Hello, and welcome to the Kulicke and Soffa 2021 fourth fiscal quarter results conference call and webcast. At this time, all participants are in listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Joe Elgindy, Senior Director, Investor Relations. Please go ahead, Joe.
Thank you. Welcome everyone to Kulicke & Soffa 's fiscal fourth quarter 2021 conference call. Joining us on today's call is Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer. For those of you who have not received a copy of today's results, the release as well as our supplemental earnings 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 position 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 position, please refer to our recent SEC filings, specifically the 10-K for the year ended October 3rd, 2020, and the 8-K filed yesterday. With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.
Thank you, Joe. As many of you are aware, we recently provided a detailed business review and outlook during our Investor Day held on September 23rd. During this presentation, we highlighted how several key long-term trends such as 5G, assembly complexity, electric vehicles, and advanced display are driving structural improvement to our business, enabling greater long-term visibility and a more consistent level of sustainable cash flow generation in the future. Throughout today's discussion, I will highlight several specific milestones which demonstrate our ongoing progress toward this fundamental enhancement. First, I would like to explain our view of the supply challenges affecting the industry today, which we have been navigating. Recently, there have been disruptions to global supply chains, including power outages in China, COVID challenges in Southeast Asia, and the freight challenge globally.
Specifically, within our industry, additional constraints were recently related to substrate and the wafer capacity shortfall, which are constraining the rate of industry growth. We ultimately expect this near-term bottleneck will gradually improve. Specifically, we anticipate improvement in wafer start toward the end of fiscal 2022, which is consistent with our expectation of a multi-year industry expansion period. It's also critically important to understand that this bottleneck ultimately stems from a short-term inability for industry capacity to meet end market demand as we transition into the new data era of semiconductor demand. In addition to this new layer of end market demand, favorable technology transition, which we are directly involved in, are well established and are set to accelerate over the long- term.
This structural dynamic includes a higher level of capital intensity for the assembly process, access to the emerging advanced LED market, 5G adoption, the electric vehicle transition, and the more semiconductor-rich consumer devices. This longer-term trend enhance our visibility and the growth potential. Looking ahead, this outlook is aligned with the long-term target we shared during our recent Investor Day. We continue to anticipate that fiscal 2022 will be another very strong year, and we also anticipate wafer capacity to improve at a faster rate beginning in the second half of 2022. With that said, I will now discuss our September quarter's performance. We again exceeded our revenue guidance, which anticipate a $461 million mid-point.
We were able to generate just over $485 million of revenue during the September quarters, which was a significant effort for our manufacturing, supply chain, and engineering team. This effort has allowed us to temporarily stretch our capacity in support of our customers during this rapid phase of industry growth. Within the September quarters, our capital equipment revenue increased by over 16% sequentially to $431 million. This was due to ongoing strength in the general semiconductor market, improvement in memory and ongoing traction and execution of our advanced LED program. Within general semiconductor, we are pleased to report several new wins for our dedicated advanced packaging tool, specifically APAMA, our thermal compression system, Katalyst, our high accuracy flip chip system, and also LITEQ 500, our dicing wafer.
This specific win highlights our direct connection to this evolving landscape and the growing need for more complex, higher value semiconductor assembly processes. This win also highlights our competitiveness and the potential for share gain in several specific leading-edge assembly applications, including mobile processing, image sensing, and silicon photonics. During the September quarter, we also recognized revenue of our initial LITEQ 500 laser-enabled dicing solution. This system has been well received due to its good wafer handling, performance, stability, and ease of operations. The need for advanced dicing system for back-end processes will accelerate with assembly complexity in the future. This system represents an additional market-ready K&S solution, which addresses the growing complexity of assembly. Fiscal 2021 revenue related to laser-based platform increased by over 200% from fiscal 2020.
These systems are highly competitive, and we anticipate demand to grow at a similar rate through fiscal 2022. We remain very focused in driving new engagements and qualifications. The need for more complex assembly isn't only limited to our new equipment solution, but is also occurring throughout the high volume semiconductor market. To shed more light on this evolving value proposition, our most advanced ball bonder platform, the RAPID series, offer key features such as real-time process monitoring, defect detection, and advanced looping that enhance productivity for complex assembly. The RAPID series represent only 39% of our total ball bonder sales in the fiscal first quarter of 2021, and has grown to represent 74% of our ball bonder business during the fiscal fourth quarter of 2021. These market-leading tools are unique and enhance corporate level growth margin.
Finally, for the general semiconductor review, we also continue to focus on new development opportunity within the electronic assembly market. As we explained during the Investor Day, the electronics assembly market represent a very sizable and largely untapped opportunity for K&S. I look forward to sharing additional detail as we prepare to bring this new solution to market over the coming quarters. Turning to LED, I'm pleased to report that we have recognized revenue of just over $80 million in advanced LED solution throughout fiscal 2021, representing nearly half of our total LED revenue. During September quarters, we recognized an additional portion of system and services revenue related to our customers' needs and order lead scheduling. This is another key milestone for the company, which serves as a testament to our leadership in most advanced back lighting and direct emission display technologies.
Highlights our execution and progress toward the long-term financial target established during the Investor Day. Additionally, we issue a press release in September 22nd that highlight our initial LUMINEX shipment and the broadening market adoption. LUMINEX is our next generation mini and micro LED solution, which target the emerging advanced display opportunity. LUMINEX has increased our market access as it provide additional process steps such as pitch adjust, sorting, and binning, but also through increasing our customer engagements. The first LUMINEX system was delivered with an initially reduced throughput in September. By October, we provide a software update that enable 10,000 Hz through the scan function. To clarify, this relates to 10,000 placements per second. At this speed, LUMINEX provide unique production advantage that will help accelerate and broaden advanced LED adoption and our ultimate market reach.
Over the coming quarters, we look forward to sharing new milestones and additional customer engagement with this high potential system. Next, automotive and industrial demand continue to remain strong and above our long-term average. We remain very positive on long-term transition, which are increasing semiconductor content per vehicle. Over the coming years, semiconductor growth with automotive is expected to be significantly above the historical growth rate of general semiconductor. In March of 2021, we enhanced our portfolio of automotive-focused solution with our PowerFusion system release. PowerFusion specifically target the growing need for advanced power semiconductor assembly, a critical application required for the electric vehicle transition. During the fiscal 2021, we shipped nearly 400 PowerFusion system, generating over $45 million of revenue.
In addition to this structural growth, driving higher semiconductor content per vehicle, we have recently expanded our market access through our new battery assembly solution. We continue to work closely with several customers who are pursuing battery assembly solution for the cylindrical market, utilizing both our ultrasonic and laser-based battery assembly solution. We have also recently delivered our newly introduced prismatic battery assembly solution. Electric vehicle battery production is anticipated to grow at a 30% CAGR through fiscal 2025, providing ongoing and long-term equipment opportunities. Lastly, within memory, revenue grew by over 90% sequentially to $36.9 million for the September quarters. This sequential growth was supported with a strong demand for our leading NAND assembly solution and the ramp from several memory-focused customers. Finally, before turning the discussion to Lester, I wanted to reiterate our optimism as we look beyond fiscal 2022.
Over the past four years, we have worked closely with the customers to solve challenges within the display, automotive, and the semiconductor assembly market. This close relationship with the industry leader have allowed us to take a calculated risk and pursue multiple development initiatives in parallel. Today, these past investments are beginning to generate returns. Over the last years, we have introduced and achieved market adoption of several high potential system that directly support high growth opportunities within the automotive, semiconductor, and advanced display market. These systems are at a different stage of maturity, providing ongoing opportunity to create value for investors. We have made many organizational refinements, which have enhanced this value creation process. We continue to have a funnel of new opportunities that provide additional upside to our long-term target.
I look forward to providing additional details on the status of our recent product release and the new development initiative over the coming quarters. With that said, I will now turn the call to Lester Wong, who will discuss our financial performance. Lester?
Thank you, Fusen. My remarks today will refer to GAAP results unless noted. As Fusen mentioned, our global operations, manufacturing, and engineering teams have overcome many supply chain related challenges this quarter. We were able to stretch our capacity during the September quarter and continue to anticipate ongoing supply chain challenges over the near- term. For the fiscal year, we were very pleased to have recognized revenue of $1.52 billion, generating non-GAAP net income of $390 million and free cash flow of over $275 million. During the September quarter, we recognized revenue of $485.3 million, up nearly 15% from our most recent record revenue in the June quarter.
We're able to meet this level by managing external supply chain challenges very closely and stretching our own capacity in support of customers' aggressive expansion plans. In addition to stretching capacity, we also recognize an additional portion of advanced displays revenue based on our customers' shipment and delivery schedules. In addition to the significant top-line achievement, we're also able to deliver strong gross margins of 47.7%. This strong margin performance was due to a higher mix of advanced assembly systems, which deliver a higher value proposition for our customers. This gross margin strength, combined with greater operating leverage, allow us to deliver non-GAAP operating margins of 33% in the September quarter. We continue to maintain our quarterly operating expense model, which represents roughly $48 million of fixed expenses, plus 5%-7% of variable expenses tied to revenue.
Tax expense for the quarter came in at $21.6 million, driving our effective tax rate to 13.9% in the September quarter. As expected, our full- year effective tax rate came in below our long-term target, largely due to the release of valuation allowances related to the successful introduction and market adoption of our PIXALUX system. Over the long- term, we continue to maintain the 18% effective tax rate target. Non-GAAP net income came in at $138.3 million, representing $2.17 of non-GAAP EPS during the September quarter, which again reflects the inherent leverage in our model and long-term cash generation potential. Turning to the balance sheet. Working capital has remained very efficient. Days of accounts receivable stay consistent at 78 days.
Days of inventory improved slightly from 60 days to 59 days, and days of accounts payable decreased from 57 days to 55 days. During the September quarter, we generated free cash flow of $118 million. Our total cash and investment balance increased by over 16% to $738.9 million. On October 18th, we announced a 21% increase for our upcoming dividend, which is payable on January 10th. As a reminder, we initiate the dividend program with our first payment of $0.12 per share in July 2018. We then raised the quarterly payment by 16.7% or $0.02 ahead of our January 2021 payable date, and we'll pay $0.17 per share during January 2022. As explained during the Investor Day, the dividend allows us to provide a consistent return, which our long-term shareholders can plan for.
While consistency is one of our guiding principles, we also want to keep our dividend competitive relative to our close semiconductor equipment peers. Additionally, we continue to believe our market valuation remains undervalued and have prioritized our open market repurchase program by increasing recent activity. During the September quarter, we repurchased just over 60,000 shares for $3.8 million, which represents nearly 40% of our total repurchase in fiscal 2021. As a comparison, during the first six weeks of fiscal 2022, we repurchased 148,000 shares for $7.9 million, which is equivalent to over 75% of our fiscal 2021 activity. We continue to have regional cash constraints in the near- term, although we expect by the second half of fiscal 2022, we will have better access to our global cash balance.
We intend to continue tactically taking advantage of market misperceptions through the use of our open market repurchase program. For the December quarter, we expect demand to remain very strong and anticipate approximately $460 million of revenue, ± $20 million. Considering our efforts to stretch capacity and deliver additional advanced display solutions during the September quarter, this December quarter outlook reflects fairly consistent linear demand for the majority of our products. This continued strength support our view of a multi-year industry expansion period and keep us well on track to reach and potentially exceed our long-term financial targets. We expect gross margins to be 47% in the December quarter, ± 50 basis points, due largely to ongoing manufacturing efficiency and strength of higher margin products.
Non-GAAP operating expenses is expected to be approximately $77 million, ±2%, and non-GAAP EPS to be $1.88, ±10%. We continue to anticipate supply chain challenges to contribute to overall industry growing pains. Looking further out, increased wafer starts should ease these constraints and continue to support above average semiconductor growth through fiscal 2023. This is very aligned with our long-term target established during the Investor Day. Over the coming quarters, we are very confident in driving new market adoption and customer wins while emerging equipment portfolio, specifically LUMINEX, our advanced display system supporting the mini LED and micro LED transition, and also our APAMA and Katalyst advanced packaging system, which support high performance computing and mobile applications.
This continues to be a very exciting period in the company's long history, and we are seeing ongoing potential to dramatically and sustainably extend our business as we continue to execute on this multifaceted growth strategy. We look forward to sharing additional information regarding these new opportunities over the coming quarters. This concludes our prepared comments. Operator, please open the call for questions.
Thank you. We're now conducting a question and answer session. If you'd like to be placed into question queue, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star one. One moment please while we poll for questions. Our first question today is coming from Craig Ellis from B. Riley Securities. Your line is now live.
Yeah. Thanks for taking the questions, team, and congratulations on the very robust quarter and strong outlook. Fusen, I wanted to start just by digging into one of the disclosures in the release regarding the backlog at $787 million. What I was hoping to do is have you help us understand the composition of that backlog. One, how distant are orders in the backlog? To what extent is it giving you visibility beyond the fiscal first quarter into the second and third quarter or maybe beyond? And then, with regards to the breadth of products that are in backlog, would it be similar to what we've been seeing, or is there a significantly different composition of systems than what we recently reported in the fiscal fourth quarter?
Craig, this is Lester. Let me take that. I think the backlog is still very strong. As far as the composition of the backlog, I think it's for capital equipment, it will be similar to the fourth quarter. Obviously the mix changes a little bit, but we still see very strong sales of our higher margin RAPID products as well as LED. I think that may increase a little bit. We also see, you know, strong sales of the advanced pack. Sorry, advanced display product going forward. I think the mix is somewhat similar. Of course, not exactly the same, but it is somewhat similar. As far as, you know, visibility, you know, we've actually we're up to.
The lead time now is, you know, almost down to about six to seven months, which is very good. It was before as close to eight months, which is double our historical average. We've worked very hard. We increased capacity, manufacturing capacity 2x since the beginning of fiscal 2021, in order to address our customers' demand. I think we see FY 2022 to continue to be strong. There obviously will be some fluctuation, particularly because of the industry-wide supply chain issues, particularly about wafer shortages, which a lot of people are experiencing now. We think that will be as Fusen said in his remarks, more alleviated towards the second half of the year.
That's real helpful, Lester. The follow-up question is somewhat related to the color you provided. We would typically expect the business to have a seasonal profile to it in the December quarter and then in the March quarter either flat or accelerating a little bit. It seems like the December quarter's outlook is really bucking that, given that the midpoint is only down $25 million or, you know, 5% or so sequentially. To what extent do you think you are seeing seasonality in the business versus just seeing the continued strong demand for your products, including all the new products, really power right through that seasonality?
Actually, Craig, I think the strong September and the December quarter we believe was because of a long lead time and that people actually book, you know, ahead, and that we really don't have the maximum capacity to deal with that. That's why all originally maximum target capacity is actually 450, around 450. Actually, we stretch the capacity, you know, to deliver what customer need, right? I think at this level, we really beyond. We probably don't expect every quarter we need to run beyond our target maximum capacity, so we might see some seasonality, you know, from this point.
That's really helpful, guys. I'll just ask one more before hopping back in the queue. Fusen, I was interested in your comments regarding products for EV battery assembly. I'm wondering if you can talk about the engagements that you have with potentially customers or customers' customers, whether the engagements are more with the battery makers themselves or with the OEMs or both.
Actually, we engage with both. We believe, Craig, if you remember, we engage with a leader in the industry in this space very early. Recently, actually, you can see a lot of players, which actually, you know, they are very happy to find us to be their partner. Actually, we expand our portfolio starting from cylindrical, and then we go to prismatic. We also, in order to be more competitive, actually, we segment, you know, our product to have a high- end. We have a little bit, you know, a low- end, you know, a more cost-effective solution, and particularly in China to compete. Overall, I think this is a very sweet spot for us, you know, and we continue to be recognized as a leader in this space.
I don't know if I answer your question.
Yeah, I think you did, Fusen. I think the takeaway is you've got significant customer diversity with increased product diversity and an increased ability to hit kind of the high- end of the market and the low- end of the market across cylindrical and prismatic. Really helpful. Thanks, guys. I'll hop back in the queue.
Good. Thank you.
Thank you. Our next question is coming from Krish Sankar from Cowen and Company. Your line is now live.
Hi. Thanks for taking my question, and congrats on executing well in a tough environment. I had three questions, too. The first one is there a way to quantify how much the revenues in September and December quarter would have been if you're not supply constrained?
Krish, I don't understand question. The revenue is a product we deliver, right? Can you ask again?
Let me ask you another way. What would the December quarter revenues or guidance have been if you're not supply constrained?
Well, Kris, I think the December quarter, yeah, revenue, the supply constraint is not as big a factor there. I think the point we're making is that we kind of stretched capacity in the September quarter to meet our customers' demand, right? I think demand is still strong. I don't think if there was infinite capacity, it would not be $500 million or $600 million quarter, if that's what you're asking.
Got it. That's super helpful, Lester. Second question is, you know, I might have missed it, but Fusen, did you give a FY 2022 revenue guide, or should we assume it's gonna be similar to FY 2021?
Well, actually, we are quite positive on the end market demand over 2022. We are feeling right now, 2022, the revenue will be comparable to 2021. That's what actually Investor Day, you know, we told our investors. That means, we expect fairly comparable. At this moment, I think what we see is maybe slight upside compared to 2021 in our memory and also auto business. Krish, as you know, this industry, we also have a global supply chain challenge. Something we focus on and many people focus on is a wafer shortage, the current constraining of our industry growth at this moment. We anticipate new wafer capacity will come online in the second half, right?
It's going to be, you know, along the comparable revenue over 2021. We are very positive about 2022, and we will provide, you know, more information about 2022 revenue expectation, you know, over the coming quarter as we see more clearly about how this wafer shortage goes.
Got it. Helpful, Fusen. Final question. Obviously very strong advanced display revenues in the September quarter. Are they all for mini LED or is anyone beginning to look at micro LED? Also along the same path for Lester, the December quarter gross margin is pretty strong too. Should we assume December is gonna be another strong advanced display quarter?
Let me answer the first part of your question. You know, Krish, you know, the mini and the micro LED, this is related to the size, right? A lot of people categorize, you know, mini LED as micro LED. From my point of view, I think the size is of course a mini LED more at this moment. Of course, the engagement with a lot of customer at this moment, we are dealing with a very small size. To answer your question, I think from my view, I think a mini LED is a majority, you know, of the revenue at this moment.
Krish, for the margin, yeah, we are calling very strong margins for Q1 at over 40-something percent, and there is quite a mix of the advanced display solution in the Q1 revenue as well.
Thank you very much. Thanks a lot, Fusen. Thanks, Lester.
Thanks, Krish.
Thank you. Next question is coming from David Duley from Steelhead Securities. Your line is now live.
Yes, thanks for taking my question, and congratulations on the great execution. 33% operating profit's a great achievement. Just a couple questions. Lester, as far as operating expenses go, do you think it's the variable and fixed expenses that you just outlined are the right numbers going forward? Or should we be adjusting operating expenses given the outlook?
No, I think it's still the right number. I mean, it's at 48%-57% and, you know, non-GAAP for this quarter at about $0.77. I mean, obviously, Dave, there's push and pulls within OpEx at any one time, right? But I think it's in the right ballpark. I mean, as we, you know, move forward some development programs and as things change, we'll update the model as warranted.
Okay. Then my other second question is, I think, well, at your Analyst Day, you talked about a 500 basis point gross margin improvement over the next several years. I realize there's lots of things that are behind that improvement, but if you could help us understand where you are kind of, as far as, you know, if this is a you know, a nine-inning ballgame, how many innings are you in to that gross margin optimization program? You know, I realize that it might take a couple quarters to see the gross margin improvements 'cause you gotta work through the inventory. With all that in mind, you know, could you just help us understand how far you are along in adjusting things to get to that to achieve that 500 basis point gross margin?
Well, gross margin improvement is always a work in progress for us, and it's something we always strive towards, right? Not just towards the 500 basis points, but we wanna push it beyond. To answer your question specifically, I think, you know, we're probably a third to halfway through that journey. I mean, I think, we've worked very hard in terms of maximizing manufacturing efficiency, you know, through supply chain, through operations, through engineering, you know, through redesign, to maximize our cost, to reduce costs, to maximize cost savings, right? I think the other thing that makes a big difference, and it will take some quarters to kick in, is also product mix, right? I mean, as Fusen indicated earlier, we have now...
In this year we migrated a lot of bonders to the, you know, the more complex higher margin RAPID Series. In LED, we also have, you know, increased the margin because we've introduced a new tool. I think that the key also going forward, we'll also have, you know, more advanced display as well as advanced packaging tools, which also carry higher margins. I think you will see, you know, margin expansion, you know, over the next couple of quarters and definitely, you know, towards the target that we set during Investor Day.
Okay. Final question from me is, Fusen, you mentioned, I think, some customer wins in the advanced packaging area, both with the thermo-compression bonder and the flip chip. Could you just elaborate a little bit more on the potential for those wins and when you would expect the revenue from those particular wins you're referring to to start to contribute?
Yeah. You know, we established our TCB base starting from OSAT customers. If you look at it at this moment with the customer base and the customer we engage actually is really a lot from OSAT to a CMOS image sensor, you know, silicon photonics, AR/VR. We are very encouraging and the technology we provide to the industry is really well-recognized. We do expect the TCB will grow strongly into this year. Of course, we expect, you know, we'll double again in 2023, right? That's our TCB. We are very, very positive. The flip chip, you know, we actually have a lot of internal program. Flip chip we develop very good tool.
Right now we already in a few customers, and this is for a high productivity, you know, high accuracy flip chip. You know, we probably just want to make more effort, but at this moment, I think it's already in many, many customers. We do believe at this moment the TCB has much more momentum, but flip chip is picking up.
Thank you.
Yeah. Okay, good. Thank you.
Thank you. Next question is coming from Charles Shi from Needham & Company. Your line is now live.
Hey, thank you for taking my question. Good evening, Fusen and Lester. I want to start going back to the question about fiscal 2022 outlook. Obviously, investors hear things through from your largest OSAT customers. Looks like the consensus view seems to be the OSAT spending on wirebonders may moderate a little bit next year. Yet, you are seeing something like a comparable outlook for next year. I wonder whether there's a little bit of a growth driver shift away from OSAT going to like IDMs next year. Is that the case? If you can tell us a little bit more in terms of the OSAT contribution to the revenue in fiscal 2021, and what you're expecting fiscal 2022.
Okay, Charles, I think at this moment, we do see some OSAT customers, you know, delays their delivery schedule due to wafer shortage. I mean, a lot of people mentioned about it. But at the same time, I think we also see some customer pull in because we have actually a spectrum of customers with us, not only OSAT customer, right? This helps. Overall, we still see a very healthy move on the demand, and 2022, we believe will be another strong year for us. To answer your question, I think if we allow for the wafer shortage, the demand for the wire bonder will be even higher. But at this moment, I think we are seeing maybe comparable business, overall and compared to, you know, 2021.
I think your question is right on. We do see actually some scheduling, you know, delay, but luckily, we have a big spectrum of customers. You know, when it's delay a little bit, we also have some people want to have an earlier schedule. I wish, you know, this help.
Charles, as far as your question for FY 2021, FY 2021 was a very strong year for OSAT, as you know, right? The OSAT account for almost close to 90% of the shipment. Historically, OSAT has accounted long-term around 65%. We think in FY 2022, we don't have a forecast. We believe, as Fusen said, right, there's a broad spectrum of customers that we now can serve, if there is a slight slowdown from the OSATs.
Right. Charles, a little bit delay from OSAT, we do believe, according to customer, this is really a wafer shortage. Basically, I think, the industry demand is really strong in market. But the wafer start increasing rate not catch up, you know, compared to actually. We do believe this is gonna, the discipline will be eased. That's everybody's expectation.
Thank you. My next question, I really wanna go to the electric vehicle part of your growth driver. I believe electrification not only means battery assembly for you guys, but also power devices. You did highlight the POWER-C product adoption, the momentum, and also some of the pricing strength over there. Obviously, very strong pricing performance. I wonder, going into next year, how can we quantify that part of the growth in terms of the power devices side and the battery assembly side? Do you kinda see some of the investment potentially very strong or concentrated in China or this is more like you have a more global exposure in on both power device side and the battery assembly side? Thank you.
Actually, Europe was quite weak, I would say. You know, it was a China-centric, we say maybe a year ago, but Europe really coming back. To answer your question, I think, you know, we are working with almost, you know, all the region, just on these power devices and the EV.
Got it. Maybe my last question is about the TCB wins. More importantly, I wanna ask you about your potential opportunity at the leading logic IDM in The U.S. Obviously, that particular customer of yours seems to be ready to ramp major advanced packaging, potentially in Malaysia, second half in 2022. I wonder whether that's a contributor to your TCB business. If it is this more like something you will see within fiscal 2022, which ends in September next year? Or is it more like a fiscal 2023 event?
Thank you.
Charles, you know, it's difficult for us specific comment about single customers. What I can tell you is all the customer we engage at this moment, I think we almost conclude a successful actually qualification. When the RAM come, you know, if it come, you know, it's going to benefit to us. That's all I can say. I'm sorry, we just cannot comment specific customers. I think engagement you know with all customers has been good. Qualification has been done, many of them, and we are very positive about TCB prospect.
Charles, I guess again, we don't comment as specific customers, but we do see advanced packaging revenue, particularly through TCB, coming in FY 2022, not just in 2023.
Yeah, the growth of, compared to 2021-2022, TCB actually grow a lot. You remember I mentioned about 2x, and we also expect we'll double again, you know, to 2023. That's our expectation. Charles, my comment is this: I think the end demand is very strong for the whole industry with a lot of our technology driver. But the new wafer capacity actually cannot catch up with the strong demand, right? That's why we are seeing, you know, some industrial pain. We do believe a new wafer start will come online, new capacity in the second half. Hopefully this will help everyone in the industry. Maybe I say a little bit.
At this moment, the new wafer start rate at this moment is about 4%. People really expect start from the end of 2022 and beyond, probably will be 6%. When all these capacity come online, actually, I think our industry will become very, very busy.
Got it. That's all from me. Thank you.
Thank you. Next question is coming from Tom Diffely from D.A. Davidson. Your line is now live.
Yeah, good morning, and thanks for the question. Fusen, you talk a lot about the industry wafer supply constraints. I think that's very well understood. Are you seeing the bigger impact at the leading edge or the trailing edge? Does it impact your core ball bonder business more, advanced packaging business?
Actually, the capacity added, I think, at this moment is really not very concentrated on the like 10 nm below, right? You know, our ball bonder, we also working with our customers and try to test its limit. We are working with some customers, you know, to use their mobile devices to test beyond 10 nm and below, and we see a positive result, right? At this moment, Tom, actually, we also believe our ball bonder support very advanced packaging, you know, even at the 10 nm. To answer your question, I think the capacity, you know, at this moment in the industry, actually, I think, is not the most advanced products. It's not like a 10 nm and so.
Yeah. Okay. That's helpful. Then moving over to the display business. When you look at the success that you've had with the PIXALUX, and now you have the new LUMINEX coming out, how do you think the rollout of the LUMINEX is going to impact the PIXALUX? Or how do you see those two playing together over the next couple years? Are there certain applications that PIXALUX will take in?
Right. Let me answer this. I think at a certain point, they are complementary. I think at a certain point, it's also become competitive, right? Let me answer a different way. The PIXALUX, at this moment, actually serves just one application, is a final placement, right? It's moved from one place to the other place. It's a final placement. It's at about 50 Hz. That means it's doing a placement of a 50 die, roughly, per second. That's our products. The difference of our LUMINEX compared to PIXALUX, actually, there are a few things different. The LUMINEX is not limited just on the final placement. It's also, you know, can do, you know, a lot of LED manufacture need in the sorting, in the, you know, PAN, you know, repeating.
You know, there are many, many applications. The customer base will be wider, and the speed will be also higher. In the future, you know, assume like, 8K TV, you know, I think there will be potential we can use this, LUMINEX to do a direct integration, you know, application. You know, one panel probably need to move about 25 million die. Right? For us, there are few difference. One is the customer base will be much wider and also, the application. The processes served, LUMINEX will be much, much wider. You know, LUMINEX start to go to customer side. We do expect, probably, we should receive revenue, early revenue by end of, fiscal quarter.
Some summertime, hopefully, we start to see initial revenue and finish qualification and production for the mass production, when the customer see the result, right? To answer your question, the expectation we have on LUMINEX is the later part of the year we start to see revenue, and once it's qualified, it can start to ramp. Majority of the revenue we still see in 2022 is of PIXALUX. But beyond 2023, I think our LUMINEX will run probably faster.
Okay, that makes sense. Thank you for the color there. Finally, Lester, you mentioned that there's a little bit of constraints on the cash from the location right now. You said that might ease in a few quarters. What are you doing to, you know, bring the cash back to The U.S.?
Well, Tom, it's if I explain the whole thing, it would take probably an hour. It's very complex, obviously tax. We're trying to bring it back to using the most tax efficient way so that, you know, there's no leakage. We expect to be able to access it by the second half of next year or this year.
Okay. I get, I guess, just the bottom line on that. What do you think the cost will be to you to bring that back or to repatriate it?
It should not be significant.
Okay, perfect. Thank you.
Thanks.
Thank you. Next question today is coming from Christian Schwab, from Craig-Hallum. Your line is now live.
Hey, great quarter and, great outlook, guys. I guess most of my questions have been answered, but, just one last one. Fusen, as we look at, you know, the tight supply environment, wafers opening up, as you said, maybe in the second half of calendar 2022, which will then, you know, drive, you know, increased demand for our advanced packaging solutions because there's more demand there as we try to get to a supply and demand equilibrium, if you will. Would you agree that this cycle appears different than others for you in particular, will be stronger for much longer? You know, as the wafers come online next year, that probably takes us well into 2023, you know, for advanced packaging strength to continue.
At which point, you know, the mini LED and micro LED adoption, you know, will be much more crystal clear. We're kind of probably on our path to the LUMINEX adoption maybe kicking in. And then, you know, we'll probably be much more well on our way to tremendous growth in the silicon photonics and silicon carbide market. As everyone's racing to, you know, make electric vehicles faster than the next guy who makes cars. Would you agree with that? Is that why you're increasing the dividend and buying back stock up at these levels when we were buying back stock not all that long ago, materially lower? Am I thinking about that correct?
Well, actually, we are quite positive about the company's prospects, right? We are no longer a single product company. 2021 actually, you know, is a very strong year. Part of the reason is also because of people working from home, and therefore, we have a lot of bookings. I think at this moment, you know, the end market demand is so strong. But, you know, the wafer capacity just cannot catch up with strong end demand. But once the wafer starts, you know, I mentioned just before to Charles's questions. You know, the wafer starts, actually the annual growth rate is expected to be 6% rather than 4%, right? So this means a lot of end demand is going to be there.
This end demand of course will help our core products in the bonder, in the wedge bonder. I think our company is well-positioned, you know, in advance, you know. We will do well in the flip chip. We will do well in the TCB. I think our advanced display offers us another area that we can grow very fast. The compound annual growth rate of mini and micro LED. Actually, you can trigger a lot of market information. A lot of people say 50%, a lot of people say 40%, but it's gonna grow very, very fast. We believe the value in this industry is not mini and the micro LED itself. It's really a mass production, mass transfer.
Transfer a lot of die from one place to the other place. We do believe, PIXALUX, we demonstrate leadership. In the LUMINEX, we are confident we are gonna attempt again to be a leader in the industry.
Great. No other questions. Thanks, guys.
Thank you.
Thank you. Our next question today is coming from Dylan Patel from SemiAnalysis. Your line is now live.
Hello. Can you help me wrap my head around the thermo-compression bonding opportunity? At investor day you disclosed some information about the advantages of a fluxless TCB and even had someone from an IDM talk about advanced packaging. Could you-
Okay.
Could you-
Yeah, go ahead.
I understand you can't discuss customers, but what is the potential of this technology?
Okay. Actually, I think the future of packaging, you know, in a big way, people are talking about heterogeneous integration, right? To support the industry, you know, high density, fine pitch, heterogeneous integration. Actually, we have two programs we look at it. One program actually is a lot of people talking about hybrid bonding. In our opinion, this is a very fine pitch application. This is very niche, very complicated and very costly. Internally, you know, other than the hybrid bonding, we actually look at, you know, a project we call Fluxless TCB. We believe. The difference of these two programs is how to clean the interface. We actually believe the Fluxless TCB process cover a lot of product is needed for the heterogeneous integration.
We start to work with, you know, a few customers. Feedback is very, very good, and the customer interest actually is growing. We do believe, you know, we expect this fluxless bonding will cover many times in terms of revenue potential compared to hybrid bonding. Hybrid bonding is very, very niche, probably particularly concentrated in less than 10-micron copper pillar pitch. But beyond that, you know, from 50 to 10, still a lot of market is a big die application. We start to engage with customers. Initial feedback has been good. I think we probably can give you more update in the next couple of quarters.
Can you re-clarify that? You believe that TCB will be a larger market than hybrid bonding as a whole in the industry?
I think, you know, the difference of these two is, you know, we haven't demonstrate, you know, the Fluxless TCB below 10 microns. One of the worry for, you know, the Fluxless TCB is potentially for the fine pitch, you might damage your oxide during the TCB. We will demonstrate for, you know, larger pitch, you know, it's still fine pitch, but not necessarily 10 micron. Actually it's worked quite well. If industry doesn't need to use a hybrid bonding, which is a very, very complicated process, I think, we believe, we have a market-ready solution. The size actually can be bigger than, you know, of course, will be bigger, much bigger than the 10-micron fine pitch. That's our opinion. It's just my opinion at this moment.
Since we have quite good momentum in TCB, we engage with many customers. We start to work with customer, you know, on this fluxless TCB bonding. I think initial feedback has been good.
With this form of advanced packaging, you know, at least hybrid bonding is on a front end basis, right? It's the foundries, it's the IDMs that are doing it. Is that going to continue to hold true, or do you think the OSATs will also be customers for this technology?
In my opinion, it's going to be quite difficult, right? It's a lot of fine process, and it's a, again, actually, cost is a very important. I, in my opinion, I think a heterogeneous integration to deal with the fine pitch. You know, fine pitch, depend on how you define fine pitch, can be 10 micron or between, say, 40 micron-10 micron. I think, maybe I don't comment about the hybrid bonding, but I do believe this fluxless bonding is going to offer very big market just for us.
Thank you.
Thanks, Dylan.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Joe for any further or closing comments.
Thank you, Kevin. Thank you all for joining today's call. We will also be presenting at the CEO Summit in person in San Francisco on December 8th, D.A. Davidson's Virtual SemiCap, Laser and Optical Conference on December 15th, and also the 24th Annual Needham Conference during the week of January 10th. As always, please feel free to follow up directly with any additional questions. Have a great day, everyone.
Thank you. That does conclude today's teleconference and webcast. Let me disconnect your line at this time, and have a wonderful day. We thank you for your participation today.