BE Semiconductor Industries: The Hidden Champion of Advanced Chip Packaging

I. Introduction & Episode Roadmap

Picture a conference room in Duiven, a small town in the eastern Netherlands, circa 1993. Richard Blickman, a 34-year-old mechanical engineer with sharp technical instincts and even sharper commercial ambition, sits across from a group of German investors. He's pitching them on what sounds like a decidedly unglamorous proposition: buying the back-end semiconductor equipment business that ASM International no longer wants.

The front-end of chip manufacturing—lithography, deposition, the precision wizardry that carves circuits onto silicon—that's where all the glory resides. The back-end? That's the packaging. The assembly. The part of the process most semiconductor executives view as barely more sophisticated than putting a product in a box.

Blickman saw something different. In 1993, ASM divested ASM Fico to Berliner Electro Holding, which would become Besi. What emerged from that transaction would become one of the most quietly remarkable stories in European technology: a company that today commands a near-monopoly in hybrid bonding—the technology that may define the AI chip era.

Over the past 10 years, BE Semiconductor Industries had an annualized return of 36.50%, outperforming the S&P 500 benchmark which had an annualized return of 11.55%. Since listing in December 1995, the equity has delivered a compounded total annual return of approximately 14% with dividends reinvested—and that figure understates the explosive gains of the past decade as advanced packaging emerged from obscurity to center stage.

BE Semiconductor Industries' CEO is Richard Blickman, appointed in Nov 1995, has a tenure of 29.67 years. He directly owns 1.88% of the company's shares, worth €182.37M. The same man who orchestrated that management buyout three decades ago still runs the company today, with substantial skin in the game.

The questions we'll explore in this deep dive are deceptively simple: How did a small Dutch company born from a spinout become the world's leading provider of hybrid bonding equipment? Why did Applied Materials, the $120 billion American semiconductor equipment giant, take a strategic 9% stake in April 2025? And most importantly—can BESI's position in die-to-wafer hybrid bonding become the next ASML-like moat in European semiconductor equipment?

The themes that emerge are familiar to students of great businesses: founder-led excellence sustained over decades, precision engineering moats built through relentless R&D, and a willingness to bet on the "back-end" when the entire industry was mesmerized by the front-end. But there's also a cautionary element: BESI operates in one of the most cyclical industries on earth, with customer concentration that can make quarterly results swing wildly.

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II. The Back-End Semiconductor Business: Why Packaging Matters

To understand why BESI matters, you must first understand why packaging matters—and why it was ignored for so long.

The semiconductor manufacturing process involves two distinct phases, wafer processing, commonly referred to as the front-end, and assembly/test operations which are commonly referred to as the back-end. For decades, the semiconductor industry operated on a simple mental model: all the value creation happened in the front-end. That's where ASML's extreme ultraviolet lithography machines print circuits with nanometer precision. That's where Applied Materials deposits atomic layers of materials. The front-end is where Moore's Law lived and breathed.

The back-end—packaging the completed chips, assembling them into functional units, testing them—was viewed as commodity work. The intellectual prestige, the research budgets, the engineering talent all flowed toward the front-end. Packaging was what you outsourced to low-cost Asian assembly houses. It was the packaging equivalent of putting a Ferrari engine in a cardboard box.

This view held some truth for a long time. When transistors kept shrinking according to Moore's Law, all you had to do was make smaller circuits on the front-end and the performance gains would follow. Packaging was an afterthought.

Then physics intervened.

The "More Than Moore" Revolution

Around 2015, the semiconductor industry confronted an uncomfortable reality: traditional Moore's Law scaling was hitting physical and economic walls. Transistors were approaching atomic dimensions. The cost of building leading-edge fabs had crossed $20 billion. And even when you could shrink transistors further, the performance gains weren't what they used to be.

The industry's response was what became known as "More than Moore"—the recognition that while the front-end remained highly valuable, increasing complexity was leading to increasing value provided by the back-end packaging process. Rather than making everything smaller on a single chip, why not stack multiple chips together? Why not place different types of chips—logic, memory, analog—side by side and connect them with high-density interconnects?

This was the genesis of advanced packaging, and it fundamentally reordered the industry's value chain.

Advanced packaging accounts for about 8% of the total semiconductor market today and is projected to double by 2030 to more than $96 billion, outpacing the rest of the chip industry. That projection from Boston Consulting Group captures the magnitude of the shift. Advanced packaging isn't just growing—it's growing faster than the already rapidly expanding semiconductor market.

Why AI Changed Everything

The emergence of artificial intelligence, and specifically the explosion in AI training and inference workloads that began around 2022, supercharged this trend. Currently, consumer electronics like smartphones dominate advanced packaging applications, but the burst of activity in the AI segment will propel future growth. AI requires rapid data exchange between computing and memory elements, which is enabled by 2.5D and 3D packaging. These approaches place more than two chips next to each other to generate high interconnect speeds at a relatively low cost. AI applications account for 25% of the total advanced packaging market already, and this is poised to grow at around 20% per year through the next decade.

Consider NVIDIA's AI accelerators. A single AI chip might combine a GPU die, multiple HBM (High Bandwidth Memory) stacks, and various other components. The performance of this system depends not just on how fast each individual chip runs, but on how quickly data can move between them. Traditional wire bonding—connecting chips with tiny gold wires—simply cannot deliver the bandwidth that AI workloads demand.

This is where hybrid bonding enters the picture. Hybrid bonding is becoming a critical technology for advanced packaging of semiconductors as designers and manufacturers race to develop more energy-efficient chips. Hybrid bonding connects chips using direct copper-to-copper bonds, which increases density and shortens the lengths of interconnect wiring between chiplets, resulting in improved overall performance, power consumption and cost.

A new report from Bloomberg Intelligence finds that the market for advanced semiconductor packaging could grow eightfold to $80.5 billion by 2033, driven by the spread of AI chips from data centers into consumer electronics and automotive applications. The 26% compound annual growth rate significantly outpaces the 10% projected growth for the overall semiconductor industry.

The Shift in Strategic Importance

For investors, the key insight is that packaging has moved from cost center to strategic asset. When Apple designs its M-series chips, the packaging architecture is as critical as the transistor design. When AMD competes with Intel, its chiplet strategy depends on advanced packaging capabilities. When hyperscalers build AI infrastructure, their suppliers' packaging technology determines system performance.

The Die Attach Equipment Market is expected to reach USD 1.93 billion in 2025 and grow at a CAGR of 10.57% to reach USD 3.19 billion by 2030. Die attach equipment—BESI's core market—sits at the heart of this transformation. By bonding technique, hybrid bonding is forecast to expand at a 12.00% CAGR to 2030.

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III. Founding Story: Richard Blickman and the ASM Spinout (1993-1995)

Every great company has an origin myth, and BESI's begins with an engineer who understood that unglamorous businesses can still be excellent businesses.

The Engineer-Entrepreneur

Richard Blickman earned a Masters Degree in Mechanical Engineering from Delft University of Technology, where he studied from 1975 to 1981. Prior to that, he attended ETH Zürich from 1973 to 1975, further enriching his technical expertise. This solid academic foundation has been instrumental in his role as President and CEO of BE Semiconductor Industries N.V. since November 1995.

Blickman's path to entrepreneurship ran through the semiconductor equipment industry. Previously, he held the position of Worldwide Sales Manager of Fico from September 1989 to February 1991. Prior to joining Fico, he served as European Marketing and Sales Manager at Advanced Semiconductor Materials International NV (ASMI), a semiconductor manufacturer.

This background gave Blickman unusual insight into both the commercial and technical aspects of the business. He understood what customers needed. He understood the manufacturing processes. And crucially, he understood that the back-end equipment business, while unfashionable, had genuine technical barriers to entry and stable customer relationships.

The ASM Connection

To understand the management buyout, you must understand ASM International's evolution. The company was founded by Arthur del Prado (1931-2016) in 1964. ASM pioneered important aspects of many established wafer-processing technologies used in industry, including lithography, deposition, ion implantation, single-wafer epitaxy, and in recent years atomic layer deposition. Semiconductor equipment companies ASML, ASM Pacific Technology (ASMPT) and Besi are former divisions of ASM.

ASM had grown into a conglomerate spanning multiple semiconductor equipment segments. By the early 1990s, management was rationalizing the portfolio, focusing resources on front-end wafer processing where ASM saw the greatest strategic opportunity. The back-end assembly business—organized around the Fico brand—was a perfectly good business, but it wasn't core to ASM's future.

After the sale of the subsidiary ASM-Fico in Herwen in 1993 to Berliner Elektro Holding AG in Berlin, BE Semiconductor Industries emerged.

The German investors—Berliner Elektro Holding—provided the financial backing. Blickman provided the vision and operational expertise. The deal closed in October 1993, and Blickman set about building what would become Besi.

The Thesis: Back-End Excellence

What set Blickman apart was his conviction that assembly equipment could be a high-margin, technology-driven business—not a commodity. The conventional wisdom held that packaging was simply packaging. Dies went into packages. Packages went into devices. The value was in the chips themselves.

Blickman recognized that as semiconductor devices became more complex, the demands on packaging equipment would increase correspondingly. Accuracy requirements would tighten. Throughput expectations would rise. Customers would pay premiums for equipment that delivered yield improvements and process reliability.

Richard Blickman founded Besi Netherlands in May 1995 and has been the CEO since its inception. Since founding the company in 1995, Blickman has been instrumental in its growth and success, steering it to become a market leader in the die attach segment.

The company went public in December 1995 on Euronext Amsterdam. The initial business model focused on developing innovative packaging solutions, with significant early emphasis on die attach equipment—machines that precisely place semiconductor dies onto substrates or leadframes.

Strategic DNA Established Early

From the beginning, BESI established patterns that would define its character:

1. European R&D, Asian manufacturing: Design and development stayed close to European engineering talent; production migrated to Asia to serve customers and achieve cost efficiencies.

2. Acquisition-driven growth: Rather than build every capability organically, BESI would systematically acquire complementary technologies and integrate them.

3. Technology focus: Unlike competitors who emphasized volume and price, BESI positioned itself on precision and performance.

4. Founder ownership: Blickman maintained substantial personal ownership, aligning his interests with shareholders.

These principles, established in the company's first few years, would guide BESI through multiple industry cycles and strategic pivots over the subsequent three decades.

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IV. Building the Portfolio: Acquisitions That Defined BESI (1995-2009)

The story of BESI from its IPO through the global financial crisis is largely an acquisition story. Blickman systematically assembled a portfolio of precision equipment businesses, each adding capabilities and market presence to the growing company.

The Roll-Up Strategy

BESI's acquisition strategy followed a clear logic: identify specialized equipment manufacturers with strong technical capabilities and customer relationships, integrate their operations to achieve scale economies, and leverage BESI's Asian manufacturing footprint to improve cost structures.

The approach was neither glamorous nor complex. It required patient execution, careful integration, and the willingness to pay full prices for quality assets. Blickman wasn't looking for turnarounds or distressed situations. He wanted established businesses with proven technologies.

RD Automation and Laurier (2000-2002)

The early acquisitions expanded BESI's product portfolio beyond the original Fico packaging capabilities. In September 2000, the company acquired RD Automation from the United States, advancing its product strategy into front-end assembly processes with the addition of flip chip capabilities. In January 2002, Laurier (also U.S.-based) was acquired, adding intelligent die sorting capabilities to the product range.

These deals were relatively modest in scale but strategically important. They established BESI's presence in the American market and demonstrated that the company could successfully integrate acquired operations.

The Datacon Acquisition (2005): A Transformative Deal

The acquisition of Datacon in January 2005 marked BESI's emergence as a major player in the die attach segment. BE Semiconductor Industries announced that it has signed an agreement to acquire 100% of the ordinary shares of Datacon Technology AG ("Datacon") for a total consideration of € 72.6 million, of which € 65 million will be in cash and the balance in 1,933,842 newly issued ordinary Besi shares. Datacon, a private company founded in 1986 and located in Radfeld, Austria is a global manufacturer of flip chip bonding, multichip die bonding and other related assembly equipment for the semiconductor and telecommunications industries.

Karl Schweitzer and Gerhard Zeindl founded Datacon in 1986 in Austria. In 1995, Helmut Rutterschmidt joined the company as third managing partner. By 2004, Datacon had established itself as a technology leader in flip chip bonding, a more advanced approach that would become increasingly important as semiconductor devices demanded higher interconnect densities.

The use of flip chip bonding technology is critical for the needs of chip manufacturers to further shrink device sizes while increasing functionality for applications such as wireless telephony, personal digital assistants, consumer electronics and Internet infrastructure. Datacon's largest customers are principally European and North American semiconductor manufacturers such as Epcos, Infineon, Bosch, ST Micro, Skyworks and Fairchild as well as Asian assembly subcontractors such as Amkor, ASE and Chippac STATS. Datacon has production facilities in Radfeld, Austria, Györ, Hungary and Berlin, Germany, currently employs approximately 440 people and has an estimated installed base of approximately 1,500 machines at customer locations worldwide.

The Datacon acquisition brought several critical assets:

• Technical expertise in flip chip bonding, which required far greater precision than traditional wire bonding approaches
• A strong customer base including major European semiconductor manufacturers
• An Austrian R&D center (Radfeld) that would become central to BESI's innovation engine
• Experienced management who understood high-precision equipment manufacturing

For some time, Datacon's management in Tirol had been looking for some time for a way to preserve the company in the long term because, although successful, it operates in a highly volatile market. The medium-sized company, despite its image as innovative and smartly managed, did not have the critical financial mass and resources for being triumphantly engaged in the North American, European and Asian key markets with customer support, sales, service, etc. Helmut Rutterschmidt, managing director of Datacon, underlines the decision: "Although Datacon was highly profitable and leader in market segments such as flip-chip technology, it was not one of the major players in the international semiconductor-equipment market."

Datacon has been part of the Dutch Besi group (BE Semiconductor Industries N.V.) since early 2005.

The Esec Acquisition (2009): Buying in a Crisis

If Datacon demonstrated BESI's ability to acquire and integrate, Esec demonstrated something equally important: the willingness to make bold moves during downturns when others were retreating.

The 2008-2009 financial crisis devastated the semiconductor equipment industry. Customers froze capital expenditures. Orders collapsed. Many equipment manufacturers were fighting for survival. Oerlikon, a Swiss technology conglomerate, decided to exit the semiconductor equipment business entirely and focus on its coating technology core.

Oerlikon of Pfäffikon, Switzerland has completed the sale of its back-end chip assembly equipment business unit Oerlikon Esec to BE Semiconductor Industries N.V. (Besi) of Duiven, The Netherlands, which manufactures die sorting, flip-chip and multi-chip die bonding, packaging and plating equipment, in exchange for 2.8 million of Besi's ordinary shares. Founded in 1968, Esec manufactures die bonding equipment for the semiconductor, telecoms and smart-card industries at its headquarters in Cham, Switzerland, and manufactures and services wire bonding systems from its Singapore assembly facility. Esec has an installed base of more than 9000 systems, in fiscal 2008 reported sales of CHF126m, and had 515 staff at the end of 2008.

The deal was structured as an all-stock transaction—BESI issued 2.8 million shares to Oerlikon—which preserved cash during a period of extreme uncertainty. "The purchase of Esec is a complementary product acquisition that fits well with our goal of becoming the world's leading assembly equipment company," says Besi's president & CEO Richard W. Blickman.

BESI says that it targets synergies from the Esec acquisition by (i) using BESI's Asian manufacturing operations and global supply chain network, (ii) integrating and coordinating R&D activities with BESI's Datacon die handling activities, (iii) leveraging the respective resources of the combined sales and customer support networks, and (iv) sharing and coordinating global IT and general and administrative functions.

The Esec acquisition was transformative for several reasons:

1. Scale: BESI's installed base more than doubled, creating service revenue opportunities and customer relationships
2. Market position: The combined company became the clear leader in die bonding systems
3. Swiss engineering: The Cham, Switzerland R&D center added another center of excellence to BESI's innovation network
4. Counter-cyclical timing: Acquiring during the downturn meant favorable terms and a strong competitive position when the cycle turned

Brand Portfolio Assembled

The principal brand names for Besi's assembly equipment systems include Datacon, Esec, Fico and Meco. By 2009, BESI had assembled the core elements of its current product portfolio:

• Fico: The original packaging and molding equipment from the ASM spinout
• Datacon: Flip chip and multichip die bonding from Austria
• Esec: Die bonding systems from Switzerland
• Meco: Plating equipment from the Netherlands

Each brand maintained its identity and technical focus while benefiting from shared manufacturing, sales, and administrative infrastructure.

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V. Operational Transformation: The Asia Manufacturing Shift (2010s)

The decade following the Esec acquisition saw BESI transform from a collection of acquired businesses into a unified, operationally excellent company. The key strategic move: shifting manufacturing to Asia while keeping R&D in Europe.

The Asia Strategy

At the end of 2022, Besi had a total of 1,675 permanent and 144 temporary employees. It outsources production to its subsidiaries in China and Malaysia.

All equipment, tools, molds and mold kits are produced in Besi's Shah Alam, Malaysia and/or Leshan, China facilities.

The rationale was straightforward: BESI's customers were overwhelmingly located in Asia. Taiwan, Korea, China, and Southeast Asia accounted for the vast majority of semiconductor assembly activity. Manufacturing close to customers reduced shipping costs, shortened lead times, and enabled closer collaboration on process development.

Besi came to Malaysia in the 1980s because its two important customers, Infineon and STMicroelectronics, were located here and required spare parts. As such, we established a spare parts hub to serve their needs, after which operations gradually evolved. In 2000, we started building modules, and in 2010 our Malaysia site started building machines. Another important milestone was the direct shipment of all machines from Malaysia, with full ownership of product quality. When it came to our decision to set up a manufacturing base in Malaysia, several factors were at play.

Malaysia is highly competitive for manufacturing, with an excellent value ratio of labor cost to labor productivity. This makes it an attractive base for Besi to operate from. Other important advantages are uninterrupted electricity supply, clean water, excellent infrastructure, and our solid relationship with the government through the Malaysian Investment Development Authority (MIDA) and Royal Malaysian Customs.

European R&D, Asian Manufacturing

The operational model that emerged preserved BESI's technical differentiation while improving cost competitiveness:

Besi Switzerland, based in Steinhausen, Switzerland, is a leader in the production of epoxy, flip chip and soft solder die bonding systems for the assembly equipment market. Besi Singapore is the Die Attach group's primary contact point in Asia, specialized in high speed epoxy and flip chip die bonding. Besi Austria, based in Radfeld, Austria, is developing state of the art flip chip and multi chip equipment on behalf of Besi Switzerland. Besi Netherlands, based in Duiven, the Netherlands, designs, develops and manages the production of molding, trim & form and singulation systems for both leadframe, substrate and wafer level packaging applications under the Fico brand name.

This structure meant that critical R&D activities—the source of BESI's competitive advantage—remained in Europe, close to universities and research institutions. Meanwhile, manufacturing could scale efficiently in Asia, where the supply chain for semiconductor equipment was concentrated.

Operational Resilience

The dual-sourcing strategy between Malaysia and China provided important risk mitigation. BESI demonstrated this during the COVID-19 pandemic and associated semiconductor supply chain disruptions: the company demonstrated operational resilience by reallocating production across its Asian facilities, advancing component purchases, and shifting to land-based logistics when air freight became disrupted.

Besi is a global company with headquarters in Duiven, the Netherlands. It operates eight facilities in Asia and Europe for development and production activities, as well as 13 sales and service offices across Europe, Asia and North America. At the end of 2023 Besi employed a total of 1,870 employees.

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VI. The Hybrid Bonding Bet: BESI's Defining Strategic Move (2015-Present)

Everything in BESI's history—the acquisitions, the operational transformation, the decades of accumulated expertise in precision die placement—converges on a single technology: hybrid bonding. This is the bet that could make BESI a generational compounder.

Why Hybrid Bonding Matters

Traditional chip packaging uses "bumps"—tiny solder balls that connect the chip to its substrate. Wire bonding uses even more basic gold or copper wires. Both approaches have fundamental limitations in how densely you can pack interconnections.

Hybrid Bonding is an innovative technology that combines multiple materials and components at the microscopic level to create highly advanced semiconductor packages. This method enhances the performance and density of interconnects, making it ideal for next-generation applications in electronics, including high-end modules and advanced packaging solutions.

Hybrid bonding eliminates the bumps entirely. Instead, copper pads on one chip are directly bonded to copper pads on another chip (or wafer) through a combination of oxide-to-oxide bonding and copper-to-copper diffusion. The result: interconnect densities that are orders of magnitude higher than traditional approaches.

As a key enabler of vertical chip stacking and high-density interconnects, it delivers lower latency, reduced energy consumption, and enhanced bandwidth/system performance.

Two Types of Hybrid Bonding

The hybrid bonding market divides into two segments that require different equipment approaches:

1. Wafer-to-Wafer (W2W) Bonding: Two complete wafers are bonded together, then diced into individual dies. This approach works well when the two wafers have matching chip sizes and yield characteristics. EV Group, an Austrian company, dominates W2W hybrid bonding equipment.

2. Die-to-Wafer (D2W) Bonding: Individual dies (already cut from their original wafers) are placed and bonded onto a target wafer. This approach offers more flexibility—you can mix dies from different processes and achieve better yield economics by only bonding known-good-dies. BESI dominates D2W hybrid bonding equipment.

Hybrid bonding equipment is still dominated by foreign companies, and domestic substitution is expected to accelerate. The global market for hybrid bonding equipment is primarily dominated by international leading companies, with BESI being the leader in this field, holding a market share as high as 67%.

The Applied Materials Partnership (2020-2025)

The pivotal moment in BESI's hybrid bonding trajectory came in October 2020, when the company announced a partnership with Applied Materials that would reshape the competitive landscape.

Applied Materials, Inc. today announced it has purchased 9 percent of the outstanding shares of the common stock of BE Semiconductor Industries N.V. (Besi), a leading manufacturer of assembly equipment for the semiconductor industry. Applied and Besi have been successfully collaborating since 2020, and recently extended their agreement, to co-develop the industry's first fully integrated equipment solution for die-based hybrid bonding.

The logic of the partnership was compelling: hybrid bonding requires both front-end capabilities (wafer surface preparation, precision film deposition) and back-end capabilities (die placement, bonding accuracy). Applied Materials excels at front-end processes; BESI excels at precision die placement. Together, they could offer customers an integrated solution that neither could provide alone.

To accelerate the use of hybrid bonding in advanced logic and memory chips, Applied Materials, in collaboration with BE Semiconductor Industries N.V. (Besi), developed the Kinex™ Bonding system – the industry's first integrated die-to-wafer hybrid bonder. The system brings together Applied's expertise in front-end wafer and chip processing with high levels of bonding accuracy and speed from Besi's leading die placement, interconnect and assembly solutions.

Applied Materials Takes a 9% Stake (April 2025)

On April 14, 2025, Applied Materials, Inc. announced it has purchased 9 percent of the outstanding shares of the common stock of BE Semiconductor Industries N.V. (Besi).

"We view this as a strategic, long-term investment that demonstrates Applied Materials' commitment to co-developing the industry's most capable hybrid bonding solution, a technology that is becoming increasingly important to the advanced logic and memory chips at the foundation of AI," said Terry Lee, Corporate Vice President and General Manager, Heterogeneous Integration and Packaging at Applied Materials. "We look forward to furthering our collaboration with Besi and delivering innovative technology to our customers." Applied Materials and Besi have co-developed an integrated hybrid bonding system, which has the full capabilities chipmakers need to take the technology to very high-volume manufacturing over the next several years.

Applied's 9% stake surpasses BlackRock's holdings, making it BESI's largest shareholder. The investment was made through market-based transactions and is not subject to regulatory approvals. Applied does not intend to seek board representation at Besi, nor does it have plans to purchase additional shares of Besi common stock.

BESI's Technological Position

<10 nm Alignment Precision: Besi's tools enable atomic-level copper-to-oxide and oxide-to-oxide bonding, essential for 3D integration. Thermo-Compression Integration: Platforms like 8800 CHAMEO ultra plus AC combine cleanroom-grade bonding and optical alignment to ensure high yield and tight pitch stacking.

The precision requirements for D2W hybrid bonding are extraordinary. The order is for Besi's latest generation system incorporating 100 nm placement accuracy and is scheduled for delivery in Q4-24 and Q1-25. One hundred nanometers is roughly 1/1,000th the width of a human hair. Getting that accuracy consistently, at production speeds, across millions of dies, represents an engineering challenge that few companies have mastered.

Why Were Competitors "Sleeping"?

The question that haunts BESI's competitors: why didn't they see this coming?

The honest answer is that hybrid bonding was long considered a niche technology with limited applicability. It required cleanroom conditions that approached front-end fabs—expensive infrastructure that most packaging operations didn't have. The volumes were small. The customers were limited to a few leading-edge applications.

BESI made the bet anyway. The company invested in R&D during industry downturns. It built the precision capabilities before the market demanded them. When AI created explosive demand for high-bandwidth chip-to-chip connections, BESI had a five-year head start.

We increased R&D spending by 31.7% this year to offer customers leading edge assembly solutions for next generation 2.5D and 3D architectures. In addition, progress continued on our hybrid bonding agenda as revenue approximately tripled versus 2023 and orders more than doubled. In addition, adoption increased from nine to fifteen customers.

Current Hybrid Bonding Trajectory

At its 2025 Investor Day, Besi elevated hybrid bonding to a core business pillar, raising long-term revenue targets to €1.5–1.9 billion with 40–55% operating margins. Financial Times reported hybrid bonding revenues at €36M in 2023, projected to surge to €476M by 2026, potentially accounting for one-third of Besi's total business.

The hybrid bonding segment is expected to be a key growth driver, with revenues forecast to surge +76% year-over-year in 2024 and +104% in 2025. Its contribution to total revenue is projected to nearly double, rising from 8% in 2023 to 14% in 2024.

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VII. Market Position & Competitive Landscape

BESI operates in a competitive market, but one where its position in the most valuable segment—advanced die attach—is remarkably strong.

Die Attach Market Leadership

Source: TechInsights, June 2024. Besi Addressable Market Share Increasing, Particularly in Key Die Attach Markets. BESI leads with an approximately 40% market share in Die Attach overall. More importantly, it leads with an estimated 75% market share in Advanced Die Attach equipment.

The segment includes Flip Chip, Hybrid Bonding as well as Thermo Compression products. BE Semiconductor is the market leader in the Die Attach semiconductor segment.

Product Portfolio

BESI's business segments reflect its evolution through acquisition:

BE Semiconductor Industries N.V. develops, manufactures, markets, sells, and services semiconductor assembly equipment for the semiconductor and electronics industries in the Netherlands, Switzerland, Austria, Singapore, Malaysia, and internationally. It operates through three segments: Die Attach, Packaging, and Plating.

The Die Attach segment—comprising single chip, multi-chip, flip chip, hybrid bonding, and thermo compression systems—generates approximately 82% of revenue and represents BESI's strategic core.

Key Customers

Besi has a highly focused product portfolio coupled with a flexible business model, which allows it to maintain high gross and operating margins. Besi's main clients include the world's largest logic and memory foundries (TSMC, Samsung, Intel, SK Hynix) as well as integrated device manufacturers, or IDMs, and outsourced assembly and test companies, or OSATs.

The primary driver behind last 12 months revenue was the China segment contributing a total revenue of €204.3m (34% of total revenue).

Customer concentration is both a strength and a risk. The world's most advanced chip manufacturers depend on BESI's equipment for their most sophisticated packaging technologies. But a handful of customers account for a substantial portion of orders.

Competitive Landscape

The die bonder equipment market remains moderately concentrated. ASMPT, Kulicke & Soffa, and BE Semiconductor collectively control a significant share of revenue, yet niche innovators keep the field dynamic. Each leader pursues continuous R&D, earmarking roughly 10% of annual sales for process modules that stretch accuracy or throughput boundaries.

The market between ASM Pacific, Kulicke and Soffa, and Besi is quite dynamic for TCB and each one excels in different areas. This has resulted in each having their own niche. Order books are going up in a major way, but not consistently across the 3 due to the niches they each occupy.

The key competitors operate in adjacent segments:

• ASMPT: Broader portfolio spanning assembly and SMT equipment; dominant in wire bonding
• Kulicke & Soffa: Strong in traditional wire bonding, developing TCB capabilities
• EV Group: Dominant in W2W hybrid bonding (different from BESI's D2W focus)
• Shinkawa, SET: Japanese players with presence in specialized applications

BESI wins due to its undisputed technological leadership and dominant position in the highest-growth segment of semiconductor packaging. Its key strengths are its cutting-edge hybrid bonding technology, superior profit margins often exceeding 60%, and a track record of explosive shareholder returns.

W2W vs. D2W: Understanding the Market Structure

With its new D2W bonding solution, extensive experience drawn from its market-leading W2W hybrid bonding solutions and industry collaborations supported by its Heterogeneous Integration Competence Center™, EVG is well positioned to support D2W bonding applications. "For 20 years, EVG has continually set new standards for wafer-to-wafer hybrid and fusion bonding with the largest installed base of wafer bonding solutions worldwide," stated Paul Lindner, executive technology director of EV Group. "We have already begun serving the needs of the emerging die-to-wafer market with a dedicated version of our established EVG GEMINI® FB system specially configured for die-to-wafer bonding. The new EVG320 D2W die preparation and activation system adds to our expertise in die-to-wafer bonding and completes EVG's equipment portfolio for providing an end-to-end hybrid bonding solution to accelerate the deployment of 3D/heterogeneous integration."

The industry's hybrid bonding market effectively divides into two segments with different leaders. EV Group owns W2W; BESI owns D2W. This is not a zero-sum competition—both approaches serve different applications and often coexist within customer facilities.

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VIII. Financial Performance & Operational Excellence

BESI's financial profile is that of a high-quality, cyclical equipment company with industry-leading margins and strong capital returns.

Recent Financial Results

In 2024, BESI's revenue was €607.47 million, an increase of 4.94% compared to the previous year's €578.86 million. Earnings were €181.99 million, an increase of 2.77%.

Duiven, the Netherlands, February 20, 2025 - BE Semiconductor Industries N.V. announced results for the fourth quarter and year ended December 31, 2024. Revenue of € 607.5 million increased 4.9% vs. 2023 principally due to higher demand by computing end-user markets, particularly for hybrid bonding and photonics applications, partially offset by weakness in mobile, automotive and Chinese end-user markets.

Gross margin of 65.2% rose by 0.3 points due to more favorable advanced packaging product mix. Net income of € 182.0 million grew 2.8% as higher revenue, gross margin and net tax benefits were partially offset by higher R&D spending and share-based compensation expense. Besi's net margin decreased slightly to 30.0% vs. 30.6% in 2023.

Margin Profile

BESI's gross margins consistently exceed 60%, placing it among the most profitable semiconductor equipment companies globally. This margin profile reflects:

• Technology differentiation: Customers pay premium prices for precision and performance
• Mix shift toward advanced packaging: Higher-value systems carry better margins
• Asian manufacturing: Production in Malaysia and China at competitive costs
• Scale benefits: Shared infrastructure across product lines

Return on equity (ROE) is 35.84% and return on invested capital (ROIC) is 10.99%.

Capital Allocation

BESI's approach to capital allocation emphasizes returning cash to shareholders while maintaining financial flexibility for opportunistic acquisitions:

Proposed dividend of € 2.18 per share. Represents pay-out ratio of 95%.

The share repurchases are part of a € 100 million share repurchase program announced on August 31, 2024.

On July 17, 2024, we successfully completed an offering of € 350 million of 4.5% Senior Notes due 2031 to further solidify our capital base and help fund growth over the next decade at attractive terms. On July 17, 2024, Besi completed the issuance of € 350 million of 4.5% Senior Notes due July 15, 2031 via a private placement to institutional investors. The Notes may not be called by the Issuer until January 15, 2031 and are listed on the International Stock Exchange. The net proceeds from the offering are anticipated to be used for general corporate purposes including potential acquisitions. In connection with the issuance, Besi received corporate credit ratings of 'BB+'; Outlook Stable from S&P Global Ratings and Fitch Ratings, respectively.

Long-Term Revenue Targets

At its 2025 Investor Day, Besi elevated hybrid bonding to a core business pillar, raising long-term revenue targets to €1.5–1.9 billion with 40–55% operating margins.

These targets represent nearly a tripling from current revenue levels, predicated on:

1. Continued growth in advanced packaging market
2. Market share gains in hybrid bonding
3. New product introductions (sub-100nm accuracy systems)
4. Potential acquisitions

Market Opportunity

The global advanced packaging market size was estimated at USD 39.60 billion in 2024 and is projected to reach USD 55.00 billion by 2030, growing at a CAGR of 5.7% from 2025 to 2030. The global advanced packaging market was estimated at around USD 39.60 billion in the year 2024 and is expected to reach around USD 41.69 billion in 2025.

Within this broader market, BESI's addressable segments—particularly die attach and hybrid bonding—are growing considerably faster than the average.

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IX. Leadership & Culture: The Blickman Factor

Thirty years of founder-led leadership has shaped BESI in ways that extend beyond strategy to culture and values.

Three Decades at the Helm

BE Semiconductor Industries' CEO is Richard Blickman, appointed in Nov 1995, has a tenure of 29.67 years. Total yearly compensation is €16.66M, comprised of 4.2% salary and 95.8% bonuses, including company stock and options. He directly owns 1.88% of the company's shares, worth €182.37M.

Blickman's compensation structure tells a story: low base salary, high performance-linked incentives. His personal ownership means his interests align directly with shareholders. When BESI's stock rises, Blickman benefits. When it falls, he feels the pain alongside other shareholders.

This is not a hired-gun CEO managing for the next quarter. This is a founder who has spent his entire career building this company and who has substantial personal wealth tied to its long-term success.

Leadership Through Cycles

The semiconductor equipment industry is brutally cyclical. Orders can swing 50% or more in a single year. Many equipment companies have been destroyed by downturns—overinvesting during booms, then bleeding cash when orders collapse.

Blickman has navigated multiple severe downturns, including the dot-com bust (2001-2002), the global financial crisis (2008-2009), and the COVID disruption (2020). His approach combines:

• Flexible cost structure: Asian manufacturing allows rapid scaling of production
• Counter-cyclical R&D: Investing in technology during downturns positions BESI for the recovery
• Opportunistic M&A: The Esec acquisition during the 2009 crisis exemplifies this approach
• Conservative balance sheet: Maintaining financial flexibility to survive downturns

Technology Focus

Unlike some equipment companies that compete primarily on price or service, BESI has consistently positioned itself as a technology leader. The company's willingness to invest heavily in hybrid bonding R&D—before the market existed at scale—reflects this orientation.

The reduction in our net margin to 25.5% this first half year primarily reflected a 24% increase in development spending and increased share based compensation versus H1-23. The R&D increase was associated with next generation hybrid bonding development targeting sub-100 nm placement accuracy, the ongoing build out of Besi's hybrid bonding and TCB capabilities in anticipation of expanded logic and memory adoption and enhancements to our current product portfolio for the next market upcycle.

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X. Investment Framework: The Bull and Bear Cases

The Bull Case

The optimistic thesis for BESI rests on several interconnected arguments:

1. Hybrid Bonding Monopoly: BESI holds a dominant position in D2W hybrid bonding equipment at the precise moment when AI, HBM, and advanced packaging are creating explosive demand. First-mover advantages in precision equipment are durable—customers don't easily switch suppliers when yields and process stability depend on equipment expertise.

2. Applied Materials Endorsement: When the world's largest semiconductor equipment company invests 9% of your company and commits to joint development, it validates your technology and provides resources for continued innovation.

3. Secular Growth in Advanced Packaging: The "More than Moore" thesis is playing out as predicted. Advanced packaging is growing faster than the overall semiconductor market and will likely continue to do so for at least the next decade.

4. Founder-Led Excellence: Thirty years of Blickman leadership has created a culture of engineering excellence and operational discipline that competitors will struggle to replicate.

5. Margin Expansion Potential: As hybrid bonding becomes a larger portion of revenue, mix shift should drive further margin improvement.

The Bear Case

The cautious thesis acknowledges substantial risks:

1. Cyclicality: Semiconductor equipment remains one of the most cyclical industries. BESI's revenue has historically swung dramatically with industry cycles, and there's no reason to expect future immunity.

2. Customer Concentration: A handful of customers—likely including TSMC, Samsung, and Intel—account for a substantial portion of hybrid bonding orders. Delays or strategic shifts at any major customer can significantly impact quarterly results.

3. Competition: While BESI currently leads in D2W hybrid bonding, competitors are investing heavily. ASMPT, Kulicke & Soffa, and even EV Group are developing competitive offerings. Chinese entrants are advancing rapidly in lower-end segments.

4. Valuation: At current prices, BESI trades at substantial premiums to both the market and many semiconductor equipment peers. This premium assumes continued execution and market growth—leaving little room for disappointment.

5. Geopolitical Risk: With substantial manufacturing in China and Malaysia, and customers in Taiwan and Korea, BESI is exposed to geopolitical tensions that could disrupt supply chains or restrict technology transfer.

Porter's Five Forces Analysis

Threat of New Entrants (Low): Precision equipment manufacturing requires decades of accumulated expertise, substantial R&D investment, and established customer relationships. Barriers to entry are high and increasing as technology complexity grows.

Supplier Power (Moderate): BESI sources specialized components from various suppliers. The company maintains dual-sourcing strategies where possible, but some critical components may have limited alternatives.

Buyer Power (Moderate-High): BESI's customers are giant semiconductor manufacturers with substantial purchasing power and technical sophistication. However, switching costs for precision equipment are significant.

Threat of Substitutes (Low): The technologies BESI provides—particularly hybrid bonding—don't have ready substitutes that achieve comparable performance.

Industry Rivalry (Moderate): Competition is intense in mainstream segments but limited in advanced packaging where BESI has technology leadership.

Hamilton Helmer's 7 Powers Analysis

Scale Economies: Moderate—BESI benefits from manufacturing scale but is not the largest player in semiconductor equipment overall.

Network Effects: Limited—equipment businesses generally don't exhibit strong network effects.

Counter-Positioning: Strong—BESI's focus on advanced packaging while competitors emphasized other segments created an opportunity to build dominant position.

Switching Costs: Strong—customers who have qualified BESI equipment for advanced processes face substantial costs to switch suppliers.

Branding: Moderate—BESI's brand names (Datacon, Esec) are respected in the industry but don't command consumer-style premiums.

Cornered Resource: Strong—the engineering talent and institutional knowledge accumulated over decades of precision equipment development is difficult for competitors to replicate.

Process Power: Strong—BESI's manufacturing processes, quality systems, and operational expertise drive consistent margins and quality.

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XI. Key Metrics for Ongoing Tracking

For investors following BESI, three metrics merit particular attention:

1. Hybrid Bonding Orders and Revenue

This is the single most important forward indicator. In Q1 2025, Besi's order intake increased by 8.2% to €131.9 million, largely driven by hybrid bonding orders. Track: - Number of hybrid bonding systems ordered - Number of distinct hybrid bonding customers - Revenue from hybrid bonding as percentage of total

2. Gross Margin Trajectory

BESI's gross margin reflects product mix, pricing power, and manufacturing efficiency. Sustained margins above 64-65% signal healthy competitive positioning and successful mix shift toward higher-value products. Margin compression would suggest pricing pressure or unfavorable product mix.

3. R&D Investment as Percentage of Revenue

We increased R&D spending by 31.7% this year to offer customers leading edge assembly solutions for next generation 2.5D and 3D architectures. Sustained R&D investment—even during downturns—has been central to BESI's competitive position. A pullback in R&D during difficult periods might preserve short-term margins but could sacrifice long-term technology leadership.

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XII. Conclusion: The Hidden Champion Emerges

The story of BE Semiconductor Industries is a story of strategic patience rewarded. When Richard Blickman led the management buyout in 1993, back-end semiconductor equipment was an afterthought—the unglamorous work of putting chips in packages while the real innovation happened elsewhere.

Three decades later, packaging has moved from afterthought to strategic imperative. The same forces that made ASML essential—the relentless demand for more computing power in smaller, more efficient packages—now make advanced packaging equipment essential.

BESI positioned itself at the intersection of these trends through a combination of prescient investment and patient execution. The acquisitions of Datacon and Esec assembled the technical capabilities. The Asia manufacturing shift created operational efficiency. The Applied Materials partnership provided validation and resources. And the hybrid bonding bet—made years before the AI boom created explosive demand—positioned BESI as the indispensable supplier of equipment for the next generation of semiconductor packaging.

The parallel to ASML is instructive but imperfect. ASML dominates lithography with true monopoly economics; BESI leads advanced die attach but faces capable competitors in adjacent segments. ASML's equipment is literally irreplaceable for cutting-edge chip production; BESI's equipment is critically important but not quite so singular.

Yet for investors seeking exposure to the advanced packaging megatrend, BESI offers a compelling combination: technology leadership, proven operational excellence, aligned management incentives, and a founder-CEO who has successfully navigated three decades of industry volatility.

The transformation from hidden champion to recognized leader is underway. Applied Materials' strategic stake marked a turning point—a validation that even the largest players in semiconductor equipment recognize BESI's position. The question now is whether BESI can maintain and extend its leadership as hybrid bonding scales from early adoption to mass production.

The company's long-term revenue targets—€1.5-1.9 billion with 40-55% operating margins—would represent roughly a tripling from current levels. Achieving these goals requires continued technology leadership, successful execution of the Applied Materials partnership, and favorable industry conditions.

For a company that spent decades building precision capabilities in an overlooked corner of the semiconductor industry, the moment of recognition has arrived. Whether BESI can capitalize on this moment will depend on the same qualities that brought it here: engineering excellence, operational discipline, and the strategic patience that comes from founder-led management with a multi-decade time horizon.

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Regulatory and Legal Considerations

• BESI is subject to export control regulations that could impact sales to China, a significant revenue contributor
• As a Dutch company with substantial operations in Asia, BESI navigates complex international tax and regulatory frameworks
• The company's credit ratings (BB+ from S&P and Fitch) reflect investment-grade quality but are not in the highest tier
• Customer concentration exposes BESI to risks from the strategic decisions of a small number of major semiconductor manufacturers

Accounting Notes

• Revenue recognition follows IFRS standards with equipment revenue generally recognized upon delivery and acceptance
• Share-based compensation has become a more significant expense, impacting reported margins
• The convertible notes and senior notes create leverage that should be monitored relative to cash generation