Amkor Technology, Inc. (AMKR) Earnings

Management highlights

### Strategic Partnerships in Key Markets - Advanced packaging has become a critical part of next-generation semiconductor development, with longer development cycles and earlier, deeper customer engagement that creates better long-term demand visibility and aligned roadmaps. - Recently announced two high-impact strategic partnerships: a 10-year advanced packaging and test agreement with TSMC to expand U.S.-based capacity and strengthen the domestic semiconductor supply chain, and a multi-year advanced packaging and test partnership with NVIDIA to support next-generation AI infrastructure. - Similar long-term alignment agreements are in place for Asia-based manufacturing facilities, creating strong confidence in long-term capacity loading across Amkor's global footprint. ### Technology Leadership - Amkor's investments in advanced packaging and test platforms position the company to support early co-development requirements for customers, with active programs covering 2.5D, high-density fan-out (HDFO), and emerging technologies like co-packaged optics for AI, HPC, and network applications. - A new HDFO data center CPU program began ramping in Q2 2026 and will continue scaling through the second half of the year; turnkey integrated packaging and test solutions reduce cycle time and support scalable manufacturing for complex next-generation AI and HPC products. ### Global Footprint Expansion - Expansion is focused on providing geographic flexibility and supply chain resiliency to meet customer regional demand: Phase 1 construction of the Arizona U.S. facility is progressing, and is already fully committed for capacity, with future expansion under evaluation. - The new Songdo, Korea assembly and test building is on track for completion by the end of 2026; R&D and cleanroom expansion at the Guangzhou campus will add capacity for data center and advanced packaging growth from 2028 onward. - Incremental cleanroom expansion is underway in Vietnam, Portugal, and Taiwan; phased capacity expansion in Vietnam for SiP and NAND memory (supporting communications and consumer end markets) frees up space in Korea for rapidly scaling advanced computing programs. ### Financial Operational Highlights - H1 2026 total revenue grew 26% year-on-year, with growth across all end markets; average factory utilization improved from the 50% range to the 70% range, with several high-demand technology platforms operating at full capacity. - Gross margin expanded 360 bps year-on-year in H1 2026, operating income more than doubled, and EPS more than tripled, demonstrating significant operating leverage as revenue scales and utilization improves.

Guidance

- Q3 2026 total revenue is guided between $1.95 billion and $2.05 billion, outperforming prior market expectations driven by strong AI and computing demand. - Q3 2026 gross margin is projected between 18.5% and 19.5%, representing a 170-270 bps sequential increase, driven by a richer mix of higher-value advanced technologies and continued operating leverage. - Q3 2026 operating expenses are expected to be ~$140 million, full-year 2026 effective tax rate is projected to be ~20%, and EPS is guided between $0.72 and $0.82 (net income of $180-$205 million). - Full-year 2026 CapEx is maintained at $2.5 billion to $3 billion, with 65-70% allocated to facility expansion (including Arizona Phase 1), 30-35% allocated to HDFO, test, and other advanced packaging capacity, and the remainder allocated to R&D and quality programs. - Long-term 2028 profitability targets from the prior Investor Day remain unchanged; near-term gross margin expansion will be partially offset by underutilization and depreciation headwinds from the new Arizona facility as it ramps in the coming years.

Segment performance

Total company Q2 2026 revenue was $1.9 billion, a 26% year-on-year increase and 13% sequential increase. By end market segment: 1) Communications: Revenue increased 6% sequentially, with double-digit growth in the iOS ecosystem offset by a 20% decline in Android revenue tied to memory supply dynamics. Communications is Amkor's largest end market, contributing ~40-45% of total revenue based on Q3 guidance. 2) Computing: Revenue hit a new quarterly record, increasing 20% sequentially, driven by broad-based growth in data center applications. Computing contributed ~30% of Q2 total revenue, with expected sequential growth of nearly 30% in Q3. 3) Automotive and Industrial: Revenue also reached a new quarterly record, increasing 17% sequentially, led by ADAS growth driven by higher semiconductor content and advanced packaging demand. Automotive and Industrial contributed ~15% of Q2 total revenue, with expected mid-single digit sequential growth in Q3. 4) Consumer: Revenue increased 15% sequentially, driven by broad demand across IoT applications. Consumer contributed ~10% of Q2 total revenue, with expected mid-teens sequential growth in Q3. By product portfolio: Advanced packaging revenue and Mainstream packaging revenue both grew year-on-year, with Mainstream achieving its fifth consecutive quarter of year-on-year growth; Mainstream revenue increased 21% year-on-year in H1 2026. Gross profit was $319 million, up 33% quarter-on-quarter, with a gross margin of 16.8% (up 250 bps sequentially). Operating income was $200 million (10.5% operating margin), net income was $174 million, and EPS was $0.70.

Risks & headwinds

- Ongoing memory supply constraints and weak Android smartphone demand are creating headwinds for the communications end market that are expected to last through Q4 2026 and into the first half of 2027. - The SiP production migration from Korea to Vietnam has created temporary stalled capacity during the transition, which will pressure near-term communications revenue and create some utilization headwinds during the multi-quarter migration. - Ramping new U.S.-based manufacturing capacity will create near-term depreciation and underutilization headwinds that will suppress gross and operating margins through the mid-2020s, before full capacity loading is achieved. - Weakening global smartphone unit demand is expected to pressure communications revenue growth for full-year 2026.

Analyst Q&A

• Q: Randy Abrams (UBS) asked about the Q3 sequential decline in communications revenue (against typical seasonal peak iOS build patterns). He asked to split Android/iOS expectations, the impact of the SiP migration to Vietnam, and whether lost Q3 revenue will shift to Q4. /

  A: Management explained that ~50% of the missing Q3 seasonal lift comes from market-driven factors: memory supply constraints and broader weak smartphone unit demand, with continued weakness in Android while iOS also faces broader industry unit declines. The remaining 50% comes from the planned SiP migration, which is a multi-phase efficiency initiative to free Korean capacity for high-value advanced products. The headwind from the migration will not be limited to Q3, and will extend into Q4 2026 and the first half of 2027, with no expectation of a large deferred Q4 lift.

• Q: Craig Ellis (B. Riley Securities) asked about R&D expense impact and the timing of the $1.5 billion prepayment from the NVIDIA strategic partnership. /

  A: Management confirmed there will be no material step-function increase in R&D spending related to the NVIDIA agreement. Amkor’s standard R&D investment remains between 3% and 5% of capital annually, and this partnership follows the same co-development model as other key customer engagements. The $1.5 billion prepayment is expected to be received in 2027, and will be credited back to NVIDIA as Amkor delivers contract manufacturing services over the 5 to 10 year term of the agreement.

• Q: Ben Reitzes (Melius Research) asked what drove the 250 bps sequential Q2 gross margin expansion, and how utilization and mix will drive further expansion in Q3. /

  A: Management explained that two-thirds of the Q2 expansion came from higher factory utilization, and one-third came from favorable product mix; the SiP portfolio actually grew in Q2, so the migration did not hurt Q2 results. For Q3, the 170-270 bps projected expansion is driven almost entirely by product mix: a large ramp of high-margin advanced computing products, paired with a reduction in lower-margin communications revenue from the SiP migration.

• Q: Steve Barger (KeyBanc Capital Markets) asked how 2026 performance tracks to the Investor Day 2028 targets, and what the growth cadence will be through the middle of the decade. /

  A: Management confirmed that current 2026 gross margin and EPS projections are on track to hit the 2028 targets this year, but the 2028 targets already account for near-term margin headwinds from the underutilized new Arizona facility. The depreciation and operating burden of ramping U.S. capacity will create a temporary drag on margins before the facility is fully loaded, so the long-term 2028 targets remain unchanged.