Kulicke & Soffa expects 15% sequential revenue growth in Q4 2025 amid memory and semiconductor recovery
Aug. 06, 2025 9:41 PM ET
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Earnings Call Insights: Kulicke and Soffa Industries (KLIC) Q3 2025
Management View- Fusen Ernie Chen, President and CEO, highlighted ongoing efforts to "extend our market access through ongoing technology transition" and expressed cautious optimism despite macroeconomic uncertainty: "We remain very focused on both core market recovery and also new product momentum." Chen noted the sequential revenue reduction was mainly due to "order hesitation within the automotive and the industrial market," attributing it to "trade uncertainty... creating a slight headwind over the coming quarters." He emphasized the company's positioning in emerging opportunities, including EV charging infrastructure, and projected that "charging-related infrastructures well exceeded a 20% CAGR over the next 5 years." Chen also detailed expansions in Advanced Dispense, vertical wire, and Thermo-Compression Bonding (TCB) portfolios, with initial high-volume production of vertical wire set for fiscal 2026 and new FTC system shipments into the high-power HBM market by end of calendar 2025.
- Lester A. Wong, CFO, stated, "Despite uncertainty regarding macro dynamics, we delivered revenue above guidance, continue to execute on those customer engagements and maintain an ongoing focus on cost control." Wong reported gross margin at 46.7%, total operating expense of $75.3 million on a GAAP basis, and a continued aggressive share repurchase program. He added, "We are also positive on recent U.S. tax law changes and are in the process of evaluating the future impact on our tax rate."
Outlook- The company expects Q4 2025 revenue to increase by approximately 15% sequentially to $170 million, with gross margins at 47%, non-GAAP operating expenses of $68 million, GAAP earnings per share targeted at $0.08, and non-GAAP earnings per share of $0.22. Wong noted, "We anticipate this softness to be short term," in automotive and industrial markets.
- Management described the outlook as cautiously optimistic, citing improvements in general semiconductor and memory segments, but noted that "end market visibility remains unclear" and a "gradual recovery" is expected with potential minor seasonality in the December quarter.
Financial Results- Reported revenue for Q3 2025 was $148.4 million, with a loss per share of ($0.06) and non-GAAP earnings per share of $0.07. Gross margin stood at 46.7%. Operating expenses were $75.3 million GAAP and $68 million non-GAAP. Tax expense was $3.2 million, with an effective tax rate anticipated to remain above 20% in the near term.
- The company repurchased approximately 668,000 shares during the quarter, equivalent to 1.3% of diluted shares, and highlighted that over $270 million has been deployed in dividends and repurchases over seven quarters.
Q&A- Krish Sankar, TD Cowen, asked about the December quarter and revenue trajectory. Fusen Ernie Chen responded that "Q1 of '26 will be flat" and reiterated that "first half of '26 will be flat to Q4 of our '25."
- Sankar also inquired about Intel CapEx cuts and FTC opportunities. Chen explained, "the engagements are still quite healthy, but... the revenue compared to previous year will be down."
- Thomas Robert Diffely, D.A. Davidson, questioned utilization rates and TCB business scale. Lester Wong reported, "utilization rate overall is about 81%... General Semi is around 83%. Memory is around 80%." Chen projected, "we have a plan and target about $250 million to $300 million in 2028" for the TCB market.
- Yu Shi, Needham & Company, probed the December quarter's confidence and TCB technology. Wong described confidence as based on "a combination of... higher order intake... recovery in both end markets," while Chen highlighted integrated chemical and physical preparation capabilities for TCB.
- Christian David Schwab, Craig-Hallum, requested clarity on market share gains. Chen cited differentiated products in pin welding, advanced dispense, and vertical wire solutions, stating, "we do believe our cost is very competitive and have differentiated products."
Sentiment Analysis- Analysts' tone was cautiously probing, focusing on near-term revenue direction, market recovery, and technology differentiation, with a slight concern over automotive softness and industry visibility.
- Management maintained a cautiously optimistic and confident tone in both prepared remarks and Q&A, with phrases such as "we remain very focused" and "we are confident." There was some hedging on outlook with "we hope" and "cautiously optimistic."
- Compared to the previous quarter, sentiment has modestly improved regarding general semiconductor and memory market recovery, though persistent concern remains about automotive and industrial headwinds.
Quarter-over-Quarter Comparison- The current quarter featured a more confident tone on memory and general semiconductor recovery, versus the previous quarter’s greater emphasis on macroeconomic and trade-related uncertainty.
- Management’s guidance for Q4 2025 revenue at $170 million marks a specific sequential growth target, compared to a range provided in the previous quarter.
- Analysts continued to focus on recovery timing, customer hesitancy, and technology adoption, with ongoing attention to utilization rates and new product launches.
- Strategic focus has shifted further toward advanced packaging, vertical wire, and TCB opportunities, as well as ongoing cost control and capital returns.
Risks and Concerns- Management cited persistent headwinds in the automotive and industrial markets, driven by global trade uncertainty, as affecting customer capacity planning.
- Additional uncertainty was noted regarding "end market visibility" and "near-term trade dynamic."
- Management is mitigating risks through product development, customer engagement, and cost controls, with ongoing monitoring of tax law impacts and macroeconomic developments.
Final Takeaway
Kulicke and Soffa Industries emphasized its strategic positioning in memory and semiconductor recovery, targeting 15% sequential revenue growth in Q4 2025 amid ongoing headwinds in automotive and industrial markets. Management remains focused on technology leadership in vertical wire and TCB, disciplined cost controls, and continued capital returns, while monitoring trade and macro uncertainties that may influence short-term demand and capacity planning.
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