For months, high-tech in general and artificial intelligence (AI) in particular have been generating enthusiasm on the stock markets. However, this also shows that no rally, no matter how intense, is immune to setbacks. The shareholders of BE Semiconductor Industries, or Besi for short, recently came to realize this. On February 22, the shares of the Dutch semiconductor equipment manufacturer reached an all-time high of just under EUR 183 in response to the technology company's strong figures. Around two weeks later, the specialty stock plummeted by around a quarter within two trading sessions. The downturn was triggered by reports from the USA, according to which the Jedec industry association there has lowered certain standards for the production of semiconductors. According to analysts, this move could have an impact on a new Besi technology - more on this later.
What is certain is that the Dutch company is at the cutting edge with its systems. In 2003, the company generated annual sales of EUR 85.5 million, with a gross margin of just over a quarter. For 2023, Besi reported revenue of EUR 578.9 million, of which almost two thirds remained in the gross profit. The Group has focused on advanced packaging. This technology combines various semiconductors in a single housing using a substrate. Besi has gradually been able to convince more and more customers of its systems. Today, its customers include well-known technology groups such as Samsung, Infineon Technologies, Dell and Nvidia. In addition to technological progress, acquisitions have also contributed to growth. In Switzerland, Besi took over the Oerlikon unit essec around 15 years ago.
Nevertheless, the equipment supplier is not immune to cyclical downturns in the semiconductor market. Turnover fell in 2022 and 2023. At the most recent presentation of figures, CEO Richard Blickman cautiously gave the all-clear: "We believe we are in the early stages of a new assembly upturn." In fact, Besi's turnover in Q4 2023 was significantly higher than in the previous year. Blickmann also expects an improvement for the first three months of the current year at the start of the 2024 financial year. Besi was able to maintain its gross margin at a high level throughout the recent downturn (see chart). Looking ahead, the CEO is focusing on hybrid bonding. This innovative technology enables even faster and more complex semiconductors in a particularly precise assembly structure. According to the top manager, such components are essential for the further development of megatrends such as AI, supercomputing and autonomous driving. Besi has already installed more than 40 hybrid bonding systems at customers in North America, Europe, Taiwan and Korea since its launch around a year ago.
And yet the reports from the US mentioned at the beginning of this article concerned precisely this technology - the potential relief could make semiconductor manufacturers hesitant to introduce hybrid bonding. Against this backdrop and in view of the relatively high volatility of Besi, new Softcallabe Barrier Reverse Convertibles (BRC) offer an interesting investment alternative: in the product currency CHF, the guaranteed distribution is 11.40% p.a. The coupon on the EUR-denominated BRC is 200 basis points higher. The barrier is a uniform 59% of the initial level - as long as Besi does not fall to or below this level during the term, investors receive the nominal back in full on the redemption date. If the barrier is breached, the partial protection expires. The term of the CHF product is 15 months, while the EUR variant matures three months later. The issuer is Basler Kantonalbank.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.