Greetings, and welcome to Kulik Insafa's twenty twenty one Investor Day and Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Algindi, Senior Director of Investor Relations and Strategic Initiatives for Kulik and Safa. Joseph, you may begin.
Welcome, everyone, to Kulik and Salfa's twenty twenty one Investor Day. Joining us on today's call are several members of the K and S leadership team who will provide a detailed review of our current and future business prospects as well as our long term financial targets and framework. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward looking statements.
Throughout today's presentation, we will reference our past, current and future baseline revenue assumptions, which represent a theoretical level of total company demand that is supported under a normalized industry growth environment. These baseline revenue assumptions are at the total company level and consider our access to new markets, our participation within several fundamental technology transitions and the replacement and incremental capacity dynamics of our core businesses. We believe this baseline perspective helps investors better understand the underlying dynamics and growth drivers of our businesses in served end markets. For a complete discussion of the risks associated with Kewlick and Sulfa that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10 ks for the year ended 10/03/2020. We've recently celebrated our seventieth anniversary and have a long history of innovation and leadership throughout our markets served.
Based on current guidance for our fiscal fourth quarter, we have grown revenue at a 19% compound annual growth rate while growing operating profit by a nearly 34% compound annual growth rate. Today, we have approximately 3,000 employees based out of 19 facilities in 13 countries. We collectively support nearly 2,000 customers and hold a very sizable market share within our long established core markets. During today's meeting, we will discuss several fundamental improvements within these core markets and also provide an overview and outlook to the new higher growth markets that we now have access to. You will also hear from several members of the K and S leadership team.
This team has over a quarter century of cumulative industry experience and has led the organization through a significant transformation over the past four years. Fuzen Chen, our President and Chief Executive Officer, will provide specifics to our organizational transformation and also to our underlying corporate strategy. Lester Wong, our Senior Vice President and Chief Financial Officer, will then walk through our financial framework and expectations. We are very happy to also showcase our key business segment heads. MK Han is our General Manager of the Aftermarket Products and Services segment and Changpin Chong is our General Manager of the Capital Equipment segment.
Both will provide many details into our respective positioning at the business and product levels. Additionally, Bob Shylak, our Chief Technology Officer, will discuss the significant and dramatic potential within the fast growing mini and microLED opportunity set. Finally, during the general semiconductor section of today's presentation, we are pleased to host a very special guest speaker who will provide an in-depth customer perspective into the growing value proposition of semiconductor assembly at the leading edge. Today's presentation is expected to run for approximately two hours, and we will hold a brief question and answer session to follow. I would now like to introduce our first speaker, President and CEO, Fusin Chen.
Fusin has a long established history of delivering value through the semiconductor equipment market and also directly to shareholders. Fruhzen joined K and S in 2016 and has been a catalyst for change, securing our dominant market positions today and materially improving our growth potential for tomorrow. Regent has fundamentally enhanced Fuel Consultant's long term potential through organizational change, aggressive and focused development and careful M and A, enhancing our competencies and access into several new and exciting high growth market opportunities. With that said, I'm happy to introduce Fuzun Chen, our President and Chief Executive Officer. Please
go ahead, Fuzun. Thank you, Joe, and thank you all for joining us today. Despite recently celebrating our seventieth anniversary, this is clearly a very unique plan in the long history of KMS. Since joining the company five years ago, the entire organization has been very focused to deliver systemic ongoing improvement across all business functions, product lines and services. The key message from today's presentation is to highlight why we are now operating and plan to continue operating at a new higher level of performance going forward.
Throughout today's discussion, we will provide many specific details to how we can sustainably support a new higher level of growth and profitability going forward. We will refine our organization, enhance our competency and make investment to expand our opening and the market presence. In addition to this comprehensive effort to drive consistent improvement, The core fiber semiconductor market, which we have led for decades, rely increasingly more on our core competency and the solution. This core offering pervasively serve the entire semiconductor market and are utilized to produce a diverse group of end applications from lighting to smartphones and to data centers. The diversity of consumer and commercial applications like the design of technology developed by KNX, is significant.
This noteworthy industry presence and operation is supported by our diluted competency. Famous has strong history of technical strengths, winning, motion control, ultrasonic, vision system, software and metrology. Longstanding competency in supply chain management and operational excellence increased our ability to quickly respond to market dynamics, maximizing value at the shareholder level. More recently, we demonstrate our ability to identify, invest and commercialize new innovative solutions, which has allowed us to move into new exciting and high growth markets. All critical competency combined with the diversity of our end market is now allowing KMS to play a kilo within several exciting technology driven change, not automatically altering sizable end market.
Within semiconductor, challenges of two dimensional low shrink are increasing the capital intensity across both high volume and leading edge applications. Next, electrification and autonomous trend are driving higher demand for semiconductor content, supporting infotainment, power distribution and power storage needs. Finally, within the advanced display space, we are playing a key role to enable market adoption of both mini and the micro LED technologies. These technology changes are increasing the size and the growth rate of our existing surf market, while also providing meaningful new opportunities, which are expanding our significance within the market we serve. Due to our customer engagement and relentlessly focus on technology change, we have prepared for this change over the past several years with focus and efficient R and D investment.
We are very well prepared for this key transition and have a broad portfolio of competitive solutions that directly address these new industry challenges. All current set of opportunities are now being realized due to a very experienced, empowered and accountable dealership team that has to support this transition. I'm pleased you will have the opportunity to hear from several of them during today's meeting. Ultimately, all of these factors have dramatically enhanced our ability to generate consistent cash flow. At this higher level of demand, fluctuations to broad industry demand trends are much less meaningful to our funding and cash flow generation.
Lester will provide many more details on our new financial model strategy. Before we go into a detail of this presentation, we wanted to remind investors of our environmental, social and governance processes. Considering our global market industry, we are in a position of strength to reduce our environmental impact, enhance employee culture and strengthen our business standards, while supporting the community where we operate. We will continue to expand our reporting metrics, while ensuring our organization is prepared to meet our future goals and recently released our fifth annual suspended dividend report that provides many more details on this initiative. These initiatives are some investments that enhance our corporate culture, creating a more aware, engaged and transparent organization, which strengthen our ability to drive operational excellence.
When we examine how we create value, it starts with our employees and the processes. Accountability and the empowerment are essential to driving operational excellence and enhancing our ability to pursue multiple opportunities in parallel. Our market share is about 50% in our key submarkets. This leadership, combined with our extensive customer network, allow us to keep a very close pause on industry trends, which allow us to maximize access to new high growth opportunities. Over the years, we should expand our core semiconductor access into general lighting, SMT, advanced display and automotive.
K and S solution have very broad industrial exposure and are increasingly aligned with higher growth end markets, such as silicon photonics, leading edge assembly as well as a prismatic and the cylindrical battery assembly. This diversity provides the scale to distribute and support our product largely through internal sales channels. This channel not only enhance our efficiency and profitability, but also provides a feedback loop, which helps better understand our customers' challenges and enhance our future technology roadmap. Additionally, we have a very solid financial footing, which we can utilize within our opportunistic repurchase program and also through our consistent dividend. We also utilized our strong financial position strategically to invest in key transitions that can benefit from our competency.
The K
and S global R and
D team has repeatedly demonstrated our ability to quickly deliver new innovative high quality solutions to meet specific industry needs. This strong R and D competency combined with our ability to identify new market challenges, enhance our ability to sustainably grow our business. New market access and the favorable market dynamic are allowing our opportunistic set to grow more rapidly than it has in the past. As we execute on these new opportunities like creating new business, once again will flow through this value creation cycle. Looking ahead, there are several increasing valuable teams that support our optimum and the growth.
As a result, our industry is expanding more aggressively than it has before. This is being driven by higher semiconductor content in many end markets. The fashion transition and the overall evolution are significant trend that support above AVD growth over the near term.
Next,
we have demonstrated a bitly to efficiently expand into adjacent markets in the past, including battery assembly, SMT, LED, free chip, thermal conversion as well as advanced display. We have refined this development process, which enhance our pipeline and that increase our success rate. Additionally, we have and will continue to target higher growth adjacency to expand our third market. We have driven progress within the APS market and continue to seek our additional opportunity. MK will provide some additional information shortly.
Assembly complexity is a major theme that is increasing our value proposition in our core high volume semiconductor market and also providing new access to the leading edge. This is supported by a significant paradigm shift within the broad semiconductor value chain. Finally, we are a key participant in the advanced display market due to our first mover advantage, which has created a new competency set that we will continue to build on. We are rapidly developing our next generation system and have several engaged customers, but Shadek will provide more information on this transition. Shortly after joining KMS, ID organized the company to drive a more accountable, efficient and empowered organization.
Initially, this was focused in growing the APS segmentation and maximizing the efficiency of the global R and D team. We set new growth in the market share target within APS, which we are executing on and have also dramatically increased efficiency and the bandwidth of our R and D team. In the years that followed, we expand our soft market access by gaining shares and also supporting above average growth in specific market areas, including LED lighting and heavy wire waste and began to benefit from increasing capital intensity within our core market. Finally, we have moved into a new exciting market, including display battery assembly and SMT, which provide both diversification and higher growth opportunities. Our plan has expanded by 250% over the past several years.
Our strong empowerment and accountable organization, structures and culture has increased our bandwidth and efficiency, allowing us to rapidly address new market needs while expanding shares within market serve. Golden acquisition has increased our competency and provide immediate access to new and fast growing market, while target R and D investment has expanded our product portfolio. Looking ahead, we anticipate this segment will increase further to approximately $5,500,000,000 by FY twenty twenty four. These new market access provide diversification, higher growth and the incremental adjacent opportunity. Today, we are critically involved in several fundamental and significant technology transitions across semiconductor, automotive and the display market.
We have worked aggressively to help strengthen our competency and expand our product portfolio to support this specific trend. As this transition becomes more meaningful through fiscal twenty twenty, we are also enjoying a period of dramatic industrial expansion. The period of expansion is being driven by a dramatic increase in semiconductor demand across our end market. Five gs is a significant end market driver, which goes beyond smartphone and infrastructures, but also through new devices and applications. Additionally, five gs is supporting the new data evolve and also new higher bandwidth network requirement.
Collectively, this fundamental technology transition combined with the industry expansion period is allowing us to operate at a new level of profitability, which we expect to be sustainable over the coming years. Looking ahead to fiscal twenty twenty four, we believe our targets are rational and realistic. However, we anticipate there could be upside to our forecast and expectations based on the timing and the growth of this trend. I would now like to turn the discussion back to Joe Akendi. Joe?
Thank you, Fusen. Our next presenter joined JUEL KINSOF in 2011 and has nearly thirty years of experience leading a variety of functions supporting both private and public organizations, largely within the software, Internet and technology markets. At K and S, Lester has been intimately involved in the development and execution of strategic initiatives at the product and corporate level. He has been critically involved in organizational change, our acquisition strategy and capital allocation initiatives. He has led the global finance, IT and facilities organizations at K and S since 2017.
It's now my pleasure to introduce Lester Wong, Senior Vice President and Chief Financial Officer. Please go ahead, Lester.
Thank you, Joe, and thank you all for joining today. As Houston mentioned, our entire organization has worked extensively to expand our market opportunities. This focus, combined with technology trends in our favor, provides new layers of structural growth, enabling better visibility and positioning us to outperform over the long term. Secondly, we have a track record of providing realistic and rational goals that align with long term market dynamics. I'll provide some details to our future financial model and framework shortly.
Considering some of our higher potential drivers such as assembly complexity and advanced display, we see upside in the out years. Next, we have taken a very long term view when allocating capital. We continue to have very strong balance sheet and have multiple paths to enhance returns at the shareholder level beyond the scope of our financial framework. Finally, it is very important to understand that our business is extremely more profitable at the $1,500,000,000 level. We have strategically enabled scale across our business from an OpEx standpoint.
This inherent leverage increases profitability but also increases our ability to generate much more consistent earnings going forward. Looking out over the coming years, we anticipate our baseline revenue to grow by $600,000,000 by fiscal year twenty twenty four. And over the next few years, we're anticipating reaching $1,500,000,000 due to a period of broad industry expansion combined with business execution through fiscal twenty twenty three. We've introduced the concept of baseline revenue over the past few years to better help investor normalize our revenue. This baseline concept references historical trends and our underlying market dynamics, which helps to understand the fundamental level of demand regardless of broader industry conditions.
Looking ahead, this additional incremental baseline growth stems from 12 specific opportunities, which we will outline in much more detail throughout today's discussion. To add more color, we have also categorized this growth based on three key strategies, which are evenly split. These stem from normal levels of semiconductor growth, above average growth in markets such as advanced packaging and automotive and share gains within advanced logic market and also within our electronic assembly business. Looking back at our last Analyst Day, we set some aggressive targets based on our understanding of the markets. At the time, they seemed aspirational, but have actually stemmed from our bottoms up long term planning process, which is conducted annually.
While the year isn't over yet, we anticipate dramatically exceeding the stretch target of RMB1.2 billion. We expect to surpass our past revenue target by 25% and our non GAAP EPS target by approximately 40% this year. At At this point, fundamental technology transitions are progressing nicely and provide a higher level of long term visibility throughout our businesses. Over the past years, our baseline revenue grew as the industry expanded, assembly started to become more complex and we now have new access into the advanced display market. We have introduced a concept of baseline revenue, which helps to illustrate our annual revenue on a normalized basis.
The variable we normalize to is semiconductor unit growth, which has averaged about 6.5% over the past decade. These new markets and core market growth opportunities within high volume semi have allowed us to grow our baseline revenue from $675,000,000 to $900,000,000 over the past three years. Historically, industry dynamics have had a material impact on demand levels for our products. While semiconductor growth has averaged a 6.5% CAGR rate over the long term, there are periods of above average and below average growth. Our baseline model is calibrated to the historical average growth of 6.5%.
We have recently exited an extended period of not only below average growth but net negative growth. Fiscal twenty nineteen and 2020 were very unique periods with semiconductor unit growth significantly below average. This was related to the industry downturn followed by a global pandemic, which impacted broad macro trends. Looking ahead, we are now experiencing fundamental technology transition such as assembly complexity and above average industry growth due to new end markets like five gs, AI and the broader data era. These trends are allowing us to operate at a new higher level of performance in the near term and a higher sustainable level going forward.
At the same time, we are very focused to execute and aggressively expand our offerings, which are providing meaningful share gain and new market opportunities. Throughout today's presentations, we will closely examine the individual opportunity sets across our end markets that bridge this baseline acceleration. Again, there are a set of 12 specific opportunities across these four major end market categories. Within general semi and memory, we see opportunities for market share gains, industry expansion and above average growth. Within aftermarket products and services, the growing installed base expand our servable market and we continue to execute our tactical strategy to provide additional value add services.
In the LED market, we anticipate market growth in the traditional lighting market to continue and much more significant growth within the broad advanced display evolution. Bob Sharlak, our CTO, will provide specific details to why we're winning in this high growth market. Finally, in automotive industrial, we're expanding our offering to support new fast growing markets. At the same time, the transition to electric vehicles and ultimately fully autonomous vehicles provide a long term and interesting market opportunity. With the expanding baseline, our ability to generate and sustain a high level of earnings has significantly improved.
As we execute to grow our baseline at a higher growth rate going forward, we continue to seek out new opportunities for margin expansion. We anticipate our gross margin to expand by approximately 500 basis points due to the growth in higher margin business and aggressive focus on cost reduction and also due to the new value proposition that has impacted the broad assembly market. By fiscal twenty twenty four, we anticipate our normalized non GAAP earnings per share to sustain above $6 By this time, we see the potential for additional upside in our higher growth markets, specifically but not limited to advanced factoring trends and also the global adoption of mini and micro LED. Assumptions in this model assume semiconductor unit growth at at least 6.5% in fiscal twenty twenty four. We are holding our tax rate and share count consistent at eighteen percent and sixty three point five million through this period.
In addition to this positive financial framework, we will also continue to take a prudent, balanced and long term view on our capital allocation strategy. A few key principles have guided our capital allocation strategy over the past several years. These include a very thoughtful and careful approach to internal and external investments. Here, we have worked to increase the success of internal projects by increasing long term development engagement with our customers and other key industry partners. While many products can be accretive, we are very selective with new internal investments in an effort to align our business with higher growth vectors.
As we expand our competencies, it opens our access to a broader set of fast growing and interesting opportunities. These provide paths to both organic and inorganic growth in the future to enhance earnings and deliver value to our shareholders. Next, we also want to maintain flexibility within our balance sheet to quickly invest in new organic and inorganic opportunities as they become available. Finally, our dividend and repurchase program allow us to provide both consistent and also opportunistic returns to shareholders. The dividend allows us to consistently return capital to shareholders regardless of industry dynamics.
We have returned nearly $100,000,000 of capital to investors through dividends since initiated in fiscal twenty eighteen. Last December, we increased this dividend by over 15%. Going forward, we strive to keep the dividend competitive for our peers and also intend to be more consistent with annual dividend increases. The repurchase program allow us to opportunistically view shares outstanding through open market purchases. Occasionally, changing ownership or market sentiment provide near term opportunities to reduce share count and add value at the per share level.
The repurchase program has added a tremendous amount of economic value to shareholders over the long term. Over the past few years, we have aggressively repurchased shares, which has depleted available cash in certain jurisdictions like The U. S. We are currently transitioning a sizable portion of our global cash balance in The U. S.
In the most cost efficient manner where it can be utilized for the dividend, share repurchase program, U. S. Based M and A or incremental R and D spending. Finally, our financial framework currently only assumes that we will offset dilution with the repurchase program, but does not assume any M and A or opportunistic repurchases, which we have engaged in over the past years. Considering these points, we expect upside in our longer term financial framework on a per share basis.
With that said, this concludes the financial discussion, and I will now turn it back to Joe.
Thank you, Lester. I'm now happy to introduce MK Han, our Vice President and General Manager of Products and Services. MK has driven the aftermarket products and services strategy and segment transformation since joining CulkinSulfa in 2017. After joining K and S, MK has enhanced our competitive advantage within the APS segment, driving market share gains, expanding our offerings and increasing recurring revenue. MK earned his master's in physics from the National University of Saint Paul and previously held senior positions at semiconductor equipment companies including maths and technology, Lam Research and Applied Materials.
MK, please go ahead. Thank
you, Joe, and thank you all for joining today. By fiscal twenty twenty four, we anticipate our aftermarket products and services or APS business to grow by another 60,000,000. This comes from three main areas industry expansion, market share gains and the value added services. There are few key messages I would like to cover regarding APS business. First, APS allowed us to further increase our engagement with the customer, which help us to understand their needs better.
This feedback is key to drive the right product development to meet our customers' future needs and challenges. Next, we'll reorganize the team and our strategy a few years ago. With a sharper focus, we have made meaningful improvement in expanding our product offerings to serve our customer and to grow our business. Finally, the growing challenges of SMB complexity and the broader challenges due to technology transition are opening up new opportunity for higher value added product and services. Today, consumable represents just under half of our APS revenue.
We are expecting this composition to remain more or less the same in the coming years. Consumables are tools used in the backend assembly equipment, capillary, wedge and dicing blade from our core consumable business today. The market opportunity for the consumable is expected to grow dramatically over the coming years with the installed base expansion from the current aggressive ramp. Spare and services represent just over the other half of our APS revenue. This business is also expected to increase with forecasted high factory utilization, new former assembly moving to high volume production and increasing demand for value added services by our customer.
Our comprehensive product offering together with our global service organization enable KNX to win to help our customer to win. As original equipment maker, our in-depth equipment and application knowledge enable a very close working relationship with many customers. We are always the first point of contact to our customers when needs arise. The other key differentiator for K and S is our unique consumable offerings, allowing us to provide a very comprehensive solution together with our equipment. This unique combined offering received very positive feedback from many customers in our annual voice of customer survey.
Our global presence in many countries near to the customer shortened our response time when the customer needs our support. Our close engagement and regular feedback from the customer helped to drive continuous improvement in our product to meet their needs. Outlook for the consumer business is very positive due to several favorable factors. First, accelerating demand from strong customer factory utilization. Second, the installed base growth from overall industry expansion and the new market that increased our served available market.
This sector will provide multi year growth opportunity to increase our recurring revenue. Why we win? Our consumables are designed and optimized for our machine through the joint development between the engineering team within KNS. We also provide a comprehensive consumable product portfolio for a wide range of backend semiconductor assembly equipment. Our continuous effort to drive best in class year end product quality together with our application expertise enhance our position to be the preferred supplier to our customers.
With a strong business outlook, we continue to invest to further strengthen our R and D and high volume manufacturing competency, especially in the area of advanced material development, manufacturing technologies and factory automation enhancement in our manufacturing hub in China. In the last couple of years, we developed a wider range of aftermarket product portfolio to serve our customer. Spare parts and service support continue to be the two key products serving our installed base. We have more than two fifty service engineer and multiple warehouse at key sites. KP has also expanded our repair and refurb services to support our customer needs throughout the entire equipment lifecycle.
There is also an increase in the demand for technology and productivity upgrade to extend equipment useful lifespan and to lower the customer COO. Our customized service program, Care and S Care, cover both labor service and spare parts, provide a comprehensive maintenance solution on our machine. This enable our customer to focus on driving manufacturing efficiency in their factory. Last but not least, we have extended our industrial four point zero solution and have recently released a cloud based KNX solution. We will continue to develop and expand this new value added service solution to serve the changing needs from our customer.
Our existing spare and service products from our installed base continue to form the backbone for our recurring revenue. However, with the growing capacity in the industry and our new equipment entering into new market segment, we expect a higher demand for our higher value added services and solutions. This includes our broader 10X care services and 10X solution that support our customer transition to Industrial four point zero and factory automation. Our new generation of bonder designed to be industrial four point zero capable which is called Smart Bonder. We have also developed our proprietary industrial four point zero software platform, 10X to enable complete machine edge cloud solution for our customer.
Some of the key benefits and features for our Canex solution includes real time advanced process control, customized visualization for user analysis and full product traceability to enable the development of predictive maintenance and factory process control. This new solution will open up many new and exciting opportunities to install base in the future. With that I end my presentation, I would like to turn the discussion back over to Joe for our next session.
Thank you, MK. Our next presenter has led many enabling innovations within semiconductor satellite. These crucial innovations, which are embedded throughout our capital equipment offerings, provide the industry with market ready solutions that mitigate the challenges of two dimensional node shrink in both high volume and also leading edge semiconductor assembly. Bob has also played instrumental roles in enabling the broad industry's gold to copper transition, which has materially reduced semiconductor production costs and extended the value proposition of wire bonding assembly. Over the past few years, Bob has increasingly focused on next generation mini and microLED placement technology.
Bob has been instrumental in the development of our current market leading placement solutions and also the development of our recently shipped Luminex system. Bob also leads our next generation advanced display roadmaps. With that said, it's my pleasure to introduce Bob Shylak, our Vice President and Chief Technology Officer.
Please go
ahead, Bob.
Hi, everyone. Today, I'd like to talk to you about LEDs at K and S. This is an exciting opportunity for growth of our baseline revenue. As you can see from this slide, we believe that by 2024, we can add about $150,000,000 to that baseline for both traditional and advanced display. So this growth potential is for both traditional and advanced display, but while our projected growth comes from both areas, today I'll focus on mini and micro LEDs for the advanced display.
So this is a significant growth opportunity for us and we'll show some market data on the subsequent slides. We have a leadership position. We're entering this with an established machine, the Pixellux, and we're working through partnerships, mergers and acquisitions and organic investment in R and D to maintain and solidify that leadership position for the future. We have already some key customer engagements for production of our Pixellux in the field and we're leveraging those to build on them to get into mini and microLED for more advanced displays. And we've created aggressive roadmaps.
So we're accomplishing that through R and D spending and we have several products in the development pipeline comprehensively to support these multiple opportunities.
If we go on to
the next
slide, I'd like to
stress that mini and microLED are complementary and that they will coexist in the future. They're intimately involved in the supply chain for both and often it's the same players. We are committed to enabling this industry transition as we see it as a great growth sector for K and S outside our traditional wire bonding and packaging. Mini LED transfer technology is extendable to microLED. So as we're working hard on the mini LED, we're also providing the future basis for entering MicroLED.
So Mini LED is applications are ramping right now. It serves the high volume display market. And this is because backlighting for many LED improves the power efficiency, the brightness and the contrast of LCD displays. And this is sort of a logical transition. It might be analogous to fluorescent lighting transitioning to LEDs a decade ago.
So when LEDs first appeared, they started to replace transitional lighting and the adoption took a few years. And so the LCD industry is driving this adoption. For microLED, there's R and D ongoing and it's intensifying to solve the near term industry challenges to drive adoption. So this will become in production for commercial displays and even mobile and wearables and that will drive the next future demand. This technology competes with other self emissive technologies such as OLED, but it's brighter and there's no burn in and it has very high reliability.
So microLED applications will start to ramp in 2024 after the R and D is accomplished. So to the next slide, where is K and S? Where are we in this? So today we have a leading solution in the largest market share for ultrafast final placement with our Pixellux product. We recently acquired a startup, UniCarta, who we had been working with that has laser technology and that adds laser competencies to our development.
So we are broadening our portfolio of next generation of mini and microLED market ready solutions and working hard in R and D to do so. So this market for both mini and microLED wafers is expected to grow at about a 55% compound annual growth rate over the next four years. So if you look at the timeline on the next slide, we have a proven ability to rapidly intercept the technology trends. So in September 2017, we identified a new events display market opportunity. By August 2019, we recognized revenue for the first machine in this market approximately two years later.
Another year later or so, we delivered the one hundredth Pixelux machine to the market. And the following February, we acquired UniCarta, who we had previously been working in collaboration with. And then just now in September, we shipped our first Luminex machine. So we're positioned to enable widespread adoption of the advanced display and we've shown that we can commercialize products within about two years. So I've spoken about the Pixellux, Luminex and microLED.
So let's talk a little bit about the technologies behind them. So the Pixellux is a mechanical transfer. You can see that the die are mounted on tape upside down and a pin mechanically presses the die down onto the PC board into solder paste. And we can do this remarkably quickly at about 50 die per second. But this is a mechanical process and this mechanical process while remarkably fast is going to run out of steam.
So we decided that we needed a new technology to gain higher cost of ownership, better cost of ownership, higher productivity. So we are developing and have developed Luminex machine. So this is based on UniCredit technology. We have a patented laser transfer. And let me describe a little bit about how it works.
So a laser, there's a tape mounted on a fused silicon substrate, like a glass substrate and the dye is mounted on to that tape. The laser beam shoots through the tape, it's positioned through the tape and the tape is two layers. The first layer of tape is gets heated, it absorbs the laser energy and gas is formed in this sort of a mini explosion. And the second layer of tape contains that explosion, so it does not add debris to the tape. And that's the genius in this technology is that there's a little micro machine that can transfer the dye very quickly.
The laser pulse heats the material in only tens of picoseconds and the dies transferred in microseconds. And as opposed to mechanical transfer, instead of moving a gantry mechanism cameras, this is all positioned by mirrors, Galvo mirrors that can move extremely quickly. So the productivity of this machine can be much higher. And it's similar in nature because the dye is mounted to tape. And then in the future for micro LEDs, where an eight ks display can have up to 100,000,000 dye LEDs mounted to them, we need much, much faster transfer.
So we're developing the same technology, but instead of shooting one die across a gap onto a board at a time, we're going to shoot many die simultaneously. So that opens market potential for us. So if you look at this chart, this is a chart that shows how a display is made. So first is the epitaxy done in the fab, then dicing of the wafer and stretching of it onto a tape. And then these dye have to be sorted and mixed because the wavelength of the dye are not uniform.
So dye of the same wavelength need to be put on a new reconstituted wafer, so that your eye cannot detect color changes. Then if it's for an RGB display, the dye are put on re pitched onto a pitched array module and then they're placed finally onto the substrate. So the Pixelux today can do the final placement onto the substrate, but does not do the sorting or the re pitching. However, the Luminex with its better accuracy and laser transfer, can do the sorting, the repitching and the final placement. So this opens not just backlighting applications, but it opens RGB applications for both mini and micro LED.
So we go on to the next page, we can look at the market. So this market shows thousands of four inch equivalent wafers on the y axis in time versus time. And you could see that in 2021, most of the market are the backlight applications for mini LED. There's a small amount of self remissive RGB, but by and large, the whole market is for backlighting. And you can see that over time, the market grows for backlighting and self emissive RGB displays and grows further until finally in 2025, micro LED emerges.
So in this market, we have engagements with multiple customers, solutions in development or already available for backlighting and self emissive displays. And so this gives us access to new process steps and increases our SAM by 66% by 2024. And this market growth, as I said previously, is 55% and it's a huge and significant growth vector for K and S and it's very exciting. So finally, let me compare the specs and the applications for our roadmap. So the Pixellux is a backlighting machine.
This is for premium displays. Our customer engagements are limited. We have partial IP and the accuracy of the placement of these die is about 20 microns at three sigma and our throughput is 50 to 75 per second. But the Luminex, the laser based system can do both backlighting and self emissive displays. This is the end market will be matched displays.
There's many customers that we're engaged with or are in the queue. We have full IP ownership. The accuracies of the placement is now below 10 micron and we can achieve much, much higher throughput with the laser based system depending on the application up to 1,000 per second. And then the self adhesive displays for micro LEDs in the future, we've already engaged with several customers, we fully own the IP. We believe we can get the accuracy less than one micron to the transfer of these dyes.
And in order to hit the throughput that makes this cost effective, we will extend this technology to throughput greater than 10,000 hertz. So with that, I'll turn this back to Joe.
Thank you, Bob. Our next speaker brings nearly thirty years of experience in the semiconductor and electronics assembly markets. Over the prior twenty years, he has driven sales, business unit strategy and operational execution within senior leadership roles at KLA Corporation and FormFactor. Prior to joining K and S, Jonathan also served as Chief Executive Officer of Everett Charles Technologies. John Pinn joined K and S in 2014 and has added a tremendous amount of value by expanding our automotive business into battery assembly and intercepting the advanced display opportunity.
He has strengthened our position through organizational refinements within the wedge bond, advanced packaging and electronics assembly businesses and currently serves as our Executive Vice President and the General Manager of our Capital Equipment segment. While Chantal is ultimately P and L responsible for our complete Capital Equipment segment, today he will cover the general semiconductor memory, automotive and industrials end market opportunities.
Please go ahead, Jonathan.
Thank you, Joe. Well, it's exciting times now on automotive and industrial segments. We believe that this fundamental changes in the coming years is providing a huge growth opportunity for K and S. Looking at this slide here, we see auto growth, industrial growth and battery interconnects contributing close to RMB 90,000,000 of incremental opportunities on auto and industrials. Some of the strong positions that we have today in auto with our core business in wire bonding, wire interconnect, battery interconnect is giving us a very strong position as a leader in automotive back end semi wire bonding.
At the same time, we are also seeing growth above the average, especially in semiconductor content, and we continue to see this expanding dramatically in the coming years as the growth of electric vehicles continue to evolve. We are strongly engaged with a lot of lead customers in Europe, U. S. And Asia, and this ongoing customer's engagement is giving us extreme momentum in the semi for auto and industrial segments. We will continue to expand that market and continue to grow in this auto industrial segments.
Let's start with a history of where K and S started in automotive segments. In 02/2006, we entered the power IC market. In 2017, we released the Rapid Pro. And we entered into the EA market after the acquisition of Assemblion entity in Netherlands. And then in 2021, we continue to expand battery solutions.
We anticipate that in 2021, this is going to contribute over RMB120 million of revenue for both auto and industrial revenue. There are some competencies that I'd like to highlight. As you can see in some of the pictures on the right, ribbon bonding. Ribbon bonding is an innovation developed by K and S together with the Autodyne brand in the past of wedge bonding. We started developing very core IGBT power modules for the industrial controls as well as the hybrid and electric vehicle productions.
This has enabled very high volume, very high reliability electric vehicle battery assembly. So this is all coming very, very strong momentum in the last couple of years and then we anticipate that this growth will continue to grow even more. Like I mentioned, we have very strong customer engagements, over 150 dedicated auto and industrial customers for both power and discrete solutions. We're also in the hybrid power hybrid, which is the picture on this bottom right is a white power module. That's a power hydrant module.
That's a simplified module, but in it, it's including MOSFETs and transistors, diodes, transistors in a power module driving inverter modules for electric vehicles and power hybrid solutions. Alternative energy solutions is a segment in the market. We continue to identify solutions to go into alternative energies, for example, like electric, hybrid electric, plug in electric, solar, storage power. These are examples of alternative energy solutions. The next slide basically shows a simple explanation of why the electric, full electric is advancing faster than the original plan.
As planned in the past, you can see in the dotted line, this was supposed to evolve in the next couple of years. But due to the whole carbon footprint reduction, CO2 reduction, incentives for zero emission vehicles in China and basically a clear plan of transition from combustion engine to electric, This initiative is driven from both regional, government, institutional, commercial has basically brought the curve forward. We expect that this is going to continue for the next many years, but the pull forward is going to be like two to three years ahead of going to full electric. As you can see, many announcements from different automotive players announcing a clear strategy and plan going towards full electric in the next coming years. How does that help KNS?
Let's look at the next picture, which is a very simple schematic of an electric car with a big battery in the center, high voltage battery, a battery management to manage the batteries as well as communicate to the electronics in the modules of the car. And then, importantly, on the left, you see an inverter for AC and DC, and that's also using what we call the IGBT modules. And of course, you have the low voltage, high voltage converters, the DC to DC. And you can see on the left side, we have a picture of the Westponder, we call it STIRRANCE. It's targeted for applications in sensors, IGPDs, diodes, hybrid pack, MOSFETs and battery managements.
So in many applications, our Y bonder family, wedge bonder, specifically Siron, has been driving very clear applications towards all these different applications. Now moving to the picture on the bottom, it's a it's our core pick and place machine and we call electronic assembly. It's basically a combination of a line that consists of a high speed pick and place called the hybrid coupled with the iFlex for different component sizes placements. Now this is used for placing components on a PCBA that's also used in many parts of the car vehicles. For example, what we've seen most recently is, for example, it's like the infotainment, the dashboards, where a lot of electronics, LED screens, all kinds of electronics are in the infotainment systems, and we see this as a big, huge advantage of a high speed automotive industry four point zero compliance in terms of supporting this industry.
On the right, you can see a battery module. There's two basically types of different battery modules that we've seen in the market. One is the cylindrical batteries and one is the prismatic. And again, we have been very strong in leading the cylindrical battery interconnect, and recently, we're also getting into certain engagements on the prismatic battery cells. The pictures on the right shows different wedge modules that again supports the different applications for the electric car modules.
So I think if you look
at the header, right, basically, we see the semi content is going to continue to grow at least 2x to maybe up to 8x when electric vehicles are just going full autonomous. So it's beyond the electric vehicles that we see adoption of semiconductor in power modules and electric vehicles. We start to see that beyond the vehicles, a very key important component is the silicon carbide adoption for fast charges in electric vehicles. And what we see that the need, the requirement to fast charge a car thirty minutes, forty minutes or less than an hour becoming a very important point for considerations for adoption for electric cars. So what we are seeing in semi is the mix compound called silicon carbide, where it provides a much higher charging rate based on the mixed compound silicon carbide attributes.
It has better thermal behavior. It has better electrical behavior. It has better contributions towards ability to fast charge a car within less than thirty minutes. So what we see here is that for silicon carbide, you can get charging rates from three fifty kilowatts or up to 1,000 volts, right. And we start to see that many key leading customers of ours adopting silicon carbide in terms of their modules that uses our wedge bonders or wire bonder solutions.
So we're going to see this also a lot towards the IPM intelligent power modules where it also has a systems and package type of efficiency gain. And this creates basically a multi chip modules within our modules. And this gives advantage of integrating the logics as well as the power IC chips into a certain module we call IPM. The picture on the right basically shows a three head wire bonded, wedge bonded that shows how the multi chips can be wire bonded using multiple heads to bond the different chips to the substrates of the lead frames. So this is one example.
But we start to see that the drive for infrastructure is becoming more and more important. As a result, silicon carbide naturally becomes a part of a very important solution to this whole infrastructure of charges. Moving on, I'd like to just explain that we have been very, very focused on the cylindrical batteries for the last couple of years, driving very high efficiency battery interconnect for cylindrical cells. The systems that we have right now are over 500 systems in cylindrical production, and it has been growing for the last couple of years and will continue to grow at a CAGR of 30% through 2025. And today, cylindrical battery interconnect represents close to 20% of all EV battery markets.
And we believe that this will continue to grow even more in the next coming years. Now moving on, K and S is moving to the next generation product, which we call a new laser based cylindrical battery systems. And recently, we got qualified with a major battery manufacturer in North Asia. We have been shipping tools to them, and they have been starting to do battery interconnect using our later generation voyage binders. And this is going to be used in large packs for commercial trucking productions.
Moving on further below, the arrow pointing out is a new entire new offering called the prismatic battery solutions. As I explained earlier, the battery comprises mainly of cylindrical as well as prismatic. And now with KNS initiative to go into the prismatic, I believe that this is also giving us a very high potential market. It will represent close to 10% of our fiscal twenty twenty two auto industrial revenue. And one of the key markets we'll see is in Europe, specifically in East Europe.
As you see, a lot of automotive players are beginning to have strong presence in East Europe to support the entire European market as well as international markets for automotive as well as going into the EV market. I'd like to hand over this time to our very key strategic customers of ours, from Intel. His name is Mustapha. He is currently the Corporate Vice President and Director for Diet Prep and Assembly Technology Development. He has been working closely with K and S in many different projects.
He's got over thirty seven years of experience leading transitions of assembly complexity. Mustafa, I'd like to introduce you and welcome to our KNX analyst day.
First off, thank you for the opportunity to participate in this call. What I'm going to share with you is our views on advanced packaging and heterogeneous integration for creating system level capabilities and in a package and also talk a bit about our partnership with KMS. Before I start, I need to make some legal disclaimers as some of the statements that refer to Intel's future plans or expectations are forward looking statements. These statements are based on current expectations and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. All right.
With that out of the way, if you look at the history of semiconductor and computer industry over the last forty years, a lot of performance has become available to a lot of people through several disruptions that have taken place. During the early years in the PC era, 1,000,000,000 devices were connected to Internet. And then in the mobile and cloud computing era, there were 10,000,000 devices connected to the clouds. Now with the computes becoming part of everything and everything getting connected and smaller, there has been an exponential growth in the amount of the data that is getting generated. But only a fraction of this data is being analyzed and translated to useful information.
And this is driving an insatiable appetite for compute power. As we look forward, we are entering an era of XX scale computing then tremendous amount of compute power will become available to the masses with around 100,000,000,000 connected devices. And this will result in even a faster Corotian data generation and driving the need for even more computing power and the network capabilities as well as storage. Now the question is that how we can create and build products to meet this growing demand for performance and functionality that is driven by data centric applications and how to do it in light of growing cost and complexity of the silicon process and the scaling. All right.
This is where advanced packaging and heterogeneous integration comes into play by enabling integration of right transistors on the right silicon process node and creating a system and package with a ton more transistors that can be achieved from a single monolithic die. By leveraging advanced packaging technologies, we can overcome some of the limitations of the monolithic silicon by repartitioning the device and bake them into tiles and chiplets. For one, this will allow us to remove the radical size limitations by building products on multiple pieces of silicon. We can also build products by using transistors on different process technology nodes from different foundry sources and optimize for yield, for cost and for performance. And at the same time, we can shorten the debug and validation cycles and as a result, shorten the time to market.
Over the past several years, many players across the semi and computer industry and the ecosystem have realized that the role of the advanced packaging is so critical in building better and differentiating products. And this has led to significant increase in R and D investments, investments in manufacturing scale ups and so on and so forth. Here, I want to share a snapshot of Intel's advanced packaging roadmap. As you can see, our portfolio is built around 2.5 bN three d interconnect technologies with the goal of minimizing interconnect or maximizing the interconnect density and minimizing the power and the latency associated with the interconnect and trying to get a performance level as if you had a monolithic piece of silicon in a disaggregated architecture. As you may know, EMIP is industry's first 2.5D embedded bridge that enables a very high, very efficient and cost effective in a kind of two d space.
This technology has been in production for quite a few years, and we have a growing number of products that are being designed and built on this architecture. Also, Foveros, the next one, is the first of the kind three d stacking technology that provides a very short interconnect with much higher interconnect density. This one, same similar to EMEB, has been in production for a while. Right now, we have two other versions of FOGOROS technology in development as it has been announced by Intel in the past. One is, progress Omni, which provides a combined direct silicon to silicon and silicon to sub share connection in a two d space.
A key attribute of this technology is that offers a path for further design flexibility and cost and performance optimization. And lastly, we have Forward Us Direct, which leverages direct copper to copper bonding instead of using soldering. As you know, this technology increases the interconnect density by a quarter of magnitude. One other point I want to make is that these technologies can also be combined in various fashions in a single package to create extremely powerful system and package type of products. I also want to show you some examples of our flagship products that are built on these architectures.
Some of these are in development and not in the market yet, but some are. To the left, I have Intel's Agilex in an which is an FPGA product on EMIP technology, which integrates fabric, high bandwidth memory and various high speed IO links from on different silicon technology nodes from different foundry sources. And in the middle, I have a couple of mainstream clients and server products, which are currently in development, and these are built on Foveros and IMU Technologies. And to the right, I'm showing Ponte Vecchio, which was announced recently and is currently we believe it is industry's most complex system in package product that is built on a combination of EMEA and POLOS packaging technologies. And as you can see in this case, we have around 47 chiplets connected to high density and high bandwidth interconnect to behave as if these are all part of a supersized monolithic device.
And this product combines layers of high bandwidth memory, cache, high speed IO and compute tiles, all of these in a single package. One key message I want to convey is that as you can see, many of the mainstream products across several market segments are now moving to advanced packaging and system package architectures. As I mentioned earlier, other industry players are also investing in advanced packaging, and they're all trying to create heterogeneous interconnect platforms to integrate chiplets with the least amount of overhead or what I call interconnect tax. And here, I'm showing a couple of examples from Samsung and TSMC. To the left, these are TSMC's three d advanced packaging platforms.
They use various interconnect schemes like organic redistribution layers or silicon interposer. They're also going to bring up direct copper to copper bonding, for their announcements. These will have different optimization points for interconnect density, for power performance, for cost. And to the right, there are a couple of examples from Samsung's Cube series platforms. They use like TSMC silicon net holder for two d.
We also recently announced their xCube two d platform using solid bumping and through silicon via interconnect. Now looking farther into the future, the next barrier to overcome is integrating optical IO in a package. This is driven by a number of factors like the need to increase the other bandwidth in particular and data center space or the fact that network power is increasing and is becoming a larger portion of the system power. Also, the need for to increase the reach of high bandwidth and high data rate connections. Now with Copac packaging of the optics, the optical ports and IO can be placed near the switch within the same package as opposed to a plug in connection to the system, which is that post that is out there today.
What this will do is it will reduce the system power tremendously and will enable our IO bandit scalability. And by the way, this level of integration requires a lot of innovations in design, in equipment, in materials, considering the type of unique requirements and challenges for electrical and optical coupling and the fact that we need to reduce the amount of the losses to this coupling. Now looking at the supply chain and supply ecosystem around the Advanced Packaging, we are seeing some major shifts that are important to understand and internalize. For one, Advanced Packaging requires some of the capabilities that exist in silicon far back end. And as you may know, the boundaries for where the silicon wafer process fabrication ends and where the package manufacturing starts up blurring.
For example, many of the process steps need to be in a silicon fab level type of a cleaning environment like ISO5 or the formation of some of the fine feature size redistribution layers requiring patterning steps that are used in silicon fabrication. And most importantly, we need the types of hardware and data automation systems that exist in the fab environment to deal with more complex flows and more stringent process and quality control requirements that are needed for these kind of technologies and processes. So to that end, we are seeing a trend where traditional front end and back end equipment, equipment and material supply chain is converging. We are seeing front end suppliers moving into the back end space and making investments, a lot of investments actually, and growing their business in advanced packaging space. And the back end suppliers are investing in cleaner tools, higher precision tools or investing in fab like processes either organically or through acquisitions.
The other trend we see is the growing number of collaborations and partnership arrangements between front end and back end suppliers. They are realizing that this is a path to accelerate the rate of innovation and the need for creating more integrated and more of a turnkey solutions for their customers. We believe this is creating an unprecedented opportunity for suppliers to invest, to collaborate, to innovate, to differentiate and improve their business portfolio and keep on expanding and taking advantage of these opportunities. Lastly, as a K and S customer, I want to make a few comments regarding our partnership between Intel and K and S. In our view, we consider K and S as a key strategic supplier and partner for Intel.
And in our view, K and S plays a critical role in support of our current and future needs for advanced packaging. I want to recognize KNS' investments and the outstanding level of commitment from all the way from Fusen, his executive team and all of KNS' employees in support of our needs. We believe based on years of working experience with KNS, they have a deep engineering bench and variable who continue developing very well engineered tools and capabilities, and we are very happy and excited about the kind of capabilities that they have provided to us. And these tools have become key enablers for our packaging technology roadmap and manufacturing. As we have worked together, we see continued improvement along the technology, quality, affordability and sustainability vectors.
And most importantly, I want to recognize the efforts by Canis in support of our needs in a super tough COVID and supply constrained environment, which apparently continues for a while. And we are more than ever dependent on KNF. And as we look into the future, we see many opportunities for collaboration, for investment and innovation to shape Intel and industry's advanced packaging roadmaps. Examples include, I have listed a few, like copper to copper interconnect, optical packaging, as I talked about it earlier, opportunities on panel processing type of tools and also collaborating to develop more intelligent manufacturing and participating in Industry four dot co transition. So with that, this concludes my talk, and thank you for listening.
Okay. Thank you, Mustafa. I'd like to
now
introduce the overall general semiconductor and memory landscape in terms of what K and S Solutions is providing in the coming years, especially in the exploding growth of the semiconductor segments. We believe that incrementally that's close to about RMB300 million of incremental general semi and memory baseline opportunities. A lot of this is going to come from advanced assembly, industrial expansion, electronics assembly as well as memory. Now with the diversification of all our product portfolio from wire bonding to advanced packaging and also for advanced display, we believe that we have created a new value across assembly markets. This has increased capital intensity of assembly and mitigating well known strength challenges.
It also offers multiyear industrial expansions to diversify core competencies, both through organic and inorganic executions. Well, we have been winning new businesses, increasing market share with our leading edge logic assemblies
as
well as core, wireborne and electronic assembly markets. Similar themes to previously I mentioned, we have very strong Internet customer engagements. We have very strong track record in solving customer and industry challenges. Now let's look at the core competencies of where we are at for electronic assembly first.
If you look at
the picture on the
right, the graph shows that this is
a $3,500,000,000 market total electronic assembly equipment 10.
We are
currently targeting a SAM, a service market of close to about $800,000,000 of capital equipment for Advanced Electronic Assembly. Now the electronic assembly is going through a lot of innovation recently. We acquired Assemblon in 2015. It was previously a PE owned asset and required for about close to 1x of its revenue in fiscal year twenty fifteen, we have fully integrated competencies to enhance the Vans packaging offerings as well as enter into the mini and microLED that Bob has previously highlighted. The development team has strong competencies and developed good offerings to expand beyond the acquisition since then.
With that, we have developed very strong competencies in high speed motion control, placement accuracies, throughput efficiency and better cost of ownership for our end customers. Now moving on, I'd like to mention about our core market in terms of the tech change and what's driving that outlook. As you can see the picture on the right, the wire bonder utilization, it's going close to up to 90 plus percent, 95 utilization. We have a very high utilized installed base of over 200,000 of wire bonders in installed base. But with such high utilization, it creates easily roughly maybe about 30,000 of bonders.
And with that increase in demand from field utilization and semi growth, we believe that this will continue to propel our core markets in wire bonding. So importantly, what's driving that high utilizations rate and the high semi content? What we have seen is that the chip modules traditionally has been a single chip, single chip that's wire bonded with multiple wires with different IO points. We've seen that in the last couple of years when multi chip has evolved exponentially because of more functionality, more packaging, more higher density into a package, we see that Y bond has increased tremendously in applications for multi chip modules. So as a result, we have 1,000,000,000,000 of semiconductors to be assembled.
We see that as a 6,500,000,000,000 of a ten year CAGR. And we see that this is also giving us above average growth anticipated through 2023. And again, many, many different reports that we've seen eight in ten semi packages are using Ybonder as the core interconnect technology. When multi chip is evolving and being introduced into this packaging, we are also seeing that the same adoption of high utilization of wire bonding for multi chip. Why do we lead now?
We continue to have very strong R and D investments, commitments to continue our roadmaps for our core markets in wire bonding. Our customer engagements are very, very strong. We have leading customers in especially in Asia, in The U. S, in Europe and Southeast Asia. And we are not only just offering Y bond solutions, we're offering the Y bond together with the consumables as well as process know how and process development.
All this package together gives a customer a really good end to end solutions in terms of developing new applications on wire bond. So as a summary, our incumbent position is we have high productivity, we have high positivity and we have high flexibility. So imagine when you're inside a factory when there are hundreds or maybe up to thousands of wire bonders sitting hour by hour. Customers would always want to make sure that machines are running at very high utilization rate, minimize any interruptions to production in terms of downtime, so uptimes are very high and importantly is portability, right? Hit the same program that you have developing one wirebonders and multiply to ten, twenty, one hundred bonders without even putting any of the process parameters.
And this is a huge advantage for KNS. Now another growth it's driving is the five gs. And five gs has enabled a lot of push for higher data rates. So
we start to
see that in five gs that the demand will continue to increase as shown in the picture on the left. You can see that the CAGR of this is growing at 77% between 21% to 23%. And at some point, half of the new smartphones is all going to be five gs enabled, and which means that the amount of semi content will continue to increase. We anticipate it's going to grow of about 4% annually. So how is KNS involved in the solutions, right?
There's more silicon contaminants, new modems, new RF, new millimeter wave antennas required, base stations on top of four gs, higher silicon intensity, higher bandwidth networking. And then on the end device, on the palm of your hand, you want to have more photos, more videos, higher resolutions and faster data rate transferring between the data centers and your phones or your mobile phones and also better edge devices. Now if you kind of look at what is the content of this package level high transistor density, we believe that Moore's Law as it evolves over the last two to three decades has kind of reached a point where transistors we call are now basically in a phase of cost and performance. As we have seen the Moore's Law in the last several decades in terms of the transition density improvement, but then the cost of end performance are not so far, I would say, matched to that to the level of that scale. So what we've seen that even with five gs now, that advanced assembly, the introduction of advanced packaging is becoming more and more important in terms of driving solutions, at the same time maintaining those cost benefits relative to the performance requirements.
So we see that the multi chip in 2018, only 20% of advanced package requirements is in general semi. But then in 2021, we begin to see close to 40% of wire bonded chip multi chip model is increasing the amount of content. And we anticipate in the next couple of years that 50% of general semi, 50% of that will be multi chip or multiple systems and package level in the package. Again, this will continue to drive high adoption of Y bonder for multi chips also in as transistor continues to scale to smaller nodes and package density continues to increase. So complexity will increase us through value propositions, extends growth across the portfolio, it reduces the reliance on unit driven capacity additions and of course, complexity creates higher value for K and S because we have a differentiation in our product and solutions, which creates higher margin opportunities.
So K and S solutions in general provides new levels of complexity for both high volume and very high leading edge applications. Now let's move on to the high volume semiconductor segments. We have connected devices in five gs IoT, RF, spec memories like NAND and high bandwidth memory and also for all kinds of optical and sensing, the camera modules, CMOS image sensors, the face recognition and also for security. Again, a lot of focus is on systems and package and multi chip modules stacked by wafer level packaging. The picture on the bottom shows a suite of solutions from Connex Elite, PowerFusions, Premier, CIS Solutions, I Flex and our high end Ybonder rapid series.
This basically creates a huge broad portfolio supporting the multi die package growth. Now
for the leading edge,
the three segments in the market is mobile, mobility, the application processes in it, the sensors in it, AI edge devices, machine learning and of course, data center rich in content and driving high data rates through heterogeneous packaging, silicon photonics. And this is basically driving and you can see the pictures below all the different advanced packaging solutions, the thermal compression bonding, the wafer level packaging, hybrid bonding, high accuracy flip chip and of course, lithography for the back end. And this is the pictures on the bottom that shows the suite of solutions. The picture on the left is a high accuracy flip chip. Picture on the center, it's Apama, which is a very leading edge for application processes bonding, the Apama series.
LiTec is for the lithography for advanced packaging. And then the Fluxus, which is a next generation thermal compression bonding. And of course, working towards a hybrid bonder in the coming years for even a high accuracy placements, for example, like copper to copper plant. Now just a very simple schematic of silicon photonics in line with what Stanfa has also mentioned about the co package. The co package optics assembly, it's a very complex assembly that requires basically transceivers that integrate together with the silicon chips.
So you would see a chip set with basically a fiber optics unit integrated into the modules. I'm not going to go into some of the details, but basically the co package optics requires the PIC as well as the EIC, which is the photonics as well as electronics integrated circuit integrated into the chip. So what's driving the differentiation in our KNS solutions is our thermal compression bonding together with our formic acid or flutter solution. Right. This basically creates a winning formula for customers who's trying to create a package for silicon photonics and what we call it, in short, co packaged optics.
And this is going to grow at 40% CAGR in the next couple of years. So this is another great application that K and N provides a differentiated solution. So all the different applications on the right shows, crypto, leading edge modules, AR display drivers and bandlogics, now chiplets, these are all kind of driving more to advanced placements like the flip chip and thermal compression point. Now, I conclude my presentation for the general semi as well as memory and the complexities of the future trends of packaging. I'd like to now turn the time to Lester, who's going to conclude in today's presentation.
Thank you.
To summarize today's presentation, we provided many specific structural drivers to support a higher level of sustainable growth and profitability. Throughout our multiple end market opportunities, we expect roughly one third of our fundamental baseline revenue growth to stem from a normal level industry growth based on historical trends, another third of the incremental baseline to be driven by above average growth opportunities. These are apparent within automotive transitions, advanced display and emerging opportunities such as silicon photonics and co packaged optics. The final third of sustainable revenue growth comes from an ongoing strategy to take shares in areas including the electronic assembly market, which provides a significant untapped opportunity. Also, transition for leading edge assembly are accelerating demand for our new equipment solutions, providing opportunities to gain share.
Changping has provided several specific cases that show how we are already actively winning at the turn within this ongoing transition. Additionally, we anticipate a period of multiyear industry expansion to continue as we move into the data era. Five gs related semiconductor demand is independently anticipated to drive demand for over 100,000,000,000 semiconductors by 2023, representing 4% of semiconductor growth per year or nearly two thirds of the historical industry growth rate. This provides an opportunity to realize the same average profitability and cash flow generation levels that are inherent in our 2024 sustainable target model today. We believe these are all very rational and achievable targets as we look ahead.
We have demonstrated a track record for setting and achieving realistic targets, both on a quarterly and long term basis, including our prior 2018 Analyst Day targets and also through a very dynamic operational and supply chain environment over the past eighteen months. We are very optimistic of the future based on our positioning. There are several industry and company specific dynamics that provide path to upside, which we also want to clarify. At the industry level, overall demand for semiconductors may exceed the historical 6.5% growth rate due to a more rapid global five gs rollout and growth in connected end devices. Also, the ongoing impact of work and play at home trends and better macro conditions can also support a longer industry expansion period.
Next, semiconductor nationalism across The U. S, Europe and Asia is driving additional investment in wafer fabrication. This is causing wafer starts to be high in 2023. This desire of local control of the semi space is likely to continue into the long term and will ultimately help drive chip ASPs down, supporting a higher demand. Ultimately, localization of the semiconductor market creates inherent efficiencies
or a need for higher capital spending.
These trends all provide local industries more confidence, supporting more consistent level of capital equipment spending and capacity expansion. These national focuses within the semiconductor industry are also directly driving above average wafer starts into fiscal twenty twenty three, which will lead to further assembly expansion. At our company level, we also see potential upside in assembly complexity, advanced display and future inorganic growth prospects. First, within assembly complexity, faster transitions at the leading edge and also within the high volume semiconductor markets can materially impact demand for our solutions. Additionally, our baseline methodology is inherently backward looking and may not fully value the current incremental baseline improvements stemming from the recent acceleration of multi die assembly.
Next, a faster industry transition towards locally dimmable backlighting and initial volume micro LED panel production can provide significant upside in the out years. Additionally, faster and broader adoption of Luminex throughout fiscal twenty twenty two may also increase our outlook and potential for outperformance over the longer term. Finally, our strong balance sheet provides additional optionality for direct shareholder returns through our consistent dividend and opportunistic repurchase program. Additionally, we continue to be extremely selective on M and A as we prioritize our higher ROI organic initiatives, although now have more access to interesting prospects based on our new market reach and positioning. We continue to take a very prudent and long term approach to capital allocation, which has added significant value at the shareholder level over the longer term.
To summarize, we have a broad set of systems and solutions that are pervasive throughout the semiconductor industry. In many cases, we are the dominant leader within the market we serve due to our deep rooted competencies from an engineering, operational and supply chain management standpoint. We are directly involved in several exciting industry transitions, providing the opportunity for market share gains and higher growth. K and S is an empowered, accountable, performance driven organization that has demonstrated the ability to drive industry change, innovation and transition into new markets. We have now reached a new level of profitability, which we believe is very sustainable and create a platform for long term market outperformance.
With that said, I would now like to turn it back to Joe for the Q and A.
Thank you, Lester. For today's question and answer section, we'll be prioritizing questions from our covering analysts and will open the floor to other publishing analysts if time permits. Operator, please poll for questions.
Thank you. At this time, we'll be conducting a question and answer session. The first question today comes from Krish Sampar of Cowen and Co. Please proceed with your question.
Yes. Hi. Thanks for taking my question and congrats on the team on a
very informative and clear presentation. I really appreciate it. I have two questions. The first one is for Lester. Thanks for the new target model and the big time revenue, how to think about it.
I'm kind of curious like obviously you have exceeded your prior numbers. So if I do the math, is the way to think about it if you're going to be earning over $6 or $1,500,000,000 on the upside every $500,000,000 incremental revenue is a little over $2 in earnings per increment is the way to think about it. And on the flip side, given that there is a cyclical aspect to this growth industry, how should we think about the downside to your model?
And then I had a follow-up.
So Krish, I think there is some cyclicality, but we believe that at this level, the earnings are much more sustainable. And again, we're talking about an average of RMB 1,500,000,000.0 over the next couple of years. There will be ins and outs just as there always is, particularly driven by supply chain constraints in the near term, wafer starts as well as other things in the supply chain semiconductor supply chain. As far as upside, as I think I indicated at the end of the presentation, we do believe there is upside to the JPY 1,500,000,000.0. And this is based from, again, maybe a faster adoption of micro mini LED, adoption of a Luminex tool as well as additional market share gains from FMP as well as the complexity assembly complexity, which could be higher than we thought.
Also, again, as I indicated, there's macro factors as in semiconductor, what we say, call nationalism as people build alternate supply chains, which will create increased demand for capital equipment. So I think there is definitely upside. There will be some security. I don't again, we're going with the $1,500,000,000 average. I'm not sure we would actually see this downside.
I think we've become very sort of rational and reasonable in terms of the way that we build them from the baseline.
Got it. Super helpful. And then
a question for Puzan or Sean. Your customer presentation, most of us are from Intel, it's super interesting. Kind of curious what do you guys do for inventory? Are you using the Enid or Kovalov's packaging technology? And on the
longer term question, most of
our mentioned about supply chain convergence and we saw last year, BE semiconductor do a partnership with Applied Materials on hybrid bonding. Is that something that you would consider where you might have to start working with the front end folks in the future? Thank you.
Hi. Thank you for the question. Yes, I think if you get seen a slide from Papani's presentation, I think we're going across multiple devices across these different platforms. The packaging of platforms is shown in the EBIT for Rose and so forth. Yes, we're going across because our machine platforms, it's not specific to a specific product, but it's going across different applications like I highlighted in my presentation earlier.
So that's the first question that I answered about going across. And as they evolve, our machine will continue to also evolve in terms of high accuracies and higher productivity and so forth. And the second question about partnerships in terms of hybrid funding or copper to copper. We're looking at all possible opportunities right now, including the internal investigations and development in terms of our product line. So right now, I would say that since the roadmap is a little further out, we are investigating in our current road map first before we kind of look external for partnership and so forth.
But the requirements right now have been quite challenging in terms of some of the things there, but I think our platform is ready to be able to meet some of the challenges ahead. So these are the answers to your two questions.
Thank you very much. Thank you. That's super helpful and informative. Thank you.
The next question is from Craig Ellis of B. Riley Securities.
Congratulations guys not only on a very insightful presentation today but on the prior target financial model execution. I wanted to start with a higher level question that kind of builds on one that Krish asked, and I'll direct it to you, Lester. So it looks like the SAM is increasing dramatically from here to fiscal 'twenty four. And I think in many of K and S's markets right now, you've got about 50% share. But as the SAM grows to $5,500,000,000 as depicted in some of the slides, it would seem that would imply much more than $1,500,000,000 in annual revenue.
So can you just talk about the expected share that the company would have in some of its growth assumptions? And is the company willing to quantify the potential upside
that you might see to
the $1,500,000,000 annual?
Well, thanks for the question, Craig. And as I answered to Krish, we do see there is upside. At this point, I think it's challenging us to quantify a specific number on the upside. There is, again, in the different vectors that we've talked about in advanced display and automotive, in general semi on the complexity. And again, I we do believe we'll continue to hold market share in our key markets in wire bonding and also in advanced display where we are a leader.
We are going to try to gain more market share in FMT, which we don't have as dominant market share as well as MK is going to grow market share in APS with the introduction of new products. So we do believe we're going to continue to drive growth across all businesses. But in terms of quantifying specific upside, again, we're very comfortable that we'll average RMB 1,500,000,000.0. We think there is definitely potential, as I indicated, to do better than that in the out years. But as a specific quantification, I think as we move towards that into a 2020, '20 '20 '5, we'll provide more guidance to you and our investors.
Thanks for that, Lester. And then my second question is a margin question, so I'll direct it to you. And it's twofold one. There's a 400 basis point gap between where we are now and the target model. So if we broke that down, what are the three or four main drivers that close that gap?
And then on the operating margin side, it looks like the target model or the baseline model is affirming operating margin levels where we are now. So can you just talk about why more of that incremental gross margin leverage wouldn't fall through to operating margins?
So in terms of gross margins, I think the improvement is based on a few things. I think we're going to optimize our core business and we're going to focus on designing for manufacturing, savings as well as the margin expansion. Also, we believe there's going to be growth in a higher margin in our core business, particularly on our what we call the HP segment of our core business of wire bonding. In addition, our new products such as advanced packaging as well as definitely an advanced display, those are also high margin products. So if you put all those together, I think that's where the bridge is from the current gross margin towards the target gross margins I indicated.
And then why wouldn't more of that gross margin expansion fall through to operating margin lesson?
Well, I think right now, it's we passed being a little bit conservative. I mean, I think OpEx will grow over time. But even at these levels, I mean, these are incredible operating margins that we're delivering based on historical what KNAPP has delivered before. So I think there's also definitely upside on the operating margin, Craig.
Yes. And no doubt, they are very impressive versus history. If I could, I wanted to ask a more technical question to Chen Pan. So when I look at the automotive commentary around battery capability, clear historic strength in cylindrical and planned there in the future. But I believe really only one volume OEM is using that technology and love to see that you're going into prismatic and that that's led by European OEMs.
But there's another battery type, which is pouch. And does the company have any opportunity to move into pouch? If not, why not? And as you look at the growth over the next four to five years between prismatic and cylindrical, how does the growth break down? Because it seems like that's a pretty important driver for the company.
Okay. Thanks for the question. I think just to give some comments about cylindrical first, right. I think, yes, cylindrical has largely on a one key adopter in the market, but we have also seen that, that adoption has gone into Asia. And it's one of my points in my presentation.
I highlighted that we recently qualified with a North Asian customer of ours, and it went into also cylindrical battery, right? So that adoption not just stayed on one, but it continued also in Asia, and we see a couple more also trying to get into cylindrical. Cylindrical offers a faster chart of current higher current density across especially when you're trying to drive a very short current in a short time. I think the cylindrical offers a better offering than the prismatic. Prismatic, as I highlighted, is it our strategic direction to go into a larger market in terms of the European segment of the market and that we see across all the automotive guys in Europe going across into prismatic.
And this is why I focus a lot about the East European countries because that's where also the springboard for all the Western Europe geography for prismatic electric vehicles. I think pouch is a combo of I would say, it's a midrange between the prismatic versus cylindrical. We do believe that the prismatic line that we are showing in one of the pictures I have can be adapted to the pouch. But first, I think we're taking a step by step approach first. We're very solid right now in cylindrical.
We're going into prismatic. We're going to establish ourselves in prismatic. And then as and when the engagement comes, we will adapt or modify our lines towards the top line. So that's kind of like the strategy, right? We believe that the next big growth will come from prismatic because of the adoption of prismatic into the European car manufacturers and pouch maybe some parts of Asia and also some parts of the Europe cycle.
But in general, I think overall, battery, whether it's syndrically, prismatic or pouch offers very high significant growth as I've shown in my slide about growing easily in a couple of x, like two x to eight x in one of my slides.
Biopsy. The next question is from Charles Hsieh of Needham and Company.
Hi, thanks for taking my question. I want to follow-up on the gross margin side. So when you look at your capital equipment versus APS, the mix definitely plays a role in terms of the puts and takes in gross margin. And I look at your APS incremental revenue target, it kind of implies by 2024, APS is going to be like in 17% of your total revenue, a little bit lower than where you were in 'nineteen and 'twenty and, yes, probably in line with 'seventeen, 'eighteen. So a lot of the margin upside has to come from the product.
And you did mention, hey, there is a little bit of upside from wire bonding, a little bit of advanced packaging, a little bit of advanced display. But
in terms of these three, can you
kind of rank order where the margin gross margin upside are going to come from? And I have a follow-up.
Well, thanks Charles. As I said, yes, part of it is product mix as it always is about. But also part of it is that we're making a concerted effort to kind of optimize the core business. And again, in terms of both the new products and the next generation of our core products, we're really designing in terms of to maximize the margin right from the start as well as we're working very closely with our supply chain as well as with our operations to again maximize the margin going forward even at this elevated ramp level.
So, Charlie, I think your question, we believe the advanced display probably have highest potential for the margin improvement.
Thank you, Lester and Fusen. That's very helpful. My next question is about advanced display. First off, a really clean profit roadmap. Really appreciate the presentation there.
I have a question. I think you're talking about five point five billion ten or SAM by fiscal twenty twenty four, '9 percent come from advanced display, which is about more or less 500,000,010, but you're only like targeting 150,000,000 incremental revenue for all the LED of a fiscal 'twenty one base of mini LED, I believe it's $70,000,000 to $80,000,000 I think if my math is right, you're kind of assuming a little bit less than 50% market share in our best display. Is that right? And where why what about the upside opportunity, what they are? Thank you.
So, Charlie, yes. I think next, I would say, eighteen months will be critical for us to see more clearly. If we are able to push Luminess to the market as fast as possible and get a very good result, The Pizzolux, we have a first in market advantage. We can establish this in Luminex. Luminex, the process capability is much, much higher than Pizzolux, right.
You hear our process is including sorting, mixing and re pitching on top of final placement and with a much, much faster speed. In the future, for example, when a better initiative come in, I think in 'twenty four, just one big display need to move 25,000,000. If we are able to demonstrate leadership, at this moment, I think they are not clear leader except KNX in Pinto Lux. If we are able to demonstrate this in next, I would say, eighteen months, then I would think the upside will be much faster. But at this moment, I think that's what we put into our forecast.
As you calculate, probably roughly about 50% of market shares. This can go higher if we demonstrate our advantage and we're accepted by our customers.
Got it. Thank you. That's all my questions. Thanks.
The next question is from Tom Diffely of D. A. Davidson. Please proceed with your question.
Yes. Good morning. Thanks for the question. Hopefully, Lester, this is your last model question. But I did have a question on the operating side of the model.
Historically, you've had a very consistent model with fixed and variable and a lot of operating leverage. Curious, when you look at the growth drivers going forward and the product mix that might entail, do you see any kind of meaningful change in the level of R and D or SG and A study you need to do to support those new products?
Well, Tom, there will be an increase
in R
and D spending going forward, but not a significant increase, I would say. I mean, again, we as I said, we look at each project very carefully. And even though most of the projects are accretive, we generally try to tackle products with the highest growth potential and the higher ROI. So I think there will be an increase in R and D as we look at the different vectors, as we identify new opportunities. But I would not say there's going to be a huge ramp up in terms of R and D.
Also, as I think we've indicated before, as we move into new products, we also have R and D falls off products that we've already developed, right? So for example, from Pixellux into Luminex as well as from some of our core wire bonders, The lower cost bonders now is going the R and D is now going into the more advanced bonders.
Okay, great. That's good to hear. And then Fusen, maybe the follow-up question on the display side. When you look at Luminex, how do you think that rolls out over the next few years? Do you have to wait for a certain technology inflection point among the panels?
Or is it just a matter of working with customers to get into their current product lines? And then ultimately, do you see this as cannibalizing the Pixellux market as the main product? Or do you see a world where they both could just side by side? Thanks.
Okay. So I think you have two questions. Maybe your first question is. I think the market is waiting for us right now for the mini LED, right. So currently, it's the big lighting.
It's the biggest market. And I think at this moment, it's really dependent on our ability to roll out the roominess. And I think the industry maybe a little bit of micro ALD infrastructure need to be totally filled up. So MiROD probably will be move much faster beyond '24. But from now, I think the growth rate is going to be huge.
I think we just really depend on our capability. So your second question is Pizzolax. We believe from now, maybe the eighteen months or maybe next two years will be the mixture of PISOLAX and the Luminex. And because of productivity of Luminex will be much higher, so at a certain point, I think we will see clear advantage of Luminex and the revenue probably will be more toward the Luminex. I personally believe probably a year maybe eighteen months from now.
In the next one year, probably we have a mixture of Pislox and Luminex. So for example, I think this year, we give a guidance of $60,000,000 to $80,000,000 for the PizzaLux line. Next year, we probably will also pull up all the same number. But in the next few quarters, we will ship multiple systems to multiple customers. So we do expect our data part over next year, we probably will start to get sizable PO for Luminess and Luminess probably will go faster from there.
Okay, great. That's helpful color. And I want to thank everybody for just a nice presentation this morning. Great information. Thank you.
Thank you.
The next question is from Christian Schwab of Craig Hallum Capital Group.
I thought that was a great explanation of the company and the future growth drivers. The model I think has been hashed
over quite a bit. But, Christian,
I just have a big picture question for you. As we highlight or is and Intel has come and highlighted as well, just kind of the importance of back end equipment supplier seems to be, in my opinion, much more important than it has ever historically, whether that's advanced packaging for with more chiplet unpackaged or customer adoption of silicon photonics and carbide or mini and micro LED. So with that as a background question, how do you see the back end evolving over the next two to five years? Certainly seems like more capabilities and scale and M and A would be very logical or do you have enough going on with all the opportunities that you highlight, we're just going to keep our head down and do what we're doing? I'd be curious,
your three to five to
be your kind of outlook as well as what you think could happen in the industry? Thanks. Okay. So I do believe
a big end will create more and more important load in the whole food chain. Most load try to increase our transitive density just by shrink in the front end. But everybody know it's more and more difficult to scale down just by physically shrink. And in the back end, we can increase transistor density in the second level. It's much, much economical, right?
So I do believe second will grow actually faster than previous years and that will be my prediction and supported by everybody's belief. So that's the first question. The second question, you're talking about M and A. So there's a lot of M and A we cannot control, but we try to look at all the possibilities. But I think at the end, the internal capability is the most right.
We need to assume this should be a default to stay alone. I think this got to be our default, continue to increase our core competency, continue to invest in the efficiency. But when the opportunity come into the M and A, we got to do the best for shareholder, right. We will kindly discuss with the Board to make the best decision. But I think at this moment, we have very strong R and D team, very experienced.
I think a roadmap we see clearly. And I think we will continue to do very, very well by staying in the long run, but we will entertain any possibility.
Great. Thank you guys. That was my only question. Thank you.
Thanks, Christian.
The next question is from Craig Ellis of B. Riley Securities. Please proceed with your question.
Yes. Thanks for taking the question. And I wanted to start just by coming back to Luminex. And I know there's been considerable discussion in the Q and A, but I wanted to take a different view and see if I could get Bob's input on some of the comments he made about customer engagements. Bob, can you provide us any color on where that's happening regionally or the type of customer?
And as you're working with different types of customers, any color on where you've got more confidence in nearer term to intermediate term ramp pacing? You probably can't name them specifically, but any qualitative color would be helpful there.
Hi. Yes, sure. I can talk a little bit about that. We have customers in Asia, Taiwan and China primarily that are LED manufacturers and display manufacturers. We also have European customers.
Actually, our list of customers that are sort of queuing up to evaluate this technology is longer than we can actually deal with at this point. So we're picking and choosing the largest and the companies that are already into working into the displays for many LEDs that want to expand their increase their productivity, lower the cost of ownership over what they can presently achieve. And we also are trying to align with customers that are have roadmaps that move them into micro LED. So generally, we have a short list of a number of customers that are trying to do both. Does that cover your question?
Yes, that's really helpful, Bob. Thanks for that. And then for my first follow-up, I wanted to bounce back to Chen Ping. One of the things that surprised me in one of the slides that you showed was that for multi chip packaging, the rate of growth will slow as we look ahead. It was 20%.
I think that was in either 2018 or 2019, '40 percent now. And so we doubled and we're going up to 50% by 2024. And yet we've got multi chip as the strategic imperative for TSMC, Samsung and Intel. So I thought we might see a higher number than 50%. So the question revolves around why we wouldn't see something that's higher than that.
Is it that we're just so highly penetrated already in smartphones that other applications just don't have the units that can push us above 50%? Or would we more likely see something above 50%? And if we did, what are the implications for growth and margins given the company's strengths in this area?
Okay. Multi chip is definitely one of the key strategic growth areas for K and S, as I have shown in my slides about the growth from 20% to 40% to 50%. And you're right there, the potential there's a lot of upside in the potential greater than 50% in terms of how transistors or how packages are being compact and developed into multi chip, right. So there is also a transition from wire bonded to advanced packaging, right, either flip chip or thermal compression bonding or eventually maybe hybrid bonding. So that transition will also create opportunities for K and S as shown in my advanced packaging portfolio with flip chip, chip thermal compression and eventually at some point hybrid bonding, right.
So those will create opportunities for growth, also create opportunities for margin growth. But right now, we see, like I mentioned in my slide, 88 to eight out of 10 devices are wired bonded and a lot of that is growing on multi chip because today, multi chip continues to be sorry, wired bonded on multi chip and wired bonded continues to be the most matured proven and cost effective platform. And we still have a very, very clear roadmap in terms of our wide bonded technologies to address some of the accuracies and client speech needed. So that roadmap will continue, but at the same time, we also have the flip chip and the event packaging platform to be able to enable opportunities of the transition from wire bonded to flip chip or advanced packaging. So I think both will offer growth opportunities as well as margin opportunities for K and N as we continue to invest in our roadmap for our products.
That's great. Thank you. Go ahead.
Yes, I think it can be 50%, can be 60%. We just cannot put everything as a very, very high number. But I think we believe the bond now is still the most dominant way to do interconnect and it's the most economical way. And we have a high confidence and if the market share continues to increase, we will be the one to grab opportunity.
That's helpful. And then my last one is for MK. MK, you talked about consumable growth opportunity within APS. And my question is, what's the attach rate? What's the share that the company has in that area now?
And as we look forward towards realizing $60,000,000 of growth, what needs to happen with the attach rates and share to drive consumables portion of growth toward $60,000,000 incremental? Thank you.
Okay. The consumable business is a very competitive business where we have quite a bit of competitor. So as I mentioned in my slide, so we invest quite a bit on R and D. So this will help us to always drive new product or better product to improve the cost of ownership. At the same time, we also invest in the Suzhou factory.
So in terms of factory automation, in terms of new manufacturing technology to make our parts cheaper. So I think this will all help us to be more competitive against our competitors in the market. So I think our capillary register for the Westwander for all the key drivers to help us to drive this business. Hope I answered your question.
Got it. Thanks for that guys. Appreciate all the color.
Thanks, Greg.
Our next question is from David Dooley of Steelhead Securities. Please proceed with your question.
Thanks for taking my question. I have
a couple. One of the assumptions I think you made in your base business is unit volume growth of around 6.5%. If unit volume growth comes
in higher, let's say, I'll just pick
up a number, let's say 10%, is there
a way that you can help us quantify what the base business would be under that scenario?
So Dave, again, it's very hard to quantify. I mean, we say the assumption takes 0.5%, right? But then I think in certain of our product lines, we believe that the unit growth will be higher, for example, in automotive as well as in display. So I mean, it's I would not say it's a straight line. If it's 6.5%, it goes to 10%, we double.
But I think if it's at 10%, then there's definitely upside, right? I mean, you look at what the growth has been over the last year or so as we catch up on underinvestment. You saw what it did to in terms of our revenue growth. So again, I don't really think we're in a position to give you a specific metric that ties to it if it was 10%. But it obviously, it will act as an accelerant in terms of our revenue.
So there may be a very quick in a given way. In 2018, actually, we predict the model we have, we will achieve $1,200,000,000 I think in three years. But unfortunately, I think we have 2019 and we had a downturn start with The U. S. China tension, then we had pandemic.
But mainly, 'twenty one, it turned out the market has the ability to collect itself. So a period of time, I think it's significantly below the EBIT. It will be picked up at another year, right. So if you look at it, I think the 6.5% probably can be higher. For example, from 6.5% to maybe 7.5% is possible, but in the long term, probably average of 10% maybe is not so easy to be sustainable.
So that's my answer.
Thank you. And then I noticed in the presentation the new Luminex tool essentially addresses three production steps, I think, final placement and sorting pitch adjustment, versus the current tool, which only does the final placement. How much does that add to the TAM adding those two additional steps that the new tool addresses?
Yes, I think the so can I let me answer the question Dave? So if you look at the slide, right, so there is a sorting, mixing. So let me just explain this in both. This too can address front end die manufacturer who makes LED dies. So that's one segment in the market.
And that market, we believe, is about the 100,000,000 fan right now at this point, an estimate. And then the other market, which is the panel makers, that final puts the final dye on the final panel, whether it's glass or substrate. And that's a RMB 200,000,000 fan right now we estimate, right? So we used to be able to address the back end with the panel, but now these two expenses are all applications for both die manufacturer as well as panel manufacturer. So the TAM basically increases from just the back end to both the die end as well as the back end.
Okay. And then just two financial questions.
I guess first, with the gross margin kind of optimization strategy that you're working through, I understand higher volumes and new products are going to help the gross margins. I imagine there's some other things going on like an introduction of new lower cost tools and whatnot. I'm just curious when in the core business will there be a new lower cost bonder coming? And what's the timing of that? And then the final question for me is just with $6 in earnings that you're kind of presenting here, could you just
help me understand what the cash flow from operations might be with that level of earnings?
And congratulations, this has been a great presentation. We really appreciate the information.
Well, thanks, Dave. Sorry, can you repeat your last question? I didn't quite catch it. Sorry, there's a little bit of static online. You said it was $6 EPS.
What was the question? Sorry.
Yes. If you produce $6 in earnings that you presented in your presentation, what is the cash flow from operations on an annual basis roughly going to be?
The tax? Cash flow from operations. Cash flow. Well, I think the cash flow would be over $250,000,000 approximately if we do that at that level. And then as far as your first question is concerned, I think we always introduce multiple products in our core business.
And also it's true we do try to drive the margins up through design as well as other things. So I think going forward there, there will be an introduction of both a more advanced Bob Ondre as well as a more cost efficient Bob Ondre. And I think the timeline for that will be the next twelve to eighteen months.
Yes. I think the roadmap as I said, right, both core wire bonding and advanced packaging, we have concurrent roadmap driving either efficiency or miniaturization of final pitch, right. So advanced packaging has, like I mentioned, a flip chip going at a couple microns, like three microns and a thermal compression about two microns and eventually when we get into a one micron space, potentially a hyperbonding, right. So each of it has addressed a roadmap that's aligned to the back end semiconductor roadmap.
Thank you.
That concludes the Q and A session of today's call.
I will now turn the
call back over to Joseph Oginde for closing comments.
Thank you, Brock, and thank you all for joining today's call. Please don't hesitate to reach out directly for any clarifications regarding today's presentation. We look forward to providing future updates as we continue to set new targets and achieve new milestones. Brock, this concludes today's presentation. Thank you.