AMKOR TECHNOLOGY, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Milestones: Advanced Packaging revenue increased 3% year-over-year, and Advanced SiP reached a record of $3.1 billion. Computing end market reached a record of $1.2 billion. Qualified new Vietnam facility and ran production for system and package and memory devices. Secured $407 million in CHIPS funding to support planned Arizona facility and expanded partnerships with TSMC and Infineon.
• Market Specifics: Communications end market had revenue decline in Q4 and full year 2024; Computing end market had strong growth but impacted by AI data center supply chain dynamics; Automotive and Industrial end market had revenue decline in Q4 and full year 2024 but expected growth in Advanced Packaging for 2025; Consumer end market had full year growth driven by wearable program.
• First Quarter and Full Year Outlook: Q1 2025 expected revenue of $1.275 billion, down 7% year-on-year. Full year 2025 expected muted first half followed by strong second half due to content recovery in next generation iOS phones, with total company revenue expected flat to low single-digit growth.

Segment Performance

• Communications: Fourth quarter revenue declined 25% sequentially; full year 2024 revenue declined 7%. In Q4 2024, due to a change in build pattern for new iOS phones and temporary lower content in the latest iOS phone, revenue declined. For 2025, expected to be muted in first half and above seasonal growth in second half, with total Communication revenue projected to be flat year-on-year.
• Computing: Fourth quarter revenue increased 13% sequentially and 16% for full year 2024 to record levels, driven by strong demand for AI GPUs and ramping programs supporting ARM-based PCs. However, dynamics within the AI data center supply chain impacted 2.5D growth expectations, but expected mild growth for full year 2025.
• Automotive and Industrial: Fourth quarter revenue declined 8% sequentially missing flat to mild growth expectations; full year 2024 revenue declined 16%. For 2025, expected Advanced Packaging programs in Automotive to grow in mid-teens percent, with mild full year growth anticipated.
• Consumer: Full year 2024 revenue increased 10% driven by the ramp of a new wearable program utilizing advanced SiP technology. For 2025, expected mild growth driven by full year production for the wearable program and modest improvements in traditional consumer programs.

Guidance

• First Quarter: Expect revenue of $1.275 billion, a year-on-year decline of 7%, primarily due to temporary socket gap in current iOS phones.
• Full Year 2025: Muted first half followed by strong second half driven by content recovery in next generation iOS phones, with total company revenue expected flat to low single-digit growth.
• CapEx: 2025 CapEx forecast is $850 million, with 5% to 10% estimated for new Advanced Packaging facility in Arizona.
• Tax Rate: Full year effective tax rate expected to increase to around 20% due to new global tax regulation.

Risks

• Geopolitical Environment: Limits visibility for full year performance, especially in computing market due to China trade restrictions.
• Tariffs: Uncertainty regarding tariffs affecting shipments and potential geographic shifts in assembly, with short-term impact currently vague.

Question and Answer

Q: Toshiya Hari with Goldman Sachs asked about the significance of the hit from the iPhone socket gap in the most recent quarter and confidence in regaining content in the back half of 2025.

A: Giel Rutten stated they have a long-standing track record with the customer, prepared mass production for next generation phone socket in 2024, and have clear line of sight for ramp in Q3 2025; Megan Faust mentioned Q4 impact was from build pattern and socket gap, with Q1 year-over-year decline driven by Communications.

Q: Joseph Moore with Morgan Stanley asked about confidence in Automotive growth in 2025 and specific package types offsetting macro weakness.

A: Giel Rutten said there is strength in Advanced Packaging for Automotive like ADAS devices, car networking, and infotainment, with strong project pipeline, but mainstream products' recovery visibility is vague.

Q: Peter Peng with JPMorgan Chase & Company asked about marquee customer dynamics and backfilling as customer ramps down.

A: Giel Rutten explained short-term dynamics in Compute market due to accelerated GPU ramp and China restrictions, but confident in project and customer pipeline with ramping second customer in 2.5D and RDL-based technologies; Megan Faust said Q1 OpEx expected to increase for seasonal reset of incentive comp, with total OpEx similar to 2024.

Q: Craig Ellis with B. Riley Securities asked about growth in Compute in 2024 from AI PCs vs GPU-based systems and ranking of growth opportunities.

A: Giel Rutten said major growth in 2024 Compute was from 2.5D AI GPUs, with diversifying customer and technology base; ranked opportunities with Communication regaining socket, Automotive Advanced Products, Compute uncertain due to China restrictions, and Consumer flat to slightly up with conservative outlook.

Q: Randy Abrams with UBS asked about CapEx allocation and tariffs impact.

A: Megan Faust said $850 million CapEx, 70% for capacity and capability in high performance computing, Advanced SiP, and test; Giel Rutten mentioned tariffs impact currently vague with no significant short-term impact, and uncertainty regarding Taiwan tariffs.

Q: Charles Shi with Needham asked about second half seasonality and confidence in regaining iPhone socket.

A: Megan Faust explained typical seasonal pattern of 45% first half and 55% second half, with second half growth needed for full year flat to low single-digit growth; Giel Rutten said confidence level is high with clear cooperation model and mass production milestones for Q3 2025 ramp.

Q: Tom Diffely with D.A. Davidson asked about next generation package type and CapEx.

A: Giel Rutten said investments in 2024 were fungible capacity for wafer-based technologies including 2.5D and RDL-based technologies; Megan Faust explained $850 million CapEx for capacity and capability, not just transformational, and tax raise related to Pillar Two adoption.

Q: Steven Fox with Fox Advisors asked about broader market state and CHIPS Act grants.

A: Giel Rutten discussed AI opportunities driving semiconductor upgrades and Megan Faust said CHIPS grants attached to milestones with uncertain timing and not incorporated in guides.

Q: Steve Barger with KeyBanc Capital Markets asked about Automotive declines and test utilization.

A: Giel Rutten said seven quarters of Automotive declines mostly in mainstream portfolio, with Advanced Products stable to up; test is an area of opportunity with high test rate in Communications and Automotive, and actively working to expand test capacity.