Press release·02/21/2025 22:14:40

Amkor’s 2024 Financial Performance: Navigating Challenges and Opportunities

Amkor Technology, the world’s largest US-headquartered outsourced semiconductor assembly and test (OSAT) service provider, has released its financial results for 2024. While the company faced some headwinds, it continues to leverage its leadership position in advanced packaging and test technologies to serve the growing demand in high-performance computing, automotive, IoT, and mobile communications markets.

Overview of Financial Performance

Amkor’s net sales decreased by 2.9% in 2024 to $6.32 billion, primarily due to lower sales in the automotive, industrial, and communications end markets, partially offset by growth in the computing and consumer end markets. Despite the revenue decline, the company’s gross margin increased to 14.8% in 2024 compared to 14.5% in 2023, mainly due to the extension of the estimated useful life of its test equipment and favorable foreign currency exchange rate movements.

However, Amkor’s operating income margin decreased to 6.9% in 2024 from 7.2% in 2023, primarily due to increased employee compensation costs and start-up costs at the new Vietnam facility. The company’s capital expenditures remained high at $743.8 million, or 11.8% of net sales, as it continued to invest in advanced packaging and test equipment.

Trends in Revenue and Profit

The decrease in Amkor’s net sales in 2024 was primarily driven by the following:

• Automotive and industrial end market decreased 16% due to elevated customer inventories and weaker demand.
• Communications end market decreased 7% due to lower supported content mix in premium tier smartphones.
• Computing and consumer end markets grew 16% and 10%, respectively, driven by strong demand for ARM-based PCs, AI devices, and IoT wearables.

Despite the revenue decline, Amkor’s gross margin improved due to the extension of the useful life of its test equipment and favorable foreign currency movements, which offset the impact of lower factory utilization.

The company’s operating income margin decreased due to higher employee compensation costs and start-up expenses at the new Vietnam facility, partially offset by the increase in gross margin and a reduction in bad debt expense.

Strengths and Weaknesses

Strengths:

• Amkor is the world’s largest US-headquartered OSAT service provider, with a strong market position and long-standing relationships with major semiconductor companies.
• The company’s broad geographic footprint, including manufacturing presence in multiple countries, allows it to support evolving global supply chains and regionalization initiatives.
• Amkor’s focus on advanced packaging and test technologies positions it well to meet the growing demand for smaller device geometries, higher integration, and lower power consumption.
• The company’s optimization of asset utilization through sophisticated planning and efficiency improvement activities is a key competitive advantage.

Weaknesses:

• Amkor’s business is cyclical and can be impacted by broad economic factors, making it challenging to predict the timing, strength, and duration of industry corrections or downturns.
• The company’s capital-intensive nature requires significant upfront investments in equipment and facilities, which can affect its liquidity and profitability if customer demand does not develop as expected.
• Amkor’s operating income margin declined in 2024 due to increased costs, which could continue to put pressure on profitability if not managed effectively.

Outlook and Future Prospects

Amkor believes that the demand for advanced packaging services will continue to grow as customers and electronics OEMs strive for smaller device geometries, higher integration, and lower power consumption. The company is well-positioned to capitalize on the growth in high-performance computing, automotive, IoT, and mobile communications markets.

To support this growth, Amkor is making strategic investments, including the construction of an advanced packaging and test facility in Arizona, which is expected to receive up to $407 million in direct funding from the U.S. Department of Commerce under the CHIPS Act. The company is also progressing with the start-up of its new facility in Vietnam, which began delivering advanced packages in the third quarter of 2024.

Amkor’s broad geographic footprint and focus on optimizing asset utilization are expected to continue to be key competitive advantages, allowing the company to support evolving global supply chains and regionalization initiatives.

However, the company’s business remains subject to the cyclical nature of the semiconductor industry and broader economic conditions, which could impact its financial performance and liquidity in the future. Amkor will need to continue to manage its capital expenditures and costs effectively to maintain profitability and competitiveness.

Liquidity and Capital Resources

Amkor’s primary sources of liquidity are cash flows from operations, current cash and cash equivalents, short-term investments, and available credit facilities. As of December 31, 2024, the company had $1.65 billion in cash, cash equivalents, and short-term investments, with $1.41 billion held by its foreign subsidiaries.

The company’s capital expenditures totaled $743.8 million in 2024, or 11.8% of net sales, focused on investments in advanced packaging and test equipment. Amkor expects its 2025 capital expenditures to be around $850 million, with approximately 5-10% allocated to the construction of the new Arizona facility.

Amkor has a $600 million senior secured revolving credit facility, which provides additional liquidity, and its foreign subsidiaries have $60 million available under term loan credit facilities. The company was in compliance with all debt covenants as of December 31, 2024 and expects to remain in compliance for at least the next 12 months.

To manage its working capital and cash flows, Amkor uses non-recourse factoring arrangements to sell certain accounts receivable to third-party financial institutions. The company also aims to return 40-50% of its cumulative free cash flow to shareholders through dividends and stock repurchases, subject to various factors and Board of Directors’ approval.

Conclusion

Amkor’s 2024 financial performance reflects the challenges and opportunities facing the OSAT industry. While the company experienced a decline in revenue, it was able to improve its gross margin and maintain a strong liquidity position through prudent management of its capital resources.

Looking ahead, Amkor’s focus on advanced packaging and test technologies, strategic investments in new facilities, and optimization of its global manufacturing footprint position the company well to capitalize on the growing demand in high-performance computing, automotive, IoT, and mobile communications markets. However, the company will need to continue to manage its costs and capital expenditures effectively to maintain profitability and competitiveness in the face of the semiconductor industry’s cyclical nature and broader economic uncertainties.