Kulicke & Soffa Analyst Sees No Meaningful Rebound In Near Term; Recommends Moving To The Sidelines

Needham analyst Charles Shi has reiterated a Hold rating on the shares of Kulicke & Soffa Industries Inc KLIC.
With the company guiding December quarter revenue down about 40% sequentially, the analyst thinks the rally is over extended.
Despite the weak guidance for December, management suggests that FY23 revenue could be about $900 million, which the analyst believes is aggressive.
Historically, the shape of semiconductor downcycles is often a sharp fall followed by a slow recovery and rarely a symmetric V or U-shaped recovery.
In recent years, the company has diversified its business into adjacent markets with strong secular tailwinds, he added.
Advanced displays, such as mini- and micro-LED, is the company's most successful diversification effort so far.
Advanced packaging, such as thermocompression bonding (TCB), is another success story for the company to diversify away from wire bonding.
While Shi believes mini-/micro-LED and TCB will drive secular growth, the base business in wire bonder will likely experience subdued demand growth over the next several quarters, largely due to global semiconductor supply chain dislocation.
He also believes the business and the stock will likely be range bound in both upside and downside direction, and thus recommend investors to move to the sidelines.
Price Action: KLIC shares are trading higher by 1.48% at $47.57 on the last check Friday.

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