Amkor anticipates Q4 revenue of $1.9B-$2.0B while narrowing 2026 CapEx to around $2.5B

• "Amkor delivered a strong third quarter with revenue of approximately $2 billion." (CEO, President & Director Kevin Engel)
• "For the second consecutive quarter, we achieved record revenue in both Computing and Automotive and Industrial end markets." (CEO, President & Director Kevin Engel)
• "Customers are not only planning further ahead, but are also making long-term commitments and providing advance payments tied to future capacity requirements." (CEO, President & Director Kevin Engel)
• "An additional HDFO CPU program for a hyperscaler began ramping in Q3 and 2 new 2.5D programs in networking and data center are expected to come online in Q4." (CEO, President & Director Kevin Engel)
• "In September, we announced Phase 2 of our Arizona advanced packaging and test campus, which is expected to break ground in late 2027 as Phase 1 construction nears completion." (CEO, President & Director Kevin Engel)
• "Together, both phases are planned to be over 90,000 square meters of clean room space and represent an estimated investment of $12 billion." (CEO, President & Director Kevin Engel)
• "Amkor delivered third quarter revenue of $1.99 billion, an increase of 5% sequentially." (Executive VP, CFO & Treasurer Megan Faust)
• "Revenue in the Communications end market declined 8% sequentially." (Executive VP, CFO & Treasurer Megan Faust)
• "Component shortages affecting premium tier smartphones and IoT wearable devices created an additional headwind during the quarter across both Communications and Consumer applications." (Executive VP, CFO & Treasurer Megan Faust)

Outlook

• "Q4 revenue is expected to be between $1.9 billion and $2 billion." (Executive VP, CFO & Treasurer Faust)
• "Gross margin is expected to be between 18% and 19%." (Executive VP, CFO & Treasurer Faust)
• "Net income is forecasted to be between $160 million and $185 million, resulting in earnings per share between $0.65 and $0.75." (Executive VP, CFO & Treasurer Faust)
• "We are narrowing our estimated 2026 CapEx spend to around $2.5 billion, primarily reflecting the timing of construction payments for our Arizona campus." (Executive VP, CFO & Treasurer Faust)
• "We expect a step-up in CapEx in 2027, driven primarily by facility investment in Arizona, Korea and Vietnam as we expand capacity to support our long-term growth opportunities." (Executive VP, CFO & Treasurer Faust)
• "For the Third Quarter, we expect Communications revenue to decline in the high single digits sequentially which is a departure from the typical seasonal patterns." (Executive VP, CFO & Treasurer Faust, prior-quarter call)

Financial Results

• "Gross margin for the quarter was 18.3%, an increase of 150 basis points sequentially and 400 basis points year-on-year." (Executive VP, CFO & Treasurer Faust)
• "Net income was $191 million, resulting in earnings per share of $0.76." (Executive VP, CFO & Treasurer Faust)
• "As of September 30, we held $2.4 billion in cash and short-term investments and total liquidity was $3.4 billion." (Executive VP, CFO & Treasurer Faust)
• "Total debt was $2.5 billion, and our debt-to-EBITDA ratio was 1.7x." (Executive VP, CFO & Treasurer Faust)
• "During the quarter, gross margin was impacted by foreign currency headwinds and to a lesser extent, the impact of the July earthquake on our Kumamoto Japan facility." (Executive VP, CFO & Treasurer Faust)

Q&A

• Ruplu Bhattacharya, BofA Securities: "How should we think about the impact of the SiP migration to Vietnam... weakness in the Android smartphone market... FX... lingering issues in Japan?" Executive VP, CFO & Treasurer Faust: "That's primarily due to favorable product mix as it relates to further growth in our compute... We are also anticipating continued unfavorable FX... we do see Android being down in Q4 compared to Q3. And we also see iOS down. So we see both ecosystems down."
• Ruplu Bhattacharya, BofA Securities: "How should we think about the division of programs between South Korea and Arizona?... how fungible is this advanced packaging equipment?" CEO, President & Director Engel: "for 2027 [Korea construction] be in the $400 million to $450 million range... for Arizona... more of a 2020 -- late 2028 type ramp profile... we wouldn't expect a big delta between the 2... these assets are fungible up and down that stack."
• Joseph Moore, Morgan Stanley: "compute, up 25%... you had talked about up 30%..." CEO, President & Director Engel: "It's more related to... over 300 steps in the process... it took a little bit longer to really load the line to the level we wanted to. I wouldn't say anything related to supply constraints."
• Jack Adair, Melius Research: "Computing to be up over 50% year-over-year in 4Q... momentum into 2027..." CEO, President & Director Engel: "We would expect a similar growth rate to even higher growth rate into 2027."
• Randy Abrams, UBS: "substrate and material costs rise... tight capacity..." CEO, President & Director Engel: "there's definitely cost pressure... Typically, we're passing those costs on to our customers... the rebound is there" (on SiP).
• Steve Barger, KeyBanc: "can you manage this build-out without incremental debt?" Executive VP, CFO & Treasurer Faust: "it's still too early to tell... but I would say the balance sheet positioning is solid through 2027."

Sentiment Analysis

• Analyst tone was neutral-to-slightly negative, concentrating on Communications weakness and cost/margin durability, including "weakness in the Android smartphone market" (Bhattacharya, BofA) and "substrate and material costs rise" (Abrams, UBS).
• Management tone was slightly positive in prepared remarks and more measured in Q&A, emphasizing execution and visibility, including "customers are... making long-term commitments and providing advance payments" (CEO, President & Director Engel) while also flagging headwinds such as "continued unfavorable FX" (Executive VP, CFO & Treasurer Faust).
• Versus the prior quarter, the current call leaned more on committed capacity expansion and prepayments, while the prior call leaned more on partnership announcements, including "a 10-year advanced packaging agreement with TSMC" and "a multi-year strategic partnership with NVIDIA" (CEO, President & Director Engel, prior-quarter call).

Quarter-over-Quarter Comparison

• Current-quarter focus shifted toward scaling programs and physical expansion detail, including "Phase 2 of our Arizona advanced packaging and test campus" and "an estimated investment of $12 billion" (CEO, President & Director Engel), compared with the prior quarter’s emphasis on newly announced strategic agreements.
• Guidance language tightened on 2026 spending, with "narrowing our estimated 2026 CapEx spend to around $2.5 billion" (Executive VP, CFO & Treasurer Faust) versus the prior-quarter range of "between $2.5 billion and $3 billion" (Executive VP, CFO & Treasurer Faust, prior-quarter call).
• Analyst questioning broadened from Q2’s heavy focus on smartphone seasonality and SiP transition into Q3’s focus on Korea vs. Arizona economics, equipment fungibility, and funding, including "how fungible is this advanced packaging equipment?" (Bhattacharya, BofA).

Risks and Concerns

• "Component shortages affecting premium tier smartphones and IoT wearable devices created an additional headwind" and "We expect these conditions to continue in the fourth quarter" (Executive VP, CFO & Treasurer Faust).
• "We are also anticipating continued unfavorable FX" (Executive VP, CFO & Treasurer Faust).
• "there's definitely cost pressure" and "Typically, we're passing those costs on to our customers" (CEO, President & Director Engel).

Final Takeaway

Amkor’s management framed Q3 around record Computing and Automotive/Industrial performance, margin expansion, and expanding customer commitments that include advance payments, while setting Q4 guidance of $1.9 billion to $2 billion in revenue and $0.65 to $0.75 in EPS. Leadership highlighted program ramps in HDFO and 2.5D and laid out a larger, longer-dated capacity build spanning Arizona, Korea, and Vietnam, while acknowledging near-term headwinds in Communications and Consumer tied to component shortages, FX pressure, and shifting smartphone build patterns.

Read the full Earnings Call Transcript

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