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Edited Transcript of KLIC earnings conference call or presentation 30-Jan-20 1:00pm GMT

Q1 2020 Kulicke and Soffa Industries Inc Earnings Call

Jan 30, 2020 (Thomson StreetEvents) -- Edited Transcript of Kulicke and Soffa Industries Inc earnings conference call or presentation Thursday, January 30, 2020 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Fusen Ernie Chen

Kulicke and Soffa Industries, Inc. - President, CEO & Director

* Joseph Elgindy

Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning

* Lester A. Wong

Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer

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Conference Call Participants

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* Christian David Schwab

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* David Duley

Steelhead Securities LLC - Managing Principal

* Krish Sankar

Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

* Peter Peng

B. Riley FBR, Inc., Research Division - Associate Analyst

* Thomas Robert Diffely

D.A. Davidson & Co., Research Division - MD & Senior Research Analyst

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Presentation

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Operator [1]

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Greetings, and welcome to the Kulicke & Soffa 2020 Fiscal First Quarter Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It's now my pleasure to introduce your host, Joseph Elgindy, Senior Director, Investor Relations and Strategic Initiatives for Kulicke & Soffa. Joe, please go ahead.

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Joseph Elgindy, Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning [2]

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Thank you. Welcome, everyone, to Kulicke & Soffa's First Quarter Fiscal 2020 Conference Call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer; and Lester Wong, Chief Financial Officer and General Counsel.

For those of you who have not received a copy of today's results, the release as well as the latest investor presentation are both available in the Investor Relations section of our website at investor.kns.com.

In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a complete discussion on the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K, for the year ended September 28, 2019.

I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [3]

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Thank you, Joe. Throughout the December quarters, we experienced expected seasonal softness in the general semiconductor market which has been more than offset by our resurgence in the demand for our advanced packaging, memory, and the automotive-focused solutions.

In addition, during this year at the recent CES event in Las Vegas we were pleased to see the strong alignment and relevance our broad equine offering have, with new and future consumer devices.

I will provide more detail to this later, but first a review of the December quarter. Over the past several years, our sequential revenue changed, December over September has averaged a 14% sequential reduction. This year was quite different in that we were able to generate $144.3 million of revenue, representing a slight 3% sequential improvement. We were also able to deliver a very strong gross margin of 48.8%, net income of $13.5 million and a GAAP EPS of $0.21.

The revenue improvement was driven by both capital equipment and aftermarket products and the service segment. Again, due to improved demand for our advanced packaging, memory and the automotive-focused systems.

General semiconductor and a general LED-focused customers represent 57% of our December quarter sales, which was sequentially down by approximately 15%, that include a larger proportion of our feature-rich (inaudible) of ball bonders.

Our dedicated advanced packaging solution represent 17% of December quarter sales, an increase of 29% sequentially.

During the December quarter, our APAMA business has strengthened. We had a new APAMA customer win. We are engaged in multiple qualifications with Katalyst, and that we continue to exceed our plan target for PIXALUX, our mini and microLED systems.

Memory represents just over 10% of December quarter revenue, a material increase of nearly 200% sequentially.

Demand within automotive and the industrial application represent approximately 20% of December quarter's revenue, an increase of roughly 24% sequentially. This was driven by traditional automotive OEM customers and the new demand for battery assembly capacity.

Why key markets, such as memory, automotive, have improved? We do not believe that this market has fully recovered, and that we anticipate additional improvements through fiscal 2020. Overall, healthy utilization rate and aftermarket sales as well as meaningful improvement within key automotive and memory end markets increase our confidence in an ongoing market recovery, which we expect to improve further throughout fiscal 2020.

Ongoing market traction within our dedicated advanced packaging systems, including our mini and microLED solution add confidence to our longer-term revenue target.

I would now like to turn the call over to Lester Wong who will cover this quarter's financial overview in greater details. Lester?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [4]

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Thank you, Fusen. My remarks today will refer to GAAP results unless noted.

Net revenue for the quarter was $144.3 million, gross margins of 48.8%, generated $70.4 million of gross profit and net income of $13.5 million or $0.21 per diluted share.

Gross margins came in better than expected, largely due to product mix. This mix includes a higher relative contribution of our APS business, stronger feature-rich ball bonder demand as well as a few higher margin advanced packaging sales.

Looking into next quarter, we anticipate gross margin to return to approximately 45%. We expect product mix to drive this reduction, which includes increased LED sales and a lower proportion of APS relative to capital equipment.

Operating expense again came in more favorably than our expected target range. This is due to an ongoing and focused effort on discretionary and noncritical costs.

Looking into March quarter, we anticipate returning to our target range of $53 million of fixed expense plus 5% to 7% of variable expense tied to revenue.

Turning to tax. We booked a net tax expense of $2.1 million, an improvement from last quarter. We continue to target a long-term average effective tax rate of approximately 18%.

Turning to the balance sheet. We ended the December quarter of a total net cash and investment position of $540.4 million or $8.43 on a diluted share basis.

During the December quarter, we have continued our repurchase activity and deployed $5.4 million to repurchase 224,000 shares.

At the end of our December quarter, we had approximately $91.8 million remaining under the existing share repurchase authorization.

On a book value per share basis, we closed the December quarter with $12.09, an increase of $0.06 from the September quarter.

Working capital, defined as accounts receivable plus inventory, less accounts payable reduced to $249.1 million.

From a DSO perspective, our days sales outstanding decreased from 126 days to 124 days. Our days sales in inventory increased from 108 days to 116 days and days of accounts payable increased from 44 days to 55 days. This concludes the financial review portion of our call.

I will now turn the discussion back over to Fusen for the March quarter business outlook.

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [5]

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Thanks, Lester. From our standpoint, low semiconductor unit volume have caused the demand for our products to be below the longer-term seasonal patterns due to broader industry and macro trade dynamics.

Over the past decade, annual semiconductor unit production grew at a compound annual growth rate of just over 6%. Over the past year, we believe the industry has expanded at a much slower rate.

Looking ahead, IT capabilities, artificial intelligence, new IoT devices, the growth in big data and automotive evolution are anticipated to a serious semiconductor unit growth to a rate well above this historical 6% average. This anticipated growth is very positive for our unit-driven products, supporting the general semiconductor in the LED space.

In addition, our new market opportunities are disruptive and are expected to grow much faster than the industry as they provide a very compelling value proposition relative to existing approaches. This is apparent in the display market as well as within advanced logic and memory applications.

Over the past few years, we improved our organization, expanded our self-available market with new innovative and extremely competitive offering to become a true multiple products and a multiple market company.

This added diversification is critical and provides a higher growth opportunity that are delivering fundamental new capabilities, are less exposed to inherent cyclical nature of semiconductor unit production and have the potential to dramatically enhance corporate level profitability.

Considering these efforts, we are now entering a very exciting time. Our new products are gaining traction, and we believe the recent period of software demand is behind us. While we remain very confident in the longer term, short-term uncertainty triggered by extended facility closures throughout China has caused us to broaden our guidance range.

For the March quarter, we are anticipating revenue to be between $140 million and $170 million. This marks the fourth sequential quarter of revenue improvements, represents over a 7% increase from the December quarters and a 34% improvement from the same period last year.

Looking to long term. All brought solution are increasingly aligned with major semiconductor packaging trends, as well as a trends that are likely to impact the broad consumer market. The Consumer Electronics Show in Las Vegas this month helped to highlight these new possibilities.

We are not going to provide a detailed summary, although it's clear right from toothbrush to toilet to oven to television, there is a growing appetite for connected semiconductor rich devices.

New devices, in addition to faster and higher bandwidth connectivity service, like 5G, will drive more streaming, crawl processing and artificial intelligence applications.

Over the coming years, we are confident this new technology will support an increased growth rate of global semiconductor production and drive increased demand for our products and services.

In parallel, we continue to make meaningful progress with our new advanced packaging products. These new products continue to represent fundamental long-term market opportunities, providing more collaborative customer engagement, increased diversity and a new growth vector.

The key products providing these new opportunities, including APAMA, our thermo-compression system, Katalyst, our High Accuracy Flip Chip system and the PIXALUX, our Mini and the microLED systems. We continue to achieve an aggressive growth rate in parallel for all of this new initiative.

For Katalyst, we are working aggressively to win new customer qualification and continue to receive positive customer feedback.

Specifically, our Katalysts have begun to ramp production in the high volume, leading-edge large application this past quarter.

Katalyst continues to be extremely competitive, and we are very focused to achieve new customer engagement and qualification over the coming quarters.

Next, we were able to recognize the revenue on 2 APAMA systems in this quarters. APAMA has been long in production at a major offset for several quarters, supporting our high-volume smartphone application. And we were recently able to penetrate a new high potential image sensor application. Our customers continue to leverage thermo-compression technology for applications we hadn't initially anticipated such as a more complex modular chip packages and also image sensor.

Our system is performing very well in high-volume product environments and remains very competitive. More recently, we have also engaged in a longer-term technology collaboration with high potential customers, which further diversifies our end market opportunities.

Finally, the PIXALUX advanced LED system continued to perform well, and we recognized revenue on 5 additional systems supporting new direct-view and backlighting applications within the display market. We continue to operationally prepare for PIXALUX demand to begin ramping materially during the second calendar half and anticipate this new opportunity to expand considerably through calendar 2021 and beyond.

PIXALUX and advanced packaging tool are all extremely competitive. And our global team continues to engage and drive new customer adoption. Over the coming years, we anticipate the pace of new customer engagement and the demand for our products to increase meaningfully.

Overall, we are very excited to demonstrate our value creation potential as we pursue these new opportunities in coordination with the expected industry recovery over the coming quarters. The entire K&S organization remain extremely committed as we execute our strategy of creating and delivering shareholder value.

This concludes our prepared remarks. Operator, we will now be happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question today is coming from Tom Diffely from D.A. Davidson.

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [2]

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First of all, I'll start on the coronavirus. It sounded like the impact of the unknown from the Coronavirus caused you to reduce the low end of your guidance by about $10 million. Is that a good way to read it?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [3]

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So Tom, actually, this actually is very difficult to quantify. But all we can tell you is, so far, we did not see any order push or cancellation in March quarters. But this extended facility closure actually didn't impact our production in China. So -- but the impact actually is manageable at this moment. And we need to monitor, the producer shutdown will be fully extended or not. And -- but what I can tell you is that demand actually is quite strong. So as long as people come in to work, our future is still very bright for us. And this phenomenon should be gone. Our company -- we actually saw the case like SARS, sitting against the growth rate.

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [4]

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Okay. And then last quarter, we talked about -- you talked about how the utilization rates in China were upwards of 90%. Are you still seeing that high-level utilization rates with your tools in the field there?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [5]

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Tom, it's Lester. So China has softened slightly. I think it's more seasonal softer semiconductor segment. Taiwan has strengthened a little bit. So I think China is -- it's still around 90%, while Taiwan has improved a little bit, closer to 80% now.

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [6]

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Okay, great. And then just a couple of questions on the new products. You talked about the image sensors being a new market you penetrated here. What is the size or opportunity in that marketplace?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [7]

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I'm sorry, what product? Can you repeat, please?

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [8]

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Yes, the APAMA for the image sensor market?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [9]

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Okay. So actually, I think for the new product, I can't probably give a bigger high level update. I think this year, the second half, we prepared the launching for the PIXALUX. And really it depends on the precise schedule. We are targeting 5% to 10% of calendar revenue so that is about maybe $35 million to $70 million. And we believe this product has a lot of potential because of -- there will be a lot of devices that would need to have a Mini-LED applications. So we are positive about PIXALUX.

And this is a year we believe is very important for our advanced packaging. We have multiple qualification ongoing for our Katalyst free chip and also APAMA TCB. So APAMA successful qualification and the design wins, we expect to ramp out R&D in 2021. So that's our focus. I think this is going to be year 2020 to ramp PIXALUX and 2021 to ramp AP, including our free chip in APAMA. And APAMA right now, I think we have more and more customers, starting from one of our major customers, and right now, we're starting to penetrate a few other customers.

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [10]

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Okay, great. And then finally, when you look at...

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [11]

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Oh, I think -- probably you were talking about imaging sensor. I think we are talking about maybe -- in 2021 and beyond, we're talking about maybe $30 million, roughly like that.

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Thomas Robert Diffely, D.A. Davidson & Co., Research Division - MD & Senior Research Analyst [12]

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Okay. That's helpful. And then as we look at the ramps of some of these new products. Lester, I'm wondering on the margin side. Are these accretive to margins? Or do they hit margins a little bit? How do how do you view margins as we roll into some of these new product strengths?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [13]

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Well, Tom, I think as we roll the new products, I think we've indicated before, the newer products, whether it is advanced packaging or Mini or microLED, their margins are above the corporate margin. So they definitely should be accretive to margins.

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Operator [14]

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Next question is coming from Krish Sankar from Cowen & Company.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [15]

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First question, either for Fusen or Lester, how much was China as a percentage of sales in December? And how do you -- how much do you expect it to be in March?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [16]

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China in December quarter was about 53%. And in March, we believe it will be above the range.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [17]

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Got you. And Lester, since you kind of highlighted that March, the mix shifts more towards LED, that's one of the reasons why you see a slight impact or negative impact on gross margin. Is it fair to assume pretty much all the LED business is coming from China?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [18]

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Yes.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [19]

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Got it, got it. All right. And then a question for Fusen. I think in the past, you've spoken about the microLED opportunity being maybe around -- but like a $50 million in calendar '20. Is that still the case?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [20]

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Yes. I think the ramp is going to happen in calendar second half. So it really depends on the precise schedule, right? We haven't -- the schedule can be earlier, and can be pushed, let' say, a couple of weeks. So it really depends on our precise schedule. And we are targeting maybe between $35 million to $70 million for the whole calendar year. Upon successful implementation to the market, hopefully, '21 and beyond can be bigger.

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Krish Sankar, Cowen and Company, LLC, Research Division - MD & Senior Research Analyst [21]

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That's very helpful. Then just a final question. Fusen, I know, when I look at the auto industrial, you said it was like 20% of the mix. In the past, some of these auto business you had, like -- actually is extremely lumpy. It comes up and then like goes away for a few quarters at a time. Is there anything different this time? Or do you think the auto market is more sustainable for you?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [22]

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Well. So as you know, we are quite positive about auto business in the long term. Because of a few things: one is that semiconductor content per vehicle is going to increase, right? And number two, I think they are mainly along the battery packaging and assembly, (inaudible). So at the beginning, you will always see it lumpy, and we believe at a longer-term, this should average out. So I do agree. I think, for the past few quarters, it will be lumpy, but for the longer term, I think we are quite confident in all of our strengths.

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Operator [23]

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My next question today is coming from David Duley from Steelhead Securities.

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David Duley, Steelhead Securities LLC - Managing Principal [24]

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I had a couple. You've talked on the last couple of conference calls about the ramp-up in PIXALUX and how it should produce, I guess, $35 million to $70 million in this upcoming year. Why -- you seem highly confident about that ramp happening. What is it that gives you confidence that you will see that level of business with this new product?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [25]

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Okay. I think we have a few customers, right? And we work closely with them. And just like any other business, they have a trend as we're working together and come out forecast. So I think this really depends on the real product introduction schedule. And it can be pushed ahead, maybe a few weeks or pushed back a few weeks, really still a little bit of modification. That's why. But mainly, they're going to -- it's going to happen in the second half of calendar year.

And as you can see, this quarter, we recognized the revenue of [5] systems. So at the beginning, I think right now customer ordered a system for a pilot production. And upon (inaudible) over a year, the volume production is going to happen, and that will be the second half for calendar year.

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David Duley, Steelhead Securities LLC - Managing Principal [26]

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And what are the lead times on that tool? If the end market product is going to ramp in the second half of the calendar year, will they be ordering -- what are the lead times?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [27]

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Well, actually, from a order to deliver, I think, it will be a few months. Few months means when you have 2 months. Something like that.

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David Duley, Steelhead Securities LLC - Managing Principal [28]

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Okay. And then you mentioned in your prepared remarks and gave a lot of data about the automotive and the memory market recovering for you in a very substantial way. Is there some reason why it jumped so much? Or what was behind the rapid growth in both the automotive and the memory space?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [29]

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Well, actually, memory, everybody expect this is going to be a year for memory to recover, was meant to start first followed by DRAM. And before I actually -- as already indication, I think, last year, the big growth already happened. And the December quarter actually is about 10% of our revenue for memory and compared to 5 year trailing average, we still have a -- there's a upside for us in the memory and also in the auto space.

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Operator [30]

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Our next question is coming from Peter Pang from B. Riley.

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Peter Peng, B. Riley FBR, Inc., Research Division - Associate Analyst [31]

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This is Peter Pang calling for Craig Ellis. Just a follow-up on the memory question. It seems like -- do the math, memory is about $40 million and at the peak, that you guys are doing about $35 million. Just wondering what the trajectory of memory is? Do you see it stabilizing at this rate? Or do you see kind of closing into that $35 million as we go through the year?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [32]

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Peter, I think, as Fusen said, both in his prepared remarks and in response to Dave's question. I think memory is recovering. So for the -- Q4 for us was very soft. And now it's rebounded significantly 10% for the December quarter. We believe it will continue to grow for all the reasons we've discussed before, memory prices are going back up, both NAND and DRAM have a big growth. So we believe that our memory business will continue to grow back towards, I guess, the way it was historically.

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Peter Peng, B. Riley FBR, Inc., Research Division - Associate Analyst [33]

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And then just on the -- you mentioned some utilization rates in China. What's the overall utilization rate?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [34]

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I think the overall utilization rate, again, as I've mentioned several times before, it varies across regions as well as customers, but I think it's closing in on 80%.

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Peter Peng, B. Riley FBR, Inc., Research Division - Associate Analyst [35]

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And just -- I think you mentioned that you're seeing more aggressive capital spending throughout fiscal '20. Are you expecting more of a seasonal ramp as we go into the back half of the calendar year? Or is it going to be somewhat below seasonal or just like the March quarter? Just want to, see if you have any visibility in to that?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [36]

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I think what -- best measure of capital spending is really customer capital spending.

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [37]

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Yes. No, I think in terms of the ramp, Peter, I think, again, we believe that the -- we believe it'll (inaudible) sequentially. I mean, Q1 was better than Q4, we believe, even though we don't -- Q2 is; better than Q1. It might guide into further quarters. We believe that the second half of the year will be stronger than the first half of the year.

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Peter Peng, B. Riley FBR, Inc., Research Division - Associate Analyst [38]

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Congratulations on the strong quarter.

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [39]

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Thanks, Peter.

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Operator [40]

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(Operator Instructions) Our next question is coming from Christian Schwab from Craig-Hallum.

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Christian David Schwab, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [41]

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Great, solid quarter. Most of my questions have been asked, but I want to just ask a couple of customer-specific questions, maybe. I know Infineon just announced that they're moving production in autos to flip chip? Is that an opportunity for you, Fusen?

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Fusen Ernie Chen, Kulicke and Soffa Industries, Inc. - President, CEO & Director [42]

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Well. So the short answer is yes, right? So I think our flip chip is always as important and will become more and more important for advanced packaging. And now all our system is very competitive and that has been recognized by our customers. So we are in multiple qualifications in mainly customer size, and we believe we have been able to.

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Christian David Schwab, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [43]

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Okay. Fabulous. And then another customer-specific question. Given the success of Tesla, is there any opportunity for them to become a material customer for you again at any time in the next year, 1.5 years or so?

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Lester A. Wong, Kulicke and Soffa Industries, Inc. - Senior VP of Legal Affairs, General Counsel, CFO & Interim Principal Accounting Officer [44]

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Craig, it's Lester. Obviously, we don't specifically talk about any individual customers, but I think it -- Tesla has identified previously as a top customer. And Tesla has -- they did great yet on their results and they're growing both in Shanghai as well as in Germany. So we believe that there's opportunities there.

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Operator [45]

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Thank you, we've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

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Joseph Elgindy, Kulicke and Soffa Industries, Inc. - Director of IR & Strategic Planning [46]

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Thank you, Kevin. Before closing, we wanted to inform investors that we will be participating in several upcoming conferences and road shows throughout the March quarter in New York, Chicago, Montreal, Minneapolis and Portland. Additional details can be found at investor.kns.com.

Thank you all for the time today. As always, please feel free to follow-up directly with additional questions. Have a great day, everyone.

Operator, this concludes our call. Thanks.

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Operator [47]

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Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.