Kulicke and Soffa Industries, Inc. - Company Profile, Information, Business Description, History, Background Information on Kulicke and Soffa Industries, Inc.
Willow Grove, Pennsylvania 19090
U.S.A.
Company Perspectives:
The K&S Strategy is to provide 'best in class' packaging assembly products supporting our customers' technology and cost roadmaps.
History of Kulicke and Soffa Industries, Inc.
Kulicke & Soffa Industries, Inc. (K&S) is the world's largest manufacturer and supplier of semiconductor assembly equipment. The c ompany offers comprehensive assembly solutions to its many customers worldwide, including wire bonding equipment, packaging materials, and test interconnect products. According to the company, its wire bonde rs are used to connect very fine wires--made of gold, aluminum, or co pper--between the bond pads of a semiconductor die and the leads on t he integrated circuit package to which the die has been attached. K&a mp;S has an extensive network of 33 worldwide facilities which offer a wide range of sales, service and applications development. Although the company is headquartered in the sleepy town of Willow Grove, Pen nsylvania, it has facilities in such highly diverse and far away loca tions as Israel, Taiwan, China, and Switzerland. In fact, approximate ly 80 percent of the company's total sales volume is generated overse as.
Company Origins in 1951
Like many other firms, the history of Kulicke & Soffa Industries begins with the biography of its founders, Fred Kulicke and Albert So ffa. Kulicke and Soffa were both educated as engineers and started wo rking as employees for Proctor Electric upon their graduation from co llege. Based in Philadelphia, Pennsylvania, Proctor Electric was a we ll-known company specializing in consumer electronics products. Ever since the end of World War II, with the growing prosperity of the Ame rican economy, the general public had been clamoring for more sophist icated consumer electronics products in order to make their lives mor e convenient. In order to meet this burgeoning demand, engineers like Kulicke and Soffa were hired to design consumer products. Shortly af ter the two men became employees of Proctor Electric, they found them selves designing such products as cake mixers and electric irons. In fact, it was a project to design electric irons that brought Kulicke and Soffa together for the first time.
Kulicke and Soffa were extremely ambitious and entrepreneurial young men, not satisfied with designing electric irons for a large company not their own. As the two men became more acquainted with one another , and started discussing their dreams and ambitions for the future, n ot surprisingly they discovered they had much in common. A close frie ndship developed as the two men worked on various projects at Proctor Electric and, after a short time, Kulicke and Soffa decided to strik e out on their own and establish a custom engineering business. In th e steamy month of July 1951, Fred Kulicke and Albert Soffa put their ambitions on paper and formed a partnership that was destined to last until one of them died. Thus Kulicke and Soffa Industries was born.
There was only one problem, and not a small one at that. The two men didn't have much money to start their business with. So they did what they could to raise the necessary funding, including raising loans f rom friends and acquaintances and pooling their own meager resources to begin operations. They established themselves in a small one-room office and began designing solutions to manufacturing problems by aut omating processes, while at the same time repairing broken machinery in order to pay the monthly rent and phone bills.
With their combined energy and technical ingenuity, Kulicke and Soffa aggressively contracted numerous small businesses and manufacturing firms throughout the greater metropolitan area of Philadelphia. When a packing firm approached them to stuff their sausages, the two entre preneurs devised a machine to standardize and stuff sausage into casi ngs in mass quantities. When a retail manufacturer asked them to desi gn a machine to stretch kidskin for ladies' gloves, Kulicke and Soffa were only too happy to oblige with an innovative machine resulting i n a significant increase in productivity and thus higher sales. Addit ional designs during their first years of business including innovati ve machines for cleaning beer cases as well as machines made to stand ardize the size of hamburger patties. In just of few short years, K&a mp;S became known as one of the most innovative and reliable custom e ngineering firms on the East Coast.
By 1956, K&S had been in business for five years. What transpired that year was to change the direction of the company's endeavors for ever. The Nobel Prize in Physics was given to three engineers working at Bell Labs for the development of a semiconductor chip. Before the Nobel winners even returned home from the award ceremony in Stockhol m, Sweden, the manufacturing division of Bell Labs, Western Electric, had decided to contract Kulicke and Soffa Industries to develop the equipment necessary to efficiently manufacture these early versions o f semiconductor chips. The two partners, thrilled with the contract, agreed to it almost without hesitation. Then reality started to sink in, and Kulicke and Soffa realized what they had agreed to, namely, a ccepting the challenge of connecting microscopic wires from the trans istor die in the semiconductor chip to the leads on its package. With in a few months, to the surprise of the electronics industry, Kulicke and Soffa had met the challenge, designing and beginning to manufact ure the world's first wire bonder. Thus the company became one of the world's first designers and manufacturers of semiconductor assembly equipment.
From the moment the company introduced its wire bonder, it took a lea ding role in the semiconductor assembly equipment industry. In 1961, the owners decided that it was time to take the company public, so K& amp;S made an initial stock offering of 100,000 shares on the NASDAQ. The company's shares were bought immediately and subsequent addition al offerings were held throughout the decade. Fortunately, the partne rs had been at the right place at the right time and, as the semicond uctor industry expanded by leaps and bounds throughout the 1960s, dem and from around the world for K&S equipment skyrocketed. In addit ion to its legendary series of wire bonders, the company began to div ersify its product line to include such items as manual and semi-auto matic equipment for wafer preparation, wafer fabrication, die bonding , and micro-tools.
Growth and Expansion: 1960s-80s
One of the most important strategic decisions that the two men made e arly on in the organization and administration of their firm was to f orge a commitment to research and development. Both owners were willi ng to invest more capital in research and development than was availa ble from annual net profits. Nothing could have been smarter, since f rom the early 1960s, K&S became synonymous with technological lea dership in the semiconductor industry. By this time, company operatio ns had significantly outgrown the first machine shop where the two en trepreneurs spent many hours building their business, so K&S move d to larger facilities in Willow Grove, Pennsylvania, while opening s ales and services offices at the same time throughout the United Stat es. Expansion was not limited to the United States. Due to the increa sing demand for its products from around the world, the company estab lished facilities in such strategic locations as Hong Kong, Switzerla nd, and Israel.
The mid-1970s brought with it a severe economic recession, and the se miconductor industry was hard hit. K&S suffered as a result, and the company was forced to either sell off or shutter all of its produ ct line, except those focusing on semiconductor assembly operations. Still maintaining the priority of research and development in that co re area, however, the company's engineers were able to introduce the first digitally-controlled, fully automatic wire bonders in the indus try. This product, designed to operate at extremely high speeds with more accuracy and greater yield than any previous wire bonders, provi ded the firm's clients with the advantage of meeting the growing dema nd for PCS. Due to the introduction of this innovative product in 197 6, Kulicke and Soffa Industries was able to recover from the losses s uffered earlier and re-establish itself as the pre-eminent leader in the semiconductor assembly equipment industry.
The 1980s started well enough for K&S, and the company celebrated its 30th anniversary with much fanfare and celebration. During the e arly 1980s, management at the firm changed hands, but stayed in firm control of the Kulicke family. Even with this transition of leadershi p from one generation to the next, the company's long-term strategic goals remained the same, namely, a clear priority to research and dev elopment and a firm commitment to expanding its overseas markets. To this end in 1981, management decided to develop a major presence in t he Japanese semiconductor market, which was growing by leaps and boun ds at the time. Kulicke and Soffa (Japan) Ltd. opened for business in Tokyo and was soon competing with other major semiconductor assembly firms on their own turf. By 1984, company sales had reached their hi ghest level ever.
The mid-1980s were not as kind to the fortunes of the company. The ev er-volatile semiconductor industry took another severe downturn, and the new leadership was confronted with its first major financial cris is. Astute and prudent decision-making by management, however, enable d K&S to weather the gyrations of the market and continue its lea dership in the industry by introducing a host of new and cutting-edge products for die bonding, wire bonding, and dicing. Such focus paid off handsomely as time went on. By the end of the 1980s, K&S had recovered financially and had introduced numerous innovative products that assured its technological leadership for years to come in the s emiconductor assembly industry.
Growth in the 1990s
During the 1990s, the semiconductor industry grew in importance, with an accompanying worldwide dependence on K&S products. K&S pr ofited immensely from the volume, complexity, and variety of semicond uctor assembly equipment required by its ever-growing list of clients . With this explosion in the industry, the company expanded dramatica lly: technology centers were established in Willow Grove, Pennsylvani a; Japan; Israel; and Singapore; customer resources centers were open ed in Taiwan and The Philippines; Micro-Swiss facilities were constru cted in Hong Kong, Singapore, and Israel; fine wire operations were b uilt in Alabama, Singapore, and Switzerland; a new Semitic manufactur ing plant was opened in California, while a state-of-the-art Flip Chi p Technologies wafer bumping manufacturing center was established in Arizona; an X-LAM Technologies research and development laboratory wa s dedicated in California, and an Advanced Polymer Solutions manufact uring facility was built at the company's headquarters in Willow Grov e, Pennsylvania. The company also completed a massive 214,000-square- foot administrative, design and manufacturing facility to serve as a new headquarters to direct worldwide operations.
By 1999, K&S employed more than 2,200 people and controlled more than 50 percent of the global wire bonding equipment market. The larg est supplier of semiconductor assembly equipment in the world, K& S was well-positioned to continue its dominance of the market. More t han twice the size of its nearest competitor, the company was searchi ng for ways to expand its presence in Asia and Europe, while maintain ing its position of strength in the United States. As long as managem ent continued to focus on research and development and introduced inn ovative products, there was no end in sight for the company's continu ed growth and expansion.
K&S in the New Millennium
K&S hit the ground running in the first year of the new millenniu m. Sales reached record levels--$899.3 million--in 2000. The comp any moved its ball bonder manufacturing to Singapore that year, antic ipating significant cost reductions from the transfer of operations. It also introduced a series of new wire bonders that were considered to have the finest pitch and be the fastest in the world. K&S bol stered its holdings with the $65 million acquisition of Probe Tec hnology Corporation and the $225 million purchase of Cerprobe Cor poration The two companies were merged into K&S's new Test Interc onnect operations.
The semiconductor industry proved its cyclical nature once again in 2 001, leaving K&S and many of its competitors scrambling to make s trategic business decisions that would cut costs and stabilize profit s. The company's revenue fell sharply from the previous year, droppin g to $555 million. As a result of the industry downturn, K&S laid off nearly 500 employees and shuttered its manufacturing facilit y in Milpitas, California. It made Flip Chip Technologies a wholly ow ned subsidiary that year.
The slowdown continued in 2002 as revenues dropped further. The compa ny posted a $274.1 million loss that year and was forced to rethi nk its expansion efforts. K&S took measures to control costs and streamline its operations--including the layoff of an additional 200 workers--and decided to focus on its wire bonders and test interface products business. The company divested its saw and hubless saw blade products line, nixed plans to develop its substrate business, and so ld its Flip Chip unit in 2004.
K&S opened a manufacturing facility in China in 2003. Management eyed this region as a key growth area and expanded the plant's produc tion capabilities in 2005. In addition, a wafer test manufacturing pl ant began operations in Taiwan in 2004.
K&S returned to profitability in 2004, a sure sign its strategy w as paying off and that, perhaps, the semiconductor industry was slowl y rebounding from its slump. The company launched its next generation wire bonding and stud bumping machines in 2005, which offered signif icant speed improvements. During this time period, the company contin ued to consolidate manufacturing operations while developing new stat e-of-the-art products. While the industry it served remained volatile , K&S had proved that it could weather difficult conditions. With a solid business plan in place, K&S management was confident the company would remain a leader in its field for years to come.
Principal Competitors: ASM International N.V.; SHINKAWA Ltd.; Sumitomo Metal Mining Co. Ltd.
Chronology
- Key Dates:
- 1951: Fred Kulicke and Albert Soffa form a partnership.
- 1956: Kulicke and Soffa Industries, Inc. (K&S) develops wo rld's first wire bonder.
- 1961: K&S makes initial public offering on NASDAQ.
- 1976: Company introduces first digitally-controlled, fully aut omatic wire bonders in the world.
- 1981: Kulicke and Soffa (Japan) Ltd. is established in Tokyo.
- 1999: Company dominates more than half of the global wire bond ing equipment market.
- 2000: Probe Technology Corporation and Cerprobe Corporation ar e acquired.
- 2003: Manufacturing operations begin in China.
- 2005: K&S launches its next generation wire bonding and st ud bumping machines.
Additional Details
- Public Company
- Incorporated:1956
- Employees:3,333
- Sales:$717.8 million (2004)
- Stock Exchanges:NASDAQ
- Ticker Symbol:KLIC
- NAIC: 333295 Semiconductor Machinery Manufacturing
Further Reference
- Dorsch, Jeff, "Kulicke and Soffa Acquires Assembly Technologi es," Electronic News, July 18, 1994, p. 2.
- "K&S Expands Chinese Manufacturing Ops," Electronic News, September 19, 2005.
- "K&S Opens China Manufacturing Operation," Assembly, N ovember 1, 2003.
- "Kulicke & Soffa Closing Plant, to Take $17 Mln Charge,"< I> Reuters News, August 27, 2002.
- "Kulicke and Soffa Industries, Inc.," Wall Street Journal, August 22, 1996, p. B6(E).
- "Kulicke and Soffa Revenues Dip In Quarter," Electronic News, April 27, 1998, p. 46.
- "Kulicke Buys Probe Technology," Wall Street Journal, Dece mber 13, 2000.
- Levine, Bernard, "Flip Chip Moves Accelerate," Electronic News , July 8, 1996, p. 8.
- Levine, Bernard, "Kulicke and Soffa Wins Orders," Electronic N ews, August 16, 1999, p. 30.
- Socolovsky, Alberto, "K&S Struggles To Make Money," Electr onic Business, November 1992, p. 73.
- "Tool Manufacturer Gets Key Benefits From Israeli Plant," Indu strial Engineering, July 1992, p. 22.