Executive Summary / Key Takeaways

• Amkor Technology is strategically positioned as a critical enabler for the burgeoning AI and high-performance computing (HPC) markets, leveraging its leadership in advanced packaging technologies like high-density fan-out and 2.5D solutions.
• The company delivered a strong Q3 2025, with record revenues in Communications and Computing, exceeding guidance, and anticipates continued year-on-year growth in Q4 2025, reflecting a return to more normal seasonal patterns.
• Amkor is undertaking significant strategic investments, including a $7 billion expansion of its Arizona campus to establish a full U.S. semiconductor supply chain, supported by CHIPS Act funding, and optimizing its global manufacturing footprint, including rationalization efforts in Japan.
• Despite a dynamic geopolitical environment and short-term headwinds in certain segments, Amkor's robust project pipeline, diversified geographic presence, and deep customer partnerships underpin its confidence in long-term profitable growth.
• Investors should monitor the successful execution of its advanced technology ramps, the optimization of its manufacturing base, and the impact of global trade policies on end-market demand and supply chain stability.

Amkor's Enduring Role in Semiconductor Packaging

Amkor Technology, Inc., founded in 1968, stands as a global leader in outsourced semiconductor packaging and test (OSAT) services, a foundational pillar of the modern electronics industry. The company's core business involves providing turnkey services, from wafer bump and probe to package design, assembly, and final system-level testing. This comprehensive offering positions Amkor as an indispensable partner for integrated device manufacturers (IDMs), fabless semiconductor companies, and contract foundries worldwide. Amkor's overarching strategy is built on three pillars: strengthening technology leadership, expanding its global manufacturing footprint, and deepening partnerships with lead customers in high-growth markets.

Amkor's history is marked by continuous adaptation and strategic investments that have shaped its current competitive advantages. The acquisition of Nanium in May 2017, for instance, expanded its capabilities, later yielding a $72.80 million receivable in June 2025 from bankruptcy proceedings . The company also established a consistent capital return policy, initiating a regular quarterly cash dividend in October 2020 and announcing an intention in November 2022 to return 40% to 50% of cumulative free cash flow to shareholders .

The semiconductor industry is currently experiencing transformative shifts, driven by the proliferation of Artificial Intelligence (AI) and High-Performance Computing (HPC). These trends are fueling demand for advanced packaging, necessitating smaller device geometries, higher levels of integration, enhanced performance, and lower power consumption. Amkor's strategic responses, including its focus on advanced packaging and a diversified global footprint, are directly aligned with these industry megatrends.

Technological Leadership: The Engine of Amkor's Advanced Offerings

Amkor's competitive edge is deeply rooted in its technological differentiation and continuous innovation in advanced packaging and test solutions. The company's portfolio encompasses critical technologies such as flip chip, memory, wafer-level processing, and advanced System-in-Package (SiP) modules. These are essential for integrating multiple functions into compact form factors, vital for applications ranging from smartphones to wearables.

A key differentiator is Amkor's expertise in High-Density Fan-Out (HDFO) technology, which utilizes RDL (Redistribution Layer) interconnects. This technology is described by management as a "critical enabler for growth in the compute domain" and a "preferred technology versus the 2.5D that users interposer, High-Density Fan-Out users RDL, high-density interconnect, and that's the more flexible more cost-effective technologies" . The tangible benefits of HDFO include improved power, bandwidth, signal, and space efficiency, making it crucial for next-generation computing and communication devices. Amkor began shipping its first HDFO product in Q3 2025, with two more products lined up for production in Q4 2025 and early next year, signaling a significant ramp-up .

In the realm of HPC and AI, Amkor is actively engaged in 2.5D technology, which involves stacking multiple dies on an interposer. While 2.5D has seen some near-term moderation due to trade restrictions, management sees "a stronger potential pipeline coming up" longer term . The company is also collaborating with data center and networking customers on co-packaged optics and photonic solutions. These initiatives involve the heterogeneous integration of optical engine chiplet dies in a module format, aiming to significantly improve power, bandwidth, signal, and space efficiency in high-performance applications . Amkor is currently in production with a lead data center customer for co-packaged optics, with multiple new generations expected to diversify within data centers and networking .

Amkor's R&D efforts extend to bridge technologies (CoWoS-L equivalent), with two customers in qualification for ramping by 2026, further complementing its 2.5D and RDL-based portfolio . The company's capital investments in high-performance computing are highly fungible, meaning equipment can be utilized across 2.5D, RDL, large body size flip chip BGA, co-packaged optics, and standard bumping, enabling high utilization rates and efficient capital deployment .

Beyond packaging, Amkor is building a comprehensive test platform to provide turnkey solutions, upgrading its test fleet to support high-density digital pins and power supplies, and investing in next-generation temperature stability handling systems, high-power burn-in, and system-level tests . Test revenue in the computing market alone grew approximately 50% year-over-year in the first half of 2025 . This integrated approach to packaging and test enhances Amkor's competitive moat by offering customers a seamless, end-to-end solution, contributing to higher average selling prices (ASPs), lower overall costs for customers, and better margins for Amkor.

Operational Excellence and Strategic Footprint Expansion

Amkor's global manufacturing footprint is a key differentiator in the OSAT industry, providing customers with supply chain resilience and geographic flexibility. The company operates facilities across Asia, Europe, and is significantly expanding its presence in the United States. This diversification is particularly crucial in the current geopolitical climate, marked by evolving trade policies and export controls.

A notable recent expansion is the Vietnam facility, which began delivering advanced packages in Q3 2024 . This facility serves as a strategic alternative to the China supply chain and a cost-effective location for SiP, with five of Amkor's top ten customers already qualifying for production there . While the ramp-up of the Vietnam facility initially impacted gross margins by approximately 100-125 basis points in Q1 and Q2 2025, management expects this burden to gradually reduce, reaching breakeven operating income by the end of 2025 as utilization optimizes .

A cornerstone of Amkor's strategic expansion is the new advanced packaging and test campus in Arizona. This initiative is a direct response to increased interest in U.S. manufacturing and aims to establish a full turnkey semiconductor supply chain in the U.S. . The total projected investment for the Arizona campus has been increased to $7 billion, reflecting plans for additional cleanroom space and a second facility . Construction of Phase 1 commenced in September 2025, with completion expected by mid-2027 and production beginning in early 2028 . The facility will feature smart factory technologies and scalable production lines, focusing on advanced packaging and testing for AI, HPC, mobile communication, and advanced automotive applications . Amkor was awarded up to $407 million in direct funding by the U.S. Department of Commerce under the CHIPS Act to support this facility, with the investment tax credit rate further boosted from 25% to 35% by the One Big Beautiful Bill Act (OBBBA) enacted on July 4, 2025 .

In Japan, Amkor is actively optimizing its manufacturing footprint to align capacity with market demand, particularly for its automotive product portfolio. These actions, which include reducing manufacturing costs and adjusting terms for underutilized production lines, are expected to begin yielding results in Q4 2025, with the full effect anticipated by the end of 2027, potentially improving corporate gross margins by around 100 basis points .

Financial Performance: A Story of Resilience and Strategic Investment

Amkor Technology's recent financial performance reflects both the cyclical nature of the semiconductor industry and the strategic investments it is making for long-term growth. For the third quarter ended September 30, 2025, Amkor delivered strong results, with revenue of $1.99 billion and EPS of $0.51, both exceeding the high end of its guidance . This represented a 6.7% increase in net sales compared to Q3 2024, primarily driven by robust demand in the computing and communications end markets .

For the nine months ended September 30, 2025, net sales reached $4.82 billion, up from $4.69 billion in the same period of 2024 . This growth was primarily fueled by the computing and consumer end markets, partially offset by a decrease in the communications segment . Gross profit for the nine months stood at $623.97 million, down from $686.50 million in 2024, with gross margin decreasing to 12.9% from 14.6% . This decline was attributed to increased overhead and employee compensation costs, as well as the initial ramp-up costs of the Vietnam facility . Operating income for the nine months was $282.42 million, down from $304.02 million in 2024 . Net income attributable to Amkor for the nine months ended September 30, 2025, was $202.13 million, or $0.81 per diluted share, compared to $248.36 million, or $1.00 per diluted share, in 2024 .

Amkor's liquidity remains robust, providing the financial flexibility for its ambitious investment plans. As of September 30, 2025, the company held $2.1 billion in cash and short-term investments, with total liquidity reaching $3.2 billion . Total debt stood at $1.8 billion, resulting in a healthy debt-to-EBITDA ratio of 1.7x . The company proactively managed its debt profile in 2025, issuing $500 million of 5.88% Senior Notes due 2033 and executing a $500 million term loan, while redeeming $525 million of 2027 Senior Notes, significantly extending its maturity profile .

Cash flow from operations for the nine months ended September 30, 2025, was $451.13 million, a decrease from $551.26 million in the prior year, primarily due to changes in working capital and lower operating profits . Capital expenditures for the nine months totaled $472.53 million, with the full-year 2025 CapEx forecast increasing to $950 million to support the Arizona campus expansion . Free cash flow for the nine months was $13.16 million, down from $105.83 million in 2024, reflecting the heavy investment cycle .

Competitive Landscape: Differentiating in a Dynamic Market

Amkor operates in a highly competitive outsourced semiconductor packaging and test market, facing substantial competition from established and emerging providers, primarily located in Asia. Key direct competitors include ASE Technology Holding Co., Ltd. (ASX), Taiwan Semiconductor Manufacturing Company (TSM), and Intel Corporation (INTC).

Amkor differentiates itself through its focus on specialized packaging services, customization, and deep customer relationships. Its expertise in technologies like wafer-level fan-out packaging offers tangible benefits such as higher efficiency in component integration, which can lead to superior margins through reduced waste and stronger customer loyalty. This contrasts with ASE's larger operational scale, which often prioritizes cost-competitive, standardized solutions for high-volume production. While ASE benefits from greater efficiency in high-volume manufacturing, Amkor's ability to offer tailored, innovative solutions provides a unique value proposition, particularly in specialized segments.

Against foundry giants like TSMC, Amkor positions itself as a complementary partner rather than a direct competitor for design slots . TSMC, with its vertically integrated model and leadership in cutting-edge process technologies, focuses on high-performance chips for AI and data centers. Amkor's value lies in providing flexible, outsourced packaging and test services that are easier to integrate for customers without in-house capabilities, especially in areas like wafer-level fan-out packaging. While TSMC's R&D investments drive superior processing capabilities, Amkor's network effects in outsourcing can foster recurring revenue and positively impact cash flow generation by offering cost-effective, third-party services.

Intel, another integrated player, focuses on proprietary technologies for high-performance computing. Amkor's outsourced model offers greater flexibility and potentially lower entry barriers for customers, with offerings like flip-chip packages that are more accessible for fabless companies. Amkor's operational efficiency in packaging-specific segments can be a strength against Intel's integrated model, which sometimes faces challenges with execution delays and cost inefficiencies.

Amkor's diversified geographic footprint, including facilities in Asia, Europe, and the U.S., is a significant competitive advantage, allowing it to support evolving global supply chains and mitigate risks associated with regional concentrations . This is particularly relevant given the "too high concentration of test in Taiwan currently" for the compute supply chain, which Amkor is actively addressing by expanding test capacity in Korea and planning for its Arizona facility . However, Amkor faces vulnerabilities, including dependence on a concentrated customer base and potential lags in advanced technology development compared to rivals with larger R&D budgets. The company's strategic response involves proactive engagement with lead customers in product development and co-development of innovative advanced packaging solutions to ensure fast time-to-market .

Outlook and Guidance: Charting a Course for Future Growth

Amkor's management has provided a forward-looking perspective that balances cautious optimism with strategic ambition. For the fourth quarter of 2025, revenue is expected to be between $1.775 billion and $1.875 billion, representing an 8% sequential decline at the midpoint but a 12% year-on-year increase . Gross margin is projected to be between 14% and 15%, including an anticipated $30 million benefit from asset sales . Operating expenses are expected to be around $120 million, with net income forecasted between $95 million and $120 million, translating to EPS of $0.38 to $0.48 .

For the full year 2025, Amkor anticipates flat to low single-digit revenue growth, characterized by a "muted first half followed by a strong second half" . This outlook is heavily influenced by the expected recovery of a key SiP socket in next-generation iOS phones, a development management expresses high confidence in, with mass production preparations underway for a Q3 2025 ramp . The Communications segment is expected to see "above seasonal growth" in the second half, with continued strength in Android offsetting a slight slowdown in iOS in Q4 2025 .

The Computing end market, despite near-term adjustments due to trade restrictions and an accelerated transition to new AI GPU product families, is expected to show "mild growth" for the full year 2025 . The long-term outlook remains robust, driven by AI and HPC investments, with high-density fan-out technology ramping as expected . The Automotive and Industrial segment, after several quarters of decline, is projected for "mild full year growth" in 2025, supported by advanced packaging for ADAS and infotainment, and an anticipated recovery in the mainstream portfolio .

Amkor's 2025 capital expenditures forecast has been increased to $950 million, up from $850 million, primarily to support the expanded investment in the Arizona campus . This $7 billion investment over time reflects increased capacity and a second facility, rather than rising construction costs . Management expects corporate gross margins to improve by around 100 basis points by the end of 2027, driven by Japan footprint optimization, Vietnam ramp-up efficiencies, and scaling of leading-edge advanced packaging . The full-year effective tax rate is expected to increase to around 20% due to new global tax regulations like Pillar Two .

Giel Rutten, CEO, announced his retirement at the end of 2025, with Kevin Engel, a 20-year Amkor veteran, named as his successor . The company plans an Investor Day in mid-2026 to share long-term financial targets and deeper insights into its strategy .

Risks and Challenges: Vigilance in a Volatile Industry

Investing in Amkor Technology carries inherent risks, primarily stemming from the cyclical and volatile nature of the semiconductor industry. Fluctuations in global economic conditions, consumer spending, and inventory adjustments by customers can significantly impact demand for Amkor's services . The company's high percentage of fixed costs means that achieving satisfactory gross margins is highly dependent on maintaining high-capacity utilization rates .

Changes in the cost, quality, and availability of raw materials (such as leadframes, laminate substrates, and gold wire) and equipment pose ongoing challenges. Amkor sources critical materials from a limited group of suppliers, and significant price increases may not always be fully passed on to customers, potentially impacting gross margins . Geopolitical tensions, trade restrictions, and export controls, particularly those impacting the sale of U.S. semiconductor technology to China, introduce significant uncertainty and can affect customer build plans and Amkor's ability to serve certain markets . The BIS Regulations, for instance, limit the export of advanced computing chips and chipmaking equipment, potentially diverting business to competitors not subject to such restrictions .

Furthermore, Amkor's substantial investments in equipment and facilities, such as the Arizona campus, are made in anticipation of customer demand. If this demand does not materialize as expected, or if there are delays in construction or production ramps, it could materially and adversely affect the business . The receipt of government awards and incentives, like the CHIPS Act funding, is conditional upon achieving specific milestones and compliance, and any reduction, termination, or clawback could impact financial results .

Conclusion

Amkor Technology is at a pivotal juncture, transforming its operational and technological capabilities to capitalize on the profound shifts in the semiconductor landscape driven by AI and HPC. The company's strategic investments in advanced packaging, particularly high-density fan-out and 2.5D technologies, coupled with its expanding global footprint, including the ambitious Arizona campus, are foundational to its long-term growth narrative. While the near-term outlook presents a mixed picture, influenced by market cyclicality and geopolitical dynamics, Amkor's ability to exceed recent guidance and its confidence in regaining key market positions underscore its operational agility and strong customer partnerships.

The path to sustained value creation for Amkor hinges on the successful execution of its advanced technology roadmaps and the efficient ramp-up of new facilities. The expected improvement in corporate gross margins by 2027, driven by strategic optimizations, signals a clear focus on profitability amidst growth. Investors should recognize Amkor's critical role in enabling next-generation electronics and its proactive stance in building a resilient, geographically diversified supply chain. The company's technological leadership, particularly in advanced packaging solutions for AI and edge devices, positions it to capture significant opportunities as these markets mature, making it a compelling, albeit complex, investment in the evolving semiconductor ecosystem.