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Besi exceeds quarterly targets on AI-related chip part orders

FILE PHOTO: Illustration picture of semiconductor chips

By Dagmarah Mackos

(Reuters) -Chipmaking parts supplier BE Semiconductor Industries (Besi) beat fourth-quarter targets on Thursday on growing demand for its hybrid bonding technology and AI-enabled computing applications from chipmakers expanding their capacity.

The Dutch group's shares were 12% higher in midday trading, the third biggest gainer on the European benchmark STOXX 600 index, after it reported a 30% rise in quarterly orders driven by hybrid bonding, a form of chip packaging required for AI applications.

Orders for the fourth quarter totalled 166 million euros ($180 million), part of which are expected to be shipped over the second and third quarters of 2024, the company said.

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Hybrid bonding orders nearly doubled, with around half of them for the group's most advanced systems.

Besi's clients, who include Nvidia supplier TSMC, Intel and Samsung, have already been adopting its advanced chipmaking tools.

Nvidia, the world's largest contract chipmaker, also posted upbeat results and forecast overnight, driving up shares of sector names including Tokyo Electron, Aixtron, Infineon ASML and ASM International.

Besi's investors are also reacting to a positive update from Intel, Degroof Petercam analyst Michael Roeg said.

The assembly equipment maker expects further growth in the hybrid bonding market and other advanced packaging technologies this year.

In response the Amsterdam-based group is expanding its activities beyond China, with investments in Malaysia, Singapore and Vietnam. This has also been driven by some customers moving their facilities out of China.

Besi reported a gross profit margin of 65.1% for the fourth quarter, while its revenue rose nearly 30% from the previous quarter to 159.6 million euros.

That exceeded its guidance for a gross margin of between 62% and 64% and quarter-on-quarter revenue growth of 15% to 25%.

For the first quarter, Besi expects its revenue to drop 5% to 15% from the prior quarter, but sees a higher gross margin of between 64% and 66%, helped by advanced packaging products.

"The slope of the recovery this year is uncertain given restrained demand for mainstream applications and weakness in automotive end-user markets currently," CEO Richard Blickman said in a statement.

He said industry analysts expect the market to rebound in 2024-2026, driven by recovery in mainstream assembly and Chinese markets, as well as additional capacity needs for AI logic and memory applications and advanced packaging.

($1 = 0.9232 euros)

(Reporting by Dagmarah Mackos in Gdansk; editing by Emelia Sithole-Matarise and Jason Neely)