares/Service 43% 17% 13% 2020 Revenue 2021 Revenue Automotive Automotive 13% 13% Computing Computing 19% 21% Source: Company estimates October 2022 38
Slide 39: Mobile: Besi's Largest End-User Market
Mobile: Besi’s Largest End-User Market Besi Involved in Almost All Components RF Front End Antennas GPS RF Tranceiver Modem Local Connectivity WiFi/NFC Microphone Cameras Application Sensors Processor Display TouchScreen Power Lidar Battery Memory Source: Unitedlex.com and ifixit.com and System plus
Slide 40: Mobile: Increasing 5G Adoption is Primary Growth Driver
Mobile: Increasing 5G Adoption is Primary Growth Driver Will Generate New Smartphone Applications and Features Growth in new features and functionality requires new/advanced assembly systems to achieve higher performance and more compact form factors 5G rollout is progressing, still mid-cycle adopti
Slide 41: Computing Demand Expanding Rapidly
Computing Demand Expanding Rapidly Advanced computing expanding to many commercial applications Data volumes growing Primary driver: hyperscale cloud infrastructure buildout exponentially Information Created, Captured, HPC driving rapid innovation in chiplet assembly technologies Copied and Consumed
Slide 42: Automotive: Growth of EV and Autonomous Driving
Automotive: Growth of EV and Autonomous Driving Will Increase Semiconductor Content and Cost per Car Majority of cars produced by 2030 will have an EV drive train Almost all will have some level of autonomous driving IDC Automotive Semi Market Forecast ($ bn) Semiconductor content per car is increas
Slide 43: Spares/Service Activities Represent Important Area of Growth
Spares/Service Activities Represent Important Area of Growth Spares & Service % of Revenue 140.0 35% 120.0 • Has Increased to 15-20% of revenue since 2017 120.0 30% • Diverse customer base • Less cyclical part of business • Highly profitable 100.0 95.0 25% • Revenue will increase as installed base g
Slide 44: IV. Strategy
IV. STRATEGY October 2022 44
Slide 45: Summary Strategy
Summary Strategy Maintain best in class technology leadership Reward Expand shareholders presence in via capital wafer level allocation assembly policy Strategic Acquire Objectives Increase companies with market complementary presence in technologies addressable and products markets ESG Integration
Slide 46: Strategic Initiatives 2022
Strategic Initiatives 2022 Revenue Growth Initiatives Production/Supply Chain • Adjusting supply chain and HC to current trends Engine 1 Engine 2 • 13% HC reduction vs. Q1 • 65% reduction Asian temporary production staff Next gen high end Increase engagement • Ramp HB production. Reduce lead times s
Slide 47: Besi Well Positioned to Capture Next Generation Opportunities
Besi Well Positioned to Capture Next Generation Opportunities Multiple long term drivers for secular growth • Computing: Big data, AI, edge computing, photonics • Mobile: Continued roll-out of 5G, wearables, and deployment of mmWave 5G • Automotive: EV and autonomous driving Slowing of Moore’s Law d
Slide 48: Asian Production Transfer Has Improved Profitability and Cash Flow
Asian Production Transfer Has Improved Profitability and Cash Flow Leading to Lower And Reduced Break Asian Production Has Fixed European and Even Revenue And Improved Cash Significantly Expanded NA Headcount Levels Generation Shipments € millions € millions 2,000 99% 2,000 300 300 278 270 1,730 1,6
Slide 49: Flexible Production Model Has Generated Consistent Gross Margins
Flexible Production Model Has Generated Consistent Gross Margins in Market Cycles Revenue Gross Margin Gross Margin adjusted 250 80% 226.1 208.3 214.0 202.4 75% 200 171.7 168.8 70% Gross Margin % € millions 150 143.2 135.0 65% 109.7 100 62.1% 62.3% 61.0% 61.0% 61.0% 60.4% 60.1% 60% 58.3% 58.2% 56.7%
Slide 50: Flexible Asian Workforce Has Enhanced Scalability
Flexible Asian Workforce Has Enhanced Scalability Fixed Headcount 1,800 1,692 1,645 1,686 1,714 1,694 100% 1,534 1,523 1,600 90% 1,400 80% 1,200 Headcount 73% 70% 70% 70% 70% 70% 69% 70% 1,000 60% 800 50% 600 400 40% 200 27% 30% 30% 30% 30% 30% 31% 30% • Reducing temporary Asian 0 20% production HC
Slide 51: Structural, Through Cycle Outperformance vs. Peers
Structural, Through Cycle Outperformance vs. Peers Return on Average Equity 60.0 Gross Margin Δ Besi 2016 YTD-22 2016/ 50.0 YTD-22 Besi’s margins and ROE have exceeded direct peers through cycles: Besi 51.0% 59.7% 8.7pts 40.0 K&S* ASM PT • Investment in business model has 43.4% 44.1% 0.7pts yielded
Slide 52: Significant ESG Progress Achieved
Significant ESG Progress Achieved Process Pillar 2021 Progress Reduced Scope 1 & 2 and 3 emissions intensity by 27% and 4%, respectively Environmental Impact Relative reductions in fuel, energy, hazardous waste and water consumption Launched sustainable design initiatives for die bonding platforms A
Slide 53: ESG Ambitions and Targets
ESG Ambitions and Targets Key Targets 2022 Key Targets 2030 100% renewable sources for European 65% renewable sources for global energy needs energy needs 15% reduction in Scope 1 and 2 60% reduction in Scope 1 and 2 carbon emissions* carbon emissions* Above-benchmark employee engagement Reduce ener
Slide 54: V. Financial Update and Summary
V. FINANCIAL UPDATE AND SUMMARY October 2022 54
Slide 55: YTD-22 Revenue Up 1.3%, Net Income Down 6.9%
YTD-22 Revenue Up 1.3%, Net Income Down 6.9% Gross and Net Margins Remain Elevated Despite Downturn Q2-22/Q3-22 YTD-21/YTD-22 Revenue Net Income Revenue Net Income 240 700 € 214.0 - 21.1% + 1.3% € 585.1 600 € 577.6 200 € 168.8 Gross Margin Gross Margin 61.0% + 1.3 points 62.3% 500 60.5% + 0.6 points
Slide 56: Strong Cash Flow Generation Continues
Strong Cash Flow Generation Continues Cash and Net Cash Up 12.1% and 19.0% vs. Q3-21 800 Dividend Q3-22 vs. Q2-22 Cash and Deposits Net Cash € 270MM • Cash and deposits € 661.8 million up € 60.2 696.6 700 672.2 661.8 million (+10.0%) due to: • + € 112.7 million cash flow from operations 598.7 601.6
Slide 57: Guidance Q4-22 and FY 2022
Guidance Q4-22 and FY 2022 € in millions Q3-22 Q4-22 FY 2021 FY 2022E* -15% Revenue € 168.8 - € 749.3 -4% -25% Gross Margin 62.3% 60% - 62% 59.6% ~61% Operating Expenses € 34.0 ~+5% € 129.2 +14% -15% -15% * 2022E assumes midpoint of guidance for Q4-22 October 2022 57
Slide 58: Investment Considerations
Investment Considerations Assembly market Long term secular Disciplined strategic Wafer level assembly ever more critical in trends drive focus has created an new growth semiconductor value advanced packaging industry leader opportunity chain growth Market presence has Tech leadership and Commitment
Slide 59: VI. Appendix
VI. APPENDIX October 2022 59
Slide 60: IDM/Subcontractor Order Trends
IDM/Subcontractor Order Trends € millions IDMs Subcontractors 1,000 939.1 900 800 45% 685.8 700 Orders 600 483.1 39% 41% 53% 500 472.1 39% 400 32% 348.7 55% 300 61% 61% 39% 47% 55% 59% 200 68% 100 61% 45% - 2018 2019 2020 2021 LTM* * Last twelve months ended September 30, 2022 October 2022 60
Slide 61: Baseline Operating Expense Trends
Baseline Operating Expense Trends Baseline Opex Other Opex* Baseline Opex % of Revenue 60.0% 39.9 40.0 37.9 50.0% 34.9 Operating Expenses (€ millions) 33.6 9.4 4.7 34.0 0.9 40.0% 3.6 30.4 30.3 30.0 8.9 30.0% 23.3 33.2 33.1 21.3% 30.0 30.4 30.3 30.5 18.2% 19.6% 20.0% 20.0 17.6% 15.1% 15.5% 14.6% 26.0
Slide 62: Net Income Trends
Net Income Trends Quarterly Trends Net Income 100 € 93.5 Net Margin 60% Q3-22 vs. Q2-22 € 84.2 Adj. Net Margin • € 57.3 million (-€ 18.3 million) 80 € 75.6 • -21.1% revenue € 67.1 € 67.5 • +1.3 points gross margin 60 € 57.3 • - € 2.7 million share-based compensation € millions 41.3% 40.4% 39.1% 37.0
Slide 63: Cash Flow Efficiency Trends
Cash Flow Efficiency Trends € millions % of Revenue 350 300 287.1 277.9 37.4% 37.1% 37.9% 250 35.0% 33.7% 200 28.4% 184.1 168.2 162.0 150 120.1 100 50 0 2017 2018 2019 2020 2021 LTM Total Cash Flow from Operations As % of Revenue October 2022 63
Slide 64: Dividend Trends
Dividend Trends Cumulative dividends of € 975.1 million since 2011, or € 12.78 per share Dividend (€) Dividend Payout Ratio 3.50 100% 3.33 100% 98% 98% 3.00 96% 2.50 2.32 95% 94% 2.00 92% 1.67 1.70 90% 90% 90% 1.50 1.01 88% 1.00 86% 0.50 84% 0.00 82% 2017 2018 2019 2020 2021 Dividend Dividend Payout
Slide 65: Share Repurchase Activity
Share Repurchase Activity Share Repurchases Average Cost per Share 90 90.0 81.8 80 80.0 70 € 69.84 70.0 Avg Cost per Share 60 60.0 50.1 € 53.60 50 50.0 € millions 44.6 40 35.5 40.0 € 38.05 30 30.0 € 24.31 20 € 21.86 17.8 20.0 10 10.0 0 0.0 2018 2019 2020 2021 2022* • Approximately 1.5 million treasu
Slide 66: Besi Market Cap & Liquidity Has Expanded
Besi Market Cap & Liquidity Has Expanded Shareholdings Migrated from NL to US/UK over Past 5 Years Symbol/ • BESI Avg. Daily Volume and Liquidity Index • Euronext AEX Avg Vol * Avg Price (€ millions) 1,500 80 Market Volume (thousands) 60 1,000 Market • € 4.1 billion ($ 4.1 billion) 40 Cap* Profile 5
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