Amkor Technology, Inc., a leading provider of semiconductor packaging and test services, has released its 2024 Form 10-K report, detailing the company’s financial performance, business operations, strategic initiatives, and the challenges it faces in the highly competitive semiconductor industry. The report provides a comprehensive overview of Amkor’s efforts to leverage its advanced packaging technologies, expand its geographic footprint, and navigate the complexities of the global semiconductor market.
Financial Highlights
- Net Sales: $6,317.7 million, a decrease of 2.9% from 2023, primarily due to lower sales in the automotive and industrial and communications end markets, partially offset by growth in computing and consumer end markets.
- Gross Profit: $933.2 million, a slight decrease from 2023, with a gross margin increase to 14.8% due to the extension of the estimated useful life of test equipment and favorable foreign currency exchange rate movements.
- Operating Income: $438.5 million, a decrease from 2023, with an operating income margin of 6.9% impacted by increased employee compensation costs and start-up costs at the Vietnam Facility.
- Net Income: $354.0 million, a decrease from 2023, reflecting lower operating profits and changes in working capital.
- Net Income Attributable to Amkor Per Common Share – Basic: $1.44, reflecting the overall decrease in net income.
- Net Income Attributable to Amkor Per Common Share – Diluted: $1.43, reflecting the overall decrease in net income.
Business Highlights
- Revenue Segments: Amkor’s revenue is divided into Advanced Products and Mainstream Products. Advanced Products, which include flip chip and wafer-level processing, accounted for 81.9% of net sales in 2024, while Mainstream Products, which use wirebond interconnect technology, made up 18.1% of net sales.
- Geographical Performance: Amkor operates a geographically diverse manufacturing base with facilities in Asia, Europe, and the United States. The company began delivering advanced SiP and memory packages from its Vietnam Facility in 2024 and plans to expand with a new facility in Arizona.
- Sales Units: The company reported a decrease in net sales in 2024 compared to 2023, primarily due to lower sales in the automotive and industrial and communications end markets, while the computing and consumer end markets showed growth.
- New Production Launches: In 2024, Amkor began operations at its Vietnam Facility, delivering advanced SiP and memory packages. The company also acquired land for a new facility in Arizona, with construction expected to begin in the second half of 2025.
- Future Outlook: Amkor plans to continue leveraging its leadership in advanced packaging technology to meet growing demand in high-performance computing, automotive, IoT, and mobile communications markets. The company is also focused on optimizing asset utilization and expanding its geographic footprint to support evolving global supply chains.
Strategic Initiatives
- Strategic Focus: Amkor is focused on leveraging its leadership in advanced packaging and test technologies to drive profitable sales growth. The company is expanding its geographic footprint with a new advanced packaging and test facility in Arizona, supported by up to $407 million in direct funding from the CHIPS Act.
- Manufacturing Enhancements: Amkor is enhancing its manufacturing capabilities by delivering advanced packages from its Vietnam Facility and investing in high-growth markets such as HPC, automotive, IoT, and mobile communications.
- Capital Management: Amkor’s capital management activities include maintaining a strong liquidity position with $1,646.5 million in cash and short-term investments as of December 31, 2024. The company has a $600 million senior secured revolving credit facility and plans to manage its capital expenditures prudently, with $743.8 million spent in 2024 primarily on advanced packaging and test equipment. Amkor also increased its quarterly dividend by 5% and paid a special cash dividend, totaling $178.6 million in dividends for 2024.
- Future Outlook: Looking ahead, Amkor plans to continue its strategic investments in advanced technology and expand its manufacturing capabilities, with approximately $850 million in capital expenditures expected for 2025. The company aims to optimize asset utilization and manage capacity expansion in response to market conditions. Amkor also anticipates an increase in its effective tax rate due to the expiration of conditional reduced tax rates and the enactment of the Pillar Two Model Rules in 2025.
Challenges and Risks
- Market Risks: The semiconductor industry is cyclical and subject to downturns, which can lead to reduced demand and excess capacity. The company is also vulnerable to fluctuations in global economic conditions and consumer spending.
- Operational Risks: Amkor’s operations are characterized by high fixed costs, and its profitability depends on efficient utilization of resources. The company faces risks from supply chain disruptions, particularly in sourcing critical materials from a limited group of suppliers.
- Regulatory Risks: New export control regulations, such as the BIS Regulations, limit Amkor’s ability to sell certain semiconductor technologies to China, potentially impacting its business and customer relationships.
- Cybersecurity and Data Privacy Risks: The company is exposed to risks from cybersecurity breaches, which could result in unauthorized disclosure of confidential information and operational disruptions.
- Indebtedness Risks: Amkor’s substantial debt levels could limit its financial flexibility and increase its vulnerability to economic downturns.
- Human Capital Risks: The company faces challenges in attracting and retaining qualified personnel, which is critical for supporting its global operations.
- Environmental and Safety Risks: Compliance with environmental, health, and safety regulations is costly, and failure to align with customer preferences for sustainable practices could harm Amkor’s reputation.
- Management Strategies: Management highlights the importance of strategic investments in advanced packaging technologies and geographic diversification to mitigate risks. The company is focused on optimizing asset utilization and leveraging its leadership in advanced technologies to drive growth in high-performance computing, automotive, IoT, and mobile communications markets.
- Market Risk Exposure: Amkor is exposed to market risks from fluctuations in interest rates and foreign currency exchange rates, particularly the U.S. dollar to Japanese yen exchange rate. These fluctuations could adversely impact the company’s financial results and increase the cost of borrowing.
SEC Filing: AMKOR TECHNOLOGY, INC. [ AMKR ] – 10-K – Feb. 21, 2025