BE Semiconductor Industries N.V. · EURONEXT:BESI
BE Semiconductor Industries — Investor Day (June 2020)
76 slides from BE Semiconductor Industries's investor day presentation, Jun 18, 2020
Slide 1: Analyst Presentation June 18, 2020
ANALYST PRESENTATION June 18, 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 press release, including, but not limited to, statements relating to ex
Slide 3: Agenda
Agenda I. Strategic Overview Richard Blickman II. End Markets & Drivers Ruurd Boomsma III. Product Development Strategy Ruurd Boomsma IV. Strategic Initiatives Richard Blickman V. Capital Allocation Strategy Richard Blickman VI. Outlook & Summary Richard Blickman June 2020 3
Slide 4: I. Strategic Overview
I. STRATEGIC OVERVIEW June 2020 4
Slide 5: CEO Summary
CEO Summary H1-20 business prospects have surprised to upside • COVID-19 and US/China issues clouding recovery post assembly market correction • Structural advantages in business model continue vs. peers through market cycles Next investment round targeted for 2021-2023 • Featuring 5G rollout and ne
Slide 6: Revenue and Gross Margin Cycles Since 2006
Revenue and Gross Margin Cycles Since 2006 € millions Revenue Gross Margin Gross Margin 700 60% 56.8% 56.8% 55.8% 600 51.1% 50% 593 500 39.5% 40% -40.0% 424 400 34.1% 379 30% 356 4 year 300 302 averages 351 +12.8% 20% 200 164 196 174 191 10% 100 0 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 7: Increased Profitability vs. Last Market Downturn
Increased Profitability vs. Last Market Downturn 2015 2019 € millions 140 +2.0% 350 356.2 349.2 120 25.8% 100 Operating Income 300 91.9 Revenue +58.7% 80 16.6% 60 57.9 250 40 20 200 0 Revenue Operating Income June 2020 7
Slide 8: Flexible Production Model Has Generated Consistent Gross Margins During Market Cycles
Flexible Production Model Has Generated Consistent Gross Margins During Market Cycles Revenue Gross Margin 180 170 100% 159 161 Downturn COVID 160 153 155 19 90% 140 80% 120 117 110 € millions 105 Gross Margin % 100 93 93 92 70% 90 91 81 80 58.7% 58.0% 55.7% 57.3% 56.3% 56.5% 56.5% 56.4% 55.9% 56.0%
Slide 9: And Helped Increase Through Cycle Margin Variance vs. Peers
And Helped Increase Through Cycle Margin Variance vs. Peers Gross Margin Operating Margin Variance Variance Q1-16 Q1-17 Q1-18 Q1-19 Q1-20 Q1-16/ Q1-16 Q1-17 Q1-18 Q1-19 Q1-20 Q1-16/ Q1-20 Q1-20 Besi 49.2% 55.7% 56.5% 55.9% 56.7% 7.5% Besi 12.2% 28.0% 31.4% 18.1% 20.6% 8.4% ASMPT ASMPT 39.9% 46.6% 44
Slide 10: 2020 WFE Spending Upgraded to Roughly Flat vs. 2019
2020 WFE Spending Upgraded to Roughly Flat vs. 2019 Source: VLSI May 26, 2020 • Significant upward revision in Q2-20 post Q1 earnings • Continued strength in logic/cloud applications • Offset by weakness in memory, discrete and analog • Automotive applications particularly weak Source: VLSI May 26,
Slide 11: WFE Recovery Influenced by COVID-19 Outbreak
WFE Recovery Influenced by COVID-19 Outbreak Source: VLSI June 15, 2020 June 2020 11
Slide 12: Assembly Market Set to Rebound in 2020 Despite Challenges
Assembly Market Set to Rebound in 2020 Despite Challenges 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 202
Slide 13: Market Update
Market Update Current Environment Looking Forward • Assembly market turned upwards in Q4-19 • Volatile situation. H2-20 difficult to predict post ~35% downturn (2017-2019) • VLSI expects rebound in 2021-2023 • Recovery interrupted by COVID-19 • Assembly market fundamentals very strong • Recent uptur
Slide 14: COVID-19 Update
COVID-19 Update Business Fully Operational • Malaysia and China back to normal. Singapore: Open, most staff working remotely • European facilities open, R&D, product management, sales staff returning to office Production Cycle Functioning • Supply chain activities back to normal, minor difficulties
Slide 15: Impact of US/China Trade Dispute
Impact of US/China Trade Dispute Conflict Reshaping Export Controls Focus Manageable China Global Semiconductor on Front End Exposure Supply Chains Equipment So Far • Seeing customer shift to • Besi US parts content • 2019 China revenue of ~ other SE Asian locations below current proposed € 112.1 mi
Slide 16: 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 17: Financial Performance Improved in H1-20
Financial Performance Improved in H1-20 (€ millions, except share data) Q1-19 Q1-20 H1-19 H1-20* Revenue 81.4 91.3 174.1 196.3 % seq. change +12.2% +12.8% • H1-20 revenue guided +13% vs. H1-19 Gross margin 55.9% 56.7% 56.5% 56.8% • Renewed mobile investment • Continued demand for logic/cloud applica
Slide 18: 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 June 2020 18
Slide 19: II. End Markets & Drivers
II. END MARKETS & DRIVERS June 2020 19
Slide 20: 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 21: Importance Recognized in 1965 by Gordon Moore
Importance Recognized in 1965 by Gordon Moore Gordon Moore’s Original Publication April 1965 Quotation in Electronics (April 1965) Source: Intel June 2020 21
Slide 22: Key Players Also Recognize Importance of Advanced Packaging
Key Players Also Recognize Importance of Advanced Packaging in Designing Next-Generation Devices June 2020 22
Slide 23: Value of Packaging Content Increasing In Semiconductor Devices
Value of Packaging Content Increasing In Semiconductor Devices 30 YEARS 1990-2020 30 YEARS 1990-2020 8-FOLD 12-FOLD Decreasing Node Size Increases Value of Packaging Content Source: ASE 3D Conference 2020 June 2020 23
Slide 24: Besi's Product Strategy Has Consistently Focused on Advanced Packaging
Besi’s Product Strategy Has Consistently Focused on Advanced Packaging Process Knowledge Extreme Precision Placement Optical System Development Very Fast Real Time Software At very high speed Metrology and Vision Mechatronics June 2020 24
Slide 25: Which Has Contributed to Operational/Financial Excellence
Which Has Contributed to Operational/Financial Excellence • FAST TIME TO MARKET NEW IPHONE MODEL RAMPS • FAST PRODUCTION RAMPS • SHORT DEVELOPMENT CYCLES FOR NEW PACKAGES AND APPLICATIONS Source: gsmarena.com June 2020 25
Slide 26: 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 27: 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 Work at Home Charging Medical Electrifi
Slide 28: Mobile: 5G Mass Market Rollout is Happening
Mobile: 5G Mass Market Rollout is Happening Nr of IOT connected objects June 2020 28
Slide 29: Mobile: New 5G Communications Structure Being Developed
Mobile: New 5G Communications Structure Being Developed Wider Spectrum enables increased- and faster- data transfer Requiring increased investment in network infrastructure As well as new, advanced receiving and transmission components in handsets Source: Skyworks June 2020 29
Slide 30: Mobile: Requires New, Higher-Speed Handset & Network Components
Mobile: Which Requires New, Higher-Speed and More Complex Handset & Network Components For 5G Network Expansion For Next Generation 5G Phones Source: Infineon New Infrastructure Devices Besi Infrastructure Customers Being Developed June 2020 30
Slide 31: Mobile: 5G Will Facilitate Edge Computing
Mobile: 5G Will Facilitate Edge Computing and Enable Many New Features & Applications Global edge computing market growing CAGR ~40% Substantial growth market for advanced computing devices Nvidia Edge Computing Google Intelligent IoT Edge Device June 2020 31
Slide 32: Computing: Data Generation Growing Exponentially
Computing: Data Generation Growing Exponentially In 2025 150 B IoT Devices 59 ZB in 2020 26% CAGR 10% Original Data June 2020 32
Slide 33: Computing: Advanced Computing & HPC Another Area of Growth
Computing: Advanced Computing & HPC Another Area of Growth Advanced computing used in many of the fastest growing or largest sections of the economy Cloud Computing Automotive Manufacturing Healthcare Gaming $ 230B $ 10T $ 14T $ 7T $ 150B COMPUTING POWER FAST DATA TRANSFER AI VISION GRAPHICS ALL BAS
Slide 34: Computing: Data Growth Requires More Powerful & Efficient Devices
Computing: Data Growth Requires More Powerful & Efficient Devices Next-generation processors more powerful Advanced packaging key enabler for leading- Future Ideas and energy-efficient edge devices NVIDIA A100 TSMC 7 nm CoWoS 54 Bio Transistors HBM2 1.6 Tb/s CoWoS AMD EPYC June 2020 34
Slide 35: Computing: Ever Increasing Computing Power Requires New Packaging Solutions
Computing: Ever Increasing Computing Power Requires New Advanced Packaging Solutions Increasing die size is not the solution CURRENT CHIPLET BASED TECHNOLOGIES CHIPLETS ON VERTICAL STACKING Chiplet usage is new trend ADVANCED SIP MCM ACTIVE INTERPOSER AMD LETI INTEL Source: TSMC & VLSI Symposium 202
Slide 36: Automotive: Electrification Will Drive Growth for Power Semiconductors
Automotive: Electrification Will Drive Growth for Advanced Power Semiconductors Electrical car sales growing strongly Increase in EV volume will generate Electrification major growth factor substantial growth in power devices By 2040, EV market larger than conventional $ Mio Many new EV models i
Slide 37: Automotive: Autonomous Driving Will Increase Demand for Complex Packages
Automotive: Autonomous Driving Will Increase Demand for More Complex, Feature-Driven Packages AUTONOMOUS DRIVING Investments ongoing Growth slower than anticipated due to complexity and need for collaboration Requires further progress in sensor technology, advanced computing and network develo
Slide 38: III. Product Development Strategy
III. PRODUCT DEVELOPMENT STRATEGY June 2020 38
Slide 39: Key Development Projects
Key Development Projects 2019 Activities 2020 Activities • Developing nano-accurate hybrid die bonding • Developed and shipped first nano-accurate system hybrid die bonding system with excellent initial results • Designing next generation TCB system • Continue development of MicroLED applications •
Slide 40: 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 41: What is a Hybrid Die Bond?
What is a Hybrid Die Bond? Hybrid Bond provides strong adhesion using very flat oxide surfaces BUMPLESS INTERCONNECT 1 Preparation • CMP Polishing • Very flat surfaces < 5nm • Surface activation • Very clean 2 Bonding • Accurate placement • Bond at room temperature • Based on initial dielectric bond
Slide 42: Hybrid Die Bonding: Superior Performance vs. FC & TCB
Hybrid Die Bonding: Superior Performance vs. FC & TCB. Enables New Device Structures Superior Performance Hybrid Bonding Move to front end-like processes facilitates next level of device integration Better thermal performance Attractive overall cost Better reliability More attractive than FC
Slide 43: Hybrid Die Bonding: Besi High-Accuracy, High-Speed System
Hybrid Die Bonding: Besi Has Developed a Very High-Accuracy & High-Speed System for 24/7 Production Proprietary Active-Controlled Bonding Method Besi’s hybrid bonding system can become Industry’s tool of reference Most accurate production system currently available Hybrid Bonding: Currently Real
Slide 44: Hybrid Die Bonding: Significant Total Market Potential
Hybrid Die Bonding: Significant Total Market Potential HYBRID BONDING EQUIPMENT MARKET Estimated 700-1,400 systems by 2030 Cumulative Total: € 2.0B Start replacements Other IDMs and of initial machines Cumulative Total: € 1B OSATs likely wait until technology Initial adoption driven matures by TSMC,
Slide 45: MicroLED: Another Emerging Growth Opportunity
MicroLED: Another Emerging Growth Opportunity Watches and Phones VR and AR Applications Larger Size and TV and TV+ June 2020 45
Slide 46: MicroLED: Basics
MicroLED: Basics LCD DISPLAY OLED DISPLAY MICROLED DISPLAY TWO BASIC METHODS FOR LIQUID CRYSTAL DISPLAY ORGANIC LIGHT EMITTING VERY SMALL SEMI- MICROLED PRODUCTION DIODE CONDUCTOR DIODES MASS TRANSFER MONOLITHIC MicroLED 10-50µm WELL ESTABLISHED WELL ESTABLISHED EMERGING TECHNOLOGY LOW COST MEDIUM C
Slide 47: MicroLED: Besi Has Two Concepts Currently in Development
MicroLED: Besi Has Two Concepts Currently in Development For Mass Transfer of Individual MicroLEDs For Monolithic MicroLEDs System based on Besi’s Jumbo concept Utilizing Besi’s next generation TCB or hybrid bonding system Very precise placement over wide area Potential application most like
Slide 48: Product Portfolio Review
Product Portfolio Review June 2020 48
Slide 49: Die Attach: EVO
Die Attach: EVO 2200 Series EVO Over 6,400 installed: Most succesful MCM Key competitive advantages system in industry Accuracy and high speed 3 µm accuracy available Multi-die, multi-wafer Extremely broad application field Rapid R&D to production Can be configured serially New developme
Slide 50: Die Attach: 2100 Epoxy Die Bonding Systems
Die Attach: 2100 Epoxy Die Bonding Systems Over 3,300 installed: Key competitive advantages Most succesful epoxy High accuracy and speed system in industry Very high control of bond line thickness High level of self diagnostics and machine learning New ultra-thin die ejector New confocal i
Slide 51: Die Attach: High Speed Flip Chip and Fan Out
Die Attach: High Speed Flip Chip and Fan Out 8800 FCQ High Speed Key competitive advantages Based on 8800 Series (1,000+ delivered) Delivers highest speed on market Minimal die hand over by novel quatro principle New die ejecting mechanism offering up to 4 die eject at same time New developm
Slide 52: Die Attach: Soft Solder 2009-2100 Series
Die Attach: Soft Solder 2009-2100 Series Key competitive advantages Best-in-class soldering system Defacto industry standard Continuously upgraded High bond force Plasma pre treatment Fully automotive qualified including traceability New developments 2020 Full 2100 based Soft Solder Sy
Slide 53: Die Attach: TCB Large Die System
Die Attach: TCB Large Die System Next generation system Market introduction expected end 2020 Developed for logic applications Competive Advantages Both chip-to-substrate and chip-to-wafer Very high precision High productivity Up to 70mmx70mm die size Ultra-low gas usage Target Markets
Slide 54: Die Attach: Large Panel
Die Attach: Large Panel 8800 Large Panel System Key competitive advantages Largest Area 650x720 mm Global Accuracy 1.5 µm Local accuracy below 1 µm Unique Measurement Frame Capable of using all Besi 8800 bondheads High Speed with special cooled linear motors New developments 2020 Impro
Slide 55: Packaging: AMS LM Molding System
Packaging: AMS LM Molding System Key competitive advantages Most cost effective system in industry Standard for thin die molding Exposed die molding (90% mkt share) Dynamic clamp force control Board thickness variation compensation Double sided molding and foil assisted molding Over 325
Slide 56: Packaging: AMS LM Molding System
Packaging: AMS LM Molding System 5G Applications Wearables Utilized in many advanced SiP packages June 2020 56
Slide 57: Packaging: Wafer Level Molding FML
Packaging: Wafer Level Molding FML Key competitive advantages Installed base of ~15 No die swim Industry standard for Narrow gap filling < 50 µm wafer molding Dynamic clamp force control Mold planarity below 5µm High precision placement 150-ton capability New developments 2020 Improved
Slide 58: Packaging: FCL High Precision Trim and Form
Packaging: FCL High Precision Trim and Form Key competitive advantages Over 1,050 installed Handles most complex HD leadframes Fast configuration Full product traceability Fully modular Many off load configurations Complete vision inspection Laser marking module Selective punching Ne
Slide 59: Plating Systems
Plating Systems Installed base of over Key competitive advantages 820 systems Very efficient chemical usage Industry standard for High precision plating leadframe plating Also in solar version available for HE cells New developments 2020 Upgraded selective litho system New efficient power
Slide 60: Technology Summary
Technology Summary • Advanced packaging is only solution for ever smaller, thinner, more complex, dense and multi-function devices • Assembly process step is now an important gating item. Specifications more like front-end • Value of packaging content increasing in devices. Decreasing node size incr
Slide 61: IV. Strategic Initiatives
IV. STRATEGIC INITIATIVES June 2020 61
Slide 62: 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 63: 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 64: 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 65: 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 66: 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 67: V. Capital Allocation Strategy
V. CAPITAL ALLOCATION STRATEGY June 2020 67
Slide 68: Strong Liquidity Position Underpins Capital Allocation Policy
Strong Liquidity Position Underpins Capital Allocation Policy Cash and Deposits Net Cash 600 527.8 507.5 € 122.4 MM Solid Liquidity Base: 500 475.5 Dividend 2018 • Cash/deposits grew to € 427.6 million Q1-20 408.4 427.6 • Net cash up by € 18.0 million (+13.8%) to 400 383.7 € 148.3 million 361.7 • Un
Slide 69: Capital Allocation Trends
Capital Allocation Trends € millions 209.5 € 732.0 million distributions since 2011 200 35.5 Dividends Share Repurchases 167.1 150 44.7 100 88.8 174.0 79.1 67.4 23.5 5.6 122.4 22.0 50 73.5 65.3 45.4 0 2016 2017 2018 2019 2020* 7% 17% 33% 26% 27% 67% 74% 83% 73% 93% * Includes dividend payment of € 1
Slide 70: Dividend Trends
Dividend Trends Dividend (€) Cumulative dividends of € 578.3MM since 2011, or € 7.74 per share* Dividend Yield 3.00 120% 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* * Calcula
Slide 71: Share Repurchase Activity
Share Repurchase Activity 50 40.0 44.7 45 35.0 € 33.27 40 • € 72.1 million purchased under 30.0 35.5 current € 75 million program 35 • 3.2 million shares Avg Cost per Share 25.0 30 € 23.74 € 24.31 • Average price € 22.51 € millions € 21.79 • € 5.6 million YTD June 15 (170k 25 22.4 22.8 20.0 shares)
Slide 72: Peer Group Capital Allocation vs. Return on Equity
Peer Group Capital Allocation vs. Return on Equity 1,600 Capital Allocation Return on Average Equity 2013-2019 45.0 1,356 1,400 • Direct peers allocated € 0.5 – 40.0 € 1.4 billion of capital since 2013 1,200 35.0 • Besi skewed towards dividends 1,000 (68%) 30.0 • PT 43% € millions 800 714 • K&S 7% 2
Slide 73: VI. Outlook & Summary
VI. OUTLOOK & SUMMARY June 2020 73
Slide 74: Guidance Q2-20
Guidance Q2-20 € in millions Revenue Gross Margin Operating Expenses -10% € 91.3 +5% - 56.7% 56%-58% € 33.0 - -15% +25% Q1-20 Q2-20 Q1-20 Q2-20 Q1-20 Q2-20 -15% -15% June 2020 74
Slide 75: 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 76: Financial Calendar
Financial Calendar 18-Jun-20 Analyst meeting, webcast 28-Jul-20 2020 Second Quarter Results 3/4-Sep-20 DB European TMT conference, virtual 7/11-Sep-20 KeplerCheuvreux/Rabobank Autumn conference, virtual 22-Oct-20 2020 Third Quarter Results 18/20-Nov-20 Morgan Stanley TMT conference, virtual 24/25-No
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