Operator:.

Greetings and welcome to the Kulicke & Soffa 2023 third quarter results. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joe Elgindy, Senior Director, Investor Relations. Thank you, sir, you may begin..

Thank you. Welcome everyone to Kulicke & Soffa’s fiscal third quarter 2023 conference call. Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer are also joining on today’s call.

Non-GAAP financial measures referenced today should be considered in addition to, not as a substitute for or in isolation from our GAAP financial information. Complete GAAP to non-GAAP reconciliation tables are available within the recently filed earnings release, as well as our earnings presentation.

This information in addition to our prepared remarks for today’s call are available at investor.kns.com. Beginning with the June quarter 10-Q filling, we have amended our segment reporting and will provide additional segmentation details of our previous capital equipment reportable segment.

This change has no effect on the composition of our APS reportable segment or our end market disclosures. During this revision, a material weakness was identified over internal controls related to segment reporting and subsequently triggered the filing of the amended 10-K for fiscal year 2022 yesterday evening.

Please note there was no impact on any reported amounts of the primary financial statements to previously reported periods associated with this amendment. Additional details are available within the 10-K/A filed yesterday evening.

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 of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the amended 10-K for the year ended October 1, 2022 and the 8-K filed yesterday.

With that said, I will now turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen. .

Thank you Joe. We continue to make progress across a broad set of growth initiatives.

During the June quarter, we delivered new ball and wedge solutions supporting high volume semiconductor applications, innovative advanced packaging solutions supporting heterogeneous integration, and reached new milestones with our emerging advanced display prospects.

We also maintained an aggressive pace of development and broadened our technology engagements in several areas. Additionally, our core market continues to improve due to technology trends, incremental capacity needs, and an ongoing product refresh cycle.

We continue to see gradual demand improvements across the ball bonder market and anticipate more meaningful demand recovery as the macro environment improves and inventory is digested throughout the electronics value chain.

Longer term, we continue to anticipate nearly 10% semiconductor unit growth in calendar year 2024 and anticipate unit growth will remain above average in 2025. In the near term, we remain focused on delivering new innovations which address long term, technology-driven growth opportunities in both our core and emerging equipment businesses.

I wanted to spend a few minutes to outline several specific initiatives in our ball, wedge, advanced display, and advanced packaging prospects that are increasing the value-add of our assembly solutions. First, we have begun the ball bonder equipment product refresh with the recently introduced PowerComm and PowerNexx ball bonder platforms.

These systems have been well received by customers as they provide new capabilities for high volume system-in-package applications. They also enable an improved machine-to-operator ratio which provides customers with efficiency improvements and greater geographical flexibility.

Over the coming quarters, we expect to release additional ball bonding solutions which will complete our portfolio refresh. We are excited to provide new levels of value to customers and look forward to additional margin and cash flow benefits to investors over the long term.

It has become clear that our core high volume semiconductor market has increasingly become more complex, creating the need for more advanced solutions and advanced features. Growing complexity needs have already improved ball bonding gross margins by over 300 basis points since 2020, and we anticipate additional improvements going forward.

Next, more efficient power control and the fast growing battery market create new technology opportunities and support higher growth rates for our leading wedge bonder platforms.

Sustainable energy, electric vehicles and more efficient consumer devices are driving demand for compound semiconductors such as silicon carbide and gallium nitride and are also creating new technology-driven demand for more complex module-based power devices.

These multi-chip, module-based power devices are driving a transition from aluminum to copper interconnects. Similar to the gold to copper transition we led within high volume ball bonding, this shift in power semiconductor requires new capabilities such as our high power interconnect, or HPI solution which we already recently announced.

HPI extends our existing technology leadership in wedge bonding and has provided new opportunities with leading customers who are directly supporting power semiconductor and electric vehicle transitions.

We are also closely engaged with a strategic customer on the most critical and demanding semiconductor assembly applications which support space exploration and satellite communications. To summarize the wedge opportunity, we have a strong and dominant historic position which has more than doubled our wedge related revenue since 2020.

We continue to support the most critical and demanding power semiconductor and cylindrical battery applications and we remain very optimistic for future growth as we are closely engaged with customers who are enabling these markets.

Next within advanced display, we have reached new milestones for our portfolio of solutions which address the long term backlighting and direct emissive opportunities that are demanding new mini and micro LED assembly solutions.

During the current September quarter, we have reached new technology milestones with LUMINEX and we’re well prepared to support higher volume demand as the market grows.

We recently announced a collaboration leveraging LUMINEX technology with a leading SMT provider to accelerate the adoption of advanced display technology in both backlighting and direct emissive applications.

The LUMINEX system is designed for mini LED opportunities for larger format direct- missive displays and also for the high volume display transition to advanced backlighting.

We have made significant progress with our LUMINEX system which supports a final placement throughput of 540,000 die-per-hour with yields of 99.9%, with even higher throughput and yields expected as we continue to develop the solution. We have demonstrated the ability to accurately place micro-LED size die at 4µm 3 sigma.

While we have seen early adopting customers use traditional die attach equipment to support initial backlighting applications, over time LED die size will continue to shrink and we anticipate demand for our dedicated high throughput, high accuracy LUMINEX system will accelerate.

Additionally, we continue to make progress on Project W and expect to provide additional visibility into Project W’s fiscal 2024 revenue expectations over the coming quarters.

Finally, while we are now providing more value in the high volume semiconductor market as wire bonding becomes more and more complex, we are also actively expanding our market share in leading edge logic and optical applications with our competitive thermocompression portfolio.

Recently, we have appreciated the increased customer interest and peer commentary regarding the longer term contributions thermocompression technology can provide to support rapidly evolving chiplet and heterogeneous trends. We have worked aggressively to expand our engagements to leading commercial customers and also global technology consortiums.

We also recently announced an expanded partnership with UCLA’s Center for Heterogeneous Integration and Performance Scaling, also known as UCLA CHIPS. Together we look forward to extending TCB pitch to below 5 µm.

In addition to this expanded technology relationship, we recently shipped a record number of fluxless TCB systems to a broadening group of commercial customers who are spearheading the transition to chiplet and heterogeneous integration.

Our strength in TCB has centered around higher volume opportunities supporting applications processors, 3D sensing and silicon photonics, which are transitioning to TCB for technical reasons such as smaller form factor, thinner substrates, and improved yields.

We have also already grown our share in chip-to-substrate TCB for heterogeneous applications in production. In addition to these proven market wins, we are pleased to also announce our active engagement in several chip-to-wafer evaluations which can materially accelerate growth of our dedicated advanced packaging portfolio over the long term.

Turning to the June quarter results, we generated $190.9 million of revenue and $0.55 of non-GAAP EPS, above prior expectations due to continuing stringent cost control on non-critical matters and discrete tax items.

Moving to the end market discussion, 79% of total revenue stemmed from capital equipment and improved 13% sequentially, supported by utilization improvements in general semiconductor, LED and memory end markets.

Within general semiconductor, ball-bonding equipment sales increased sequentially by 45%, largely due to increased utilization rates and stronger demand of our highest performance Rapid series. We also reached a new record quarter for our thermocompression business and booked revenue for several fluxless systems and our latest TCB platform.

Within LED, we have also seen utilization rates improve which supported demand for our Ultralux Plus system. As of August 1 last week, the United States has implemented the anticipated ban on incandescent light bulbs in favor of more efficient LED lighting.

We anticipate utilization rates will continue to improve through the September quarter for high bright LED lighting applications. Next, automotive and industrial has slightly softened, although remains quite strong from a historic standpoint.

Demand for power semiconductor continues to be robust due to our contributions to the broad EV transition and the increasing content of semiconductors per vehicle. We also look forward to sharing news regarding our battery assembly opportunities over the coming quarters.

Within memory, we recognized a better than expected improvement in utilization rates and a pickup in demand for our NAND assembly solutions. Historically, we have enjoyed a dominant position in NAND assembly and have continued to expand our market reach into DRAM applications.

Looking into fiscal 2024, we are excited about prospects such as vertical fan out, also known as VFO, which is expected to further expand our share in high density DRAM applications and can provide significant cost improvements over TSV-based approaches used in applications such as high bandwidth memory.

I look forward to sharing more details on this exciting opportunity over the coming quarters. To summarize, we remain actively engaged with multiple customers who are enabling technology transitions in automotive, semiconductor and display opportunities.

Our investments in development, engineering capabilities and new market opportunities have enhanced our fundamental strength, increased our value add, and have solidified key pillars to our long term growth strategy.

We are currently progressing several parallel qualifications and evaluations and we look forward to providing a more detailed outlook over the coming quarters. Finally within our core capital equipment markets, we have seen clear demand improvements and are forecasting utilization rates to further improve through the September quarter.

Looking into the next few years, we continue to anticipate above average semiconductor unit growth and also anticipate taking share in new markets. We look forward to delivering a steady pace of new systems and features and also announcing new customer and technology wins over the coming quarters.

With that said, I will now turn the call over to Lester, who will discuss our financial performance and outlook.

Lester?.

Thank you Fusen. My remarks today will refer to GAAP results unless noted. Before commenting on our June quarter financial performance, I wanted to address two specific items related to our June quarter performance.

First, during the June quarter, we booked impairment charges of $21.5 million associated with our 2017 acquisition of Liteq BV and a minority equity security investment related to a technology asset.

Neither of these non-cash impairment charges have a material impact on the near term outlook, and we continue to support the market opportunities these investments have previously provided. To add context, since our acquisition of Liteq BV, we have deployed over $1 billion toward capital expenditures, acquisitions and shareholder returns.

Of this cumulative deployment, approximately 75% was returned to shareholders through the company’s increasing dividend and opportunistic repurchase programs. Next, I also wanted to set clear expectations regarding our order intake and backlog activity over the coming quarters.

We continue to hold a sizeable amount of order backlog roughly four times the size of our third quarter fiscal 2019 backlog. This excess backlog will reduce the book-to-bill ratio and ultimately land at roughly three to four months of revenue, which is in line with our average lead times.

In addition, some of our anticipated incremental opportunities in fiscal 2024 are not included in the current backlog. With that said, it remains a very exciting time for the company with ongoing near and long term improvements within our core markets and ongoing execution across a variety of end market applications.

As an update, our capacity expansion investments are continuing on track to provide critical operational capacity to support the growing demand of our advanced packaging and advanced display offerings. During the June quarter, we generated $190.9 million of revenue, 47.2% gross margin, and $0.55 of non-GAAP EPS.

Gross margins came in just below expectations largely due to mix stemming from a rebound in high bright LED demand and also an increase in higher volume orders. Non-GAAP operating expenses came in at $66 million, below our prior expectations due to shifts in discretionary spending and ongoing cost controls.

Finally, tax expense for the quarter was $148,000, lower than anticipated due to the reduction in profit before tax mainly from the impairment charges, and a discrete item related to the reversal of uncertain tax positions.

Turning to the balance sheet, working capital days decreased from 517 to 465 days in the June quarter primarily due to the sequential improvement in revenue and relatively flat working capital. Our repurchase program remains opportunistic, and we have increased our repurchase activity by 71% sequentially, to $8.5 million during the June quarter.

Looking ahead to the September quarter, we anticipate revenue of approximately $200 million plus or minus $20 million, with gross margins of 48%. Non-GAAP operating expenses are anticipated to be approximately $70.5 million plus or minus 2% due to additional general and R&D investments.

We remain focused on controlling and limiting any non-critical activities and have maintained a very cautious, needs-based hiring approach. Our collective cost control efforts have reduced our June quarter operating expenses by approximately $4.5 million from our original budget.

Non-GAAP net income for the September quarter is expected to be approximately $24 million with non-GAAP earnings per share of approximately $0.42. It remains a very interesting period of time at K&S as the value of semiconductor assembly is rapidly increasing.

As our core business continues to strengthen, we remain focused on expanding our long term market access with our competitive advanced packaging, advanced display and automotive solutions. We look forward to sharing our progress over the coming quarters. This concludes our prepared comments. Operator, please open the call for questions..

Thank you. We will now be conducting a question and answer session. [Operator instructions] Our first question comes from Craig Ellis with B. Riley Securities. Please proceed with your question..

Yes, thanks for taking the question, and thank you for all the information this morning. Fusen, I wanted to start off following up on one of your earlier points about the view on calendar ’24 industry growth at 10% year-on-year - I think that was, or I’m assuming that’s on a unit basis.

The question is this - around that level of industry growth, how would you expect K&S to perform given the growth initiatives that you’ve outlined and the improved positioning in some of your larger end markets, like general semi?.

Okay, so Craig, we believe ’24 will be a better year for us than ’23, above average right now is forecast, but we do also get feedback from customers, but what will be the final number [indiscernible] depends on the macro environment. At this moment, it’s still a little bit dynamic, but we feel like 10% is probably a good number.

With this assumption, I think we will see improvement in our bond ball shipments, I think particularly. We start to see growth. We believe that ball bonder will grow even more, and not only shipment, I think we will see the gross margin expansion.

Other than ball bonder, the wedge bonder demand is still strong, I think due to [indiscernible] semi and the EV, and in addition I think we will put a new capability to wedge bonder. For the AP, I think we will see the growth as in heterogeneous integration.

We have TCB in non-heterogeneous focus in volume semi and focus on multiple applications such as silicon photonics, 3D sensing and processors, and also have heterogeneous [indiscernible]--we believe particularly in heterogeneous integration, we can show growth.

We also hope to see actually growth in advanced display in the W Project and also in LUMINEX. We probably will have a better feeling about the industry rate of recovery maybe by November.

Maybe by November, we will have a better feeling about rate of recovery, so 10% right now is a number from the industry and also from us, and really depends on the next couple months. The industry is still [indiscernible] forecast. Greg, I hope I answered your questions..

Yes, that’s really helpful, Fusen. Then combining that commentary with points that Lester made about higher backlog levels than 2019, but I think if I heard you right, Lester, the likelihood that backlog does decline over the next few quarters.

Can you talk about the visibility that you have into the fiscal first quarter of the year, and if we look beyond the guidance for the fiscal fourth quarter, can you talk about some of the nearer term gives and takes for what’s typically a seasonal softer part of the business?.

Yes, sure Craig. I did say--I mean, we still have a very healthy backlog, it’s just below about $500 million, so we do expect that backlog to come down over time, over the next couple quarters. As far as near term visibility, as Fusen mentioned, right, it is pretty dynamic at this point.

We believe there will probably be some more seasonality this year then during ’21 - ’22 during the ramp.

Also, I think for FY24, as Fusen indicates, we believe it will be a much better year than ’23, however when--I think the first half may not be as strong as the second half, but again there’s a lot of moving pieces right now, but we feel pretty good about ’24 as compared to ’23..

Got it, guys. Thanks for the help, and I’ll hope back in the queue. .

Our next question comes from Dave Duley with Steelhead Securities. Please proceed with your question..

Yes, thanks for taking my question.

I was wondering, as far as the improvement that you’re seeing in your overall revenue in both the June quarter and the September quarter you just guided to, what segments are showing improvement sequentially?.

Well Dave, I think ball bonder is the main business unit that is showing improvement. Wedge bonder has remained relatively strong throughout the last couple quarters, but I think we are seeing ball bonder become stronger.

I think this is tied to seeing utilization rates going up, and so I think that’s basically the increases over quarter-to-quarter, and as well as Fusen mentioned, we shipped a record number of fluxless TCB this quarter as well as record TCB revenue for the quarter that just ended..

Okay, and as a follow-up on the thermo-compression bonding market, could you just perhaps articulate what you think your position there is, how big the market is, what percentage of that market you think you’re currently capturing? There seems to be a little bit of push and pull as to whether thermo-compression bonding or hybrid bonding is going to be a bigger market.

If you could just talk about which pieces of the market you think each technology would capture, or just characterize how you think you’re doing in this particular market..

Okay, Dave, we believe we have a quite strong TCB product portfolio. Actually, I think I made a comment - our TCB has two markets, one is a focus on high volume semiconductor and is for non-heterogeneous integration, and we serve in applications such as application processor, 3D sensing, and also silicon photonics.

Actually, this year has been quite well. Other than that, I think we have a lot of focus on heterogeneous integration. Last year, starting from last year, we believe we are very strong in our position in heterogeneous integration in the C-to-S chip substrate, and the customers are actually already in production.

We at this moment engage with multiple customers in the C-to-W and we do believe we are on the way to get market share.

For our TCB, I think our focus at this moment is working with multiple customers in IDM, [indiscernible] and also foundry to push our TCB capability, to push our technical innovation to the best, which is below 10 µm, and with all the information, we feel--we actually feel quite positive about the direction we are going.

When you hear about--when you ask about our fluxless TCB versus hybrid, let me make a comment. I think at this moment, these two markets are not overlapping. Hybrid bonding has its advantages, which is non-thermal, actually you don’t have heat, you also don’t have stress, so this is an advantage hybrid has.

In the meantime, I think this is a little bit more expensive process, so to ask how do we compare to hybrid, I think it’s a hard question. I just want to tell you our mission actually is to push TCB as far as possible below 10 µm.

In the future, I think that when they might at some point [indiscernible], and which one has higher volume, I think it’s really a lot depends.

For K&S, I think really it depends on the capability of our TCB, how far it can extend to [indiscernible], and also for hybrid bonding, how cost effective and how much productivity this process can improve in addition to actually--of course [indiscernible] no thermal, no stress, the process actually is robust.

Also, finally I think it depends on final customer choice, right, so to answer your question, I think hybrid and TCB at this moment is not competing, and our mission is to push TCB as far as possible, as the press release described today..

Okay, and then--.

[Indiscernible]. It’s our belief, I think this year our TCB, we are looking around $60 million-some, maybe $68 million with total dedicated AP probably above $100 million, so by 2025, we actually have a lot of opportunity.

But after realize market share, we also need to wait a little bit, couple months for the high volume, but we do believe by 2025, our TCB alone should be above $100 million [indiscernible] our dedicated AP, we are looking for about $200 million..

Okay, and then you mentioned some details about high bandwidth memory. I’m wondering what your exposure is there.

Are you currently in production, are you using wire bonders for the stacks, or maybe you can elaborate a little bit?.

Actually, we are working with actually not many, this industry only a few, but we also work with a few memory customers. There’s a publication by a major customer [indiscernible] actually to use wire, vertical wire actually to be alternative for TSV, so we are working with the customers.

I think next year, there is a possibility for one or two customers, maybe in small volume in our pre-production, so we are actually pretty excited about this opportunity..

Thank you..

Our next question comes from Charles Shi with Needham & Company. Please proceed with your question..

Hi, good evening Fusen and Lester. Thanks for giving me the opportunity to ask a couple questions. I wanted to start again on thermo compression bonding. I think a year ago, you announced receiving roughly $80 million orders in your backlog to ship by the end of ’23 and $300 million cumulatively by the end of 2025, so this is a two-part question.

How many have you shipped so far out of that $80 million orders, and have you turned more of the opportunity beyond the initial $80 million, more into the--from $80 million to $300 million opportunity into the backlog, and if yes, how much you received, have you turned opportunity into backlog as of today? Thank you..

This $80 million, I think [indiscernible] there, I would think maybe by the latest by middle of next year would complete.

Charles, I think when we look at the opportunity, we have been engaging customers but a lot of time, I think--I can tell you the customer engage and have a high potential [indiscernible] there, but sometimes I think their opportunity, their profit integration architecture might have fine tuned.

We actually--as I mentioned, I think quantify, we probably above $100 million, but I think [indiscernible], the $300 million is including this $18 million - I forget actually exactly what I say, but I can tell you all the opportunities are still there.

But you know, the customers forecast [indiscernible] and also their process, the project, the schedule might have a little bit shift, but I can tell you all the customers we engage are still very positive and maybe the forecast is a little bit different, so right now we are looking at the TCB, I think by 2025 annual revenue will be greater than $100 million..

And Charles, just for a point of reference, over the last two quarters, we’ve shipped over $40 million worth of TCB..

You mean fiscal Q2 and Q3, right?.

That’s right - fiscal Q2 and Q3..

Yes, thanks for the great color, Fusen and Lester. Also on TCB, you mentioned other than IDM, there’s an [indiscernible] and foundry opportunity.

I wanted to ask you specifically about the foundry - I’ve definitely heard some of your IDM strength seems to be carried over to foundry, at least from what they are doing in terms of evaluation, so can you talk a little bit more about the engagement with the leading foundry TCB, what’s the status there? I mean, obviously this is probably a beachhead, but what’s the first application of any of the evaluation you’re engaging with them, is it the C-to-S, C-to-W, or is it flux, with flux or fluxless, that kind of application? Thank you..

Yes, so I think I mentioned we have multiple engagements going on in the C-to-W, [indiscernible] especially when you’re talking about the customers. But I think at this moment, the C-to-W, fluxless with cover to cover contact capability, and that’s really we are focused on and we have multiple [indiscernible] in our ship or going to ship.

In our [indiscernible], this is not the first time we processed this process, so I think there are two purposes for fluxless, particularly in the C-to-W. One is to reduce different flux remand, which will impact the yield and [indiscernible].

[Indiscernible], I think the copper contact are very important and not only cover the copper contact, reliable copper contact is--reliability is very important. I think we have a very special structure and process to make a very reliable copper-to-copper contact, and this is a comment by many customers we are engaged with..

Thank you--yes?.

You know--.

Go ahead, Charles?.

No, please finish your thoughts..

I think in terms of applications, we actually don’t specifically comment about customers’ process, but I can tell you we have multiple engagements, and I think C-to-W is the bigger focus area, I think at this moment, and which we are quite excited about..

Thank you. Maybe one last question, very short. Do you have any preliminary view about the fiscal first quarter 2024, the December quarter in terms of how much sequential is it going to be from the fiscal fourth quarter, the September quarter? Thank you..

Charles, as you know, we don’t guide beyond the quarter. As I think both Fusen and I said earlier, there will be some seasonality in the first fiscal quarter, unlike during the ramp of ’21 - ’22.

We do believe that the businesses continue to improve as well, but as far as the magnitude, I think again there’s a lot of uncertainty in macros out there, that we’ll give further color in our Q4 earnings release..

Yes, so Charles, maybe I’d just make one comment. I think we do feel ’24 will be a better year. Really, I think how much bigger, I think I can tell you, if we even count the biggest opportunity, I think it’s really ball bonder. Our ball bonder really came down from a very high level, so we are actually quite pleased.

If you remember, I think in Q1, we feel like our ball bonder actually has come to a trough, and Q2 actually showed improvement, so a noticeable change from Q2 to Q3, Q3 to Q4 is also ball bonder, and we are seeing short term capacity buy and also some customer need for the better capability of bonder to handle more complicated structures.

If you ask me, we feel better [indiscernible] opportunity. I think ball bonder can carry a very good growth for ’24, but really how much is much, I think probably depends on the recovery.

I think we will have a better judge probably in November, but we feel like the current rate of recovery is still not very strong, so we do expect our second half will be better than the first half. I hope this helps..

Yes, thanks for the abundant color, Fusen. Thank you..

Okay, thank you Charles..

I’ll hop back in the queue, thank you..

Our next question comes from Tom Diffely with DA Davidson. Please proceed with your questions..

Yes, good morning Joe, and good evening Lester and Fusen.

Maybe Fusen, following up on that last response, what are the utilization rates today and how low did they go a couple of quarters ago?.

Maybe I’ll answer that, Tom. Utilization rate right now is around 70%. The previous quarter was around 60%, and I think the quarter before that was about the same, a little bit lower, so we are seeing it up go up. We also see Q4 utilization rate will also probably be higher than Q3, so we’re seeing that nice trend as it heads towards the mid-70s. .

Great, okay. Very helpful, appreciate that Lester. Wanted to dig in a little bit on the tool refresh that you’re doing across your product lines. You mentioned a couple of new ones hitting the market.

How do you see that rolling out as a percentage of your sales, or percentage of revenues or shipments? Is a two to three quarter transition, do you think a year from now, you’ll be largely with the new higher margin tools? Just a little color on that would be great..

Tom, I think the first tool [indiscernible] and we have--as I say, another one is for high performance one, and hopefully we will see maybe some margin improvement in about two quarters, maybe two to three quarters. I hope that helps..

Yes, and Tom, we expect most of the products that Fusen referred to, to be released by the first half of ’24.

Obviously as it’s released, it takes a little bit of time to gain traction, but I think we expect the margin improvements starting in ’24 and definitely by the second half of ’24, the increase particularly in ball bonder margins should start hitting..

Okay, appreciate that.

Then I guess finally, maybe just a quick update on the Project, still expected to start to ramp in the first half of ’24?.

No, actually Tom, if you listen to me, I think actually this is a timing issue, but we always feel this is going to be ’24 will be prototyping and preproduction, right, so I think beyond that--beyond that, I think the volume will be higher, but next year I think we are working together with the customers just on preproduction and also prototyping..

Okay, I apologize for that. I must have--.

I think in about maybe two quarters, if we probably have more insight, we will share it with you and share with the public..

Okay, and then final question, maybe for Lester, looking at the cash balance and the share repurchase, your share repurchase levels, although up sequentially are well below where they were a few quarters ago.

Has there been a different philosophy or change of thought as far as share repurchasing over time?.

No, no. I think we’ve--our philosophy always has been to be opportunistic, right? Fusen always discusses with the board every quarter on our capital allocation, so we kind of slowed down for a while and we picked up a little bit, but we believe that we will probably continue to be opportunistic, and I think the volume will continue to grow..

Okay, thank you..

AS a reminder, if you would like to ask a question, please press star, one on your telephone keypad. Our next question comes from Christian Schwab with Craig Hallum. Please proceed with your question..

Hey guys, I just have one quick question.

Your commentary regarding memory, that you saw better than expected improvement in utilization rates and a pick-up in demand in the end, which we’re not really seeing or hearing from anybody else, including the manufacturers’ demand, other than possibly bottoming, so I’m just looking for greater clarity on that statement, please..

I think actually in our NAND, we actually have quite high market share, right, and I think this quarter, we do get business from--in our NAND business. But at this moment, Christian, even people expect memory to touch to the bottom, we still see a recovery will be still slow. Overall, I think memory, our expectation is an up trend.

We do believe the best, ’24 the whole industry, [indiscernible] go back to our ’22 plus maybe about 10%. [Indiscernible] make a comment as NAND, we have a pretty good market share whenever capacity comes, and a next focus for us and see if we can get also market share gain in [indiscernible]..

Okay, great. Thank you, no other questions..

There are no further questions at this time. I would now like to turn the floor back over to Joe Elgindy for closing comments..

Thank you Maria, and thank you all for joining today’s call. Over the coming months, we will be presenting at several investor conferences. As always, please feel free to follow up directly with any additional questions. This concludes today’s call. Have a great day, everyone..

You may disconnect your lines at this time. Thank you for your participation..