René Raaijmakers
2 November

Besi received the first orders for its hybrid bonders last quarter from memory maker Micron and back-end subcontractors Amkor and ASE. The chip recession is hitting harder than expected, though.

Last week’s Q&A during Besi’s quarterly results ended in an embarrassing moment for CEO Richard Blickman. One of the participating analysts sighed that he was a bit lost. “It’s very difficult to understand the nuances and all the things you’ve said and written in press releases. How many units for hybrid bonding do you think you’ll have shipped by the end of this year? Is this still the sort of high 20s you were talking about? Just to help us understand a little bit because you’re giving us too many hints and it’s just difficult for me at least, a simple analyst, to understand all these things.”

With that, Blickman received a firm slap on the wrist, as this was a seasoned analyst. During question-and-answer sessions following the presentation of company results, CEOs and CTOs are usually treated with complete respect. Participating analysts and investors always behave humbly, always thanking for the opportunity to ask questions.

It’s rare for a CEO to get lectured in this way. In last quarter’s Q&A session, the main pain point was the increasingly vague outlook for Besi’s hybrid-bonding machines. Blickman has been proclaiming for several years that both Intel and TSMC are going to buy fifty bonders. Now he had to report that a total of over forty will be in the field with customers by the end of this year. By the end of 2022, there were already over twenty.

This time, Blickman said that no customer had given him more precise numbers of machines in this uncertain time. “What is, let’s say, positive in many ways is the continued adoption and also orders for these hybrid bonders.” According to Blickman, customers in different market segments are adopting Besi’s hybrid-bonding technology. “First logic, now memory, and more to come. So that bodes well,” he tried to put a positive spin on it. “We see a gradual increase in volume in Taiwan. We see an establishment of an initial mainstream volume application market in the US. This all follows the 2023-2024 plans, which should lead to a significant volume increase in 2025 and 2026. And that roadmap still stands.”


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Besi’s Q3 webinar concluded after 42 minutes, following the critical questioner. Usually, over an hour is available.

Peak in 2025 and 2026

The current slump is more severe than expected. In the third quarter, Besi’s revenue (123 million euros) and net income (35 million euros) fell 24 and 34 percent, respectively, compared to the second quarter of this year. The year-on-year decline in sales and net income (28 and 39 percent, respectively) shows that the chip industry is still in recession.

The decline in sales was mainly due to weak demand from the high-end smartphone market. Besi managed to reduce operating expenses by 16 percent. As a result, profits remained relatively high, also due to the more than decent gross margin of 65 percent. The company received 13 percent more orders this quarter, mainly due to increased demand for electronics for next-generation AI, high-performance computing, hybrid-bonding and photonics applications.

Blickman was positive about the year ahead, based mainly on data from market researcher Techinsights and increasing machine utilization rates Besi observed among its own customers. That utilization rate had bottomed out in the second quarter of this year, the top executive said. Blickman sees the early stages of an upturn in the assembly market. But he also added that current geopolitical developments make everything uncertain. Key end-user markets for mobile computers and automobiles are still struggling.

Techinsights expects the assembly machinery market to rebound from a low this year and peak at over 7 billion dollars in 2025 and 2026. Another piece of positive news this week was Samsung’s announcement that it foresees an end to the memory chip slump in 2024.

Big memory manufacturer

Besi is still facing headwinds, but its position in the advanced packaging market remains excellent. With Intel and TSMC as lead customers, the machine builder has a leading position in hybrid bonding. That promises high sales in the coming years. The company already recorded new hybrid-bonding orders from subcontractors Amkor and ASE. Blickman didn’t mention these OSATs (outsourced assembly and test) by name; he refers to them as the largest subcontractors in electronics.

Orders from these types of customers are a good sign because Amkor and ASE are much smaller than Intel, Samsung and TSMC. For them, the move to hybrid bonding means substantially higher investments. To get this technology up and running, they have to buy much more expensive machines than they’re used to. They also have to build cleanrooms and take other measures for clean operations. OSATs’ willingness to take this hurdle shows that they’re also taking hybrid bonding seriously and getting ready to take over the advanced assembly work from the big guys.

In addition, Besi announced that a major US memory manufacturer had also kicked in its first orders for hybrid bonding. This can only be Micron. Other memory makers such as SK Hynix and Samsung are also considering the technology. The OSAT and Micron cases are likely technology purchases. That is, these customers are gearing up for a new boom in designs that use hybrid bonding for interconnects.

Blickman touted that he had five new customers for assembly machines for connecting fiber optics to electronics. The importance of optical communications is particularly growing in data centers because of the energy savings and high speed the technology brings. “Right now, there’s a decent increase in demand in a broader sense,” the Besi CEO said about these new customers. “Both the lesser critical, but also the more critical applications.”