庫力索法 (KLIC) 2011 Q3 法說會逐字稿

Greetings and welcome to the Kulicke & Soffa third fiscal quarter 2011 results call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr Joseph Elgindy, Manager of Investor Relations for Kulicke & Soffa. Thank you Mr Elgindy, you may begin.

Thank you, Jackie. Good morning everyone and welcome to Kulicke & Soffa's third fiscal quarter 2011 conference call. For those of you who have not seen the results announced this morning, they are available in the Investor Relations section of our website at KNS.com. An audio recording of this entire conference call may be accessed from the Kulicke & Soffa website for a limited period of time. In addition to historical statements, today's remarks will contain statements relating to future events and-or 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. For a complete discussion of the risks associated with Kulicke & Soffa that could affect our future results and financial condition, please refer to our SEC filings, particularly the 10-K for the year ended October 2nd, 2010, and our other recent SEC filings.

For our call today we're joined by Bruno Guilmart, President and CEO and Jonathan Chou, Senior Vice President and CFO. I would now like to turn the call over to Mr. Bruno Guilmart. Please go ahead, Bruno.

Thank you, Joe, and thank you all for joining our call today. We are pleased with our financial performance in the June quarter. We achieved revenue of $294.4 million, which was again above the high end of our guidance, and roughly 42% higher than our prior quarter. Our quarterly net income of $70.7 million surpassed the Company's historic record. Importantly, our flexible and efficient manufacturing model has enabled us to increase production and meet our customers' record demand while balancing our inventory and expenses. Our recent efforts to improve efficiency while increasing the capacity of our supply chain allowed us to operate at the higher revenue level and maximize our profitability. While our gross margin declined slightly sequentially, we achieved a 660 basis point improvement in operating margin. At the high level, June quarter results reflect the strong demand generated from our market leadership position, specifically with our Ball and Wedge bonder equipment lines. By providing world class solutions for our customers, we continue to strengthen our Ball and Wedge bonder market positions. We are not resting on our laurels. We continue to work closely with our customers to understand their needs, in order to develop our R&D road map. This has been and remains the strategy in our ability to maintain our leadership position in providing next generation solutions to our customers. While demand for our Wedge bonder equipment continues to be strong, revenue in the June quarter decreased about 32% from the record level achieved in the March quarter. This decline was due to a more normalized sales levels in the power semiconductor space while demand in the hybrid (inaudible) markets remained relatively flat. Our Ball bonder business benefited from gains across a wide range of customers and applications. As you would expect, demand from our outside customers was particularly strong, representing 78% of our total Ball bonder machines shipped. From an application standpoint, approximately 30% of our Ball bonder shipments were sold as copper capable bonders.

With respect to copper, we strive to maintain our industry position by offering the best equipment and tool solutions available in the market in terms of process capabilities, [customer] (inaudible), and overall turnkey solutions. We continue to receive broad customer acceptance of our newly introduced IConn [TS] ProCu Ball bonder and our CuPRA 3G Copper Capillary products. The success of our copper capable solution affirms our customers continued drive for incremental copper capacity and highlights our leadership in this significant transition. The industry's transition to copper will continue to drive considerable savings in the packaging costs of wire bonded integrated circuits. These cost reductions further enhance the value proposition of our products by sharpening our customer's pay back period and improving the fundamental capabilities. We anticipate the copper transition trend to continue for several years.

In addition to copper, we continue to benefit from ongoing replacement demand from customers ordering our latest generation of gold only Ball bonders which enable our customers to handle the latest leading technology in terms of, bond pitch and Ball size and moreover, we continue to see strong market acceptance of our large bondable area [continued] machines. This option is available on all our power series models and allows our customers to gain added efficiency by increasing throughput and reducing selling times. [ATE] Ball bonders have made up about 5% of this quarters Ball bonder shipments While this is really small in comparison to our record June quarter shipments, we continue to view this space as an attractive, profitable and great market. ATE bonders had significant R&D and supply chain synergies with operational IC Ball bonders. We remain focused on participating on future developments in the ATE market including commercial and general [license] applications.

I will now turn the call over to Jonathan for more detailed financial review of the June quarter. Jonathan?

Thank you, Bruno. My remarks today will only refer to GAAP results.

On today's call I will compare the June quarter to the March quarter. Net revenue for the quarter was $294.4 million, up $87.7 million, or 42.4% from last quarter. The net revenue change was driven by a $93.9 million increase in Ball bonder equipment, partially offset by a $14.3 million reduction -- from bonder equipment volume. In addition, our AT premier line and our expandable tools business were both up sequentially. Gross profit was $134.1 million, up $35.1 million from last quarter and our gross margin was 45.5%. While still strong, gross margin was slightly below our March quarter primarily due to product mix changes relating to the sharp increase in Ball bonder demand.

Operating expenses was $54.4 million, down $2.9 million from the March quarter. This underscores the flexibility of our business model as we were able to support the 42% sequential revenue increase while reducing our operating expenditures. With an operating margin of 27.7%, we generated $81.7 million of income from operations, nearly twice that of the previous quarter. Looking ahead to the September quarter, we estimate total operating expenses will decline by about 5% to $50 million.

Our tax provision for June came in at $9 million, with an effective tax rate of 11.3%. Looking beyond fiscal 2011, we anticipate a longer term effective tax rate to improve to 5% to 10% level.

Turning to the balance sheet. We generated $53.7 million of cash while ending the quarter with total cash and investments of $335.5 million. This represents an increase of $172.5 million over the past 12 months. Working capital defined as account receivable plus inventory less accounts payable increased by $34.1 million sequentially to $204.7 million.

So with DSO perspective, due to changes in customer and product mix, our days sales outstanding decreased 5 days to 66 days. With respect to inventories, our days sales inventory decreased by 21 days to 48 days. Accounts payable days decreased by 9 days to 54 days.

This concludes the financial review portion of our call. I will now turn the discussion back to Bruno for the September quarter business outlook.

Thanks, Jonathan. Looking forward to the second quarter, we expect our overall business to soften relative to June quarter, although remain strong from a historic standpoint. Specifically the forecast revenue in the September quarter to be approximately $155 million to $175 million. This reflects lower Ball bonder demand, stemming primarily from our outside customers. However, we continue to see newly introduced products for sales in -- copper and not valuable area offering contributing significantly to our overall future financial performance.

In the last 12 months we have worked hard to build a highly efficient and flexible manufacturing model and to optimize our research and development and business operation organization through recent (inaudible) of the fluctuations of our customers' demand in an effort to maximize our financial performance. Going forward, we will strive to maintain our focus on new and existing market opportunities while continuing to improve our efficiencies in our business model. This concludes our prepared remarks. Operator, we will now be happy to take any questions.

Bruno, I just want to add one thing. I did say the OpEx was $52.4 million, not $54.4 million. Just want to correct that.

Operator, we'll now be happy to take any questions. Thank you.

(Operator Instructions) David Wu, Indaba Global Research.

My question really is the visibility beyond the September quarter. When we listened to TSMC, their wafer shipments would indicate that quote-unquote, inventory correction in Q3. I was just wondering at this point do you have any feeling whether the December quarter is going to be a second sequential down quarter or not? And also, follow-up. Can you remind me us, why did Wedge bonder -- I didn't hear very clearly -- decline on a quarterly basis in the June quarter?

Yes, hi, David, this is Bruno. So, let me answer your first question first. First, we only provide guidance for the current quarter, which is our fourth fiscal quarter, and we will not comment further than providing guidance for the current quarter. As for the second question regarding Wedge bonders, we have been through a transition from manufacturing Wedge bonders in Irvine, California to Asia. And I think as we've seen I would say a catch-up in the process of this condition, we are now back to more normalized levels in terms of what the demand looks like from a Wedge bonder perspective. And again, I mean, there is no secret here that the industry, the semiconductor industry generally is being cautious and there's a lot of macro economic factors that are not too favorable right now and I think everybody's taking a very prudent stance on [Federal] equipment. I would say our Wedge bonder quarter was still very good but obviously not as good as what it was in the previous quarter. And again, according to guidance, we'll only provide revenue guidance for the current quarter which is our fourth quarter.

Can I make a quick follow-up? In terms of the -- is there any indication that you can give on the utilization rate of the OSAT customers on, particularly the [on] copper Ball bonders?

Again, as far as utilization is concerned, I think it's better that we do business with most of the OSAT guys and they represent close to 80% of our business. I think you can get data likely from OSAT customer base especially regarding Taiwan provided data on a monthly basis.

Lee Simpson, Jefferies & Company.

Just wanted to re-explore Wedge bonders again if I could. It seems after all that the slowdown is ahead of that for wire bonders, allowing for the copper transition, of course. But can you give us an update really as to what you will expect will be the order interest here going forward. I know you talked about a new normalized level, but can you give us a sense that this is a level for the next 2, 3 quarters now? And also, can you frame the answer with respect to gross margin. I know we've talked about in the past that a gross margin peak for this business area is 55% to 60%. Are we at that level just now or how should we share from there, if you like.

Okay. Again, I want to reiterate that we only provide guidance for the current quarter, and we won't provide any sort of visibility or indication of what's going to happen past the current quarter. From a gross margin perspective, obviously because we had for I would say a couple of quarters, both manufacturing in the states and in Asia. We have not benefited as much as we should have on the gross margin improvements that we are anticipating from moving the manufacturing from US to Asia. Now that this is done, that obviously, is going to have a benefit going forward. The key to our model from a gross margin perspective is really the product mix. So, as our Ball bonder -- and I would say more the traditional Ball bonder volume decreases, and we have a better mix in copper Ball bonder, large area Ball bonder and Wedge bonder; we should see I would say a good impact on gross margins. Having said that, again, we do not provide guidance on gross margin because it's very hard to anticipate, again, what's going to be the need for even the current quarter. Okay? Jonathan, do you have any other -- comments on the margin or --?

I think if you look at our margin historically, it's always been in the 40% plus, basic -- 48.4% basically for the current quarter. So, as what Bruno said, it is about the mix of it. Wedge bonder is soft, clearly it's in the range that you talked about in terms of mid-50s but it really depends on the volume of the Ball bonder. And also depending on the types of customers that buy the Ball bonder itself as well. I think through our innovations, through our technology leadership in this area, we will continue to basically tap the pricing power to basically maintain our gross margin levels.

Again, I want to re-emphasize that the bulk of the decline, the sequential decline in revenue is really attributed to our Ball bonder business. And especially from our OSAT customers being more conservative and rescheduling orders to current quarters or reducing their capital expansion plan for the rest of their fiscal year which is the calendar year.

Great. That's pretty clear. Thank you very much. I want to ask a question on LEDs. I know we look to Cree and Samsung in LED, but the book-to-bill is at 1.3 now for [Astrum]. And the guiding -- well, I think they're guiding through a growth quarter. We see the MOCVD reactor shipping sometimes 6 months ahead of what we see in bonders. Can you give us any sort of indication that you might be seeing a turn in LED bonders over the next few months?

Again, the area we're participating in the LED bonders, it's more the high end I would say application of the market. So, we are not -- we basically leverage the Ball bonder technology that we have and use that for our LED bonders. So, our LED bonders are not -- I would say cannot be widely sold to the larger markets which are in the LED market that you may refer to. We are very focused on the higher end, which is more like industrial lighting, the LED back lighting for flat panel TVs, and hopefully, the more drone lighting pickup. That's the space we probably stay.

That's clear again. Maybe just one final question. You mentioned OpEx being down. I think you said 5% Q-on-Q. The mix therein, what would be holding $16.5 million for R&D or should we expect some of the savings to come from there?

I think if you look at our OpEx, partly -- $50 million, it is keeping the R&D consistent and basically keeping our fixed cost at somewhere between $36 million and $37 million. Our variable costs, about 68% of the revenue. So, we are basically keeping all these things fairly steady and continue to invest for the future from an R&D perspective.

Krish Sankar, Bank of America-Merrill Lynch.

I have a few of them. Bruno, do you think the Wedge bonder business is going to decline in September? Is it all coming from the Ball bonder business?

As I've said, the majority of the decline is coming from the Ball bonder business. We don't provide specific guidance for business units, but I can -- what I can tell you is that relatively flattish from the Wedge bonder perspective versus the current quarter. Relatively flattish.

Okay. All right. And then just a longer term question. Looks like the Ball bonder business has modeled for seasonality bend. But if I'm right, the Wedge bonder business is more cyclical. What gives you the comfort that the June quarter reset was more a reset to normalized levels and not a beginning of a multi-quarter down shift for the Wedge bonder business?

In terms of volumes, you're talking of several magnitudes compare -- I mean, Wedge bonders compared to Ball bonders. We sell several thousands, in a good quarter we several thousand Ball bonders and a good quarter we sell maybe over 100 and something Wedge bonders. So, obviously the variation on the Ball bonder has a much larger impact on revenue than variation on Wedge bonder, even in the HD. Wedge bonder is obviously significantly higher than for Ball bonder. That nonetheless cannot overcome the swings in volume that you have in Ball bonders and try to offset that with the volumes that we've seen in the Wedge bonder business.

Got it. And should we assume that the mix of software capable Ball bonders should increase in September, given that the overall -- the volume's going down or falling (inaudible) transition right?

I think we probably can expect the mix to be about the same as the current quarter.

Krish, this is Jonathan. You look at historically, basically been tracking about 50% of Ball bonders sold, copper capable, and even with a basically lower volume revenues, holding up at that percentage level.

And then just two final housekeeping questions. What is the backlog in June? I think we had $177 million. I want to make sure that's right. What percentage of Ball bonder shipment goes to the memory customers?

Say the last part again, Krish.

Do you know what percentage was for memory customers of Ball bonders in June?

We don't disclose that mix, but I think I can confirm your first question on the backlog. Yes, because the backlog for June was $176 million. But again, I want to stress that our backlog is risk (inaudible). So, that's the correct number, yes.

Thom Diffely, DA Davidson.

So, quick question, what's driving the non-copper portion of your Ball bonder business right now?

Well, it's -- I mean, it's the same as what has been driving that in the previous quarter. I mean, as we see from the silicon technology perspective, 65-nanometer becoming more of a mainstream technology, there is a need -- the Ball bonders which are all the past generations, like 4, 5 years old type bonders, are not necessarily able to give you the same productivity that you would get from the latest and greatest Ball bonders, in terms of pitch and Ball size. I'm not saying it's impossible to use 5 year old bonder to bond 65-nanometer technology but that you would probably lose quite a bit in productivity. Therefore, that's still the drive that's happening in the industry. To be able to be more efficient, get more productivity out of the Ball bonder and there is still significant portion of the ICs that are assembled today that cannot be and probably will never be converted to copper, despite gold prices going up. So, that's the main drive. It's a replacement of the older generation bonders with newer generation bonders to be able to handle the more main stream technology, the 65-nanometer and below.

Okay, so the gold copper wire bonders, actually the gold wire bonders still have capabilities above that of the copper wire at this point, or is it more just a productivity issue.

I'm sorry, say that again.

As far as stuff like pitch goes, does the gold wire bonder does that still have capability advantages over the copper wire bonders?

Yes, yes, yes. We actually have better capabilities with gold than we have with copper right now from pitch side.

Okay, and is there a gross margin impact, whether it's gold or copper?

Well, depends how you look at it. If basically you buy a gold Ball bonder, and you buy a kit, because most -- you have 2 options. You can buy a gold enabled Ball bonder and buy a kit to be able to do copper, which will not give you the same basic in terms of essentially productivity and efficiency as dedicated or copper Ball bonder, such as [ProCu], then I would say the margins are more or less the same. If you decide to go for a machine that's optimized for copper process which we call the ProCu machine, then we have expected better margin on our ProCu machine than we have on our standard gold Bonder machine.

Okay. And what do you see right now as far as the proliferation of copper into the IDM specifically. It sounds like a lot of business comes from the OSATs. Just wondering how the IDMs are transitioning right now.

IDMs are transitioning to copper. There is no doubt about that. What you have to keep in mind is more and more IDMs are using OSATs for their assembly and test. So, definitely there is a move. That is, I would say across the overall semiconductor industry to move to copper as gold prices keep going up. So, whether you are an OSAT or an IDM, it doesn't change much of the business model. You try to drive your costs down. I mean, yes, we do see more and more IDMs moving to copper.

What do you think the industry average is right now for copper? Are we at 20% copper across the board?

Honestly I don't have the data point. I think you can probably get that from industry data to get a more -- a better figure than what I would be able to give you.

Just finally, you talked about taxes being 5% to 10% longer term. Was that the guidance for the out quarter as well or did I miss something there?

We're currently at 11.3%. When we say long-term, we're talking about next fiscal year.

Okay.

We're still in the process of going through some basically legal entity restructuring, which is actually allowing us to basically reduce our effective tax rate. So, once we go through the -- get through the phase 2 of this project, we should be in the 5% to 10% range.

Okay. But you think for the out quarter, at or below what we just reported?

I'm sorry?

For the September quarter, still at or below what you just reported, the 11.3%?

Well, it depends on timing. We could basically get to the longer term range, it depends on how the -- right now I guess we are looking at somewhere between -- within the current level. The next fiscal year basically will get below 10%.

(Operator Instructions) David Duley, Steelhead.

Yes, I was wondering if you could talk a little bit about what you think your market share is, both in Wedge bonders and in Ball bonders.

Maybe I think there is some data that just came out which is publicly available. We have from a Ball bonder perspective, we are way over 50%. That's -- I mean, the data tracks about a -- it's about a quarter or 2 behind so I'm not so sure exactly. So, you should double check on that but there is some data that came out of -- I believe out of the LSI or Gartner in terms of market share. In Wedge bonder, we are basically significantly higher than that. And for copper, as I've said, many times, we are dominating the space. There is no official data for copper but largely, I mean, we have a very significant market share. We have the best solution available in the market. That provides the best cost of ownership for customers and the best performance.

Would you say at the high end of the copper wire bonding spectrum, are you still pretty much the sole source guy at most of the customers?

I wouldn't say sole source but I would say we dominate.

Okay. And one of the questions I think a lot of people are trying to figure out is your guidance in September, I think you did better in June than people expected and then your guide in September is down probably a lot more than people expected and, typically, like last year that happened in the December quarter. I'm just trying to figure out why it's happening in the September quarter this year and if there's anything -- any color or help that you can give us about why September's down so much. You did mention the things people rescheduling orders, maybe you could talk a little about that.

I mean, we started to see in the second quarter kind of a lot of, I would say, industry news from companies seeing a lot more, I would say, having a more cautious outlook on the second half of the year. And I think that's really what's driving our current quarter. There is -- at the macro level, there is a lot of uncertainty in the economy, whether you look at Europe or the US. There is a lot of talks in Asia about potential of property bubbles that have been built over time, maybe in China and some other part of Asia, and, therefore, this industry is driven primarily by the consumer demand. There is just an area I would say of sentiment of being cautious when it comes to increasing capacity or spending for capital for the rest of the year. So again, we will not provide guidance beyond the current quarter but I think the general sentiment that we can read every day in the news is a sentiment of caution from the consumer demand, which is not only in Europe and US but also in Asia. And that's what's driving a slowdown in our demand, primarily for the Ball bonders in our fourth fiscal quarter, in September quarter.

Now, you mentioned the OSAT, I think it was the OSAT rescheduled orders. Were those rescheduled from the September quarter into the December quarter?

Well, again, we can -- they can reschedule whenever they want. They can also pull back orders. So, which is, again, the reason why we don't want to provide guidance beyond the current quarter. So, we'll see how our first quarter develops and then we'll provide guidance at that time, once we have better visibility. So, what we've seen is definitely a serious slowdown in demand for the current quarter. But remember that we've had -- I mean, if you look at on a year-on-year basis, we're going to have 6% to 8% of year-on-year growth. Everything taken perspective, even at that level, Q4 is going to be financially a pretty decent quarter. So, it's a cyclical business. We all know that. And I think that you cannot just take in isolation just every quarter. I mean, we had a record quarter in the history of the Company in the June quarter. So, the quarter before was also very good. We had a very big drop from the last year from the fourth quarter into the first quarter. So, it makes it -- which is the main reason why we want to keep guiding for the current quarter, because things can change very rapidly. We still believe that there is a lot of runway for the copper transition. We still believe that we're in leadership position from a technology perspective but it's just how to predict what's going to happen beyond the current quarter.

Okay, one financial question. You're forecasting -- a pretty significant dip in the September quarter, similar to the December quarter of last year. It may even look the exact -- around the same revenue level. I don't have the numbers to compare in front of me. But one thing you could help us with is can you compare the September quarter to last December's quarter on an operating margin basis? Will we be better than last December or worse or maybe just give us comparisons to that particular quarter because it looks an awful lot like that quarter.

Actually David, it's about the same, actually, in terms of the revenue. And we've been keeping our fixed cost level very consistent and that's the meaning of this model itself is really fallen through when the volume picks up.

So, we could make the conclusion then that profitability levels would be similar to last time you tipped to $155 million?

Yes.

Mahesh Sanganeria, RBC Capital Markets.

Just wanted to get a little bit more color on what you just talked about. And so, from the end demand perspective, you started hearing some weakness in the May and June time frame. If you could just talk about when did you start to hear about the rescheduling? Was that primarily in June-July time frame? Some color on that will be helpful. And one more question. Can you give some color on what end market of your geography might be driving PCs or memories or that section. Other helpful of hint we can get to understand what's going on.

I would say, basically we started to see some signs of softening pretty much like everybody else saw these signs, which were around I would say the June-July time frame. If you follow foundries, if you follow the OSATs, if you follow all of the industry, generally speaking, you could see that there were signs of less optimism, than there was a few months before that. As far as the end markets, because we sell mostly, again, about close to 80% of our business goes through the OSATs, we do not control and we do not know exactly what are the edifications. That's really a question that's more for our customers to be asked to, rather than for us, because we are kind of agnostic as to where our Ball bonders are being utilized. Of course, the copper migration started with IC -- I mean when I say IC, it was logic and analog and so on more than with memory. That's how it's a lot more widespread, which is why it's difficult to really give you or quantify applications that may have a lower demand or seeing some slowing demand as opposed to another application. Because again, we do not control the end applications. We do rightly know where for Ball bonders, where it's going for Wedge bonders, where it's going for power semiconductor and hybrid and (inaudible). And so we've seen, again, as I mentioned in the prepared remarks that for power semiconductors there was definitely a correction and a recent more normalized level as typically these type of companies have been more conservative when it comes to CapEx. But other than that, we do not have dire visibility on the end application.

Okay. That is very helpful. Just one follow-up question then. I think the previous caller asked a similar question. If we compare this to what happened in September-December, is there any color you can provide as you talk to the customers, are there behaviors similar to when they lowered their orders in the December quarter? Because the ramp-down seems to be of a similar nature. And how would you compare that decline to the current decline? And if you can share your thoughts on how do you think as the cycles, have they changed from what used to be a historical -- this looks like a much smaller cycle than what you had seen in the past, longer and deeper and this period we're seeing more frequent cycles. If you can provide your thoughts on that, that would be very helpful.

Again, I think I want to re-emphasize that fiscal year 2010 for Kulicke & Soffa was a record year. Fiscal year 2011 based on the guidance that we've given will be another record year. The demand in our business can change very rapidly. It's just the nature of the business. If you look at the same quarter a year ago was a very strong quarter and it's typically the case because a lot of the OSAT companies want to add, usually, a very strong order group because it's the pre-Christmas season when there is a lot of demand for consumer groups. Now, we've seen -- actually, we had a fairly significant drop from our last Q4 to Q1 and we recovered very quickly and we saw an acceleration of this transition from gold to copper. So, I think that, that's the problem that is very difficult to linearize the business. I want to bring back, again the point I mentioned earlier, is that if you look at it, try to generalize it on a year-on-year basis, it's going to be -- if you take the current guidance, it's going to be a 6% to 8% growth versus last year, which was already a very good year for Kulicke & Soffa. So, it's hard to credit. I'm not an economist. The cycles, yes, they have seemed to change. Sometimes everybody seems to think that the last calendar quarter is softer because a lot of customers build up capacity in the first 3 calendar years. Maybe this time capacity was a little bit ahead of time and there is some corrections that are being made. And again, I will reiterate that we just -- we provide the guidance for the current quarter. So, as we come to our first fiscal quarter, and then we'll provide guidance at that time.

(Operator Instructions) David Duley, Steelhead.

Just a couple questions from me. Did you have any 10% customers in the quarter and what were the rough percentages?

We actually had 3 over-10% customers, David.

Okay. And Bruno, one for you. In aggregate, do you think that the pace of the copper migration has slowed or is it moving along at the same pace as normal? The reason I say in aggregate is one of your customers, Siliconware talked about pushing its targets out just a bit for when it would achieve 50% copper revenue. It wasn't really a big deal, like a quarter or so. I'm just wondering in total what you're seeing with the pace of copper migration.

I think in aggregate, as I said, David, we have still quite a bit of runway ahead of us. The adoption of copper -- I mean, you have the leaders, right? Who are -- happen to be in Taiwan. We've seen the rate of adoption actually accelerating in the other OSAT players and I think this is going to continue. I think the gold prices were above $1,600 an ounce this week and I don't think there is any indication that this is going to come down and again, once you did the effort of converting a product from gold to copper, even if gold goes back to $300 an ounce, you're not going to go back to gold because it was just so much work to convert from gold to copper in the first place from a design -- from a qualification perspective. So, I think we will continue to see this pace that we've seen in the last 2 years for the foreseeable future and which is why we're going to continue to invest in the R&D at the rate we've been investing in the past and maintain our leadership position in the copper solutions because we believe that this is the future for where the industry's going.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Mr Joseph Elgindy for any closing comments.

Thank you all for the time today. Before we end I'd like to take this opportunity to remind investors that Management will be presenting at the Oppenheimer 14th Annual Technology Conference which will be held at the Four Seasons Hotel in Boston at approximately 3.05 PM Eastern on August 10, 2011. If you're unable to attend in person, a link to the webcast will be accessible from the Investor Events page of our website. Again, thank you all for the time today. Operator, this concludes our call. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.