Kulicke & Soffa (KLIC) makes thermocompression bonding (TCB) equipment used in [[What Is Advanced Packaging]] assembly, particularly for [[Chiplets and Heterogeneous Integration]] and [[HBM and Package Integration]]. **What they do:** Sell specialized bonding tools to [[OSATs - Outsourced Semiconductor Assembly and Test]] and IDMs. TCB enables precise chiplet stacking and high-density interconnects. Positioning toward hybrid bonding paths as technology evolves. **Why it's interesting:** - Direct exposure to advanced packaging tool adoption - Net cash balance sheet (~$472M) provides downside protection - If TCB adoption expands with chiplet demand, KLIC participates as picks-and-shovels **Current state:** - Price: ~$48.35 - PE effectively meaningless due to recent losses and quarterly swings - Profitability volatile, typical of equipment cyclicality **The value angle:** [[Equipment Tools Cyclicality]] creates entry points when orders are weak but technology adoption keeps advancing. Market extrapolates trough conditions, missing the turn. **Risks:** - Brutal cyclicality. Orders can drop 50%+ when customers pause capex. - Technology risk if hybrid bonding displaces TCB faster than expected - Competitor dynamics (BESI, Applied Materials) **How to size it:** Small position only. Not concentration-worthy due to earnings volatility. Use as optional kicker in [[Concentrated Packaging Portfolio]] if you want equipment exposure. **What to watch:** - Bookings momentum (leads revenue by quarters) - Customer wins and installed base growth - Return to sustained profitability - Gross margin resilience through cycles **Don't buy:** When tool orders are strong and stock has rallied. Wait for cycle weakness and balance sheet strength. Links: [[Advanced Packaging MOC]], [[Advanced Packaging Equipment]], [[Equipment Tools Cyclicality]] --- #investing #semiconductors