Greetings, welcome to the Kulicke & Soffa 2018 Analyst Day and conference call. At this time, all participants are in a listen-only mode. 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, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke & Soffa. Joseph, you may begin.
Thanks, Brock. Welcome everyone to Kulicke & Soffa's 2018 Analyst Day. This will be audio broadcast. For those dialing in, presentation materials can be found at investor.kns.com under Events and Presentations. This event provides a unique opportunity to participate in discussions from several key members of the company's executive leadership team who are critical in driving and achieving our long-term objectives. 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 these 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 10-K for the year ended September 30th, 2017. Joining us today are several members of the senior KNS executive team. Fusen Chen, our President and CEO, will provide a high-level introduction to the company's strategy and positioning. The next three speakers will provide insight and overview to three fundamentally different end markets that we serve: general semiconductor and LED, automotive and industrial, and advanced packaging. Kwong Han is our Senior Vice President of Sales and Advanced Aftermarket Products and Services, and he'll cover general semi and LED piece. Chan Pin Chong, the company's Senior Vice President of Wedge Bonder and APMR Equipment, will cover the automotive market trends.
Shubneesh Batra, our Vice President of Advanced Packaging, will cover some higher growth areas within assembly. The last two presentations will discuss how we can drive value and deliver value within these trends. Nelson Wong, our Senior Vice President of Ball Bonding, will connect our end markets to our products and services portfolio. Lester Wong, our Senior Vice President, Interim Chief Financial Officer, and General Counsel, will tie this back into our long-term financial model with some key financial KPIs. From a timing standpoint, presentations will be approximately 15-20 minutes long. Directly after the financials, Fusen Chen will cover with a brief summary. Lastly, we've designated about 30 minutes for Q&A session after the presentation, and we'll prioritize questions from our covering analysts first. As a reminder, we're broadcasting audio.
Please remember to use the microphone when asking questions, and I'll run them around. It's now my pleasure to introduce our first speaker, Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer. Fusen joined KNS in October 2016 after driving fundamental business improvement as the Chief Executive Officer and President of Mattson Technology. He previously held positions in business unit management, operations, and ultimately Chief Technology Officer of Novellus Systems. Prior to joining Novellus, Fusen was Group Vice President and General Manager for the copper physical vapor deposition, PVD, and interconnect product business group at Applied Materials. Fusen holds over 60 U.S. patents and earned his PhD degree in material sciences and engineering from the State University of New York.
Since joining K&S in October of 2016, he has driven fundamental improvements in organizational design, has redefined corporate priorities, has identified and targeted new market opportunities, and continues to serve as a shareholder advocate through a more aggressive share repurchase program, and also by championing our recently introduced quarterly dividend. Fusen will provide a high-level overview to strategy and key market drivers. Please go ahead, Fusen.
Well, thank you, Joe Well, good afternoon. I'd like to thank all the support from you in the past years. We are making a difference in the company. I would like to show you some of the strategy we have. Okay, I joined company latter part of 2016. It's less than two years. Before that, I was in the front end for more than 25 years and working on a lot of development and also general management of the company. When we look back in the past 10 years, we see fundamentally this industry changing. Number one, Moore's law is slowing down. What are this means? When a Moore's law slow down, people need to figure out another way to improve the Moore's law.
We see a phenomena that this trigger a lot of innovation and investment coming toward back end because Moore's law slow down. Means every technological advancement is more and more expensive, right? That's one of the reason I joined KNS. KNS has a strong fundamental, and I'd like to take this opportunity. A lot of investment, a lot of innovation is in back end. I think we will have opportunity to build KNS a very successful, a strong, a leading back-end company because of this opportunity. Definition of a successful company, in my way, in my own definition, is we have a strong core business, and we can leverage this business and even grow bigger. I give you example. Ball bonder, we are number one in the industry.
Not only ball bonder we are number one, wedge bonder we are also number one, right? You probably don't know, 2018, there are one trillion over semiconductor devices, finished products. When they finish a product, they need a home. They need to have a home. They need to be packaged. 70%-80% of finished semiconductor devices choose ball bonder as interconnect solution. 70% of market shares for packaging is ball bonder. We are number one in the industry. We are also number one in wedge bonder, right? I like to make this core business become grow bigger. Within the first two months when I joined the company, I make a strategy. We want to grow wire bond even bigger, although we are number one, right? We decide to extend to LED market.
12 months after we make this strategy, we grew LED business 3x compared to previous years. By doing that, I think we achieve three things. Number one, we gain additional market shares in ball bonder. We generate additional profit in ball bonder. Number two, we not only optimize the cost structure for the low-cost LED bonder, we also optimize the whole cost structures for the whole bonders. We can use our knowledge in the LED bonder, which is price-sensitive, improve gross margin for the whole ball bonder. Number three, more importantly, why we want to get into LED market is because of by getting into a price-sensitive market, we eliminate majority of future competitor in China. If we can compete in China, we can compete everywhere, right? We have both high-end and also low-end.
I can tell you, I think, in term ball bonder, we are stronger than ever. 80% of finished IC product use the ball bonder as interconnect solution, right? That's how we leverage our core business. Number two, how we leverage it, is we form a business we call APS, right? We put a service, spares, and the consumable together, and we are gentleman, Kwong on the back. Currently, I think, this APS account for 20% of our revenue. In the next four, five years, this will be 30% of our revenue, right? We leverage our core business and grows bigger. The second, we extend our product to next market. Right? Currently, we have multiple program in advanced packaging, is called more than Moore's Law, right? Moore's Law is slowing down.
Everybody comes to a more than Moore's Law. We have many program, and even some program we did not announce yet. We believe giving our technology inception, this product is gonna grow market to next level. We also have several joint project with our partner. Recently, we announced we have a joint development program with Rohinni. This is a micro LED company, and we believe this is a technology, the most imminent to the production technology. We also believe the micro LED, mini LED will be the next big wave of growth. We believe the mini LED will be the next step for backlighting, compete with OLED, and this will take a part of market share from OLED. General lighting for the micro LED will come in in next couple years.
We believe micro LED, mini LED will be big wave of growth for industry, and hopefully it will be for us. We also not exclude a possibility to do M&A. Actively, we are looking. Any possibility, any suitable partner, we are not excluding the possibility for M&A, right? We have mean to make our core business even stronger. We are preparing many projects. When the technology is inception, come true, we are gonna grow a company with new products. We have new partnership, therefore, we have mean to return the value to shareholder. Right? We are in the middle of second stock buyback program. The first buyback, $100 million is done. The second buyback we announced last August. Up to date, we spent approximately $85 million.
This morning, we amend additional $100 million to buy back our stock. In June 4th, about a month ago, we also declared dividend program. It's $0.40 per quarter, so roughly it's about 2% over a year, right? This is the way we put shareholder return as our top priority. Okay. When I join a company, the first step, I look at organization. Actually, last year, we fine-tune our organization. There are a few area we have fine-tuned. Number one, we decentralize our R&D engineer. We deploy roughly half of our engineering resource to business unit. Therefore, they can move faster, come to the market, and respond to customers' need, right? Another half, we continue to stay in the central of engineering.
They look ahead to look for the future potential growth and make products and make a concept, participate in like Industry 4.0, so on and so forth, right. They are very focused for future and current business unit, they are focused on current revenue. Therefore, they are clear the responsibility, and also, they are empowered to do what they need to do in terms of growth of the revenue. As I mentioned, we also form a business unit, and Kwong Han is gonna be putting on this business unit, APS. It's a service, it's a consumable, it's also spares, and in the future will be a refurbished. Put all this to become a focused business unit.
We will grow this business unit at the current of 20% of total revenue to 30% of total revenue next four, five years. Organization is a better, you know, ownership and also better efficiency to move forward. This chart show quarter-to-quarter revenue variation. This chart make two conclusion. Number one, our revenue is in uptrend. Number two, I think the range is tightening, right? Due to diversification of our product and nature of semiconductor business. In 1980 to 1990, I think this industry was driven by a single product. It's called personal computer. It's by corporate spending. Right now, there are many, many affordable electronics, and the customer base is global customers. Basically, this business should be driven by GDP.
It's more stabilized business and plus additional growth because communication not only happen between the people to people. People to people, you see, is like a Facebook, like a WeChat. A lot of people to people communication, right? You also see Amazon, Alibaba is the people to object, right? You purchase stuff. There's a lot of communication, people to object. You also see object to object communication, right? You see a big factory, Foxconn. It's people communicate to robot. It's a whole total new revolution, and I think the demand of the IC and the communication device is gonna continue to grow. Not make our industry less cyclical and also seasonal. Okay, industry evolution. I think industry is changing, growing. Our actually, current product is very align with the fast growing of industry trend.
You will see a few segment right now, actually grow very fast. Automobile, IoT, LED, and the memory. This is the first time in the K&S history we have all the solution for the interconnect process. I also mentioned, I think, this industry is more, less, seasonal and also, with less, cyclicality. It's because our customer base is broadened. It's no longer corporate spending, right? It's everybody can buy affordable electronics. This industry will continue to grow with the additional new method, new capability, to make a packaging, for us, right? For example, a new way of LED. I talk about the micro LED and mini LED. There will be a lot of, new method for, more than Moore's Law.
Industry 4.0 is coming, will connect people to people, will connect actually maturity Industry 4.0 is object to object and people to object, right? In the tuning process, we will come out a very wide portfolio of advanced packaging portfolios. We have ability to have major share gain, and this is going to be in TCB, right? To gain a major market share gain in the advanced DRAM and the advanced logic. Okay, opportunity for us. The vertical is the number of IC produced and the package in particular year. In 2018, it is close to one trillion and continue growing, right? Because of all the communication, all the connectivity between various object. And horizontal is revenue for assembly equipment or bonding equipment, right? Few conclusion.
This one trillion devices in 2018, 80% use a bondable TCB packaging solution. In next five years, we don't see that will be changed. Next conclusion is the revenue for the assembly equipment, compound annual growth CAGR, is about 7%. Very fast growing. Of course, we like to grow faster than that. The third conclusion is in 2018, people think we are wire bond company. At that time, we have five product in our portfolio. In 2018, at this moment, we have 21 product in our product portfolio. Nelson will talk about it in more detail later. Our market. How do you see our market? It's very difficult. We summarize. I think we align our business into three segment, right, end market.
One is a general semiconductor and LED. The other one is auto. Finally, I think the last one is advanced packaging, right? We align our business in three areas, and you will see, you know, a detailed presentation in these three areas. Right. We are number one in wire bonders, as I mentioned. We are significant in install base, and there are many diversified products come to the market. For this market, you know, mean to us is really a capacity expansion. There will be more and more affordable device. There will be more and more population, there will be more and more connectivity. That drive capacity expansion, that drive the growth for us. For auto, we also see a fundamental, you know, a revolution for the auto industry.
The acceleration in the hybrid EV car, and eventually, autonomous car need additional reliability and capability inside the car. That drive additional reliability and capability for our equipment. That drive the growth. Together, we working with 100 dedicated auto customers. Together, we will drive this industry continue to grow. This industry is not only capacity related, it's also capability. For us, we are gonna grow according to capability and capacity. The third area is advanced packaging. This is the more than Moore's law, and this a new way to make, you know, micro LED. This is a new way to do many new auto advanced packaging method. We will have a portfolio, and we will come to a growth when this industry need. This is really, capability related.
In terms of the three areas, before 2015, auto and advanced packaging occupy less in a portion of our revenue, right? You see 2014, the automobile and the advanced packaging is about 28%. 2018, for the first half, 60%, roughly, is our general semiconductor. Roughly, auto and advanced packaging occupy about 40%, right? We are seeing diversification of our business from this chart. We are seeing more diversification. In this industry, I think there's a more driver. That's why we believe, I think this industry is more stable. The up and down is gonna be less. The overcapacity is gonna be less because it's more consumer related. Look ahead. How do I expect K&S, and how should investor expect us? Right. 2017 is a very, very high years.
KNS grew 30%. You also look at this industry, the bonding industry, assembly industry grow. Compound annual growth rate is about 7%. We are not excluding possibility that we can grow higher. Realistically, we like to come a model for people understand us a little bit better. Assume 2017 is a very high level, and we don't want to put a number. It's a hypothetical number that we never can achieve. We assume 10% is achievable for next couple years. For 2017, we achieve $809 million. The analyst, I think, have expectation this year we will do $900 million.
Assume we start $900 million for 2018, with a 10% compound annual growth rate, which is higher than compound annual growth rate for the assembly company like our industry. Right. What that is mean to us? I think 10% is doable. We want to do better than the market, it's not too high we cannot achieve. If the market, I think, is friendly, we should be able to do more than that. We like to come out a model for people to understand us. Right. Assume 10% from here. 10% we believe is doable. Half of that is gonna come from capacity expansion from auto and the general semi, as I just described.
Half of that is going to come from capability at 2D industry that enable us to grow and enable. Therefore enable the industry to grow, right? Ten percent, what that is mean? This is number close to $1.2 billion. I think Lester is going to give us a follow-through model, you know, after my presentation at the end. Also after me, there will be several presenter talk about this market, you know, general semi, auto, and advanced packaging in more detail. I'd like to thank everyone for your support. Again, I want to assure you shareholder is our top priority, right? I'd like to get back to Joe for next section.
Thank you, Fusen. Our next speaker is Meng-Kwong Han , the Senior Vice President of Global Sales and Aftermarket Products and Services at Kulicke & Soffa. He is responsible for driving operational excellence through the company's global sales and service organizations. In addition, he is also leading our aftermarket products and services business. Kwong was most recently the Executive Vice President of Global Business Operations and Office of the CEO at Mattson Technology. He was responsible for the global sales, marketing, business, and also the support service legacy organizations. He grew the company's revenue by 50% after the first year and helped to achieve a spectacular corporate turnaround. After 22 consecutive quarters of losses, the company has achieved 10 consecutive profitable quarters. Before Mattson Technology, he was Vice President of Sales and Business Development at Novellus Systems.
Kwong's career spans more than 30 years at leading semiconductor and semiconductor capital equipment companies, including Applied Materials, STMicroelectronics, and Texas Instruments. Kwong received his Bachelor of Science degree in Chemistry and Masters of Science degree in Materials Engineering. He holds two granted patents, has authored several publications, and has chaired several international technology-focused conferences. Kwong's presentation will provide a background to our broad opportunities covering our general semiconductor and LED applications. Go ahead, Kwong.
Thank you, Joe. That bio sounds pretty good. I have to turn around and look for who the guy is. A very good afternoon to each and every one of you. I know it's a very exciting opportunity to be here once a year and meet some of your old friends, because there's a lot of exciting activities out there. But you are very smart today because you attended the most exciting event of this, of this event, right? As the analyst day of Kulicke & Soffa. Like, like Fusen, I joined this company for a little bit over one year, about a year and three months, although I've been in this industry for over 30 years, as Joe mentioned. The, the thing is that, you know, I've been attending this event for, like, over 30 times already.
It seems like, you know, either I'm getting older or you guys getting younger. The group is getting younger and younger every year. Okay, I'm gonna spend the next 20 minutes or so to give you a feel of why KNS is the right place to place your capital. It's an exciting time and it's an exciting company, and that's why I'm here at this company. You know, to me, my experience of working in the industry for 30 years or so, more than 30 years or so, for any organization, it's only as good as the people behind it. It's as good as people behind it. I'm not gonna talk about the past of KNS. I'm gonna look forward to the future. We have the right team. We have the right leadership.
One thing that you have not heard about the background of Fusen Chen is that he managed, he grew one of the most successful product at Applied Materials. It's not just for Applied Materials, for the whole industry. That is the Endura PVD platform. Over a period of 10 years, he grew the business from about $2 million- $50 million. When he left, it was about $3 billion. That's phenomenal. Okay. When I joined this, the back-end industry, I realized that, hey, wait a minute. There's, in the front-end world, there's a big guy called Applied Materials. In the back-end world, you know, there's no Applied Materials yet. My personal goal is that we're gonna make this a more than Applied company for the back end. That's, that's the aim, guys. Okay.
You have heard the story from Fusen already. In 2017, right here, we achieved $809 million. That's a phenomenal year already. That bring us very close to the historical high of this company. The historical high revenue of this company was $899 million. We're gonna exceed that easily, very soon. For the next three or four years here, by 2021, we have a clear plan, very clear and very executable plan to achieve around $1.2 billion. That come out to about 10%-12% growth rate annually. The incremental part of it is gonna be about $400 million. That's this gap right here. That's about 50% growth from what we did in 2017.
That's phenomenal, 50%. For the general semi, or I call it the consumer electronics part, LED account for about 42% of that incremental growth. Even in the past, this company, the significant part of this bar right here is ball bonder. We've repeatedly reminded you that we are the number one company in ball bonder. We command about 70%-80% of all the products out there in ball bonder. Pretty much everything you see, everything you use, all the electronics with devices that you see around you have 70%-80% of our product in it. We cannot be accountable for the consumer market and also the LED combined together.
It can be account for about 42% of the total incremental growth in, within the next three years or so. Our strategy is very clear, okay? That is efficient business optimization and leveraging on the industry trends. Our core competency is on the ball bonder. Ball bonder has been phenomenally strong for the core markets, such as the consumer electronics market, the smartphones, PC, IoT connected devices, or smart devices we call sometimes, and also LED. LED has been a phenomenal market for us. We have grown for almost 200% the last year or two.
In term of the industry trend, we see that more and more semiconductor unit count. The growth rate has been going from 3.9% to about 6.8%. LED continue to have more and more penetration with a much bigger market share. Last but not least is China factor. China is a huge market, and I'm gonna talk more about it. China represents about 40% of our total revenue last year, as it went up for about 25%. After my talk, my two other colleagues will talk about the other two bar. That is the autonomous driving and industrial, and then also advanced packaging.
In a way, like very much like the Applied Materials story, Applied started out with a single product, which was what? That was the etcher. They were very strong in etch in the beginning, and then they grew out from that. They grew the portfolio. They got into PVD, they got into CMP, they got into APC. We are very much on the same path. We were strong in ball bonder, but we're gonna proliferate, we're gonna grow from there to increase our portfolio to include autonomous driving market and also advanced packaging market. The mobile phone market has been good for us for the last 10 years or so. The market size still continues to be big, but the problem is that where's the growth?
Our phone is not that great anymore, and you'll see this in the chart later. What's the next major area for growth? Smart devices. Smart speakers, smart TVs, smart wearables. I'm sure each and every one of you are very familiar with those products. Very soon, in next two years, we're gonna have smarter robots also, I'm sure. That's the AI stuff. All right, the exciting things about these emerging products or these emerging market, okay, is that look at the volume, look at the unit sold. It's huge. This is pretty much just U.S.-centric. So far, these devices mainly are for the U.S. market. We have to get the global market has not really penetrated yet. The other thing that stand out is the general, the semi content of it.
90% of these, you know, semi component devices use ball bonders, the product that we in the commanding lead, 70%-80% market share. That's pretty exciting. Now, look, you know, looking forward, like I mentioned earlier, the mobile phone stayed pretty flat on the bottom there. That's the low bar in the, in the on the chart there. Then take a look at the growth, the forecast for the smart devices. It's increased drastically, dramatically. This is estimated that by 2025, the ratio of the smart devices versus the smartphone is seven to one. seven to one, gentlemen. That's huge. We're at the heart of it. We're right at the heart of it. Okay. Okay, let me switch gear and talk about LED.
You want me to switch back to the new tech phone? Is solid-state LED. Now, you look around you. At the last CES show in Vegas, what was the biggest item there? That was the wall, right? The LED, the micro-LED, the TV by Samsung. Yeah. You notice that, you know, they put like hundreds of thousands or even millions of those tiny little micro-LEDs. It's not gonna be cost effective to pick and place each of those. It's not gonna be cost effective. This is exactly what Fusen Chen talked about earlier, that we are getting to that market, but we're gonna do this in partnership with our, you know, strategic partner. Mentioned what is the name. It's a breakthrough technology.
It's a mass transfer mechanism to transfer, you know, 50, 100 of the LED die per second. That would drive down the cost significantly. Why, why is it so important to drive the cost of lumen, of cost per lumen? Because as the cost drops, the devices, the component will be more affordable, and therefore more and more people will buy the product. Therefore, we're gonna get more, more business, more market share. Okay. Currently, and in the future, LED is the way to go, especially micro-LED. We have shipped the first LED platform almost 10 years ago, nine years ago to be exact. But not until last year where we've placed focus, emphasis on that market, especially for China market. We have grown significantly in that market in LED.
Of course, we in the commanding position with as many of our leading customer globally. Okay, China, the big China. My favorite topic and also Donald Trump favorite topic too. They want to be self-sufficient. They want to be independent from, you know, from the rest of the world. They want to build up their own electronic industry, period. They have a lot of cash to do that, okay? As long as we have that imbalanced trade. They are nowhere near the domestic production versus the domestic consumption is nowhere equal. What does that mean? That mean that the front end will continue to be a very aggressive to build up the capacity, and the back end will pretty soon catching up, and we're there. We have a huge resource in China.
We have over 1,200 employee in China. We have a demo center in China. Okay? We have, you know, engineering center in China. We there. We're gonna capture that, you know, the, the lion's share of that emerging market. Mentioned this already. Almost half of the global IC consumption is in China. For our, for K&S Vision, last year was about 40% of our revenue come from China market, and that number only gonna go up. And I mentioned earlier, you know, the our market share at the key leading company in China is huge. At some of the customer site, we command 100% market share, especially for the bonders market. Last but not least is this key strategic alliance partnership. Why we're using that model? Because it's more cost effective.
It's more cost effective, right? If they do good, we buy them out, right? It's like try it before you buy it. That bring me to the final slide. The takeaway from my session here. Who are we? We are not just a leading, we are the number one company in the back end providing the interconnect solution with the broad exposure to the consumer electronic market. We're number one in bonders, and we're going to expand that into the autonomous, in the power sub-market and also advanced packaging. You know, technology continue to evolve, and we continue to evolve with it. Okay. This is beyond what the ongoing industry capacity expansion. That is the 7%. That is the 7%, the boring 7% growth that Fusen Chen mentioned earlier.
As I talk about this earlier, the connected devices or the smart devices and LED will just continue to fuel the growth of this industry. China will continue to be a major source of revenue for us. Right? We there, right? As I've mentioned already. We continue to build more and more alliance partnership with key partners globally. Okay? Again, congratulations that you're taking your time off to be here with us today, you know, to share with us, you know, the story, to share with you this exciting story of how K&S is doing, of our vision, and 50% growth by 2021. That's come out to be like 10%-12% annual growth. Okay? All right.
With that, I'm gonna turn it back.
Thank you, Kwong. Our next speaker is Chan Pin Chong. Chan Pin Chong brings over 25 years of experience in the semiconductor and electronics industries, and has held engineering and operational roles early in his career. Over the prior 15 years, his focus has been on sales, business unit management, and executive management. A significant portion of his experience was at KLA-Tencor, where he served positions in general management and as a senior technical director. More recently, he served as vice president of sales and general management of FormFactor. Later, he served as global president and chief executive officer of Everett Charles Technologies. Chan Pin Chong earned undergraduate degrees in electrical engineering and computer science, and later his MBA from the University of Leicester in the U.K.
Joining K&S in early 2014, Chan Pin has made a tremendous impact by driving share gains in consumables, executing on our new battery assembly initiatives, and in general, driving profitability across K&S. Chan Pin currently manages several business units at K&S, including wedge bonding and the complete line of APMR equipment, covering opportunities in automotive, power storage, advanced packaging, micro and mini-LED, and also electronics assembly. Chan Pin will provide some insight into our position and opportunities within the automotive and industrial space. Thank you, Chan Pin .
Thank you, Joe. Thank you, Kwong. My section is about an exciting growth in automotive and industrials. As you know, the car has become more like the iPhone or the iPad. If you just walk in any Model 3 right now, it looks exactly like an iPad. You basically touch control of the entire car using a touch screen. Let me talk to you about what happens behind that bonnet, right? That whole mechanics of driving autonomous autonomous vehicle at automotive in the next industrial section. You can see in this slide here that, you know, there's three incremental growth that our CEO, Fusen Chen, has explained. One of them is the general semiconductor growth, the second area is the automotive growth, and of course, the third area is advanced packaging.
In the section I'm covering today, it's about the automotive and industrial section, about the next section of growth in K&S. This is gonna contribute in the next five years, from 2017- 2021, and this chart shows it's 25% of the incremental growth coming specifically from automotive and industrials. What's the strategy? The strategy is engagements, okay? We have very close engagements with our customers, collaboration partners, and most second important thing is we have the breadth of products to cover all solutions to the market. One of the stories, and I always reread this, several years ago, I was being called into a customer situation, and they said that we need to make many battery packs, okay, for cars.
We need to have interconnect solutions to basically chain up all the batteries to drive cars to very high current dissipation, you know, to get, you know, speed and distance. It was a team that we worked with, basically it's our development team, R&D team and the marketing team. We spent several occasions trying to understand what they need, what they require, and what's essentials. I think in a course of three to four months, we were able to develop prototype solutions for them. I think in this market, speed and time to market is super essential. In the whole world of, you know, electronics and semiconductors, it's about speed, execution, and of course, time to market.
We were able to make a machine or a tool to interconnect all those batteries together. As a result, we were able to sell, you know, many multiple machines into those electric vehicles. I'm sure if you walk out a street, in Market Street, you see at least one out of four cars are electric cars today. Believe me, under that, below that chassis is one of those battery packs wire bonded by K&S. Remember that, right? It's gonna be wire bonded by K&S, and it's a story that started three to four years ago that we did it. That's what I call collaboration, right?
Because when you start with a customer problem, you develop an application, you work towards driving a solution towards applications, you are able to develop a product and a solution, they are able to bring it to the market. When they are successful, supplier of choice, like us, will be successful. That's a story about collaboration. That story was about power storage, and I think there are other examples of even in power control. Power controls are things that drive the car, right? It could be the steering, or it could be some kind of things that drive the engine, right? Second area is safety and sensors. As you know, the car has a high reliability and requirements of quality.
Safety is an important part, and includes the airbags and all the sensors around the car, for safety and making sure that you do not hit something you're not supposed to hit, or it gives you some warning. Today, if you go into any rental car today, you'll be surprised to see how much sensors there is on the dashboard, right? The left and the right and the back and the front, right? It just could be a Nissan, right? It doesn't even have to be a very luxurious car, but sensors is becoming a very central part of safety in every automobile.
Infotainment, I think everybody is very proud, every car manufacturer is very proud to see the whole dashboard from the left all the way to the center of the car, with all different kinds of pictures and graphics and statistics and stuff, right? That's all about infotainment, right? Giving you data, giving you information to be able to drive and experience a very different experience in today's drive. I think as, you know, I travel a lot and I get into many rental cars, I think the most time I spend is trying to figure out the infotainment, right? Where is the charging area? Where is the GPS? Where is the Bluetooth and all that stuff, right? You know what I'm talking about, right? Okay. That's what you know. 'Cause I think today, you know, it used to be about the gas.
It's about how the mileage. Now it's like, where's the Bluetooth? Where's the USB charging? Okay? How do I get my phone to sync? Isn't that those things you think about when you, when you rent a car? Well, I think we are aligned. Next thing, automotive lighting. Back in those days of halogen lights, the days are over. I think we have exciting projects, you know, to work on very specific lighting for cars. I think it's the very same story, right?
You know, a German company came to us and said, "We want matrix lighting in a high beam LED so that it can project far, it can project close, it can project in a curve, it can project corners, and it's able to turn off and turn on at, with intelligence." Automotive lighting has become smart lighting because it's able to detect curves, corners, pedestrians, and danger areas. That's also becoming a core trend in terms of automotives. These are the four areas, right? Control, power control storage, safety sensors, infotainment, and automotive lighting. I think in line with the CEO and Kwong, everybody's driving at more semiconductor content in the car, and that drives electronics, that drives software, that drives more control. Electrification and hybrid, I think I don't have to explain more about it.
Like I said, one in four cars on the road is either electric or hybrid, and you see more of that in also in Asia, and especially in China, that same story that Kwong has mentioned, that electrification and the support from the central government is driving a lot of electrification. All right. You know, we talk about level one to level five autonomous driving, getting connected to the infrastructure. I think it's becoming more and more, and you see more and more autonomous car, especially in the Bay Area. You know, there's a lot of campuses here that's trying it out. Same thing also in China. We see a lot of campuses driving autonomous cars, right? Of course, you know, one charge, 300 miles, hopefully go 400 mi, then 500 mi, then 600 mi, right?
It's all about efficiency, right? Getting more efficient on the cars so that you can expand, and you don't have to worry about running out of power, right? Common discussions, if you drive up to Tahoe, how many hours is that? How many kilometers or how many miles is that? Can a single charge take you all the way to Tahoe and back? Today it's a little bit of a, you know, iffy situation, right? Maybe, maybe not, right? If you go at 60 mi for the next four hours, maybe. If you go at 80 mi, I'm not sure, right? Right. Where's the next charging station? You gotta figure that out. I think it's all about efficiency. We can get 1 charge and get you to Tahoe, I think that's perfect, right?
Another charge to get you back to here, that'll be good. That's all about e-energy efficiency. All right. Those are all trends in industry. All right. Let's see. All right. I think this slide basically talks about the evolution of car. You can see automobile from Ford in 1920. I think we introduced ABS systems in the 1980s. That's the first time where electronics is being introduced in ABS brakes, injections, the airbags, and of course, cruise control. You know, those days when you had cruise control, you were so proud of it 'cause you were like, "Oh, my hand, my foot is off the gas." Remember those days? Yeah. Now it's no big deal, right?
Of course, you have, you have, you know, the electronic, temperature as well as the clock. You start to have, navigations and of course I think when, BMW and Mercedes came out with the Park Assist, you know, if you remember those occasions, whoa, one button and it parks by itself. You know, good about it. That wasn't too long ago. You know. You started to have, you know, systems to be able to detect, you know, emergency braking and so forth. I think right now we are in this era. You know, semi-autonomous, autonomous, you know, the vehicle-to-vehicle communications, network roads, right, roads with street lamps, with network, signals to be able to communicate with your car.
Know when the school is around, when is the cities around, when it's around. you know, augmented reality, right? The whole dashboard, the heads-up display, the display, your whole glass with all the kinds of, you know, digital statistics. You wanna know about temperature, you wanna know about road, you wanna know about how far your gas is gonna take you. That's the whole evolution. I think we are these exciting days of autonomous driving and okay. Right next. This slide basically shows that in 2018, and this is data coming from Gartner, that 9% of any company supplying semiconductor will have a business about 9% as a percentage of automotive sales of a total revenue, right? In our situation, K&S, we are 15%. Why? Because we are addressing a lot more opportunities.
The things I just explained, okay? I talk about the batteries, I talk about the infotainment, I talk about the sensors, I talk about autonomous. That's all driving the incremental opportunities to give a lot more opportunities than our peers at 9%. We're proud to be 15 and over average of 9%. Why? We have multiple products serving multiple applications. Different products, nothing's gonna Type of a portfolio to address. We have, you know, we have a huge customer base. Specifically to my heart is very specific about engaging on customers, right? Every month, somebody's coming to us with a picture, with a sample about a product they need to put in a car. Bonders and pick and place, even have a die attach and all these things, right?
This is the entire K&S solutions addressing on die bonder. All right. Traditional automotive sensors and electronics, we basically continue to execute multiple platforms, multiple products. We have six distinct platforms, okay? Wedge bonder, a ball bonder, a pick and place, a die attach, in the future, other solutions that Last four months, I think we introduced Smart bonder that's addressing the automotive, industrial, you know, area. A factory needs to know traceability. Made, when it's out, and time, and power, and so forth. Need traceability, you need to be able to feed back that information back to a central system. Does something about it, you know, because it's all about quality of information that That's what we're gonna be addressing in Industry 4.0.
All our machines and tools have the capability at some level extent to drive those quality information. Aftermarket, as a result of all this equipment that we have, we have a lot of aftermarket solutions that ties in together with equipment. That, as is, like I said, trace exactly what is, what event occurred at what time. 10% of our revenue, this is non-semi. Automotive is the Q1, okay? I think we can explain over 20 something % is on first half. Basically, we have a lot of opportunities in some business for non-semi, but specific more on automotive. Recently, platform for an automotive. eight out of 10 top automotive component suppliers are our customers. Automotive customers.
The broad offerings, in 2014, it was pretty much power control and info and sensing. As you see, the years come, and the storage came around because of the battery, like I mentioned, under the car. You can see the content of infotainment and power storage increasing over the years, okay. Because of all the mobile 24% of sales is, in the first half is auto and industrial. Multiple platforms, we are very diverse, you know, and applications. Delivering very high performance, so the car and safe drives a huge requirement called safety and reliability. 10 parts per million, DPPM. You can see that if we do not have a machine or a bonder or a machine that drives high reliability, our customers are not gonna qualify that product, okay.
Every car has at least 10 to 15, either a warranty or some kind of support. If some sensor is failing, that's not going to work. High reliability, high performance, it's a must-have in automotive. Let me kind of wrap up on the key messages and the strategy for the automotive segments. I think having a diverse portfolio of solutions addresses the market requirements. A customer comes to you and says, "I have a sample, I have a drawing of a product, and I want you to be able to give me solutions, not sell me a box. Sell me two boxes. I want to talk about number one. Yeah, we have the market leadership, okay? That reinforces our brand and loyalty to our customers.
Having a market leadership in automotive is very key because the brand is gonna take us to the next 10 years. We're very strategic. Every automotive customer that we engage in, we think about a 10-year plan. We don't think about, you know, what drives revenue. Some of our platforms are. That's very important. We develop very long-term relationships, okay? A lot of our customers have been with us for a long time. We continue to ensure that these relationships are high quality and driving for. I mentioned about zero tolerance for any problems or defects. Again, it's the same like when you buy a car, and say, "I'm gonna guarantee you five years, whatever years, X years." The same thing, we have to be able to support. Diversification, right?
Most recently, someone said, "I have a camera that's gonna sit in the front of the car and the back of the car. I need you to develop a solution, three months." What do we do? We said, "Sorry, we don't have a product." No, we said, "We will figure out what we need to do to have the." Over that three months, very intensive. Development engineers, we helped to develop a German automotive customer. There's a reason why we have been successful. It's about the solutions, it's about applications, it's about Very exciting segment of automotive. Hope every one of you will buy electric car within the next three years. Come talk to me, I'll find a way to get you there, right? You need to get an electric car, all right? Support our wire bonders and also support the environment.
Hey, come on, we got to be green, right? You guys are, you know, you guys are writing things to tell the world that we got to live in a green world, right? Thank you very much. We'll be happy to talk more about our solutions later.
Thanks, Chan Pin. Our next speaker is Shubneesh Batra, currently serving as our Vice President for the Advanced Packaging Business Unit. He joined K&S in January of 2017. Shubneesh has nearly 30 years of combined technology and business industry experience. He started his career in R&D at Micron, working on SRAM and DRAM process integration, later served roles in manufacturing and business development. He later transitioned to business development for Micron's CMOS image sensor business and was ultimately responsible for worldwide channel sales before joining K&S. Shubneesh has published 35 referenced research articles and has patented over 100 inventions. He received his PhD degree in electrical and computer engineering from the University of Texas at Austin, and his MBA from the Fuqua School of Business at Duke.
He is currently responsible for our APAMA thermo-compression and die attach offerings, and has steered the development of our recently introduced Katalyst high accuracy flip chip bonder. Shubneesh will now cover our broadening opportunities within the advanced packaging market. Thanks, Shubneesh. Please go ahead.
Thank you, Joe. Very kind and generous introduction. I had a question before I start, you know, get us a discount. I'll definitely sign up, if you do that. You know, I'm here, I joined K&S in January 2017, and can't tell you how excited I am because I think we're entering the golden age of packaging, and it's also related to the BU I run, which is advanced packaging. Let me walk you through that. As Fusen Chen mentioned, you know, we're looking at three areas. You know, Kwong covered general semiconductors, Chan Pin Chong just covered automotive and industrial.
I'm gonna cover the third leg, advanced packaging, which is part of our plan to go from $809 million to roughly $1.2 billion, and this is gonna contribute about 33% of that. That's the easy part, which is roughly about $125 million. The question is: How are we gonna do it? For it comes down to positioning. We're gonna look at the key customers we wanna target, because there are not very many customers in advanced packaging. We're gonna study the type of applications they're engaged in. You know, these are the customers you're looking at for, like, cloud computing, artificial intelligence, autonomous driving, all the buzzwords floating around today.
As I walk through my presentation, I'm gonna give you a flavor of the technologies underlying, the packaging technologies underlying each of these market segments. Obviously, we're gonna build a portfolio, which we're already, you know, halfway through it. We've developed quite a few new tools, and we're gonna match these portfolios to these end customer applications. As we go along over the next few years, we're also gonna have some more tools in development, which we're gonna offer to them as things change. You know, this is still a very nascent and developing area, the market tends to shift on which technology it's gonna rely on. We have to be agile and adapt to that. As I said, you know, I've spent almost 30 years in the memory industry. During my 30 years, there were two major packaging technologies in memory.
For the first 15 years, there was a TSOP package, which had to be less than $0.10. For the next 15 years, there was the BGA package, which again, had to be less than $0.10, and you had to get 99.99% yield. That's all you focused on, was cost and volume. Nobody ever cared about, you know, what you could do with packaging. As Moore's Law is slowing down, and Fusen Chen kind of pointed that out, you're really looking at advanced packaging as a way of extending Moore's Law. The same things that Moore's Law was doing, you know, enhancing the performance every 18 months or cutting down the chip size in half if you were in the memory business, the form factor, you know, the power usage in a processor, for example.
You're trying to do the same things with advanced packaging today. Let's take a deeper look at that on the next slide. You know, this quote on the right is basically saying that Moore's Law is slowing down. It may not be applicable the way it used to be, which was like, you know, there was an industry roadmap, it was well-established. All the equipment vendors and the front-end fab guys, every 18 months they knew they had to double the performance. It was very easy. The script was laid out. Not so much so, right? It leads to a lot of opportunity in advanced packaging. Let me give you an example.
When you're looking at, you know, doing advanced processor solution for artificial intelligence, whether it's for training or for inference, you don't wanna put everything in a 7-nm technology. Why? Because if you look at a 7-nm fab, and I think, you guys must have seen the announcement from a major company out of Taiwan, they said they're gonna invest $25 billion in a 7-nm facility. If you look at a 3D NAND memory facility today, you're looking at something north of $10 billion. Does it all need to be done in a 7-nm technology? The answer is no, right? If you look at a high-performance computing processor today, the core processor you can do in 7-nm technology, right?
You can bring in memory, which is typically 15 nm or 18 nm, your DRAM and HBM, and then your graphics unit can be 22 nm or 28 nm. This concept of taking all these different dies from different fabs and different nodes and technology, putting them on a, either on a substrate or a silicon interposer, which is also pretty expensive, and combining them into a single package is called heterogeneous packaging or heterogeneous integration. That's where a lot of the focus in the industry is going, and that's also one example of an area we're playing in. If you look at autonomous driving, that's also got a similar requirement. Let's take a look at that on the next slide. This is, sorry, it's a pretty dense slide, but I'll walk you through it. It'll be easy, trust me.
Let's look at the first couple of slices. You know, you've got cloud computing and artificial intelligence. What does that translate to in terms of K&S doing in there? If you look at cloud computing and artificial intelligence, it's the same thing I just mentioned. You're really looking at thermal compression bonding, and you're looking at high-accuracy flip chip. The processor, the HBM, you have to place it very accurately on the silicon interposer. Once you've placed them, reflowed them, you have to pick up this very large die and bond it onto a substrate using thermal compression bonding. If you look at autonomous driving and you have a TPU with the memory, it's pretty much the same thing. Mobile, you're looking at wafer-level packaging technology.
It helps you reduce the size of your components, so you can fit in more battery in a mobile phone, and that's the feature that customers want. If you're looking at micro and mini LEDs, I haven't mentioned the technology on this slide, but you're really looking at like mass transfer concepts, as Fusen Chen mentioned once again earlier, and I think Kwong and Chan Pin Chong also touched on that. Connected devices. This is related to system and packaging technologies, right? If you look at each of these market verticals, you've got an underlying advanced packaging technology behind it. Now, the question is, you know, this is still pretty dry, so let me take you on the next slide, and I'll give you a visual on the tools and solutions we're offering, so it'll become really, really simple.
Once again, I'll start off with cloud and artificial intelligence. This tool in the middle, our APAMA tool, is the thermo-compression bonding tool. Today, we announced our Katalyst flip-chip, high-accuracy flip-chip tool. That does the high-accuracy flip-chip placement, or we're targeting that portion of the market. If you look at connected devices in 4G, 5G, we've got our hybrid tool for doing system-in-package. We've not shown the tool for micro and mini LED, but that's in development. If you look at the mobile market, again, this tool is used for placing, you know, CMOS image sensors. This is our portfolio, and, sorry, I missed this one. This is our LITEQ lithography tool. It's gonna be required whenever you have to redistribute the bond pads. It's a redistribution layer.
It does the photolithography, almost goes into fab-like conditions. We have, as you can see, one, two, three, four, five, six offerings now in advanced packaging, and we're gonna continue investing. We're investing at a very high rate, we're gonna keep building on this. You may ask the question, well, why do that? Well, as investors and shareholders, you would want to look at, for example, in the NAND market, if you look at the projections on the memory industry, the bit growth rate is 50% over the next four years. Definitely gonna require more and more packaging tools. If you look at DRAM, same story. You're gonna require more packaging because the bit growth rate, although not as fast in the previous years, is still 30%. Along with that, very exciting, they're stacking up DRAM.
In the old days, they were all done in single chips. Now they're eight high stacks. That requires thermal compression bonding. We see a lot of potential for thermal compression bonding. In fact, in our customer engagements, we're seeing that this will happen around the 2020 timeframe. It could be a little bit late or a little bit earlier, it's hard to predict, but it's definitely coming in the 2020 timeframe. Another very exciting market, 3D sensing. This is the facial recognition that one other phone company has, and now all the Chinese makers wanna do it. You can imagine what the volume is, and that reflects in the compounded, in the 200% CAGR behind that. You're also starting from a very small base, of course.
There's only one company doing this, and that too in their highest cost model or highest selling, the high-end model. Of course, next generation LED. This is again, a very massive area and a massive opportunity. KNS is doing a lot of exciting stuff in this area. We're developing very innovative approaches, as I'll discuss on the next slide, to do enabled mass transfer. If you do that, then as Fusen Chen mentioned, he had kind of showed you all the revenue potentials in one of his slides, the opportunity is really great. It could be, in fact, this alone could be equal all the other areas. I'm gonna talk a little bit more about that.
If you look at the display market, the display market's transitioning from LCD technology to OLED technology or organic LED. If you look at the last 10 years, the display industry, you could easily say is several tens of millions of dollars or maybe over $100 billion invested in assets to build the displays. They don't want to throw that away just because they're moving to organic LEDs, right? People wanna use that investment base, and one of the technologies that's being applied for that is mini LEDs. You can build your phone screens, they can just be as bright as organic LED displays. That's one of the areas that's of, it should be a high growth area in the future in the LED market.
Another one is micro LEDs, where people are trying to take these LEDs built and mass place them to build a display instead of having this large factory using large sheets of glass and trying to build an organic LED, right? For this one, of course, you need very, very high speed machines that pick and place or do mass transfer very, very efficiently. So you actually need speeds that are 100x greater than what we have today. So a lot of technology development is required here. I'm happy to report, as the three speakers before me mentioned, we have a partnership with Rohinni, and that is gonna try and develop very, very innovative technology. We're also talking to several end customers and trying to develop the channels behind it.
In closing, as I mentioned earlier, I think, I'm very excited to be here. You guys should be equally excited to be at this point. I think we're entering the golden age of packaging when it comes to these advanced packaging technologies. Basically because you're trying to extend Moore's Law, which is a very, very powerful concept. If you look at the markets, you've got several opportunities out there. You've got autonomous driving, as mentioned, memory, cloud, artificial intelligence, connected devices, and displays. Tremendous opportunity. How is KNS positioned? The key question. Hopefully, I've described to you in my 20 minutes that we're trying to develop very diversified and comprehensive solutions. I showed you in that tool chart, and hopefully you can relate to it. Later as well, you can get a copy of the slides.
We have six very different technology platforms which we're developing and trying to do derivatives off with our technology. We're pursuing that very, very aggressively. Lastly, you know, this allows us to support the industry's requirements by providing solutions. That should translate into returns for your capital invested with us. Thank you.
Our next speaker is Nelson Wong, a veteran at KNS, and currently serves as Senior Vice President of the Ball Bonder Business Unit. Nelson joined KNS in 1997 and previously supported process and packaging engineering at STMicroelectronics. Over nearly 20 years, Nelson has been P&L responsible for our global ball bonding business, further increasing its dominant market share positions. He has been critically involved in supply chain transitions and fundamental and dramatic technology shifts such as the global adoption of LED, NAND flash, and copper wire bonding. He also drove development of our wafer level bonding program and our entry into image and 3D sensing markets. Nelson has earned his MBA degree and also a degree in physics from the National University of Singapore. He has chaired several technical forums at industry trade shows, including SEMICON.
Nelson's presentation will change to more of a product perspective and highlight how our key offerings connect to our key end markets in general, semiconductor and LED, automotive and industrial, advanced packaging. Thank you, Nelson.
Thank you, Joe. Good afternoon, everyone. I'll try to walk through the portfolio of products that we have in K&S, and how is it connecting us to the various market segment that we have. Let me start with the ball bonder, which is my favorite product because I run it. Ball bonding product is interesting for K&S, you know, and it's also been very exciting for us. One thing about ball bonding is that you walk into any technical seminar, for example, in SEMICON West, there are hardly one or two papers about wire bonding. The rest is about advanced packaging or something else. This is a product that have been driving K&S more currently as well as moving forward. I myself, you know, have participated the technical forums.
I'm the lone speaker talking about ball bonding. Ball bonding is still exciting. It's still sexy. It's something that, you know, everyone should look at. You know, we basically make wire bonding continue to be relevant. Those people who cover semiconductor, you know, long enough, they understand what the market says about wire bonding, you know. Right now, you know, we are continuing to move it in different directions. Okay. Historically, we are a market leader. We are still a market leader. We'll continue to be a market leader. Right now, we have about 65% market share. If we are looking at a more aggressive penetration to LED market, I expect the market share to grow even further in the next, in the coming years.
It's very significant for the K&S. It drive about 56% of our revenue. Over 75% of semiconductor is basically are wire bonded. This give us economy of scale, which should drive, you know, profitability to enough dollar for us to sustain our R&D investment. With this sustained R&D investment allow us to, you know, move the wire bonder to a different direction. You heard a lot about autonomous, say, a car. We're also moving towards a smart bonder as well as autonomous bonder that's going to come in the next few years. That's why I say making wire bonding sexy. You know, it's not an old technology.
We just, I think K&S being in the leadership, we had to push it forward in that particular directions. The connected devices and the LED are driving a lot of the wire bonding because these are the lower-end packages, and wire bonding is still the most cost-effective interconnect technology, and it's very flexible. In K&S, we have a term, is that you draw the wire connection, we will bond it. No matter how the wire is connected, we'll find a way to bond it. NAND flash, definitely NAND flash has huge growth. You know, Shubneesh talk about, you know, growing at a 50% bit count increase year on year. That's how we bond it. We bond up to 32 stack of bonding.
You know, basically you have a stack is of 36 die, we, you know, we bond it. It's pretty challenging. General semiconductor basically cover a lot of space, especially on the lead frame, the QFN packages, you know, are mostly wire bonded. In fact, you look at the handphone devices, the low and mid-end handphone processor or graphics, you know, or basebands, they are continuing to be wire bonded because they're just flexible. When you put multiple chip together, you know, the fastest way to market is to have it wire bonded rather than other technology. That's why wire bonders SIP is still important for wire bonding, you know. 75%-80% of the SIP packages have at least one of the chip is wire bonded. Yeah. We continue to invest in wire bonding.
We continue to improve our coverage in the three segments. You look at here, we have various model to cover various segment. Why do we want to do that? Because different segments have its requirements and their, you know, their special needs and so on. We basically optimize each of this model to address that particular segment in terms of technology required, in terms of the cost that the market segment is willing to accept. Okay. Next, I'll talk about the wedge bonding. Wedge bonding is mainly on the heavy wire side. It's basically synonymous to power storage as well as the electrical vehicle. Again, historically, we are a market leader. We continue to be a market leader in this segment.
It drive about 17% of our revenue in 2018. We have a broad portfolio. We just don't cover in the power storage as well. We also cover in the semi as well, the hybrids. The hybrid means the chip that's power and as well as non-semiconductor chip. Automotive remains the main driver for this particular products, and battery assembly, you know, lately have been driving a huge growth for this or huge demand for this particular products. Power controls, all the mobiles, you know, either is the vehicles or devices that need higher current will require a heavy wedge bonded unit. That will drive a lot of units as well.
Like Chan Pin Chong early on talk about energy sustainability and efficiencies, you know, this is a product that help to, you know, connect those products and to produce the end product. Here, as being the heavier wire requirement, generally addresses a lot of the general semi but in the power amplifiers area, and also power ICs, it cover quite a bit of that. Definitely very strong in the automotive as well industrial segments. Not so much in the advanced packaging at this moment. Let's talk about the electronic assembly. This is also a very important product. Every unit that's packaged or every passive that's been produced need to be placed on the board, either on a PCB boards or on a flex circuit.
The market size is pretty broad and, the test is keeping, you know, the equipment allowed to place a passive as well as active chips or package on the piece of board. It give us about 9% of our revenue, and we have the leading automotive solutions, and mainly because of historical reasons. You know, the company they acquire, you know, traditionally participate in the automotive segment. We continue to participate in that and continue to strengthen our position in that segment. With that, being in the leading position in the automotive solution, give us opportunity to, you know, to engage our customer. The close support that we provide our customer also help us to understand the segments a lot better.
Again, you know, the key driver, the automotive market or the high accuracy, the semi as well as SMT component placement, this is, we participate very heavily in the accurate of SMT or high accuracy SMT placement market segments. Being in the automotive market, high reliability is the key, you know, because once you put something on the chip on the board, they put in the car, you have to make sure that it stays there. You know, any of the chips fall off, you know, it's not a nice picture. The ability to place a large and small component using the same piece of equipment basically drive efficiency for our customers. You know, the same piece of equipment, you can do everything on the board and in one pass.
I mentioned that every piece of package that produced need to be placed on the board. We cover all the market segments that we have defined. Particularly auto, we are pretty strong in the automotive and industrial segment. Let's talk about our APAMA. Our APAMA is a latest addition. This one is in the advanced packaging area. It's a thermal compression market. It's an emerging market. Also, in this particular family, we also have the die bonder. It's a very exciting area. It's new packaging. If you go to any seminar, there are a lot of people talk about advanced packaging. TCB is one of them.
Being in a new packaging technology, we're basically engaging a lot of global customer. Right now at the applications lab, basically, we are working with customer to, you know, to be familiar with this technology or they evaluate this technology to make sure that it's reliable, stable and productive so that they can go into manufacturing. These are some of the, what you call the seed that we have sowed, you know, we hope that this will grow, you know, in the coming years and so on. While we grow this market, we have to make sure that our wire bonding continue to grow as well. You know, this market will probably grow faster.
This particular technology is very suitable for high-performance applications, you know, especially those fine pitch of what you call the flip chip. You know, this will be a area that we would like to go. Because mass reflow will not able to give you the accuracy that the TCB is able to give it to you. Okay. All those big dice, you know, item that requires a lot of interconnect, you know, things like artificial intelligence, big data, cloud computing or autonomous driving and graphic processing. These are the key market driver that will drive the demand for this particular equipment. Next, we have also other equipment that address the advanced packaging as well.
You know, we have a equipment called LITEQ, which is basically lithography equipments that use on the wafer level packaging. The hybrid, which is a mass reflow equipment and basically allow us to place both active and a passive package into the same board is including direct die attach as well as a flip chip as well. We also have a wafer level ball bonder that's you know that participate in the wafer level packaging area. We do bumping, we do wire bonding, and then after that you do a wafer molding. The we are selling this technology is well used in some of the high-end smartphone.
It's a new opportunity, new market opportunity for us, especially the LITEQ as well as the hybrid. It's a new architecture allow us to, you know, participate in this advanced packaging more effectively. In fact, this help us grow our advanced packaging portfolio. Most of the market drivers are mainly on the high end application chips, things like blockchains or cryptocurrency chips. The application processors, image sensor, or 3D sensors, SIPs, the [metro] for SIP, fan out and fan in wafer level package and the high accuracy flip chip. We just launched a flip chip bonder called Katalyst, you know, two days ago.
This is a high accuracy flip chip meant for the advanced packaging segment. After selling all those equipment, our customers, you know, they need services, you know, or spare parts. Either it's help them to improve the equipment efficiency or help them to maintain the machines. We formed a business unit called the APS, which is the Aftermarket Product and Services. The, we changed organization slightly and put more emphasis into this business unit. We see that there's a lot of potential in it. It's also a strategy priority for us, you know. Beside engaging the customer, it also give us a recurring revenue, you know. Not just sell a piece of equipment, the service and the spare parts that can go along.
We have a lot of machine being installed out in the field, so that create a unique opportunity for us to, you know, provide these services. The increased packaging complexity also drives demand for this for help, you know, for servicing, you know, our customers. This is also good for us. You know, the more we service our customer, the more we understand our customer, you know. That increase our customer engagement, which in turn also help us to drive our development of our new equipment to address all those things that we see in the field. Okay. Again, these services covers all the products in our K&S portfolio, which means we cover all the segments that we had defined.
You know, you can see that we have a broad coverage of equipment in the interconnect as well, you know, from from the IC to the outside world, as well as the IC to the board level. In some products, for example, the bonder, we have dominant position in it, you know, and having the portfolio allow us to participate in diverse end products. One of the key things that the customer look for all this product is high performance. Yeah. Well, they buy the equipments, they expect the performance continue to be stayed there throughout its equipment life. And we have an engaged sales team that allow us to expand our customer base. Again, the key driver right now is basically the general semi and LED, automotive, and industrial.
Yes, advanced packaging is a market that we are developing, and we are, you know, we are participating that will help us to, you know, go to the next stage of packaging. Overall, you know, engaging our customer is important, understand their needs is important, understand where they are going is important, for us. Okay. That's all I have.
Great. Thank you, Nelson. The next section is on financial, sort of the punchline to this presentation. Lester Wong joined the company in September 2011 as Senior Vice President, Legal Affairs and General Counsel. Prior to joining K&S, Lester served as General Counsel at GigaMedia Limited, a U.S.-listed major provider of online software, from May 2008 to August 2011. He previously served as Senior Legal Counsel at CDC Corporation, a U.S.-listed software media company. Lester obtained his J.D. from the University of British Columbia in Canada. Over the past several years, Lester has been closely involved with business improvement plans, acquisition initiatives, capital allocation discussions, new partnership arrangements, and also investor relations.
Lester assumed the role of Interim Chief Financial Officer and Interim Principal Accounting Officer effective November 28, 2017, and continues to serve in his prior capacity as the company's Senior Vice President, Legal Affairs and General Counsel. Lester will spend a few minutes to cover a few slides that tie back these market drivers into a financial model, and also go through some of our capital allocation approaches and targets in the long term. Thanks, Lester.
Thanks, Joe. As I hope you've gotten from our presentation today, K&S has undergone a significant evolution over the last couple years. We're a very different company now. We have diversified our revenue significantly, and it's closely aligned with some of the fastest-growing trends in the industry, like IoT, as Kwong discussed, autonomous automobile, as Chan Pin Chong was talking about, and also AI cloud, as Shubneesh discussed in his section. This diversification has allowed much less volatility in our revenues, less cyclicality, less seasonality, and has allowed us greater confidence to guide over a longer period. To get to the target of $1.2 million that Fusen Chen has set for us by 2021, we would have focused very closely on growing revenue base.
However, we're also focused very closely on driving down costs through efficiency in our supply chain, in manufacturing, and as Fusen described, aligning our engineering and R&D teams more closely with the business unit. We have made significant investments over the last couple of years in those growth initiatives that my colleagues discussed today. This has put us in a great position to have the operating leverage to drive fall through to our gross margin from a healthy 47% to an even more attractive 49%-51%. Our operation efficiency as well as our cost-saving efforts will also allow us to improve our operating margin by 400 to 700 basis points by 2021 to 24%-27%. This results in an operating income per share of $4.00-$4.75. I'll wait as people jot and take pictures.
The presentation is also available on our website. What does this mean? Our strong financial performance as well as our growth prospects has allowed us to return much more capital to our investors and shareholders. Year-to-date, we have repurchased $83.6 million worth of shares. As Fusen mentioned earlier, in June, we initiated a dividend of $0.12 per quarter, which is about a yield of 2%. Today, we announce an addition of another $100 million to our share repurchase program. It is our long-term target to return 50% of operating cash flow to our shareholders. It's an exciting and interesting time for KNS.
We have a very strong balance sheet, a robust core business, very exciting growth initiatives that my colleagues discussed, and we believe that this puts us in a very good position to drive an expansion of our share multiple as well as return more capital to our investors. Thank you. Fusen Chen. Fusen Chen will now wrap up for a few comments.
Okay. Thank you, Lester Wong. I think it's an exciting day, and we appreciate your presence here. I'd like to make a few concluding for you tonight. Why I joined the industry, and I explained to you. Moore's law actually rule the industry for past 30 years. I think you know Moore's law very well. When Moore's law slow down, AP technology not advancement, we have to pay high price, and people cannot afford it. Therefore, more and Moore's law is more important, right? Next 10 years will be prime year for back-end. You can find a company called KNS. I think we are committed, and we have a good opportunity to be very strong and to be very successful and to be a leading company, right? Why?
You mentioned, you remember I mentioned we have organization change. We have better accountability. We move much faster. We have a general manager, like the Chan Pin. I think you heard about him, right? Customer ask him to do something, he say, "Okay, I will do this in three months." He's aggressive. He will make things done. General manager's job is to grab revenue and develop products. We give him a resource to fast to market, right? Not only I think, he is a good general manager for K&S, grow revenue, and he's a colonel in Singaporean, Singapore army. He's a colonel, right? You know how aggressive he is. That's a criteria we choose a general manager. He's really accountable for customers, accountable for revenue growth, right?
We have clear accountability and fast time to market. Our products are very important to the industry. We have one trillion of semiconductor devices, finished products, not including LED in year 2018, right. I think right now, probably 25% more than one trillion units. 80% of these units use our ball bonder. I'd like to correct a mistaken perception in the past 20 months. People feel like KNS is a ball bonder company. Ball bonder is gonna die. No, it's wrong, right. I give you an example. You remember 10 years ago, people talk about TSV. You remember TSV? TSV, through silicon via. They are talking about 3D packaging, right. 3D packaging is a way of more and Moore's law. More and Moore's law, that means that you can accommodate in a smaller form factor.
You stack die together, you know, occupy, you know, less real estate. If you do a through silicon via, you need to make it thin. You need to etch through all these packages, 32 die, create an aspect ratio of via 20 to one. You put a PVD glue layer. You put a CMP, you polish it away. You create a lot of defect. We have a general manager called Nelson, right? He's very innovative. People think Ball Bonder is gonna die, but he actually invent three-dimensional ball bonder, right? You have ball bonder stack one layer by one layer. You have 32 layer of NAND. 95% of NAND actually is, use our ball bonder, 3D NAND. Lots of information I want to let you know. Ball bonder, no longer a previous ball bonder.
This allow innovation, allow productivity, allow small future within our ball bonder. Next five years, I don't see any change. 75% of this $1.25 trillion-semiconductor devices. When finished product needs a home, they're going to use Nelson's products. They will use a ball bonder. Maturity ball bonder is going to be from Nelson, right? Presence of our product, I think, is very important in this industry, right? A lot of, some of the flip chip come back to the ball bonder because it's more effective. We can handle more than 3,000 pin. Used to be why people use a flip chip is because of, it's much more productive. Multiple, you know, bond pad. If you use the ball bonder, it take a longer time, and it's not so effective.
Right now, Nelson Wong can do 3,000 bond pad. I would like to correct. It's a misperception. Number three, I think not only ball bonder and wire bonder, we are number one, right? We have a lot of R&D pipeline, and the technology inception is going to demand. You can see demand from what? Memory, big data, cloud, AI. It's going to grow. We'll have a new advanced packaging measure, new capability, and we have maturity in our pipeline. When the market needed a high volume production, we announced a flip chip. We have a TCB. We're working on die bonding. It's the first time, I think, in KNS history, we have all the solution, interconnect, in a process. Okay. Operational focus. We have a very aggressive and very smart general manager.
They work with customers to grow this industry. Not only we focus on additional revenue, we focus on cost structures. We focus on quality over earning, right? Not only additional revenue, right? As a result, when we make a profit, grow a company, and our priority is to return the value to a shareholder, right? We are in the middle of a second stock purchase, first one, $100 million finish. Last year, August, we announced the second one. From August to today, we spent additional $85 million. Today, actually, we have one of our board member here. They authorized additional $100 million amendment through a stock repurchase program, right? We also declare dividend policy, $0.12 per share, equivalent to about 2% of. This is the way. Let me conclude.
KNS, I think we have a core, very strong core business. We leverage our core business, make our core business even stronger. We have a strong R&D pipeline to anticipate the interception of technology change. When technology need, we will provide a solution to grow a company, along with all our very healthy core business, right? As a result, when we are profitable, getting bigger, we return the value to our shareholder. That's the takeaway I like to give to you. Appreciate your participant, and you can count on us to deliver the shareholder value. Okay. Thank you.
Great. Thank you, Fusen Chen. That concludes our formal presentation. We've allocated about 30 minutes for question and answer session. We'd like to prioritize our covering analysts first. I think Craig Ellis from B. Riley.
Yeah. Craig Ellis, B. Riley FBR. Thanks so much for the presentation and all the financial and other product and strategy details, guys. Fusen Chen, the first question I had was maybe one for you and some of the other group heads. As we look at the growth of the business towards $1.2 billion over the next three to four years, can you talk about the relative growth of the opportunities that you identified, the auto opportunity, general, industrial, or general, et cetera? Which of those would be the faster grower relative to the midpoint of the 10% CAGR? Which a little bit slower? I have a follow-up on cash return.
Okay. The question is, you know, this $1.2 billion as a model, where the growth come from, right? We believe, this year, I think analyst has expectation about $900 million, a little bit north of that. The reason we pick up a 10%, was because of, I think 2017 is a very big year, right? It's really very difficult to pick up the growth rate. Very difficult. The reason I think we pick up 10% is because 2017 is a very big year. Any time, you have a very big year, possibility to go down, you know, or inventory correction, I think possibility is high, right? We don't exclude the possibility we can grow higher than 10%. Really depend on the market.
Just to clarify. With respect to growth around the 10%, general semi, auto and industrial, advanced packaging, which of those would be growing above 10%? Or do you expect all of them would be growing near that 10% level?
Well, this is the way I see. Advanced packaging will grow faster, so as our, you know, core business, right. Our core business, as I mentioned, is a majority of the solution for industry. Actually, I would see, you know, probably advanced packaging can be higher than 10%, and hopefully, our core business can be 10%.
Moving on to the cash return, expectations and a question on gross margin. I'll just ask them together. First, on cash return. You just initiated a very nice dividend with a goal to return 50% of operating cash flow. Do you expect to split that between share buyback and dividend increases, or how do you look at prioritizing one versus the other?
I think the dividend is a commitment, right? You cannot just say next quarter, we forget about it, right? If you see right now, roughly, we have 70 million shares, a little bit less than that, and you have roughly $0.50 per shares per year, right? That put about $35 million. This year, you know, depend on the model, how you look at it, you know, if we say we don't have the number. Assume this year, we make profit after tax, say $100 million or $150 million, right? First priority, you got to take out the dividend because dividend is a committed money, right? Then we will decide how much it going to be stock buyback.
Look at the history, I think, from August last year to today, approximately, what, how many months? four months, is about nine months, 10 months, we spent about $85 million. I think our board support, you know, capital allocation, we believe 50% of $150 million, $75 million, I think that will be minimum we will spend.
Thank you. Lastly, if Joe will let me have one more. With respect to the target financial model, gross margins moving up very significantly to 49.5%, the new midpoint. Can you talk a little bit about the specific drivers to gross margin improvement? It would be helpful if you could prioritize those in their order of magnitude, whether it's cost, mix, overhead coverage, et cetera. Thank you.
Actually, I won't go. It'll take me forever. I think it's a combination of all of them. The mix, also, I think, as I said, we've invested significantly over the last couple of years. We think the products are in a very good position. I think they're ready for the market, and I think, the spend on the development has the bulk of it has been done already. I think, we can basically have much more operating leverage on that. As Fusen Chen says, we also are very focused on our costs. We drive our supply chain very, very hard. We're always looking for second source, or we're always looking at where is the best place globally to develop our products as well as to build our products. I think that always will be a driver.
I think also, we try to keep a very tight lid on operating costs. We are relatively frugal, and, we watch the money we spend. We don't always assume it's gonna be great days, even though we think they will be. I think, it's a combination of supply chain, manufacturing, the OpEx, as well as the fact that we think the bulk of R&D should have been done already.
Our next question comes from Thomas Diffely, with you, David.
Yeah. Thank you. Maybe just extending on to my last question, what is the relative margin profile of the three main growth drivers that you've outlined today?
I think that we have quite a healthy, you know, margin profile for general semi, so is auto. Advanced packaging, you know, right now is a volume is low for the industry, also for us, right? When the volume go up, you know, to answer Craig's question, I think that will be the opportunity. We can raise the margin. We can spend our margin.
Since some of these advanced packaging products are fairly new, do you think that the contribution to that $400 million of growth is more weighted in the back half of that period?
I think that you can see roughly ratio will hold, you know. Advanced packaging revenue will grow, so is our core product line. I really expect, you know, this 10% roughly will be in line. You know, our growth, advanced packaging may be a little bit more. If it's 10%, I would say maybe 15%, right? Maybe core business will be 9%, and auto probably will be 10%. That would be roughly like that, right?
Yeah. Okay. Maybe just a fun question for Lester. If you could put a bow on the recent accounting issue, and how you've put that to bed.
Oh, that is a fun question. We believe that the restatement and the press release issue is basically, we put a bow, we put a conclusion to the unfortunate incident. We believe the company is stronger for it. I can't guarantee you, I don't speak for the SEC, I don't speak for litigious assignments, but I think the company is very comfortable with the position we took. We've done a thorough investigation. We work closely with external advisors. We believe that this is the end of it.
David Duley. Go ahead.
Thanks, I don't really wanna ask this question, but I'm gonna ask it anyway. A lot of the upfront wafer fab equipment companies have seen consternation recently or nervousness about Samsung pushouts in NAND and DRAM. I realize that you don't have direct exposure on that side of things, but I'm just wondering how that could potentially impact you if there were an impact.
I think, we all know Samsung delay investment, right? Long term, I am very bullish in this industry. You know, the content on memory, I think, is only continuing. Customer delay the investment with reasons, you know. I don't want to make any hypothesis. You see the consumption of the memory, see in the cloud, you know, in the big data, I think can only increase, right? Long term, if we have a setback for memory, I think it's temporary. You see this many times, the NAND price, you know, going down and the next cycle getting bigger is because of what is more effective compared to a hard disk drive, right? Long term, I'm very bullish in this industry.
I think we have visibility not very clear for next six months. Even with that, the memory is only 20% or even slightly less than 20% of our business. We also diversify. We are in auto, we are in industrial, we are in general semi. General semi including IoT. There's a lot of connectivity, right? They need that to be packaged. Even without memory, the impact to us would be less significant compared before.
Just to clarify what you said. Look, Samsung has delayed some spending in NAND and DRAM, but that has not yet trickled back into the number of units that they're producing.
That's what you would see is units trajectory.
Right.
from either one of those businesses.
Yeah.
I suspect you haven't seen that yet, but I was just wondering like, you know, have you seen the slowdown in units, or is this really what they say it is?
Okay.
-cost issue at Samsung?
Well, I think it's not. Well, a lot of information is so difficult, right? It's, it's, you know. I think mobile is a little bit slowdown. Memory is a little bit slowdown. This actually already took place, I would say, starting from March quarter, right? If you see from, I'm sorry, March quarter. If you see our June quarter actually is still quite healthy, right? If this continue, you know, say with the trade war, I think what I try to say is we are much more diversified. We cannot control quarter-to-quarter variation. In longer term, I think in yearly basis, I think for us, we feel like this industry is still pretty healthy. Dave, can I answer your question this way?
Yeah.
Okay.
Follow-up question from Craig Ellis at B. Riley FBR.
Thanks. There's actually two. The first question is on the target financial model and the earnings per share. Can you just clarify what degree of share repurchases, any, is included? It seems like there might be about $10 million of shares of repurchase that are included in the earnings range of $4- $4.75. Is that correct?
Approximately.
Okay. Then the second question is for Fusen Chen, and it's more of a bigger picture question. I think early in your presentation, you indicated that you would be open and interested in inorganic growth. Can you talk about areas of strategic interest? Fusen Chen, you've done some smaller deals, and as you talk about areas of either technological or product interest, can you help us understand what your size preference might be, if you're hoping to stay smaller, or if you'd be comfortable doing a larger size deal? Thanks, guys.
Okay. Well, I think M&A is always a good opportunity. We need to make sure we will do it well. First priority for me is when I join the company, I want to make sure we have a culture. The power of organic growth is very powerful. Okay. The first priority I try to set it up is that we have ability to do organic growth. If we only count on, you know, inorganic growth, I think you probably don't have an organization capability to continue to fund the company. The possibility for the success of successful M&A is not 100%, right? My first priority is always organic. I think next couple years, this $1.2 billion model is organic growth. Right?
Actually, the wording I use is we will not exclude the possibility to do M&A, right? If a opportunity present itself in our adjacent industry, and we have a cost synergy, and it's complementary, I think we will go for it, and we'll present to the board, and I think our board, you know, would help. What I try to say is that organic growth actually is our first priority, right? We have set up a strategy. When the opportunity present itself, we will look at it. Look at it. If it's good, I think we will go for it.
We'll open the floor for Q&A to non-covering analysts and institutional investors. Our first question comes from Robert Mertens.
I work with, Krish Sankar at Cowen.
Okay.
I just wanted to get your view on how you're sizing the bonder opportunity within the EV market in terms of EV units or battery capacity build out at auto OEMs and sort of the subsequent spend on your equipment.
Changing the orientation. The very simple formula for EV would be you look at how much watts of energy that you're producing a year in terms of costs. You take an average of that, you basically look at the number of cells you need to build in a car for the electric cars. You multiply by basically the number of production lines you need to make to enable the number of cars. I cannot get into those formulas because it's gonna be, you know, specific to a customer, which I'm not supposed to say anything. You can just see, and some of these are public, in terms of how many cars are gonna be manufactured per week.
If you look at how many thousands of cells is in a car battery, you can multiply the number of bonders, right? We have a formula, but again, I don't want to be too prescriptive about it. X bonders equal to X batteries equals to X cars equals to X wattage, and that's the formula.
Okay.
I hope that answer your questions.
Yeah, yeah. That's very helpful. Just as a quick follow-up, I think you previously mentioned that the products that you have specifically target cylindrical cells. Is that correct? Is there an opportunity for prismatic or other types of cells? Just as a follow-up there, I know, it's too early for cyclicality in the EV market, but are your orders coming through in bulk or are they sort of linear as the customer or future customers ramp?
Okay. It's a good question. I'll answer in the most generic format again. Number 1, I think not everybody has adopted the cylindrical cells. There's maybe a couple. We have 1 leading guy, and you have many followers. I think that basically gates our capacity to ramp for that linearity that you just described. Prismatic cells are basically a bigger, bulkier type of pack we call pouch, and some of these are interconnect using some kind of control, okay, we call BMS. We call many ways of controlling multiple cells that interconnect. The interconnects are in much lesser quantity than the cylindrical cells. One is in thousands and One is in maybe up to 100, right?
They're kind of magnitude differences, and you can see that the adoption of wire bonder would be different for prismatic versus cylindrical, probably in the magnitude, like I said, thousands versus hundreds, right? There is still no standardization of electrical vehicles yet in terms of cylindrical versus prismatic, but there is a lot of discussions and chapters going on about which is the battery technology. I think the next five years, there's gonna be some convergences between prismatic versus cylindrical. And we are watching it, okay? We participate in both, but there's a huge, much more wire bonder stuff in cylindrical, as I just described in my presentation today. Both we participating, one uses less and one uses more.
Great. Thanks.
Next question comes from Dan Ramirez at Whale Rock Capital.
Hi. I was wondering how you, as a relatively new management team, evaluates the success of prior M&A and prior R&D decisions. You know, going forward, as you think about new M&A, new R&D decisions, what kind of metrics do you use? What's your framework for evaluating the attractiveness of those investments in terms of hurdle rates, ROI, returns?
Actually, I spend more time to look at the our product portfolio and their competitiveness and also customer engagement, right? In terms of M&A, I heard a little bit. Majority of M&A was actually on private company. When you deal with a private company, I think it was less transparency. You probably don't know the whole story. If I have preference, not say, you know, next one got to be like it is, probably public company will be my preference. Of course, we will need to present a target and engage with the board for a discussion, but that would be my preference, right? I believe organic growth for next couple of years, we already set our strategy. We have a good plan.
If we want to have another growth path, will be, you know, complementary to a company, and they will be more transparent, and they're subject to SEC regulations, so we know them a little bit more. I don't know if I answered your questions.
Think going forward, what's your process for evaluating new M&A or new product decisions, new product R&D investment decisions? You know, what kind of metrics do you What's your framework for making decisions for future investments?
One, I think, every R&D project we have a core PDP program, right? We actually have a evaluation to look at the market, right? What will be the return. Actually, every R&D project we have a list, this one, we just follow through more strictly. We have a core gate A and gate B and gate C.
Gate E, right? A is to collect information from customer and all from the market. We come back to do analysis, what can be return rate, right? On and so forth.
We have time for probably two more questions. Next question comes from Edward de Jong at NIBC.
Thank you, gentlemen. Few questions then. You are targeting to win market share in the coming years, right? You're growing faster than the market. Are you going to take share from the other big competition or are you probably going to take share from smaller companies in the field?
Well, to get the market shares, the easy one is got to be from a big guy. From a small guy, is not consistent, is not sizable, right? If you want to get the market shares, preferably is from big company.
From bigger companies.
Yeah.
Maybe finally on China and the trade war that's probably going to start.
Can you say a little bit on how that could impact your company because you also have quite a bit of production, I think, in China?
Well, all production is consumable, right? It's a category. It's, you know, we sell the bonder, and every day, you know, every customer need to have some consumable. We really don't see, at this moment, at this moment, this trade war between China and the U.S. directly impact us. We are in headquarters in Singapore, right? We don't see the effect. Through all this exercise, I personally believe, also a lot of people believe, China is committed to develop a semiconductor industry. They treat this as a national security, right? In longer term, the semiconductor is unlike the solar and also LED. The entrance label is low, right? So far, I think, China already spent tremendous money in semiconductor, and the result is probably not as good as they expected.
If they continue to commit in investment of semiconductor, I think, Chinese business will continue. Next five to 10 years, I really don't see they are gonna slow down the investment. Right.
Thanks.
Yeah.
Any more questions?
Thank you. Jesse Johannessen, Cowen Asset Management. The bottom two trends up on the screen there on that slide 33, 3D sensing and next-gen LED. As you look out at the roadmap from what the leaders in those end markets can see, there seems to be a lot of stopping and starting. There's certainly, it's more of a want than a need i n memory. How much planning can you do? Whether it's Chinese handset makers or cars on 3D sensing and TV versus phone and LED, how do you see those developing over time?
Okay. Shubneesh, this is your folio. You want me to answer or you want to? Hmm?
Sure.
Okay. The question is, the growth rate, you know, how do we estimate it, right? Well, I think, this 2017- 2021, we already have a historical result, right? The NAND flash, I think it's not difficult, right? There's a lot of historical result. The NAND will continue to grow. There's no doubt, right? Right now, NAND production is with the 64 layer, right? It's a crossover cost compared to hard disk drive. There's no doubt, I think, that NAND will continue to grow. The growth rate, I think, in the past few years already established. This is a 50% unit growth, I think, we feel comfortable about it.
The 3D sensing and next-gen LED, that's what I'm more curious about.
LED? Okay. The micro LED, if you see LED is such a bigger industry, you know. I think energy is a big problem for everybody, right? People believe the development of the alternative energy is easy, right? Actually, the whole industry put a lot of resource into, you know, alternative energy. Another way to deal with alternative energy is energy saving, right? LED is another way for alternative energy, right? I can tell you, the potential is very big. The replacement of energy source, just China itself, I think will achieve this number. There's no doubt, right? A lot of people believe LED already, many, many years, but actually LED, we believe there's a long life. It's really a national strategy and a big country behind that.
I think they produce so affordable LED, it's gonna proliferate. I have no doubt, I think this, and this forecast is achievable.
Last question comes from, Brian Chin at Stifel.
First, I want to thank you for bringing all of you, I was gonna say lieutenants, but I should say colonels.
here to help present this information to us. One question. Piggybacking off the next-gen LED, your forecast that goes out to 2021 timeframe, does that include development and then future volume, commercial sales of a, you know, a not yet developed product that helps to place, I presume the micro LEDs and the MOCVD tool, that sort of an operation?
Yes.
Is that embedded in that long-term forecast?
Yes, it is.
Are revenues embedded there?
Yes, it is.
Well, just kind of the walk up to that.
When would you expect qualifications to occur? You know, what kind of timeframe to monitor?
I think qualification probably will start next years.
Okay.
Probably expect a higher volume, 2020.
Okay. I anticipate you would expect competitors also in that space?
Yeah, of course. Of course. This is a big market. There will be multiple competitors.
Sure. Sure.
We need to make sure we working on the right technology.
Okay. great. Thank you. Thanks so much.
That concludes the Q&A session today. Just thank you for the time. If you have any questions, please feel free to reach out to myself or to Fusen Chen and the staff. We can be available and accessible. We appreciate the time. Brock, this concludes our webcast. Thank you.
Okay. Thank you.