• Revenue: $1.86 billion, a 27% sequential increase.
• EPS: $0.49.
• Gross Profit: $272 million.
• Gross Margin: 14.6%.
• Operating Expenses: $123 million.
• Operating Income: $149 million, with an 8% margin.
• Net Income: $123 million.
• EBITDA: $309 million, with a 16.6% margin.
• Cash and Short-term Investments: $1.5 billion.
• Total Liquidity: $2.2 billion.
• Total Debt: $1.1 billion.
• Debt-to-EBITDA Ratio: 1x.
• Q4 Revenue Outlook: Approximately $1.65 billion, an 11% sequential decline.
• Full Year CapEx Forecast: $750 million.

• Warning! GuruFocus has detected 8 Warning Signs with BOM:532313.

Release Date: October 28, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Amkor Technology Inc (NASDAQ:AMKR) reported a 27% sequential increase in revenue for Q3 2024, reaching $1.86 billion, driven by strong demand for advanced SiP technology.
• The company successfully ramped high-volume production for new premium tier smartphones, consumer wearables, and AI-enabled ARM-based PCs.
• Amkor's advanced packaging revenue increased by 6% year-to-date over 2023, despite challenges in traditional markets.
• The company has expanded its global manufacturing footprint, with new production starting in Vietnam and plans for an Arizona facility progressing well.
• Strategic partnerships with industry leaders like TSMC and Infineon are strengthening Amkor's position in growth markets such as AI and high-performance computing.

Negative Points

• Amkor Technology Inc (NASDAQ:AMKR) experienced a 24% year-to-date revenue decline in its mainstream business due to continued weakness in the automotive, industrial, and consumer markets.
• The company anticipates a more than seasonal decline in Q4 2024 revenue, primarily due to weaker-than-expected dynamics in the communications end market.
• Gross margins were constrained in Q3 due to higher material content and underutilization in mainstream factories, impacting profitability.
• The automotive and industrial markets are recovering slower than anticipated, with a 17% year-to-date revenue decline.
• Amkor faces challenges with underutilization in its factories, particularly in the Philippines and Japan, affecting overall efficiency.

Q & A Highlights

Q: Can you discuss your capacity additions and any changes in plans due to slower demand in core markets? A: (Giel Rutten, CEO) Most investments were in computing, specifically 2.5D capacity, which came online in Q2 and is fully utilized. We plan further expansion into 2025. Advanced SiP capacity was also expanded for a wearable consumer device, and we expect high utilization to continue.

Q: How do you see underutilization charges progressing into next year? A: (Giel Rutten, CEO) Underutilization is mainly in automotive and industrial product factories, running at about 60% utilization. We expect these lines to gradually fill up during 2025 as the market recovers. (Megan Faust, CFO) The Vietnam facility's ramp will impact margins by about 100 basis points in Q4, tapering off by Q3 2025.

Q: What is your visibility into the premium-tier smartphone build plan for early 2025? A: (Giel Rutten, CEO) Visibility is limited. 2024 saw a deviation from normal seasonality with a stronger first half. We expect recovery in 2025, driven by AI functionality in premium-tier phones, which should trigger an upcycle.

Q: How do you view the automotive and industrial markets' recovery? A: (Giel Rutten, CEO) The market is stabilizing, with modest growth expected in Q4 and gradual growth into 2025. Inventory depletion is taking longer, and end market demand, especially in EVs, is weaker than expected.

Q: Can you provide more details on your engagement with hyperscalers for AI and customer diversification? A: (Giel Rutten, CEO) We are onboarding another customer for 2.5D technologies, ramping up in Q4 and into next year. We are also qualifying customers on next-generation RBL-based technologies, ramping in the second half of 2025, diversifying both our customer and technology portfolios.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.