Greetings and welcome to Kulicke and Soffa First Fiscal Quarter 2016 Results Conference 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 Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke and Soffa. Thank you. You may begin.

Thank you Christine. Welcome everyone to Kulicke and Soffa’s first quarter fiscal 2016 conference call. Joining us on the call today is Jonathan Chou, Interim CEO, CFO. Similar to last earnings call, I will be assisting with the financial and Q&A portion of this call. For those of you who have not received a copy of today’s results the release as well as the latest Investor presentation, are both available in the Investor Relations section of our website at kns.com. 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. 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 and Soffa that could affect our future results and financial condition please refer to our recent SEC filings, specifically the 10-K for the year ended October 3, 2015. I’d now like to turn the call over to Jonathan Chou for the business overview. Please go ahead John.

Thanks, Joe. While the current market environment continues to be challenging, I am pleased to share that with $108.2 million of quarterly revenue, we have exceeded our revenue guidance of $90 million to $100 million. This performance facilitated by our global sales effort and flexible manufacturing capacity was supported by better-than-expected and market demand. Despite our better-than-expected performance the typical December quarter seasonality was further impacted by ongoing and broad-based industry cyclicality which has continued to limit the industry’s needs for equipment capacity addition. Overall inventory at ship [ph] manufactures seems to be stabilizing and utilization rates for our core ball bonding installed base continue to be relatively healthy in the 75% range. While first quarter business results our topline revenue of $408.5 million drove $50.4 million of gross profit, a 46.5% gross margin and a breakeven net income. This was much lower than our previously anticipated breakeven revenue level of $125 million, driven primarily by lowering operating – lower operating expenses. During the first quarter as inventory digestion has clearly limited the industry short-term need to invest in new capacity, we have continued to invest in new developments and have really new solutions throughout this period of softness to further expand our market reach among our Advanced Packaging Program, as well as throughout our traditional offerings. In our ball bonding business, we have recently released new features to expand and better serve both existing and new customers. These efforts extend our breadth of offerings by targeting stat and dynamic ramp applications and also the power devices that require high throughput, extremely low looping and overall quality improvement for thin stack and overhanging die application. Sales in ball bonding were down slightly quarter-on-quarter, which is normally expected due to seasonality in December. Copper shipment accounted for 93% of machines sold…

Thank you, Jonathan. My remarks today will only refer to GAAP results and will compare the December quarter to the September quarter. Net revenue for the quarter was a $108.5 million, strong gross margins of 46.5% generated $50.4 million of gross profit. We ended the December quarter with a total cash and investment position of $492.9 million. From a diluted share standpoint this cash position was equivalent to $6.97 and our book value equivalent was $10.67. Throughout the December quarter, we continue to operate under rigid focus on cost control. Due to this coordinated effort in addition to some equity compensation reversals, lower prototyping expenses, and R&D tax credits, our collective expenses were approximately $6 million below our anticipated model, which has great reduced our December quarter’s breakeven. As Jonathan mentioned during last quarter’s call, we previously anticipated a breakeven level of approximately $125 million. Looking ahead towards the March quarter, we’re maintaining our existing operating expense model estimates, which include approximately $45 million of fixed expense plus an additional variable expense of 6% to 7% of revenue. The state-level model, in addition to some expected prototype expenses, as well as incremental discrete tax expense, is expected to bring the March quarter’s net income breakeven to approximately $130 million slightly above our expectations from last quarter. Turning back to the December quarter, working capital defined as accounts receivable plus inventory, less accounts payable decreased by $17.7 million to $144.5 million. From a days perspective our days sales outstanding increased from 82 days to 90 days. Our days sales of inventory decreased from 117 days to 108 days and days of accounts payable increased from 38 days to 52 days. Throughout the December quarter we have continued to take advantage of the soft market valuation by further executing towards our repurchase program. During the quarter we repurchased 1.2 million additional shares at an average price of $10.34, which accounted for approximately $12.8 million of cash outflows. From the program’s inception through the December quarter we have repurchased nearly 7.7 million shares or 9.9% of our initial diluted share count when the program was initiated. We continue to believe that the average price is at a substantial discount to our intrinsic valuation. As of the end of our fiscal year, we had approximately $8.6 million remaining under the current program. While the current industry and macro conditions provide a short-term opportunity to further reduce our average repurchase price our U.S. cash position is extremely limited and remains a major constraint. The limited U.S. cash balance has driven us to consider adding a credit facility to provide for incremental U.S. liquidity. While the credit facility can help the buffer the limited cash balance, we continue to only use available on hand U.S. cash to fund the repurchase program. This concludes the financial review portion of our call. I'll now turn the discussion back over to Jonathan for the March quarter’s business outlook.

Thanks Joe. As disclosed in this morning’s press release due to the continuing market environment we’re targeting revenue to come in between $130 million and $140 million for the March quarter. While we have continued to see lower semiconductor output over the past several weeks with inventory returning to more normalized levels, we need to be ready to ramp production, while we continue to execute on our aggressive development initiatives in parallel. While outlook for 2016 continue to be very cautious due to both macro and industry uncertainty, down cycle is eventually turned and we will be ready to ramp production and participate in a next wave of semiconductor growth. We continue to be increasingly optimistic as it as in the past, semiconductor unit growth will continue to drive incremental capacity requirements into the long-term. More importantly our current development efforts are further extended to – further extended our reach into the sizable in growing markets. With nearly half of all semiconductor unit production being dedicated to consumer and communication segments visibility into market adoption of new consumer devices plays a role engaging our future requirements and demand for our equipment solution. To draw some connection to this year’s Consumer Electronic Show in Las Vegas, major themes were related to automotive and connect their home. Within automotive the growing infotainment options and wide spread adoption of more advanced driver assited systems are expected to further increase the semiconductor content of each automotive – automobile produced. Although automotive is a smaller portion of the global semiconductor segment, this segment required high reliability semiconductor power modules and sensors produced by many of our customers and addressed by nearly all of our solutions. The other big thing was growing base of device supporting standardization communication protocol, which are providing the infrastructure to bring the connect to home within reach. At a high level, we expect that as mobile devices drove the last wave of semiconductor growth IoT devices will drive them next. Considering our market leadership in traditional semiconductor production equipment and our broadened base of solutions, we are well prepared to support this anticipated next phase of industry growth. We continue to demonstrate fundamental, long-term and sustainable business improvement by expanding our solutions, drive cost reduction efforts, focus on critical development projects and prudently deploy capital throughout this period of softness. We look forward to sharing progress on our development efforts as we move forward. This concludes our prepared remarks. Operator, we will now be happy to take any questions.

Thank you. We will now be conducting question-and-answer session. [Operator Instruction] Thank you. Our first question comes from the line of Krish Sankar with Bank of America Merrill Lynch. Please proceed with your question.

Yes hi. Thanks for taking my question. I had a few of them, Jonathan the December quarter numbers are definitely better-than-expected, so in terms of [indiscernible] few years was there any didn’t give any lot more prudence [ph] into the December quarter or do you think of a better environment last quarter for your products?

Actually, these demands we’ve experienced were laid in the quarter, as you know we guided $90 million to $100 million when we announced the last earnings – during our last earnings call. So we did actually expect to kind of get into sort of the mid point that range. But late in the quarter we were getting some additional demand, and there were certainly demand coming across not just China, as well as Taiwan and basically pretty broad-based. So we were able to capture them and we shut them out within the quarter. So no point which is – we are expecting based on what we see we set the current quarter as what we see right now as well.

Got it, [indiscernible]. And then on the gross margin side, it seem like some times [ph] lower than dollar [indiscernible] December is it just due to the mix of [indiscernible]?

Yes, I would say yes, it’s mainly if you look at our OSAT makes this quarter this past quarter, reported quarter is about 85% OSAT versus IBM when you see that and also what drives the copper [indiscernible] versus gold.

Okay. One of the questions on the balance sheet, you mentioned that the U.S. cash position is limited. Curious how much of your cash is onshore and how much do you need from an operational perspective.

Well, most of our cash are offshore outside the U.S. And we do actually sell to some of the U.S. customers so our onshore cash generation is limited. And that’s the reality. And we are able to actually of course meet our operating requirements and so forth. But in terms of the actual cash accumulations, that’s limited. And that’s why we’re setting up a [indiscernible] facility to have actually some additional cushion. But we always continue to look at ways to kind of bring back cash with minimum tax leakage. And perhaps there may be some changes in terms of the corporate tax code going forward that may allow us to bring some cash back

Final question the breakeven, did you guys say that the March breakeven is going to be about $130 million? The second being what is the breakeven when to get past the March quarter?

Okay. As previously guided, we do have actually some prototype expenses of about $6 million for APR business for the current quarter, and some discrete items. So pass this current quarter, which means getting into the Q3 we expect that to come down to about $115 million to $120 million breakeven level.

Got it. Thank you very much. Thanks a lot Jon.

Yes, no problem, thanks. Thanks for your question.

Our next question comes from the line of Tom Diffely with D.A. Davidson. Please proceed with your question.

Yes, good afternoon. So when you look at the breakeven for the third fiscal quarter was 150 – $120 million is that kind of go forward breakeven beyond that point as well, or there one-time are there?

Yes. That’s actually on going, based on our current fixed cost, variable cost about $45 million of fixed and 67% variable tied to revenue.

Okay.

As you may have actually seen in our filings we have actually done a minor – modest restructuring where we took out some head count as well is reduced our fixed cost. So this is all the benefits that we are actually getting from that modest restructuring towards the end of last year.

Okay and in regards to the U.S.-based cash, have you brought cash back in the past and what was the penalty for doing so?

We have not repatriated cash because it's 35% and obviously we do sell to some customers in the U.S. And that's where we are able to accumulate cash balances in the U.S.

Okay. So on a go forward basis for the new revenues, what percent would be typically U.S.-based versus offshore ?

About 5% I would say U.S. The rest are offshore, mainly in Asia.

Okay. And then what you think the utilization rate it is for your tools in the field today and how does that compare where they normally are during this period of time going into Chinese New Year?

Currently about 75% utilization rate in terms of what we see in the field. At this point in time it is hard to say. It’s typically around this time of the year you go back a number of years and that's before Chinese New Year we get very limited visibility. What we are at least seeing this year is that we are getting a bit more visibility than in previous years and that's actually a good news. So utilization should pick up from this point forward because they are ordering machines. And as mentioned in the past, that when you get into kind of 80 range you really have to start planning for new capacity.

Okay. With the somewhat healthy utilization rates and a little bit more activity, why are you, I guess, more cautious for 2016 than you have been recently in recent years, based on activities you see today?

Well because I would say most of the market outlook by analysts are all showing some of the flattish year and we just want to be cautiously optimistic in terms of what we're looking at here. There are also a lot of macro industry volatility that we’re seeing the equity markets certainly is very choppy at this point in time. So all these things could actually impact our customers’ CapEx decisions in terms of investing new capacities.

Okay. And then finally on the thermo-compression we see a good first-order today, what would you expect to be the follow-on to that? Is this customer going to require a certain number of tools to build out a fleet or how do view the thermo-compression going from here?

We have obviously a number of these tools out there, in this particular case the strategic customer and so we are working with them to make sure that this particular machine goes through the acceptance process since we discussed the deal. We have other I would say customers that we are working with that hopefully will also cross the line from a deal perspective in the coming months and in quarters.

Okay. So what are the end-markets chip types that are moving towards this technology?

What we are seeing more are still coming from the memory side, for our APAMA solution. I mentioned on the last call there we have four flavors that basically in terms of the Chip-to-Wafer, and Chip-to-Substrate and plus we have fan-out wafer for level packaging as well as high accuracy flip chip. And we’re getting a lot of inquiries for these different flavors that we produce. The challenge that we have is to meet all these inquiries and prioritize which customer that we work we allocate more resources to. And that’s something that our team is diligently working to try to satisfy or meet all the inquiries out there.

Okay. So how many tools are in the filed at this point?

At this point in time we have six and we have three that’s going out in the next few days in a week.

Great. Okay, thank you.

Yes, thanks Tom.

Our next question comes from line of Mohit Khanna with Value Investment Principals. Please proceed with your question.

Okay, good morning guys. I have a question on Advanced Packaging here. What do you think should be the next step with the current customer and then after memory, do see the trend extending to other types of applications and if you do, which should be the next set of applications about things for PCBs? Thank you.

Yes, I think based on what the [indiscernible] publication we are seeing it seems like there is definitely a lot of interest and some traction that is taking place within – certainly with in the memory players. We certainly are very interested to gain further traction with our memory customers that are coming from either the [indiscernible], both of those and hopefully to get into more of the volume type of repeat purchase order for multiple types of machines purchase orders. And that’s something that we are continuing to work with. There is a lot of different end applications that our customers are currently looking at and want our machine to go through a qualification process forward. Different type of – memory type of including the high-bandwidth memories or game calculator [ph] memory chips.

And Mohit, after memory the market expectations are that logic will start mid to higher end logic applications and start adopting more then 2.5 D type approach, they would likely leverage either thermo-compression or high-density fan-out in a lot of places. Beyond logic, sort of System-in-Package or system-on-chip type of applications like a package-on-package with a memory die and a logic die or the likely higher volume type of runners that would adopt these [indiscernible]. This is a few years out probably but this is sort of the expectations from some of our third-party market.

All right. I’m talking on the breakeven level given $150 million, $120 million [ph] and the most recent quarter, March quarters $430 million, do you think it would be fair to say that it is quite conservative breakeven level given by you, I mean after doing breakeven $108 million [ph]. $130 million looks, if we are also talking like $130 million in the current quarter, do you think it would be fair to say that this is a very conservative communication?

Well I would say it was a balanced view because as you can see in the past historically we are able to kind of match our cost pretty effective if we need to. Our aim here is not really to provide some kind of guidance on our breakeven level but I prefer not to kind of go through some extreme cost-containment measures, but allow our team to basically to really leverage off the budget they have to pursue business opportunities. So there are ways to tighten our belt if we need to. And we certainly have done so in the past. But I think the $115 million to $120 million [ph] in terms of how we actually guide the cost structure it is a balanced approach.

All right, and just the last one for my side. What was the cash generated from operations during the first quarter and what is the expectations for the current quarter or so?

Yes, one second. Yes cash generated, it’s about $6 million for the last quarter.

That is from operations, I think.

Yes.

All right. Thank you.

[Operator Instructions] Our next question comes from the line of David Duley with Steelhead Securities. Please proceed with your question.

Thanks for taking my question. Will thermo-compression bonding be a major revenue contributor in calendar 2016 or which year do expect there to be a meaningful revenue contribution and how big is that market now?

Well I think we believe this market – depending on the solutions that there we’re pursuing for each of the segment that we actually pursuing for each of the favor that we actually pursuing is about probably $120 million or so or higher in each of the solutions. But we think there is – it is now just taking traction to decide for the market. It really depends on the adoption from our customers. For this particular year since it is just starting out, I would say from our perspective we set our budget fairly conservatively from what we want to achieve. So I don’t – just to answer your first question, it will have we’re expecting revenue but it's not going to be a significant level of revenue compared to the rest of the Company. But the key is actually we need to be well-positioned if basically adoption takes place and then it’s really the 2017 kind of year that we need to be prepared for.

So meaningful revenue is 2017 I guess is what you just said.

Yes.

And size of the current market, the size in calendar 2016 is that the $120 million you are referring to or is that next year?

Yes Dave, our gauge is that in 2016 sort of what we – the Advance Packaging of Chip-to-Substrate, Chip-to-Wafer fan-out and high accuracy flip chip, are collectively about $230 million from about $130 million in 2015. And again this data is mostly our interpretation of collection of third-party market groups.

And who accounts for most of this $100 million or $200 million market now? Or the two biggest competing companies to that size of the market?

Well a chunk of it is high accuracy flip chip so the typical flip chip players will be there, as well as some of the potentially be larger Japanese conglomerate that has initiated sort of this thermo-compression adoption a few years back.

Okay. And when you guided to the March quarter fairly substantial increase in revenue what are the – which are the – it’s mostly the ball bonder business that’s providing the big chunk of uptick or is there some other pieces that are growing?

Yes, that’s the wire bonding business is really what we refer to as our core business so yes the pickup in terms of volume and the revenue guidance is manly from that business.

I guess, I was wondering if there was going to be incremental new product revenue in the upcoming quarter, more from compression bonding revenue or if this was just dollar recovery from the core business?

Well I think there is going to be a small portion of it but especially the fact that the machines that we will be, in terms of, we were able to recognize revenue on these machines the fall through is quite good because of the fact that we have expense these machines already. So the fall through on the net income is going to be quite high. But the topline revenue is self is still majority coming from our ball bonding and it’s a small extend of what’s bonding [ph].

Okay. Just to change topic slightly, there’s just lots of talk about companies moving to a fan-out type advanced package, right. You have TSMC investing $1 billion in fan-out and you have all the test and assembly guys allocating higher levels of their CapEx budgets which are growing this year towards fan-out packaging. I was wondering, I think, it is to an acquisition you made some time ago but what is sure back exposure to that particular trend, since it’s a pretty powerful trend right now?

Yes so Dave we have two different platforms that address this fan-out wafer solution, and it’s definitely a hot topic right now with customers. But with the assembly on acquisition and what we call APMR solution, that has a more of a panel-root based approach for fan-out devices that don’t necessarily require the accuracy and there are a few different flavors of fan-out there. And then for higher accuracy, high density fan-out wafer level packaging solutions we have the APAMA thermo-compression base of the machine. That works in effort and it’s the fan-out solution but it easy to be APAMA architecture and falls under the APAMA series of thermo-compression bonders. So again it’s our organic development initiative so we have those two different pieces that target the market collectively.

In the piece from the assembly on, I think, that’s the one that’s more near-term oriented capable of growing with the fan-out trends this year. Do you expect that product line to show substantial growth or how should we look at that, because there’s certainly a lot of growth in fan-out spending this year?

For APMR collectively, I mean, there’s lot of opportunities and it continues to be a pretty serious R&D allocation kind of priority discussion that we have quarterly. But there's a lot of opportunities within other hot areas too, but there is assembly on machines and production doing fan-out today and we continue to receive customer feedback on fan-out and continue to distribute evaluation machines and demo machines to customers. We’re almost to some point slightly inventory limited with our APMR business but again it's sort of an ongoing prioritization.

Yes let me add a little bit to that. For APMR we’re already still going through our integration process and we set a reasonable budget for them for this year. We are expecting more growth to come from the subsequent year for this year. But I can say there are actually a lot of interests in terms of their solution on the Mass Reflow side. So the nice challenges the fact that we need to ramp and be more scalable while addressing the fact that they manly sell in different currencies and where the K&S side actually do sell in U.S. dollars in source in U.S. dollars. So there's some integration related activities that we need to kind of finish for the rest of the year. But the team is working well together with us in terms of the integration process and we expect great things from that acquisition.

Okay, thank you.

Welcome.

Our next question comes from the line of Rishabh Jain with Singular Research. Please proceed with your question. Thank you. Our next question comes from the line of Steven Paleo with HSBC. Please proceed with your question.

That’s great, I'm curious you had said that that the late in the December quarter pickup you said China as well as Taiwan contributing fairly broad-based. And as I guess as you look into your March quarter you're looking at I guess what about 25% quarter-on- quarter growth at the midpoint is there any concentration there or is that also fairly broad-based regional?

Well, I would say, if you look at the trend and we are seeing some steady pickup in terms of demand coming from China. And late in the quarter we are seeing basically from Taiwan as well. So China if you look at – if you look at our top ten list, I mean, basically we sell through a distributor in China but [indiscernible] most of the top OSAT in China and they are steadily investing, we’re also seeing some steady investments coming from second [indiscernible] as well in China. So the fact that China wants to be a leader in 10 years and I would say there is definitely increase investments in various bloggers, different players on line [ph].

I guess two more questions as kind of clarifications to being. Would you remind me you mentioned that you had a bit more visibility this time ahead of Chinese New Year the previously, but remind me how the seasonality worked. Did everything just go quietly next week, or what are the milestones, when do things come back on and when do you get better visibility? How does it normally work?

Sure, sure, our normal seasonality, as you know, December quarter is typically the lowest quarter. We have seen the past five years sometimes the second quarter would be lower. And the fact that people don’t like decisions until after Chinese New Year. For this year we’re seeing priorities, we’re seeing basically appeals [ph] from our customers earlier on. So that’s why we are able to actually guide a little higher. It’s a little different than previous years for that part.

And then the last question, you made the passing remark about LED being less than 5% of revenue. Do you have any more visibility in there for, I don’t know, things to improve more or just general thoughts already market deteriorating for that matter? Any updates on LED?

Well, we are seeing some inquiries and we are expecting some of the LED he players to further consider us. So it seems like it’s a trend. The question down is it’s all about pricing and how do we actually maintaining our market share based. As mentioned in the past LED is generally about 5% or less, but we are selective in terms of the customer we serve and we are seeing some bigger players inquiring that they are building new plants and capacity and we will selectively participate in this. So in terms of outlook I think this current quarter could be higher than 5%.

Okay, thanks a lot Jonathan.

No problem Steve.

[Operator Instructions] Our next question comes from the line of Rishabh Jain with Singular Research. Please proceed with you question.

Hi, so my question is basically on thermal compressor bonder business, what kind of revenues you see coming from thermal compressor bonders going forward then the market kind of matures in like 2017 and 2018, a couple years down the line when there is some maturity in the market with market share specifically you see for yourselves?

Rishabh, we don't guide the current quarter, but we have provided roughly what the size of that market was…

Okay.

As Joe just mentioned and the Advanced Packaging size is probably 250 and it could grow at certainly higher CAGR. The chart on that – it could grow as much as 40% CAGR over the next several years. The question is really the adoption by our customers. And I did mention in terms of this current year, we are actually just trying to at least get a position in there. So that in the long-term, we could be at least a 30% buyer in the market that we’re serving.

Okay. So 250 million for thermo-compression bonders or advanced packaging?

We’re talking about advanced packaging. And the thermal compression, I mentioned before flavors it's really – there are two flavors to thermal compression bonder, chip to substrate and chip to wafer and then there are two other kind of flavors, which is fan-out wafer level packaging and that that doesn't use thermal compression bonder and high accuracy flip chip, which also in the value of TCB.

Okay. And then also you guys are [indiscernible] significant in putting Advanced Packaging initiative. So I know the wire bonding market is becoming more macro place in the market now. So what type of revenue composition do you see from Advanced Packaging and from the existing wire bonding business going forward let’s say about four or five years down the line. What kind of revenue composition in the Advanced Packaging do you see and I am asking this just because you know – I’m just seeing the last advancements into Advanced Packaging.

Well, I think it is a good question. I mean we have different models that we run on our corporate – we run a five year old corporate model. And there is actually a scenario where it could be actually – it could grow to a reasonable size. So, really again this is kind of – it really depends on our customers basically adoption of this, but one thing for sure in our opinion is that the traditional – the core business is well matured and is not going away anytime soon. The question is…

Okay.

Advanced Packaging…

Okay.

At least it could be a meaningful contributor in terms of revenue…

Yes.

Bottom line to our business.

All right, okay. And also on the wire bonding side of things – utilization rate was 75% this quarter. So when do you see the utilization rates going up in the next few quarters and finally rates in the 80% ballpark and you actually see the demand going up in the Wire Bonding product lines?

This where we are cautiously optimistic, we are obviously after this current quarter we hope that will be a ramp in terms of the Q3 and Q4. But that’s something we have to look at one quarter at a time. But we are always ready. We are pretty flexible as you know, flexible manufacturing. And so we’re ready, if the demand is there, we will definitely try to capture as much as we can.

Got you. And what is the CapEx guidance for FY’16? Is it still around $11 million or is your revised CapEx guidance for FY’16?

Our CapEx actually is generally we’re low – our CapEx is generally $2.5 million for the quarter. I think it goes about same level.

All right got it. Yes that's all for my side. Thanks so much guys.

Hey thank you. Thanks for the question.

Our next question comes from the line of [indiscernible] Capital Management. Please proceed with your question.

Hey, good morning, Jonathan and Joseph. Thank you very much for the call. I have a first question on the demand side. And then probably a follow-up. So given that as you mentioned just now the majority of sales of bonding equipment has already pointed that to the replacement demand cycle and then given the actually some pretty slow sales in the fourth quarter 2015, first quarter 2016, do you actually see this pent-up demand appearing in the second half 2016 or the first quarter of 2017? Just to also understand how we actually extended happening in the past? Thank you.

Yes, Howard, thanks. I think generally, whenever we are in a downturn kind of environment, there is some impact of pent up demand, this is six months out, it is outside of our comfort zone and giving guidance. So I think generally on the analyst consensus and what I've been reading over the last week or two, whenever we’re in a downturn situation it is always have second-half 2016 based on our guidance it seems like that that’s developing that way but again our visibility doesn't go out that far.

Okay. Sure. And my second question relates more on the capital return policy side, given the stock market correction as you mentioned just now, and then eventual recovery semi cycle, I mean the debate is probably how many quarters from now. And the cash position is actually about 60% to 70% of market cap. So I [indiscernible] is actually trading at extremely attractive level. So we just want to understand if you have any plans to launch a bigger share buyback program. Because I think earlier on, in the conference call, you have also talked about adding more sales in fiscal year 2016 would be booked in the U.S., and you also mentioned the bit about the credit facility that you can take. Thank you.

Yes. Sure. Let me address that. The topic of capital allocation, it’s regularly discussed at the management level as well as the Board level and this is something that we review on a quarterly basis. So while we actually are open to continue with the share repurchase program, the question then is really to address the cyclicality of the business, in terms of broadening the business revenue streams that we believe is actually a higher priority at this point in time. But I think even if we want to actually increase the size of the program, just keep in mind, if we actually borrow a basically lever up onshore in the U.S., we have to pay that back at some point. So we still need U.S. dollars to eventually service that debt. So we are very cognizant just to ensure that our cash then onshore in the U.S. will need some cash flow sources to meet that. So that’s something that we are continuing to analyze and also update on some – on a quarterly basis basically.

I’ll catch you, Thank you very much.

Thank you.

Thank you. We’ve reached the end of the question-and-answer session. Mr Elgindy, I would now like to turn the floor back over to you for closing comments.

Thanks, Christine. Thank you all for this time. As usual please feel free to call us directly with any additional questions. Christine, this concludes our call. Good day.