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FOIA Confidential Treatment Request

Certain confidential information in this letter has been omitted and provided separately in an unredacted version to the Securities and Exchange Commission. Confidential treatment has been requested under 17 C.F.R. § 200.83 with respect to the omitted portions, which are identified in this letter by the mark “[*].”

                       July 12, 2023

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

Office of Manufacturing

100 F Street, N.E.

Washington, D.C. 20549

Attention: Beverly Singleton and Andrew Blume

Re: Kulicke and Soffa Industries, Inc.

Form 10-K for the fiscal year ended October 1, 2022

Filed November 17, 2022

Form 10-Q for the quarterly period ended December 31, 2022

Filed February 2, 2023

Response dated April 12, 2023

Response dated June 9, 2023

File No. 000-00121

Dear Beverly Singleton and Andrew Blume:

We are writing in response to the comment letter of the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), dated June 12, 2023, to Lester Wong, Chief Financial Officer of Kulicke and Soffa Industries, Inc. (the “Company”), related to the above referenced filings made by the Company.

For your convenience, the Staff’s comments are reproduced below in italics, followed by the Company’s responses.

***

CONFIDENTIAL TREATMENT REQUESTED BY KULICKE AND SOFFA INDUSTRIES, INC.

Form 10-K for the Fiscal Year Ended October 1, 2022

Notes to Consolidated Financial Statements

Note 16: Segment Information, page 68, page 68

1.We have reviewed your response to comment 1 and have the following comments:

•We note that you currently believe your Aftermarket Product and Services ("APS") reportable segment consists of a single operating segment instead of six operating segments and that your Capital Equipment reportable segment consists of five operating segments instead of six operating segments. Considering you previously indicated in response to comment 2 in your letter dated April 12, 2023 that discrete financial information for each operating segment "is available to the CODM for his review during various updates throughout the financial year, including revenue outlooks, financial forecasts, business reviews and reports on operations" and that such "information is regularly reviewed by the CODM to make decisions about resources to be allocated to the component and assess its performance," we are unclear why you now believe APS consists of a single operating segment and why you no longer consider Wafer Level Bonder to be an operating segment. In doing so, clarify why the Wafer Level Bonder operating segment was collapsed into the Ball Bonder operating segment

Response:

The Company acknowledges that the response made in the letter dated April 12, 2023 (“first response letter”) was prior to the Company performing a fresh review of its segment reporting and information used in the process. At the granular level, the discrete financial information for the six different components within APS and CE, respectively, is prepared by the financial planning and analysis (“FP&A”) team to the senior management including the Company’s chief operating decision maker (the “CODM”). Notwithstanding the above, the Company noted from its fresh review of the segment reporting process that the information provided to, and used by, the CODM was limited to the Quarterly Business Unit Financial Review (“QFR”), Quarterly Business Review (“QBR”) and Executive Summary Review as elaborated in the letter dated June 9, 2023 (“second response letter”). Based on the Company’s re-evaluation of the financial information presented to the CODM, the Company would like to highlight that the CODM’s review is mainly focused on the QFR and QBR, coupled with the four additional factors1 discussed in the second response letter. Therefore, the Company concluded that APS is one operating segment.

Similar to the re-assessment that APS is one operating segment, upon further review of the financial information provided in the Executive Summary, QFR presentation and board of directors presentation, the Company noted that financial information for CE was consistently broken down and presented as five business units, namely: Ball Bonder, Wedge Bonder, Electronic Assembly/Advanced Packaging Mass Reflow, Advanced Packaging and Lithography. Financial information such as revenue, cost of goods sold, and operating expenses for Wafer Level Bonder are included as part of Ball Bonder in the financial information presented to and assessed by the CODM, rather than presented and reviewed on a standalone basis. Based on this fact pattern, Wafer Level Bonder does not meet the definition of an operating segment under ASC 280-10-50-1(b), which states that one of the characteristics of an operating segment is that “its operating results are regularly reviewed by the public entity's [CODM] to make decisions about resources to be allocated to the segment and assess its performance”.

1 The four additional factors are: the nature of the business activities of each component, the organizational structure, information presented to the board of directors and budgeting process.

CONFIDENTIAL TREATMENT REQUESTED BY KULICKE AND SOFFA INDUSTRIES, INC.

In conclusion, the Company incorrectly assessed and stated in the first response letter that the discrete financial information for each component in APS and CE prepared by FP&A to the senior management including the CODM was of the same granularity and format as compared to the financial information presented in the QFR, QBR and Executive Summary Review to the CODM, which is the information the CODM uses in order to assess performance and allocate resources.

•We note that the "Executive Summary Review" includes business unit performance measures for the six historical APS operating segments, including gross margin and direct operating margin. Please confirm whether or not your CODM receives and reviews this monthly package and tell us how he uses such information.

Response:

The Executive Summary Review is a monthly financial snapshot that is provided to the senior management via email. The Company confirms that the CODM is one of the recipients that receives this snapshot via email on a monthly basis. Considering the granularity of such information, there are no discussions or meetings to review these monthly snapshots, nor does the CODM respond via email to ask questions relating to the Executive Summary Review. The CODM does not make any decisions on the allocation of resources based on the monthly Executive Summary Review because this only serves as a snapshot of information for the CODM’s reference. Instead, the CODM discusses and raises questions based on financial information provided during the QFR and strategy and operational information provided during the QBR meetings. It is during these quarterly meetings that the CODM reviews the segment profitability and makes decisions on the allocation of resources.

•Explain in greater detail how you determined your Ball Bonder and Wedge Bonder operating segments have similar economic characteristics. In particular, address the differences in operating margin percentage during fiscal years 2021 and 2022 and how those variances compare to those in fiscal years 2018 and 2019.

Response:

The Company would like to highlight to the Staff that the Company structured its aggregation assessment based on two key concepts in its ASC 280 quantitative aggregation analysis: (1) gross margins as the primary factor in assessing economic similarity, while using sales growth trends and operating margins as supplementary factors to the gross margin assessment; and (2) assessing the financial measures on a long-term basis, as opposed to focusing on temporary dissimilarities.

Firstly, ASC 280-10-55-7C states that “segments having similar economic characteristics would be expected to have similar long-term average gross margins. That measure is used, only as an example, because gross margin is a measure of profitability that is less likely to be affected by allocations. Evaluating similar economic characteristics is a matter of judgment that depends on specific facts and circumstances”. The Company assessed its long-term gross margins as the primary factor in determining economic similarity because the Company is of the view that gross margin is a better representation of economics as compared to operating margin, since revenue and cost of sales move in tandem, whereas operating expenses are fairly consistent regardless of revenue trends. Based on the aforementioned accounting guidance and the Company’s view of the economics of gross margin, the Company determined that the five-year average gross margin for Ball Bonder and Wedge Bonder were [*] and [*] respectively, and the Company is of the view that these five-year average gross margins are indicative of the conclusion that these two operating segments have economic similarity.

CONFIDENTIAL TREATMENT REQUESTED BY KULICKE AND SOFFA INDUSTRIES, INC.

Secondly, with regard to the operating margin assessment, the operating margins for Ball Bonder and Wedge Bonder (which represent the Company’s core capital equipment business) are similar in fiscal year 2018 (Ball Bonder: [*]; Wedge Bonder: [*]) and fiscal year 2019 (Ball Bonder: [*]; Wedge Bonder: [*]). However, the operating margins in fiscal year 2021 (Ball Bonder: [*]; Wedge Bonder: [*]) and fiscal year 2022 (Ball Bonder: [*]; Wedge Bonder: [*]) are less similar due to specific unusual events. The Company would like to highlight that in fiscal year 2021 and fiscal year 2022, there was a significant ramp in the entire semiconductor industry that was unprecedented and unexpected due to COVID-19 that resulted in significant additional demand for certain high-volume applications that utilized more ball bonding than wedge bonding packaging equipment and solutions, thereby leading to better than expected revenue for Ball Bonder. We expect this significant difference in sales ramp to be temporary as there is a normalization of operating margin in fiscal year 2023, which brings the operating margin levels closer to the long-term averages of [*] for Ball Bonder and [*] for Wedge Bonder. The significant increase in revenue for Ball Bonder as compared to revenue for Wedge Bonder in fiscal year 2021 and fiscal year 2022 is the main factor for the higher operating margin in Ball Bonder as compared to Wedge Bonder for those two years. Operating expenses for both operating segments are not directly proportionate to revenue, hence a more than proportionate increase in revenue for Ball Bonder in fiscal year 2021 and fiscal year 2022 will naturally translate to higher operating margins for Ball Bonder as compared to Wedge Bonder.

Given the unusual increase in revenue for Ball Bonder as mentioned above, the Company focused on the long-term average operating margin as the financial measure to determine economic similarity, rather than the operating margins of individual years. The Company’s position is supported by ASC 280-10-50-11 which states that “operating segments often exhibit similar long-term financial performance if they have similar economic characteristics. For example, similar long-term average gross margins for two operating segments would be expected if their economic characteristics were similar”. The Company would like to emphasize that the accounting guidance focuses on the principle of “long-term financial performance”. Although the accounting guidance does not define “long-term” or the period over which an entity should evaluate economic similarity of two or more operating segments, the Company has applied judgment and used a five-year average for gross margin and four-year average for operating margin due to the anomaly in fiscal year 2020 as explained in the second response letter.

In addition, the Company took reference from ASC 280-10-5-11, which states that operating segments are considered to be similar if they can be expected to have essentially the same future prospects. Therefore, the similarity of the economic characteristics should be evaluated based on future prospects and not necessarily on the current indicators. Based on this guidance, the Company would like to highlight that the forecasted gross margins for Ball Bonder and Wedge Bonder for fiscal year 2023 are [*] and [*] respectively. The forecasted operating margins for Ball Bonder and Wedge Bonder for fiscal year 2023 are [*] and [*] respectively. As highlighted above, subsequent to the increase in operating margin for Ball Bonder in fiscal year 2021 and fiscal year 2022, there is a normalization of operating margin in fiscal year 2023, which portrays the cyclical nature of the semiconductor industry. Hence, the Company has made the judgment to not rely on temporary dissimilarities in financial performance among the two operating segments, as solely comparing financial performance of two or more operating segments for a particular year to determine economic characteristics will not be in line with the “long-term” principle stated in ASC 280-10-50-11 and not in line with the cyclical nature of the industry in which the Company operates.

In conclusion, the Company is of the view that Ball Bonder and Wedge Bonder are economically similar due to their similar long-term average gross margins, long-term average operating margins and similar qualitative factors as stated in the first response letter. The aggregation of these two operating segments is consistent with the objectives and basic principles of ASC 280.

CONFIDENTIAL TREATMENT REQUESTED BY KULICKE AND SOFFA INDUSTRIES, INC.

•Tell us if you believe the proposed revisions to your operating segments represent an error under ASC 250.

Response:

The Company has considered guidance under ASC 250, Accounting Changes and Error Corrections (“ASC 250”). As defined in ASC 250-10-20, an error is any “error in recognition, measurement, presentation, or disclosure in financial statements resulting from mathematical mistakes, mistakes in the application of generally accepted accounting principles (GAAP), or oversight or misuse of facts that existed at the time the financial statements were prepared”.

Based on the Company’s re-assessment of the guidance under ASC 280 and re-evaluation of the financial information presented to the CODM, the Company concluded that the APS reportable segment consists of one operating segment and acknowledges that its prior period conclusion that APS has six operating segments was an error. The Company has also concluded that the APS operating segment is also the reportable segment, which is consistent with the Company’s prior segment reporting.

Additionally, as explained in the Company’s second response letter, the Company has disaggregated three operating segments (Advanced Packaging, Electronic Assembly/Advanced Packaging Mass Reflow and Lithography) from the Capital Equipment reportable segment, none of which are individually significant reportable segments under ASC 280-10-50-12, to be disclosed in an “all other” category in the segment reporting footnote. The Company acknowledges that its prior period conclusion regarding the segment reporting on the Capital Equipment reportable segment was an error. As a result, the Company has incorrectly presented certain segment-related disclosures relating to the Capital Equipment reportable segment in our historical financial statements.

The Company has considered the principles under the SAB 99 and SAB 108 guidance in assessing the relevant qualitative and quantitative factors to determine the materiality of the error in the presentation of the segment-related disclosures. The Company concluded that the error has no impact on any reported amounts of the primary financial statements. There is also no impact to the key metrics, such as the Company