Kulicke and Soffa Industries, Inc. - Company Profile, Information, Business Description, History, Background Information on Kulicke and Soffa Industries, Inc.

2101 Blair Mill Road
Willow Grove, Pennsylvania 19090

Company Perspectives:

The K & S mission is to maintain global leadership in semiconductor assembly by providing customers with high-quality, reliable and cost-effective systems and services. K & S specializes in applying advanced process technology to individual assembly problems and delivering solutions that add real value by helping customers meet their business objectives. K & S gives customers the highest quality hardware and software and the highest level of responsiveness in the way it engineers, manufactures, delivers and supports its equipment. Key K & S strengths are technological expertise, the ability to manufacture high-quality, reliable assembly systems, marketplace presence and long-standing relationships with many of our customers. These close working relationships, some of which involve sharing technology 'roadmaps' and long-range strategic plans, provide important information for our development programs, help us enhance machine performance and help us develop process and equipment solutions for customers' future assembly problems.

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 company offers comprehensive assembly solutions to its many customers worldwide, including chip and wire solutions of wire bonding, die bonding, wafer dicing equipment, and also factory automation. Flip chip solutions include flip chip bumping technology, die placement equipment, glob top and underfill materials, and thin film organic laminates. K & S has an extensive network of 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, Pennsylvania, it has facilities in such highly diverse and far away locations as Israel, Hong Kong, and Switzerland. In fact, approximately 80 percent of the company's total sales volume is generated overseas.

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 Soffa. Kulicke and Soffa were both educated as engineers and started working as employees for Proctor Electric upon their graduation from college. Based in Philadelphia, Pennsylvania, Proctor Electric was a well-known company specializing in consumer electronics products. Ever since the end of World War II, with the growing prosperity of the American economy, the general public had been clamoring for more sophisticated consumer electronics products in order to make their lives more convenient. In order to meet this burgeoning demand, engineers like Kulicke and Soffa were hired to design consumer products. Shortly after the two men became employees of Proctor Electric, they found themselves 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, not surprisingly they discovered they had much in common. A close friendship developed as the two men worked on various projects at Proctor Electric and, after a short time, Kulicke and Soffa decided to strike out on their own and establish a custom engineering business. In the 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 from 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 automating 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 entrepreneurs devised a machine to standardize and stuff sausage into casings in mass quantities. When a retail manufacturer asked them to design a machine to stretch kidskin for ladies' gloves, Kulicke and Soffa were only too happy to oblige with an innovative machine resulting in a significant increase in productivity and thus higher sales. Additional designs during their first years of business including innovative machines for cleaning beer cases as well as machines made to standardize the size of hamburger patties. In just of few short years, K & S became known as one of the most innovative and reliable custom engineering 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 forever. 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 Stockholm, 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 of 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, accepting the challenge of connecting microscopic wires from the transistor die in the semiconductor chip to the leads on its package. Within a few months, to the surprise of the electronics industry, Kulicke and Soffa had met the challenge, designing and beginning to manufacture 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 leading role in the semiconductor assembly equipment industry. In 1961, the owners decided that it was time to take the company public, so K & S made an initial stock offering of 100,000 shares on the NASDAQ market. The company's shares were bought immediately and subsequent additional offerings were held throughout the decade. Fortunately, the partners had been at the right place at the right time and, as the semiconductor industry expanded by leaps and bounds throughout the 1960s, demand from around the world for K & S equipment skyrocketed. In addition to its legendary series of wire bonders, the company began to diversify its product line to include such items as manual and semi-automatic 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 early on in the organization and administration of their firm was to forge a commitment to research and development. Both owners were willing to invest more capital in research and development than was available from annual net profits. Nothing could have been smarter, since from the early 1960s, K & S became synonymous with technological leadership in the semiconductor industry. By now, company operations had significantly outgrown the first machine shop where the two entrepreneurs spent many hours building their business, so K & S moved to larger facilities in Willow Grove, Pennsylvania, while opening sales and services offices at the same time throughout the United States. Expansion was not limited to the United States. Due to the increasing demand for its products from around the world, the company established facilities in such strategic locations as Hong Kong, Switzerland, and Israel.

The mid-1970s brought with it a severe economic recession, and the semiconductor industry was hard hit. K & S suffered as a result, and the company was forced to either sell off or shutter all of its product line, except those focusing on semiconductor assembly operations. Still maintaining the priority of research and development in that core area, however, the company's engineers were able to introduce the first digitally-controlled, fully automatic wire bonders in the industry. This product, designed to operate at extremely high speeds with more accuracy and greater yield than any previous wire bonders, provided the firm's clients with the advantage of meeting the growing demand for PCS. Due to the introduction of this innovative product in 1976, Kulicke and Soffa Industries was able to recover from the losses suffered 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 early 1980s, management at the firm changed hands, but stayed in firm control of the Kulicke family. Even with this transition of leadership from one generation to the next, the company's long-term strategic goals remained the same, namely, a clear priority to research and development and a firm commitment to expanding its overseas markets. To this end in 1981, management decided to develop a major presence in the Japanese semiconductor market, which was growing by leaps and bounds 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 highest level ever.

The mid-1980s were not as kind to the fortunes of the company. The ever-volatile semiconductor industry took another severe downturn, and the new leadership was confronted with its first major financial crisis. Astute and prudent decision-making by management, however, enabled K & S to weather the gyrations of the market and continue its leadership 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 semiconductor assembly industry.

The 1990s and Beyond

During the 1990s, the semiconductor industry grew in importance, with an accompanying worldwide dependence on K & S products. K & S profited immensely from the volume, complexity, and variety of semiconductor assembly equipment required by its ever-growing list of clients. With this explosion in the industry, the company expanded dramatically: technology centers were established in Willow Grove, Pennsylvania, Japan, Israel, and Singapore; customer resources centers were opened in Taiwan and The Philippines; Micro-Swiss facilities were constructed in Hong Kong, Singapore, and Israel; fine wire operations were built in Alabama, Singapore, and Switzerland; a new Semitic manufacturing plant was opened in California, while a state-of-the-art Flip Chip Technologies wafer bumping manufacturing center was established in Arizona; an X-LAM Technologies research and development laboratory was dedicated in California, and an Advanced Polymer Solutions manufacturing facility was built at the company's headquarters in Willow Grove, 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 largest supplier of semiconductor assembly equipment in the world, K & S was well-positioned to continue its dominance of the market. More than twice the size of its nearest competitor, the company was searching for ways to expand its presence in Asia and Europe, while maintaining its position of strength in the United States. As long as management continued to focus on research and development and introduced innovative products, there was no end in sight for the company's continued growth and expansion.

Principal Subsidiaries: American Fine Wire, Inc.; Flip Chip Technologies, LLC; Semitic, Inc.

Principal Competitors: ESEC Holding, Inc.; Kaijo, Ltd.; Shinkawa Ltd.


Additional Details

Further Reference

Dorsch, Jeff, 'Kulicke and Soffa Acquires Assembly Technologies,' Electronic News, p. 2.'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.Levine, Bernard, 'Flip Chip Moves Accelerate,' Electronic News, July 8, 1996, p. 8.Levine, Bernard, 'Kulicke and Soffa Wins Orders,' Electronic News, August 16, 1999, p. 30.Socolovsky, Alberto, 'K & S Struggles To Make Money,' Electronic Business, November 1992, p. 73.'Tool Manufacturer Gets Key Benefits From Israeli Plant,' Industrial Engineering, July 1992, p. 22.

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