Kulicke and Soffa Industries - Q3 2024
August 7, 2024
Transcript
Operator (participant)
Welcome to the Kulicke and Soffa 2024 Third Quarter Results. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations. Thank you, Joe. You may begin.
Joseph Elgindy (Director of Investor Relations)
Thank you. Welcome, everyone, to Kulicke and Soffa's Fiscal Third Quarter 2024 Conference Call. Fusen Chen, President and Chief Executive Officer, and Lester Wong, Chief Financial Officer, are also joining on today's call. Non-GAAP financial measures referenced today should be considered in addition to, not as a substitute for or in isolation from, our GAAP financial information. GAAP to non-GAAP reconciliation tables are included within our latest earnings release and earnings presentation. Both are available at investor.klic.com, along with prepared remarks for today's call. 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, and are subject to risks and uncertainties that may cause our actual results and financial condition to differ materially from the statements made today.
For a complete discussion of the risks associated with Kulicke and Soffa that could affect our future results and financial condition, please refer to our recent and upcoming SEC filings, specifically our latest Form 10-K, as well as the 8-K filed today. With that said, I'll now turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.
Fusen Chen (CEO)
Thank you, Joe. Good afternoon, everyone. Throughout the past quarters, we continued to execute on several growth initiatives, including driving critical progress in advanced packaging and advanced dispense qualification, enjoying broadening adoption of our new ball bonding solution, while we also observe ongoing utilization improvement across several of our GM market. Before reviewing our quarterly results and performance, I would like to mention a few points on the recent industry momentum within thermal compression. There have been three key milestones, which we are excited to explain. First, the formation of, as well as our membership in, the US-JOINT Consortium was announced last month. Resonac Holdings Corporation, leading provider of global semiconductor materials, formed this consortium to support industry collaboration and the market adoption of new advanced packaging production solution.
After JOINT and the JOINT2 were created in Japan, the US-JOINT Consortium represents the third joint consortium globally and the first in the United States. A combination of ten leading equipment, materials, and process companies based in the US and Japan represent the US-JOINT founding members, who have the near-term goal to establish a US-based R&D facility with advanced packaging capability. Construction for the US-based R&D facility will begin in the current calendar year, and at completion, will provide access for critical industry-leading advanced packaging technologies, materials, and processes, which are not readily available locally to many of our US-based customers.
Our second TCB milestone is associated with a collaboration with a subsidiary of a large semiconductor conglomerate, who has successfully demonstrated our leading fluxless thermal compression, or FTC system, which is capable of direct copper-to-copper bonding as a standard feature, can also enable an exciting new chip-to-wafer hybrid bonding process. Hybrid bonding involves making both conductive and dielectric bonds, provide specific benefits for select end market. With a lower requirement for capital-intensive front-end investment relative to existing chip-to-wafer hybrid solution, we expect this fluxless FTC process to further expand our long-term chiplet and the heterogeneous opportunities. As explained by industry headlines, there are many hybrid bonding processes, including wafer-to-wafer as well as chip-to-wafer. This innovative TCB-enabled hybrid solution target chip-to-wafer application for deployment in high volume, consumer, and the compute market by offering a lower capital-intensive path to hybrid-based chiplet assembly.
At a higher level, adopting chiplet-based packaging can reduce product development time, allow for amortizing design costs over broader end market, and is critically important in extending Moore's law. With that said, our existing FTC system, which can bond copper-to-copper interconnect as a standard features, can provide a more direct pathway to chiplet-based production for many customers. Those who seeking chip-to-wafer hybrid options now have an additional alternative. As the industry accelerates the adoption of thermal compression, we continue to enjoy growing commercial success and the broadening market access through our intimate and expanding customer engagement. Four years on a trading basis, our TCB business has grown by 10 times, and we are still in the early stage. This was accomplished through new access to silicon photonics, 3D sensing, and the leading-edge market, including our first mover position in fluxless TCB at the leading IDM customers.
We have continued to drive industry adoption and have announced several wins in the assembly and the test space earlier today, highlighting these rapidly growing opportunities. Also, we continue to make progress in our foundry engagements and remain very optimistic that we can unlock an additional leading-edge customers over the near term. Similar to our initial IDM customer engagement, which began in 2020, new technology win with a leading customer require a lengthy and a collaborative engagement process and a significant patience. This recent win and the evaluation progress help solidify our TCB process as a long-term solution to support the growing adoption of chiplet-based architectures. While there are several different technology and the process to support the diverse needs of the future chiplet market, we are well prepared to support the industry with our leading solution.
We are clearly excited as we are securing positions in the new market, supporting AI, HPC, and mobility, which have historically not included prior input from our server market. This will provide confidence in our leadership as well as the long-term potential for fluxless adoption. Due to thermal compression adaptability, out-of-the-box copper-to-copper capability and a broader customer set, it provides lower barriers to entry for mass market chipset adoption. Thermal compression is an emerging technology with a long technology life ahead to support this growing market need. Even interconnect technology can be challenging for analysts and the investor to forecast. Although I would like to remind investors to not overly focus on one specific interconnect technology. There are many packaging transitions across our end market, with a growing number of trade-offs, largely between cost and the performance, but also production capability and the system level requirement.
It's critically important to recognize that the high volume, cost-sensitive portion of the semiconductor assembly market will also need a stack die solution over the long term. These various market needs are becoming more evident every quarter as we are actively developing several market dies and a stack die solution, which are being evaluated across our customer base. Many of these higher volume opportunity will likely demand more cost-effective process, such as vertical wires and remain independent from many of today's TCB and the hybrid focus market. From our humble wire bonding route, we are pleased with our new market footing and the access we have demonstrated. Recent customer adoption, combined with ongoing innovation, provide a strong foundation to support long-term advanced packaging adoption. I'm very proud of our team for developing and driving the recent customer success across the portfolio.
Turning to our June quarter business result, we were able to achieve our guidance midpoint while generating slightly more non-GAAP EPS than anticipated due to our operational focus. At a high level, we expect most of our end markets have already experienced trough level of demand over the past 18 months. Over this time, certain markets began showing signs of improvement, while other markets face headwinds that restrict our corporate-level performance. For example, our ball bonding revenue on a year-to-date basis has improved by 42%. Despite this relatively meaningful level of improvement, we also experienced offset due to well-known automotive and industrial headwinds, which reduced wedge demand earlier this year. At this point, we are pleased to begin seeing signs of multiple end markets are improving gradually, although in better coordination, and we remain optimistic.
While the market environment has become more positive, we expect our high volume solutions are still well below the normal demand level we would consider sustainable for the broader industry. Our ball and wedge businesses have room to grow. Looking at our end market more specifically, we continue to see utilization improvement in general semiconductor, pockets of demand improvement in LED, automotive, and industrial, resilience in APS, and ongoing recovery in memory. In general semiconductor, utilization rate for ball bonding have continued to improve sequentially, although have yet reached the critical tipping point, expected to drive higher volume customer to broadly require capacity addition. These other activity has centered around higher volume region, where utilization rate has averaged over 80% for the past two quarters.
At the same time, the rest of the world has lagged slightly, but is continuing to improve. As expected, global ball bonding utilization rates have exceeded 75% last quarter, and are anticipated to be in the high 70% range during the fourth fiscal quarter. Looking out into fiscal 2025, we continue to anticipate semiconductor unit growth expectation will support an additional step up in demand for our high volume solution. We also anticipate ongoing industry growth will continue into calendar 2025 based on market forecast, but also due to ongoing global front-end related investment. In addition to the improving General Semiconductor dynamic, we also booked approximately $20 million in thermal compression revenue during June quarter, which include our recognition of an additional FTC system, which support the recent TCB-enabled hybrid development milestone.
With automotive and the industrial, we have also seen improvement in demand, as our interconnect leadership position is actively supporting emerging process if utilized in efficient power storage, power delivery, and the power control for electric vehicle, charging infrastructures, industrial application, and the sustainable energy generation. We continue to see many innovations affecting power semiconductor assembly, which are driving the need for more robust interconnect technologies, such as our recent high power interconnect or HPI solution within wedge bonding. HPI being deployed in high volume battery production, as well as for more efficient power conversion required for charging and sustainable energy applications. We remain directly involved with several global EV manufacturers, the broader power semiconductor technology transitions, as well as the leaders in the dynamic battery market. Over the next few quarters, we continue to support an exciting dispense opportunity recently deployed with a leading solid state battery companies.
While some market of automotive and industrial may still be digesting capacity, we expect ongoing improvement to continue throughout fiscal 2025. Within memory, we see customers investing in new capacity and the technology, which is supporting the NAND market and again, support for new stack die solution in the large and the established LPDDR market. While NAND is arguably the largest stack die market in the semiconductor market, relying nearly exclusively on wire bonding technology, we expect high volume DRAM to transition to 3D packaging format over the coming years. Several important leaders in the memory market are expected to accelerate development and the pre-production activity over the coming quarters, with higher volume production to begin in late calendar 2025 or early 2026.
Similar to growing leading-edge and high-volume assembly need for chiplet-based architectures, the memory market continued to seek out new ways to leverage packaging technology to drive greater transistor density per area. Our thermal compression and the vertical wire solutions are anticipated to more effectively meet the next market's performance, manufacturability, and the cost requirement. Thus, emerging technology, such as TCB-enabled hybrid bonding, that can be prohibitively expensive due to the requirement for front-end capability, as well as known yield challenges. We remain in a very unique industry position and, evident in our leadership, enabling critical technology transition, such as the direct copper-to-copper and the fluxless adoption for leading-edge applications, high power interconnect solution for automotive and the industrial application, and the vertical wire solution for higher-volume consumer-oriented market. This emerging solution supplements our existing broad portfolio of interconnect solution.
We are well positioned to support customers' needs while delivering significant long-term value to investors. In closing, after nearly 2 years of capacity digestion, we are pleased to continue seeing greater signs of broader-based cyclical recovery across multiple end markets. Gartner recently projects a 17% semiconductor revenue industry growth rate through calendar year 2025. This growth expectation seems very reasonable, considering ongoing global front-end investment, and is expected to be led primarily by AI, automotive, and the general semiconductor, which we expect will directly benefit the company and its investors. Global utilization rates, we are moving to the high 70% range, also increased confidence for a more robust 2025 recovery. I will now turn the call over to Lester for the financial review update.
Lester Wong (CFO)
Thank you, Fusen. My remarks today will refer to GAAP results, unless noted. While there continues to be headwinds across specific end markets, it remains a transformative time for the company. As Fusen mentioned,... Multiple end markets are showing signs of improvement, represented in utilization rates as well as growth expectations into next year, while momentum in our portfolio of advanced packaging solutions is accelerating through both our direct customer qualifications and broadening industry adoption. During the June quarter, we generated $181.7 million of revenues and a 46.6% gross margin. Gross margin were largely affected by product and customer mix. Operating expenses came in slightly lower than expected, as we have maintained a significant focus on operational efficiency, as our development teams remain nimble and were effectively reallocated to support in-demand projects over the past quarter.
GAAP tax expense came in at $4.1 million during the June quarter. We continue to anticipate an effective tax rate above 20% through the remainder of fiscal year 2024, largely related to our R&D tax treatment under Section 174. Our repurchase program remains opportunistic, and we have again increased our repurchase activity sequentially. During the June quarter, we booked $44 million of open market repurchase activity, which represents a sequential increase of nearly 18% and a 64% increase over the previous December quarter. As a reference point, we repurchased $728.5 million through both open market and accelerated repurchase activity under the existing repurchase program since August of 2017. At the end of the June quarter, we had approximately $73 million remaining on this existing share repurchase authorization.
In addition to the long-term nature of our share repurchase program, we continue to support an industry-leading dividend program as we continue to execute on new long-term growth opportunities. As Fusen clearly explained, we remain very optimistic in a broader multi-market recovery over the coming quarters. Although we may not be at the tipping point yet, we anticipate meaningful capacity demand improvements for our high-volume markets over the near term. For the September quarter, we expect revenue of approximately $180 million, ±$10 million, with gross margins of 47%. Non-GAAP operating expenses are anticipated to be $69 million, ±2%. Collectively, for the September quarter, we expect GAAP EPS of $0.22 per share and non-GAAP EPS of $0.35 per share.
Looking ahead, we remain very focused on our close customer engagements and look forward to providing additional details to the technology transitions we are involved in that are supporting new technology and adoption milestones, which will help build a foundation in memory, dispense, and thermal compression growth prospects over the coming years. This concludes our prepared comments. Operator, please open the call for questions.
Operator (participant)
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Craig Ellis with B. Riley Securities. Please proceed with your question.
Craig Ellis (Analyst)
Yeah, thanks for taking the question, and Fusen, thank you for all the help with the new product information. I wanted to inquire on a near-term item first and look a little bit beyond the September quarter. So, as you look at the gives and takes for the fiscal first quarter, with the broad-based or coordinated, I guess, coordinated recovery you talked about, Fusen, how do you think about the impact of what you're seeing with some improving end markets or portions of end markets versus just still relatively low utilization levels in most of industry? Thank you.
Lester Wong (CFO)
So, Craig, you are asking about Q4, FY-
Craig Ellis (Analyst)
Calendar 4, yeah. Yeah.
Lester Wong (CFO)
Yeah. Yeah. Okay. So, last quarter, I think, we expect a gradual recovery, with a slight improvement, into September. You know, although we saw the utilization rate went up, but are still not high enough to trigger, you know, broader recovery. So at this moment, actually, I think we are seeing, you know, Q4 actually is flat, you know, compared to the Q3.
Craig Ellis (Analyst)
That's helpful. Then as you look out further, Fusen, and this is more of a question about what your customers are telling you and how they're telling you to get the business ready for what should be some seasonal acceleration in the business. Can you just talk about how you envision the slope of recovery playing out? It seems like we've got very uneven demand dynamics across end markets. Indeed, some are recovering, some seem to be still trying to find the bottom, like industrial. What does that mean for how the business might perform as we think about calendar one Q through three Q next year?
Lester Wong (CFO)
Oh, okay. So...
Fusen Chen (CEO)
... I give you, see, in the past about six quarters, our revenue relatively is quite flat. But at this moment, you know, it's our feeling this is the first time in the past eight quarters, we see multiple end market improvement in our coordination. For example, I think, early 2023, the ball bonding actually, you know, are picking up a lot. In the meantime, the wedge bonding, which was impacted by industrial, you know, and also auto. So that's why I think, you know, we actually almost have a consecutive, you know, six months of quite flat. But what we are seeing, you know, from feedback, we're seeing, you know, auto really coming back.
We are the Q3, Q4, we also get a quite good order from a big, you know, EV company for wedge bonders, and memory is also picking up. So if you are asking about 2025, I think many people have an optimistic view about 2025. With 75%, this will actually trigger broader, you know, recovery and in our many end markets. So you ask about seasonality, this is our view. This, you know, we probably can see a growth into the Q1 because of our utilization rate is inching up close to 80%. But also, I think it's not impossible if we see flat to slightly, very, very minor seasonality over Q1 and Q2, with a stronger, you know, recovery in the Q3, Q4 2025. Hope I answer your questions.
Craig Ellis (Analyst)
That's really helpful, Houston. Thanks for taking both questions.
Operator (participant)
Thank you. Our next question comes from the line of Krish Sankar from TD Cowen. Please proceed with your question.
Krish Sankar (Analyst)
Yeah, hi, thanks for taking my question. I have a few of them. First one and a clarification. When you said December quarter flat versus September, was that for revenues or utilization rate?
Fusen Chen (CEO)
Oh, actually, flat, because we also guide, we also guide, you know, $180 million for Q4, right? And, actually, Q3, we just finished with a $181 million. So I mean, flat is the revenue. But utilization, we are actually seeing continue to inching up, some area already over 80% for two quarters. And, average right now, I think it's 75%. We do expect, in Q4 will go to higher 70%, but still not touch 80% yet.
So that's why I answer, if asked seasonality, it's hard to get, you know, because of recovery expected by Gartner, we will have a chance maybe go up in Q1, but it's also not impossible we see flat also, or actually very, very minor, you know, seasonality, supported by a second half very strong recovery.
Krish Sankar (Analyst)
Got it. Got it. And then just on that point, you know, historically, you know, OSAT had an appetite to add capacity when utilization rate is about 90%, given the lead times are not that long. So is that a fair assumption? In that case, maybe the recovery is truly later sometime next year, till we get to 90%, or do you think there's an appetite to add capacity even below 90?
Fusen Chen (CEO)
Well, I think it's 80%, you know, trigger additional, additional buy. Actually, we did see, we did see, you know, OSAT start to contribute in. We actually start from Q3 and Q4, also from China. We also have memory OSAT, also start to have a buy. So, we feel OSAT is the, i-is really in that capacity now.
Krish Sankar (Analyst)
Got it. Got it. And then two quick questions on Advanced Packaging. One is, can you talk a little bit about the status of your TCB call at the Taiwan Foundry? What is going on there?
Fusen Chen (CEO)
Okay. So, Chris, I think we actually have an engagement and a qualification. Actually, we have multiple projects, you know, over there. And this place is, we believe is going to be a growth for us in the futures. The qualification is for (inaudible), and this is for the high-end, you know, the products. And it's a (inaudible). And for the (inaudible), we are the only one in the mass production, you know, for the industry. And qualification actually take a long time. The previous IDM company, we took close to two years, yeah, to finish it. But so far, in our opinion, we believe all the result come out positive, and we have an early. The production for the first customer is intended for first half of 2025.
We feel positive, and we have an initial discussion, you know, about capacity, you know, and also delivery schedule at the early stage. So, we expect reach new near-term milestone, and we will be able to update everyone, maybe in our December call or November call.
Krish Sankar (Analyst)
Got it. Then final question. I think in the last time, you mentioned FY 2025 advanced packaging dedicated AP revenue could be $200 million. Are you still sticking with that number, or do you think it may be lower than that?
Fusen Chen (CEO)
Chris, could you repeat?
Krish Sankar (Analyst)
I think last quarter, you said, in fiscal 2025, advanced packaging revenues could be $200 million?
Fusen Chen (CEO)
Right.
Krish Sankar (Analyst)
Dedicated AP.
Fusen Chen (CEO)
Right.
Krish Sankar (Analyst)
Is that still the case?
Fusen Chen (CEO)
Yeah. So, this is our forecast. Our HPC alone, in 2025, last quarter, we forecast about $100 million. But for the dedicated, you know, the advanced packaging, this including HPC, also including vertical wire and also including system in packaging. So all these adding together were close to $200 million. And, you know, since that we adding up more engagement in our site, we are doing a long-term forecast. At this moment, we probably will be able to share with you in the next couple of quarters.
Krish Sankar (Analyst)
Thank you very much, Fusen. Thanks.
Operator (participant)
Thank you. Our next question comes from the line of Tom Diffely with D.A. Davidson. Please proceed with your question.
Tom Diffely (Analyst)
Yeah, good afternoon. I appreciate the question. When I look at the guidance for flat next quarter at $180 million, is there any kind of a shift between end markets or products, or is it going to be fairly similar to what you had this quarter?
Fusen Chen (CEO)
Actually, it's quite similar, you know, compared to Q3.
Tom Diffely (Analyst)
Okay. And then, Fusen, when you looked at the slides you produced, and you gave a five-year average for the different segments, when you look over the next five years, do you think that those are pretty good numbers, or do you think some of those markets were overstated with the big upturn or understated because of growth drivers?
Fusen Chen (CEO)
Tom, could you, talking about which number? Can you ask again?
Tom Diffely (Analyst)
Yeah, on your slides, you had a five-year average for the different segments.
Fusen Chen (CEO)
Ah.
Tom Diffely (Analyst)
I was wondering if those five-year segment five-year averages are good, you know, on a go-forward basis, or if you think they're over or understated for the next five years?
Fusen Chen (CEO)
Yeah. Good.
Lester Wong (CFO)
So yeah. Tom, it's Lester. So we believe that those numbers are good going forward on a five-year basis. As a projection going forward, there might even be a little bit of an upside going forward.
Tom Diffely (Analyst)
Okay, great. And then finally, Lester, when you look at the Project W that was canceled last quarter, what was the cost associated with that, and have those expenses or costs been reallocated?
Lester Wong (CFO)
So, I think for Project W, there's minimal cost associated with in Q3 and in Q4 going forward. And we have reallocated those resources. I think in my remarks, I mentioned that we kept our OpEx down because, we reallocated, those resources in an efficient manner to projects, that is, we, that was more in demand for the quarter and going forward.
Tom Diffely (Analyst)
Great. Thank you.
Operator (participant)
Thank you. Our next question comes from the line of David Duley with Steelhead Securities. Please proceed with your question.
David Duley (Analyst)
Thanks for taking my questions. Let's start on advanced packaging. I was wondering if you could just help us understand the applications that you have thus far kind of captured in order to produce this 10x growth in your thermal compression bonding. And just digging into that puzzle just a little bit further, you know, I think we all recollect your first customer here was a big IDM CPU provider. If you could kind of just help us understand, at that big customer. Are you doing chip on wafer or chip on substrate? And, you know, how does that help you win business at the big foundry?
Fusen Chen (CEO)
So, Dave, I think we start to get a more significant revenue in 2021. So it's about, you know, couple less than $10 million. So within four years, I think, you know, first, I think we start with OSAT. You know, after OSAT, we are working with a IDM company, and we develop actually a chip to substrate. And in the meantime, I think, you know, when we work with OSAT, we're also working with, you know, you know, the customers who focus on silicon photonics and also like 3D sensing. You know, so right now, I think we have, you know, you know, special market, silicon photonics, silicon sensing, and also have actually more important is a heterogeneous integration.
So, I think last year, we was 2023, was $76 million-$80 million. So, we actually start to focus, we believe in the futures. There are a few bigger area for us. One is the OSAT. We actually feel very comfortable. We continue to get more revenue and more application over there. And number two is a chip-to-substrate. I think we are doing very well. What we are focusing right now, actually, is going to be a chip-to-wafer. We believe this is a huge market as well as a foundry, right? So we, these are two areas. I think we probably will fill out our growth for next couple of years.
David Duley (Analyst)
And does the outsourcing of part of the CoWoS process to the OSAT, and I think that's the OS part, the chip on substrate, is that a beneficial trend for you guys, given that you already have relationships with these OSATs and they're using your equipment, or do you have to go in and kind of prove yourself completely new there?
Fusen Chen (CEO)
Yeah, it's beneficial to us.
David Duley (Analyst)
I'm sorry, I didn't hear that.
Fusen Chen (CEO)
It's beneficial to us.
David Duley (Analyst)
Okay. Okay. Final question from me is just on the core business. You know, a couple of years ago, it was obviously running at much, much higher levels. And I'm just kind of curious, is there any reason that you can see that that core business wouldn't achieve peak levels of revenue again, like it was a few years ago, given the appropriate circumstances in the end markets?
Fusen Chen (CEO)
Well, so, David, you are asking about the core business, right? So actually the year 2020 to 2021, I think we actually went up from, like, 500 something, you know, to about 1.5x. This is a 2.6x growth, 2.6x, right? That's very, very significant. So that's why I think our 2021, 2022, 1.5x, I think a lot of customers, they overbuy a lot of our core business. Therefore, I think it's we are down to this level. But if you look at it, if Gartner prediction is correct, the 17% unit growth, just assume, you know, half of that is, say, AI related or whatever, even at 8%, right, will achieve a lot of capacity buy for our core business.
I give you an average of a normal bond business, like even before COVID, it's about $500 million-$600 million. So with, you know, a trigger capacity buy, I think, you, you can calculate, you know, you know, we are still, this year is still less than $400 million for bond. So we believe we have a huge, we have a huge, you know, you know, opportunity in core business. Also, you know, our, new technology adds value for the future in the bond, including BSOB and also in the wedge bond of HPI. So we do believe, semiconductor downturn, normally, no more than six quarters. We already have eight quarters, right? Including this quarter, maybe nine quarters.
So the longer the downturn, actually we believe often in some way, has to be stronger and a strong, you know, start from there.
David Duley (Analyst)
Yeah, the longer you stay under the curve, the bigger you'll be over the part of the curve when things get better, right? You know, everything kind of evens out that way. Okay. Thank you.
Operator (participant)
Thank you. Our next question comes from the line of Ross Cole with Needham & Company. Please proceed with your question.
Ross Cole (Analyst)
Hi, thank you for taking my question. I noticed that you mentioned, you expect the December quarter to be flat compared to the September quarter. And you're expecting gross margin to remain roughly the same area for the two quarters as well? Thank you.
Lester Wong (CFO)
So actually, hi, so it's Lester. So I'm saying, I don't think we guided to the December quarter. I think what Fusen said was actually the September quarter, which we just guided to, is flat to the third quarter. He did mention for the December quarter, which is our first fiscal quarter for 2025, you know, there is some uptake, but there may also be some seasonality in there. So I think, right now it's fair to say.
As far as gross margin is concerned, yeah, I think we believe the gross margin will probably stay around the 47% level through the rest of the calendar year, but then we'll pick up in the calendar year 2025, as some of our cost reduction initiatives kicked in, as well as some of our newer products, which are starting to get traction, but will have a lot more traction in 2025, and those are much higher margin products. So we still are aiming towards a 50% growth margin on a corporate-wide basis.
Ross Cole (Analyst)
Great. Thank you for the clarification and the answer.
Lester Wong (CFO)
Thank you.
Operator (participant)
Thank you. Our next question comes from the line of Christian Schwab with Craig-Hallum Capital Group. Please proceed with your question.
Christian Schwab (Analyst)
Great. Just, Fusen, you know, other than Gartner, you know, revenue growth or semiconductor unit growth, is any of your dialogue with any of your customers suggesting that the first half of calendar 2025, that they plan on giving you a bunch of orders?
Fusen Chen (CEO)
I think everybody we talk optimistic on 2025 because downturn has been very long. Actually, you know, the short term, you know, we have been in this chart for 6-8 quarters already, right? If you look at it, and historically, we don't see this, that means our market is stabilized, and in the future, we have a new product to offer. But the short term, I think is really hard to judge. You know, in the meantime, the utilization rate is inching to 80%, right? You know, 75, we do believe finish Q4 will be a high 78. And, you know, that's why it still didn't trigger capacity buy. Maybe customers still have a little budget concern, you know, and the macro, all these...
So if you're asking me about Q1 and Q2, it can go up, but it can also be flat, also be if so seasonality, we don't expect a major one, but actually we are quite bullish, so as many customer we talk 25, you know, we agree.
Christian Schwab (Analyst)
Just in further clarity, what type of applications or end markets are people most excited about a recovery in 2025 then? You know, automotive, industrial, et cetera.
Fusen Chen (CEO)
Okay, I can tell you, of course, we look at, you know, our advanced packaging, and we also look at the, you know, the wedge bonder is a lot of auto, industrial, and, mainly it's bonder, right? So, bonder actually, you know, the customer is in general semi, and, is also auto and also in, in, in, in AI. So, I think the application is quite broad. And, you know, I mentioned the average normal year of a bonder should be 500-600, right? Even before COVID. And, we have been in a prolonged downturn, and we do believe a little bit of a broader recovery. I think we probably will be the first one to see the recovery.
Christian Schwab (Analyst)
Okay, great. No other questions. Thank you.
Operator (participant)
Thank you. There are no further questions at this time. I'd like to turn the floor back over to Joe for closing comments.
David Duley (Analyst)
Thank you, Alicia, and thank you all for joining today's call. Over the coming quarter, we'll be presenting at several conferences and roadshows. As always, please feel free to follow up directly with any additional questions. This concludes today's call. Have a great day, everyone.