BE Semiconductor Industries N : NEEDHAM VIRTUAL SEMICAP & EDA CONFERENCE

NEEDHAM VIRTUAL SEMICAP & EDA CONFERENCE

August 2020

Safe Harbor Statement

This presentation contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the presentation, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as "anticipate", "estimate", "expect", "can", "intend", "believes", "may", "plan", "predict", "project", "forecast", "will", "would", and similar expressions are intended to identify forward looking statements, although not all forward looking statements contain these identifying words. The financial guidance set forth under the heading "Outlook" contains such forward looking statements. While these forward looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward looking statements, including any inability to maintain continued demand for our products; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; the extent and duration of the COVID-19 pandemic and measures taken to contain the outbreak, and the associated adverse impacts on the global economy, financial markets, and our operations as well as those of our customers and suppliers failure to develop new and enhanced products and introduce them at competitive price levels; failure to adequately decrease costs and expenses as revenues decline; loss of significant customers, including through consolidation or the emergence of industry alliances; lengthening of the sales cycle; acts of terrorism and violence; disruption or failure of our information technology systems; inability to forecast demand and inventory levels for our products; the integrity of product pricing and protection of our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations, particularly to the extent occurring in the Asia Pacific region; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; any inability to attract and retain skilled personnel; those additional risk factors set forth in Besi's annual report for the year ended December 31, 2019; and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.

August 2020

2

Agenda

1. Company Overview

1. Market

III. Outlook and Summary

August 2020

3

I. COMPANY OVERVIEW

August 2020

4

Besi Overview

Corporate Profile

Financial Highlights

Investment Considerations

• Leading assembly equipment supplier with #1 and #2 positions in key markets. 32% addressable market share
• Broad portfolio: die attach, packaging and plating
• Strategic positioning in substrate and wafer level packaging
• Global operations in 6 countries; 1,691 employees. HQ in the Netherlands
• LTM revenue and net income of € 397.7 million and € 106.6 million
• Cash/deposits at Q2-20: € 366.6 million
• Net cash/deposits at Q2-20: € 93.6 million
• € 732.6 million of dividends and share repurchases since 2011*
• Applications for digital society key long term drivers: Internet of Everything, AI, Big Data, Cloud computing, 5G network roll out, 3D imaging
• Advanced packaging critical part of semi value chain
• China market growth and share gains also benefit revenue development
• Asian production optimization, European overhead reduction and common parts initiatives also help drive profit potential

* Includes 2019 dividend payment of € 1.01 per share and share repurchases through June 30, 2020

August 2020

5

Company History

400

(€ millions)	300
Revenue	200
	100	€ 85.5

25.9%

0

2003

August 2020

Die Attach Acquisitions

Product Strategy

• Expanded advanced packaging leadership into die attach area
• Gained market share organically and via acquisitions
• Gained mindshare with key industry leaders
• Growth in China, key customers and electronics supply chains

Successful Execution of Strategic Plan Initiatives

• Asian production transfer combined with European restructuring enhanced profit potential
• Developed Asian production hubs (MY and CN), Singapore development/support center and Asian supply chain
• Scalability enhanced. Break even revenue levels reduced

Financial Metrics

• Achieved peer leading gross and net margins and ROI
• Improved cash flow generation
• Implemented attractive capital allocation policy

Revenue Gross Margin

€ 397.7

57.9%

LTM

70.0%

65.0%

60.0%

55.0%

50.0%

45.0%

40.0%

35.0%

30.0%

25.0%

20.0%

6

Best in Class Product Portfolio

Die Attach

Die Bonding

Multi Module Attach

Flip Chip

Large Panel Size

Die Sorting

• 2100 xP plus / hS

• 2009 SSI

• 2200 evo

• 8800 CHAMEO advanced

New

• 8800 CHAMEO PLP

• WTT

• 2100 sD

plus

/ PPP

plus • 2100 SSI

New

New

• 2200 evo plus

• 8800 TCB advanced

New

• TTR

• 2100 DS

• 2100 sD

advanced

• 2200 evo hS

• 8800 FC Quantum hs

New

New

New

• 2100 hSi

• 2100 Advanced i

• 2200 evo advanced

New

• 2100 FC hS

New

Packaging

Molding	AMS-i					Trim&Form	Trim&Form
AMS-X			AMS-W/LM	FML
New			New
		FCL	FCL X/P	New
• HD Leadframe	• Leadframe	• Substrate	• Wafer
	•	X	Incl Sorting
• 100x300	• MEMS		• Panel
		•	P
• Power Devices	• Sensors

Die Lid Attach

• DLA
• DLA Next GenNew

FSL

• Singulation
• Sorting

Plating

Plating

• Leadframe

• Solar

• Next Gen HD plating with integrated litho New

August 2020

• Film & Foil
• Battery
• Advanced Surface Prep New
• Wettable Flank New

In Development

• Next generation Die Attach
• Next generation Packaging
• Common modules

7

Customer Ecosystem

Customers	OEMs	End Products
IDMs

Subcontractors

• Diversified, blue chip customer base, top 10 = 44% of 2019 revenue
• Leading IDMs and subcontractors. 61%/39% split in 2019
• Also supply leading fabless companies: Qualcomm, Broadcom, MediaTek via subcontractors
• Long term relationships, some exceeding 50 years

August 2020

8

Product Positioning

Semiconductor Manufacturing Equipment

(2019: $61.7B)*

Front end: $53.2B	Assembly: $3.0B	Test: $5.5B
(86.2%)	(4.8%)	(8.9%)

Semiconductor Assembly Process

Dicing

Die Attach Wire Bond Packaging** Plating

Leadframe Assembly

Substrate

Wire Bond Assembly

Substrate

Flip Chip Assembly/TCB

Wafer Level Packaging

Flip Chip Assembly/Fan Out

• Source: VLSI June 2020
• Includes Molding, Trim and Form and Singulation Systems

August 2020

9

Operational Profile

Duiven & Drunen,

(The Netherlands)

	Steinhausen,	Radfeld, (Austria)
	(Switzerland)
Chandler		Suzhou
	Chengdu	Korea
		Leshan	Shanghai
		Taiwan
		Shenzhen

Sales Office

Production Site

Sales, Production and R&D Site

ThailandPhilippines

Malaysia

Singapore

			LTM June 30, 2020
• Development activities in Europe		Europe/NA	Asia
Revenue (MMs)	€ 83.3	20.9%	€ 314.4		79.1%
• Production in Asia
• Sales/service activities in Asia, US and Europe	Headcount	503	29.7%	1,188		70.3%

August 2020

10

Summary Financials

Year Ended December 31,	2017	2018	2019	H1-19H1-20
(€ millions, except share data)
Revenue	592.8	525.3	356.2	174.1	215.6
% seq. change	58%	-11%	-32%		+24%
Gross margin	57.1%	56.8%	55.8%	55.9% 59.7%
EBITDA	222.8	187.7	111.7	49.7	77.1
Pretax income	199.2	154.9	78.1	32.7	61.9
Net income	173.2	136.3	81.3	28.4	53.7
Net margin	29.2% 25.9% 22.8%	16.3% 24.9%
EPS (diluted) (a)	2.17	1.68	1.06	0.39	0.74
EPS (basic) (a)	2.32	1.83	1.12	0.38	0.69
Dividend per share (a)	2.32	1.67	1.01
Net cash	247.6	199.4	130.3	86.1	93.6

1. Adjusted for 2:1 stock split in May 2018 August 2020

Long term, step function revenue growth in cyclical business

• Last peak reached in 2017 at € 592.8 million

H1-20 business prospects have surprised to the upside

• Renewed mobile investment for next cycle
• Increased Chinese investment since H2-19
• Continued logic/AI/cloud expansion
• H1-20revenue and orders +23.8% and 32.5% vs. H1-19
• COVID-19and US/China issues clouding assembly market recovery

Strong margins and profit potential

• Quarterly gross margins of 55%+ achieved in 2018-2019 downturn
• 62% gross margin achieved in Q2-20 with market position, product mix and labor efficiency
• Opex management creates significant operating leverage
• H1-20net margin rose to 24.9% vs. 16.3% in H1-19
• Peer leading financial metrics through market cycles

Improved cash generation supports shareholder friendly capital allocation policy

11

Solid Liquidity Position to Help Navigate Uncertain Environment

			Cash and Deposits			Net Cash			Q2-20 vs. Q1-20
										• Net cash decreased by € 54.7 million (-36.9%)
	600										to € 93.6 million
		527.8								•	Principally due to:
			507.5	€ 122.4 MM				€ 73.5 MM		• - € 73.5 million dividends paid
	500		475.5		Dividend				Dividend		•	- €	4.3 million capitalized R&D
			2018				2019
									•	- €	3.1 million share repurchases
								427.6
							408.4			• Partial offset: + € 22.9 million cash from
	400				361.7	383.7			366.6			operations
€ millions	304.8									• € 7.0 million 2016 Convertible Notes converted
300										• € 118 million remains outstanding
	247.6
			229.7						Q2-20 vs. Q2-19
	200		199.4
								• + € 7.5 million (+8.7%)
	168.1
							148.3
							130.3		€ 150 million 0.75% Convertible Notes issued in
	100					106.9			93.6
				86.1			July 2020
										•	Bolsters liquidity
	0									• Provides flexibility for strategic initiatives,
										acquisitions and capital allocation
	2016	2017	2018	Q1-19	Q2-19	Q3-19	Q4-19	Q1-20	Q2-20
	August 2020												12

Revenue and Gross Margin Cycles Since 2006

€ millions												Revenue	Gross Margin
700
600
																									59.5%
																				593	56.8%
																					55.8%
500																		51.1%
400																			424				-40.0%
									39.5%			379
300				34.1%																	356	+20.6%
											302
																					318
4 year							351
averages																										264
200
					164
100		191
0

Gross Margin

70%

60%

50%

40%

30%

20%

10%

0%

* Nine months assuming midpoint of Q3-20 guidance.

August 2020

13

Increased Profitability vs. Last Industry Cycle

€ millions

Trough

2015

2019

€ millions

Post Trough

Nine Months 2016

Nine Months 2020E*

350

300

349.2

+2.0%356.2

25.8%

91.9

		350
140
120
100	Income	300
80

			160
		140
	318.1	120
+12.7%	32.3%			Income
		100
	102.7

Revenue

250

200

+58.7%

16.6%

57.9

Revenue Operating Income

60	Operating	Revenue
		250
40
20
0		200

282.3		+85.4%	80	Operating
	19.6%					60
55.4
								40
								20
								0
			Revenue			Operating Income

* Assumes midpoint of guidance for Q3-20

August 2020

14

Increased Through Cycle Returns vs. Peers

Gross Margin

								Variance
	2016	2017	2018	2019		YTD	2016/
								2020
Besi	51.0%	57.1%	56.8%	55.8%	59.7%		+8.7%
ASMPT	43.4%	47.9%	45.9%	41.1%		42.2%		-1.2%
(Backend)
K&S*	44.8%	47.2%	46.1%	47.1%		46.0%		+1.2%

Operating Margin

								Variance
	2016	2017	2018	2019		YTD	2016/
								2020
Besi	20.0%	35.3%	32.9%	25.8%	31.2%		+11.2%
ASMPT	20.6%	25.1%	21.7%	6.8%		11.4%		-9.2%
(Backend)
K&S*	6.2%	14.7%	6.3%	1.4%		7.3%		+1.1%

* On fiscal year basis except for LTM and YTD, which are on a calendar year basis.

Return on Average Equity

50.0%

40.0%
30.0%	Besi

20.0%

10.0%
				ASMPT
							K&S*
0.0%
2016	2017	2018	2019	LTM
		Besi	19.3%	44.5%	33.8%	24.3%	29.9%
		ASMPT	16.9%	27.4%	18.8%	5.2%	7.2%
		K&S*	6.2%	14.7%	6.3%	1.4%	6.0%

August 2020

15

Business Model Objectives

Revenue

Addressable

Market Share

Gross Margin

Net Margin

Headcount

Split

August 2020

Objectives

€ 800MM

40%+

55-60%

30-35%

80% Asia/20% Euro

16

Capital Allocation Trends

€ millions

209.5

200

35.5

Dividends

167.1

Share Repurchases

150	44.7

100				88.8
					174.0			79.7
		67.4		23.5			6.2
	22.0				122.4
50
				65.3				73.5
	45.4
0
2016		2017	2018	2019	2020*
							8%
	33%	26%	17%	27%
	67%		74%	83%	73%	92%

* Share purchases included as of June 30, 2020

August 2020

• € 732.6 million distributions since 2011:
• • € 79.7 million YTD including May dividend
• € 73.3 million shares repurchased under current € 75 million authorization
• • Average price of € 22.58
  • 7.3 million shares in Treasury at average price of € 15.48 (9.1%/shares outstanding)
• Share repurchase program extended and increased
• • Extended to October 30, 2021
  • Increased by € 50 million to € 125 million

17

II. MARKET

August 2020

18

Assembly Equipment Market Trends

Assembly Equipment Market

	5.0	Market Size		YoY Growth Rate							50%
			4.5	4.3				4.2	4.6
								3.6
billions	4.0	3.1	3.5			3.0	3.3			30%
3.0								10%
		25.8%			11.3%		15.6%
		12.5%			9.5%	9.7%
US$	2.0						-10%
			-2.5%
	1.0	-15.9%									-30%
	0.0					-31.5%					-50%
		2015	2016	2017	2018	2019	2020E	2021E	2022E	2023E

Source: VLSI June 15, 2020
• VLSI 2020 forecast back to pre COVID-19
			Besi Revenue	estimate
			•	+11.3% in 2020
		Revenue	YoY Growth Rate	•	Reversal from -8.3% April forecast

	600			592.8	525.3
							70%	• Multiyear growth 2019 to 2023 (+53%
				57.9%
millions			375.4					50%	total)
400	349.2			356.2	20.6%
		30%
						263.8	318.1	• Market fundamentals very strong
		7.5%					10%	• 5G could be game changer
€
200									• Mobile makers pack more
	-7.8%			-11.4%				-10%
									-30%	features/functionality into handsets
						-32.2%			• WAHE further advances Cloud, AI and
	0								-50%	logic applications
		2015	2016	2017	2018	2019	9mo-2019	9mo-2020*		• Chinese want semi independence

* Assumes midpoint of guidance for Q3-20

August 2020

19

Semi Equipment Climate Index Changed Significantly in H1-20

Source: VLSI June 24, 2020

August 2020

20

Besi Market Share Trends

	2015	2016	2017	2018	2019
Total Assembly Market ($MM)	$3,148	$3,541	$4,453	$4,343	$2,974
Besi Market Share	12.3%	11.8%	15.0%	13.8%	13.4%
Addressable Market ($MM)	$1,271	$1,506	$1,940	$1,848	$ 1,247
Besi Market Share	29.9%	27.6%	34.2%	32.4%	32.0%
Die Attach	35.5%	34.2%	42.0%	38.6%	37.5%
Packaging & Plating	21.1%	17.6%	18.8%	21.4%	22.1%

Percentage of	2017	2018	2019
Total Revenue
Die Attach	81.6%	76.4%	75.6%
Packaging	15.2%	19.2%	19.6%
Plating	3.2%	4.4%	4.8%

• VLSI updated market data in May 2020
• Besi addressable market share relatively stable between 2018 and 2019

Source: VLSI May 2020 and Besi estimates

August 2020

21

Move to Digital Society Helps Drive Advanced Packaging Growth

August 2020

22

Advanced Packaging Critical to Next Generation Applications

Mobile Revolution

• Mobile internet
• Messaging
• Social media
• Shared economy
• Gaming
• Geo-location
• Audio/video
• Auto electronics

Digital Society

• Smart mfg, cities, mobility and homes
• 5G mobile/wearable devices
• Artificial intelligence
• Driverless cars
• Data mining
• Cloud servers
• High performance Computing
• IoT
• VR/AR
• MEMS

Greater

Miniaturization

Higher	Greater
Accuracy	Complexity

Die Bond	Packaging
Datacon 8800 TC	Fico AMS-LM
Datacon 8800 CHAMEO fan-out	Fico Singulation Line
Esec DB2009	FML Wafer Molding
Esec DB2100	Fico Compact Line - X
Lower Power	Increased
Consumption	Density

Higher

Performance

August 2020

23

Requiring Increased Density, Higher Accuracy and Smaller Form Factors for Next Generation Devices

Front End

• Transistor scaling
• Lithography
• New structures 3D

100

NM

10

1

0.1

2010	2015	2020	2025	2030
		Logic Metal Pitch			Edge Placement Accuracy	Source: Samsung
		Node Name	Source: ASML 3D Conference 2020

Back End Assembly

• More contacts
• Smaller pitches
• Thinner/denser more complex packages

	From Simple Wire Bond	To BGA/Flip Chip	To Complex 3D Structures With	To Complex Chiplet Based
•	Stacked structures		Tsvs,microbumps And Thin Dies	Structures And More Dense
	3D			Contacts With Hybrid Bonding
•	WLP/FOWLP
	packages

August 2020

24

Advanced Packaging Unit Volume and Market Share Are Increasing

Advanced Packaging Silicon Demand Growth & Market Share 2011 - 2023

	55								50%
							43%
	45						40%	41%
				38%	39%		40%
			36%	37%
Eq.		34%
						%
35	32%
300MMwafers,M	31%							ShareMarketAP
		26%						30%
	25

19%	20%
15
13%

• Assembly process step now important

gating item

• Specifications more like front-end

• Advanced packaging applications have

grown significantly since 2010

• Currently, estimated 38% of wafers use

advanced packaging interconnects

• Leading growth segment of assembly

equipment market

5

10%

• Flip chip and WLP are leading AP assembly

processes next five years

1. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0%

Flip Chip		Wafer Level Packaging
Fan-Out Wafer Level Packaging		TSV (3D & 2.5D)
Advanced Packaging Unit Market Share (%)

Source: VLSI February 2020

August 2020

25

Besi Portfolio Well Positioned by Node Size and Accuracy

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Estimated % of 2019 Revenue

Accuracy Size

Micron NM

25%

10+

28+

20%	10	28

40%	7	17

	15%	3	10

Typical Application	Besi Equipment
Automotive, SiP	Die Attach
Packaging
Power
Plating
IOT	Die Attach
Packaging
General ICs
Plating
Computer, PC, Mobile	Die Attach
Cloud Computing	Packaging
High Performance Computing	Die Attach
Memory	Packaging

• 75% of Besi equipment revenue advanced packaging as per VLSI definition
• 55% equipment revenue is < 7 micron accuracy and sub 17 nanometer
• Most rapidly growing market segment

August 2020

26

Besi End User Markets

2019 % of Revenue

	Ind'l/LED
	9%
Automotive	Mobile Internet
Devices
17%	32%

Spares/Service

20%

Computer, PCs

22%

Source: Company Estimates

August 2020

• Mobile Internet, Computing and Automotive are largest end markets
• • Estimated 71% of revenue in 2019
  • Percentages vary p.a. based on customer roadmaps
• Mobile is largest market
• • % varies based on timing and success of new product introductions
• Computing growth due to increased demand for high end logic, cloud and memory solutions
• Growth in automotive reflects ever increasing electronic content
• Spares/service: 20% of 2019 revenue
• • Growth in installed base
  • Less volatile revenue stream

27

Key End User Market Growth Drivers

	Mobile Internet	Computing	Automotive
	5G Ramp Underway	Development Continues Despite
	Digital Society Accelerating
Increasing Mobile Content & Features	Near-Term Weakness

Cloud Infrastructure

Autonomous Driving

HPC/VisionLidar

5G subscriptions expected to reach 2.5	Medical	Work at Home	Electrification	Charging
Economy
billion by 2025 vs. 0.2 billion in 2020		Infrastructure

August 2020

28

Current Technology Roadmap

•	IDMs investing in
Customers	next generation
	devices

5G Applications

Artificial Intelligence

Cloud Infrastructure

Advanced Logic and

• Increasing R&DMemory Apps activities

Besi

• Highly focused per customer roadmaps

August 2020

2020 Development Activities

• Shipped first nano-accurate hybrid die bonding system with excellent initial results
• Ongoing development of MicroLED applications
• Next generation TCB system nearing completion
• Next-generationsoft solder and plating systems for automotive and power applications

29

Hybrid Die Bonding: Next Generation Bonding Technology

Higher accuracy, more dense contact technology

WIRE BOND	FLIP CHIP	FAN OUT and WLCSP	TCB BONDING
1975	1995		2012
	2010
100-55 µm sides only	Pitch	150-80 µm	Pitch 80-25 µm

Source:Amkor	Source:Amkor	Source: Infineon	Source:Micron
Epoxy Die Bond	Create Bump on Die	Create Fan Out Wafer	Create Micro Pillar
Flip Chip	and overmolding dies	TCB Bond
Wire Bond
Reflow	Create RDL Layer direct	Underfill
Mold
Underfill	Bumps	Mold
	Mold	No use of substrate
August 2020

HYBRID BONDING

2018 NEW DtW

Pitch < 20µm

Source:Xperi

Create Cu Bond Pad

Hybrid Bond

Anneal

Mold

30

MicroLED: Another Emerging Growth Opportunity

Watches and Phones, Automotive IT

VR and AR Applications

Larger Size TV and TV+

Mass Transfer Of Individual MicroLEDs

• Very precise placement over wide area
• First system delivered and accepted
• Interest from additional potential customers

Monolithic Based MicroLEDs Solutions

 Utilizing Besi's next generation TCB or Hybrid Bonding System

 Potential application: AR or VR glasses

Requires Substantial Productivity Improvements Prior To Mass Commercialization

August 2020

31

III. OUTLOOK AND SUMMARY

August 2020

32

Guidance Q3-20

€ in millions

Q2-20

Revenue

€ 124.3

Gross Margin

62.0%

Operating Expenses

€ 28.6

August 2020

Q3-20				Seasonal Revenue Trends
						Q3E/Q2
-10%						Average decline (-16.3%)
-
-25%						-	17.5%
									-3.2%
					-27.6%
58% - 60%							-6.3%
								-13.5%
				-30.8%
		• Besi quarterly revenue development influenced by
-10%		seasonal trends
	• Orders typically ramp in H1 and decline
-
-15%	-15%	sequentially in each of Q3 and Q4

• Sequential decrease in line with 16.3% average Q2-Q3 decline past 5 years
• • Assumes midpoint of guidance for Q3-20

33

Summary

Assembly market	Long term secular	Disciplined	Market presence
ever more critical	trends drive	strategic focus	has grown via key
in semiconductor	advanced	has created an	IDM customers
value chain	packaging growth	industry leader	and supply chains

Asian production	Tech leadership	Attractive capital
and scalable
expansion has	model have	allocation policy
been a game	resulted in	rewards
changer	benchmark	shareholders
	financial returns

August 2020

34