AMKOR TECHNOLOGY, INC. Q3 FY2024 earnings call

• Amkor delivered third quarter performance in line with expectations with revenue of $1.86 billion and EPS of $0.49, with 27% sequential revenue increase mainly from advanced SiP tech.
• Successfully ramped high volume production for new premium tier smartphones, consumer wearables, and AI-enabled ARM-based PCs. Utilized incremental 2.5D capacity for high-performance computing.
• Vietnam facility started initial production in Q3, Arizona plans progressing, and strategic partnerships with TSMC and Infineon strengthened.
• Focused on three strategic pillars: technology leadership in advanced packaging, global manufacturing footprint, and secular growth market partnerships.

Communications: Revenue increased 36% sequentially, but full year 2024 expected to decline single-digits. Automotive and Industrial: Revenue year-to-date down 17%, full year 2024 expected to decline double-digits. Computing: Revenue increased 6% sequentially and 23% year-on-year, with 2.5D revenue expected to quadruple vs 2023. Consumer: Revenue increased 70% sequentially, driven by high volume production of a new wearable IoT device, but traditional consumer had modest growth.

• Fourth quarter revenue expected at $1.65 billion midpoint, an 11% sequential decline due to communication end-market dynamics.
• Full year 2024: communications to decline single-digits, automotive and industrial to decline double-digits, offset by growth in computing and consumer.
• Q4 gross margin flat to Q3, operating expenses around $120 million, full-year effective tax rate ~18%. CapEx forecast held at $750 million, two-thirds focused on 2.5D and advanced SiP capacity.

• Prolonged weakness in automotive, industrial, and communication markets impacting revenue.
• Underutilization in mainstream factories affecting gross margin.
• Material content impact on gross margin due to product mix concentrate in advanced SiP.

Q: Could you talk a bit more about capacity additions and underutilization charges?

A: Giel Rutten mentioned capacity expansions in computing, specifically 2.5D, with investments continuing. Underutilization in mainstream factories (automotive and industrial) expected to gradually improve with market recovery.

Q: How is visibility into early 2025 for premium tier smartphone build plan?

A: Giel Rutten stated visibility limited, but expected a stronger cycle in 2025 driven by AI functionality in premium tier phones.

Q: How to categorize business vs seasonal trends into first half of next year?

A: Giel Rutten mentioned headwinds in iOS communication, gradual recovery in Android, continued gradual recovery in auto/industrial with potential acceleration, continued growth in computing, and gradual improvement in consumer.

Q: Dynamics in first half 2025 and gross margins?

A: Megan Faust said automotive, industrial, and traditional server/consumer expected to gradually increase in 2025, bringing margin expansion, and compute growth including 2.5D with higher gross margin.

Q: Milestones for Vietnam ramp and Arizona progress?

A: Giel Rutten mentioned ramping SiP and memory products in Vietnam, qualifying 2.5D installed base with additional capacity coming Q2 2025; Arizona MOU with TSMC for advanced packaging technology for joint customers.