Kulicke and Soffa Industries (NASDAQ:KLIC) reported fiscal first-quarter 2026 results that came in above its expectations, as Interim CEO and CFO Lester Wong said demand is improving “at a faster and stronger pace than previously expected” amid favorable utilization trends in key end markets. Management also issued March-quarter guidance calling for sequential growth and continued profitability, while emphasizing a continued production ramp to meet customer demand.
Demand trends and utilization levels
Wong said customer sentiment has “strengthened meaningfully” and utilization “across the most significant markets and regions remains favorable.” While he noted that “residual headwinds in the automotive market may persist near term,” he characterized general semiconductor and memory markets as demonstrating “robust demand,” supported by broadening technology improvements and renewed production activity across regions.
- China: over 90%, described as in the high 80s to 90s for a while
- Rest of Asia: around 80%, which has increased
- Southeast Asia: in the 70% range, but rising over recent quarters
- North America/Europe: about 80%
For the March quarter and the broader fiscal year, Wong said the company has “better visibility into the remainder of FY 2026,” adding that he expects the fiscal third quarter to be “sequentially better than Q2,” and that the second half of fiscal 2026 should be about 15% to 20% better than the first half. He described that view as based on current visibility, while noting ongoing macro uncertainty and potential upside beyond that range.
Quarter performance by end market
Management highlighted strength in general semiconductor, mixed results in memory due to mix, and a modest sequential improvement in automotive and industrial.
Wong said general semiconductor revenue rose 27% sequentially and was up more than 90% year over year, driven by customers’ technology and capacity needs. He estimated utilization levels in that end market remained over 80%.
Within memory, Wong said demand declined sequentially after rising 60% in the prior quarter, attributing the change to product and customer mix. He also cautioned that customer concentration can create quarter-to-quarter variability. However, he said ball bonding utilization rates in the memory market now exceed 85%, up from the mid-70% range last year, which he said indicates a “healthy capacity environment” for NAND assembly solutions.
Wong also tied AI-related workloads to both capacity tightness across the memory market and to emerging packaging requirements, including “cost-effective stack DRAM” and “high bandwidth flash (HBF).”
In automotive and industrial, Wong said the company experienced a 15% sequential revenue improvement in the December quarter, while still expecting industry headwinds to linger through fiscal 2026. He reiterated longer-term optimism, including an expectation that semiconductor content per vehicle, supported by ADAS requirements, could double over the coming 10 years, and noted anticipated opportunities tied to power semiconductor needs for battery and plug-in hybrids.
Aftermarket products and services rose 14% year over year, which management linked to increased production activity and improved utilization across the installed base.
Advanced packaging, memory-related opportunities, and product roadmap
Wong said demand for the company’s portfolio of advanced packaging solutions, including fluxless thermo-compression bonding (TCB) tools, remains robust and that the company continues to anticipate a “strong growth year” for advanced packaging opportunities. He said transitions of both vertical wire and thermo-compression are on track, with advanced TCB capacity in demand “throughout our customer base.”
During the call, Wong said the company has 120 TCB tools in the field, and that half are fluxless. He also indicated that fiscal 2026 TCB revenue is expected to be over $100 million.
On memory-related advanced packaging, Wong said the company shipped its first high-bandwidth memory (HBM) system to a large memory customer during the December quarter. He said the system was shipped to the customer’s U.S. facility and is undergoing qualification. Wong expects volume production to be more fiscal 2027, though he said there “may be POs within FY 2026.”
Regarding high bandwidth flash, Wong clarified that it is “a TCB play” rather than vertical wire. He described HBF as early-stage and said the company is exploring the technology with a few customers, anticipating that multiple packaging technologies could be used, including TCB. When asked about timing, Wong said commercialization is likely “more of a CY 2027 play.” He also said a next milestone could be shipping a system, potentially “before PO.”
For vertical wire, Wong said the company is working with eight customers across Korea, China, and the U.S. He suggested there could be some activity in the latter half of fiscal 2026, but that it would “expand much more in FY 2027.”
Management also discussed advanced dispense, noting the company introduced its latest Echelon dispense system at Productronica in November and that customer feedback has been positive with “multiple customers engaged.”
In power semiconductors, Wong said the company is expanding its portfolio as applications evolve toward more efficient materials and more complex assembly techniques, trends he tied to automotive, mobility, and data center power-efficiency requirements.
Financial results and margin commentary
Wong said the company delivered revenue above guidance and continued to focus on cost control. Gross margin was 49.6%, and the company reported $0.32 GAAP EPS and $0.44 non-GAAP EPS.
He attributed sequential gross margin improvement to customer and product mix, as well as revenue recognized from systems that had previously been expensed, which he said was “largely related to prior impairment charges, as well as previously expensed R&D systems.”
Total operating expense was $81.1 million GAAP and $74.2 million non-GAAP. Tax expense was $5.7 million, and Wong said the company expects its effective tax rate to remain above 20% in the near term.
In the Q&A, Wong said he expects gross margin to remain around 49% to 50% for the rest of fiscal 2026, citing higher demand for high-performance ball bonders (which he said carry better margins), improved absorption from higher volume, and continued cost-control discipline.
March-quarter outlook
For the March quarter, the company guided to revenue of $230 million, representing a 15% sequential increase, with gross margin of 49%. Non-GAAP operating expenses are expected to be $73 million. The company targeted $0.53 GAAP EPS and $0.67 non-GAAP EPS.
Looking ahead, Wong said Kulicke & Soffa remains focused on ramping production and executing growth strategies across advanced packaging, advanced dispense, and power semiconductors, while preparing for what he described as a broadening recovery in core markets.
About Kulicke and Soffa Industries (NASDAQ:KLIC)
Kulicke & Soffa Industries (NASDAQ:KLIC) is a global supplier of semiconductor and LED assembly equipment. The company specializes in the design, development and manufacture of advanced die bonding, wire bonding, flip-chip bumping and wafer-level packaging systems. Its solutions support a wide range of applications in consumer electronics, automotive, communications and other high-growth segments within the semiconductor and LED industries.
Key products include precision wire bonders for microelectronic packaging, die attach systems for chip placement, flip-chip bonders for advanced packaging architectures and LED packaging platforms that enable high-volume production of automotive and general-illumination LEDs.
