AMKR - Earnings call 3 2023 | Amkor Technology, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Amkor Technology Third Quarter 2023 Earnings Conference Call. My name is Diego, and I will be your conference facilitator today. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Jennifer Jue, Head of Investor Relations. Ms. ahead. go please Jue,

Jennifer Jue

Good Amkor's and Conference Third operator. joining Call. you us for Quarter afternoon, you, thank everyone, for Thank XXXX Earnings

and Joining Chief Financial Giel are Megan Officer; Officer. me Chief Faust, Rutten, our today Executive our

earnings that this and SEC accompany Relations of today's is with with along Investor afternoon our the call. press website, release on the Our filed page the was available presentation slides

equivalent to on measures, presentation, website. and non-GAAP you the we U.S. the find this GAAP During financial reconciliation our will can use

We we will about statements our expectations based on for performance make forward-looking it. Amkor's the currently future environment as see

Of differ XX-Q. over filings refer final for Please from in note Please materially course, cause financial and to SEC risk included our on release Form could factors, these I'll to uncertainties the discussed Giel. and expectations. now and could preliminary, actual the today information are results that data exceptions to call our results be turn results differ. will And that press actual

Giel Rutten

Thank quarter, billion you, delivered driven the Revenue end $X.XX everyone, in guidance. for XX% you up in and results solid today. launch thank third the of and call premium by the tier both at joining the of the Amkor revenue of profitability Packaging, high Jennifer. sequentially, growth Advanced was with Good afternoon, supporting smartphones.

in outperformance Year-to-date, revenue XX% of period. to same an compared prior strong semiconductor $X.X X% estimated decline reflecting down billion over that was year, industry of versus

Although end overall demand, remain market areas some elevated levels we macroeconomic conditions smartphones improvements observed and in to dampen certain markets. continue like PCs, inventory and in

well the our that industry the the that confident and growth on positioned footprint. remain is packaging strategic advanced our focus to place in with and broad outperform remain for drivers industry Amkor we forward, geographic Looking secular

our Revenue row. in for projected this strong Now overall markets. let our in second cycle market end year remained a industry the the units to end within decline throughout communication has each of despite review dynamics me smartphone

revenue with partner growth quarter premium $X of proven operational trusted solutions expertise as set codeveloping billion mark leading a Third crossing for X%. on smartphones, tier year-on-year position and technology our record, our of also growth the record sequential track and a our and a innovative Amkor a delivering build new XX% through excellence.

technology enable wide advanced of throughout continuous functionality packaging a advanced integration, range our heterogeneous and the we and form functionality and Our technology supports applications innovation With for SiP performance. phone. factor,

record operational display utilize supporting further Devices which key and in drove smartphones. controllers, RF, portfolio, SiP Amkor's and footprint focus scale levels. on sensors new premium tier technology advanced applications, XG connectivity, and our the drivers technology, camera touch broad to growing for revenue memory are communication excellence

market as automotive period sequentially for Overall same up this end revenue year-to-date year. industrial last from and is well packaging market the the in flat as year-to-date. revenue advanced versus XX% But was

Although semiconductor we measures have we will ongoing car variability customers, continue. observed per increasing applications of content near-term expect control inventory by the some trend in that with certain certain

in the growth carbide sensors cameras efficiency of Growth the leading These materials charging especially gallium with segment gap RADAR multiple EV improvements high-performance and generate and from systems enable in nitride. processors assistance silicon and like electrification, to driver infrastructure. Advanced power band is like in materials in innovation LiDAR. white applications, introduction and

advanced pipeline built Japan of support notably applications capacity automotive strategically we Europe, for and and technology leading in Korea, semiconductors. have new automotive by partnering regional growth technology critical our expanding future regions, for solutions, we a in in our with In are these chains for supply factories lead for the As base portfolio. OSAT, utilizing customers automotive

changeovers applications for resulting in advanced decline X.XD tech the of devices modular by for bandwidth leading the data integrating OSAT AI packaging demand technologies cycle corrections substrates. chain memory deployment product high supply excess high-performance ] revenue end mature leading-edge computing the inventory center in our on with is with supporting interposers, sequential markets, more impacted computing technologies, [ life offset combined Strong Amkor a of was in and dynamics segments. and near-term other computing and Mixed ASIC XX%. on

and To support demand our And online are year. positioned customers computing strong our of this relationship we and than and with have opportunities in compared we established utilization to the the on by the future, more investments double will end portfolio the lead quarter capacity tripled well market capitalize second year, expect by in coming and with next year. our optimizing to broad capacity Amkor the to QX now with foundries. line of the is planned packaging advanced

headwinds Revenue market back a consumer full impacting The demand. the market and market remained this product Reduced wearable cycle end changeovers holding consumer dampen are to within excess in sequentially. spending, life stable still IoT inventory continue the recovery.

are Beyond we investing expanding capacity manufacturing to this and grow, and we the technology will SiP advanced in wearable scale innovation. cycle, and expect our and drive diversify IoT market

our We multiple a devices, qualifying customers set smartphones. AR/VR advanced are we the excellence new tier SiP consumer advanced and support watches the from our within of to packaging third reliability products high ramp that significant in ranging ramp manufacturing a and premium location, smart half to are experience. audio diverse products organization we engaged expect demonstrated emerging Within XXXX. with across to of In supply new Vietnam second volume quarter, the operational

manufacturing. in across supply countries With uniquely is broad Geopolitical with multiple support geographic the customers semiconductor our to chain. dynamics positioned and to Asia our continue and in impact Europe, Amkor footprint cost-effective reliable

will customers on chains. We derisking supply are support diversifying actively our programs and their that working with

packaging test we progressing advanced to establish our discussions facility. an In and the are U.S.,

SiP progressing memory manufacturing opening ceremony our and programs U.S. funding On partners Bac for the are advanced actively chips held and And We site. further commitments secure customers chain. on we our new Vietnam and have with working and campus for strengthens XX, October footprint. broad Ninh The of diversifies submitted grand supply pre-application a for our long-term to technology. manufacturing geographic qualifications is

an expertise, cost-effective a customers. our attractive believe is and with location. packaging local reliable evolving We manufacturing semiconductor deliver location coupled the ecosystem, will that for scale Amkor's advanced Vietnam and

quarter Now let the turn outlook. me to fourth

With the guidance. markets, inventory of customers the backdrop, uncertainties observing close the quarter expecting billion on at be to With softer midpoint $X.XXX a several we ongoing out are to are the seasonal, this revenue fourth we position prudent of year. in with than the taking

the we that place. technology to remain Although industry it recover portfolio, is And industry drivers accelerate global believe scale in Amkor recovers. to poised the as with semiconductor this our taking longer footprint, secular and from than anticipated is the for growth cycle, leading market

detailed to provide the more turn Megan to financial over information. now will I that, With call

Megan Faust

Giel, you, everyone. and afternoon, good Thank

a highlight revenue quarter billion quarterly packaging with a launch sequentially, XX% growing of to advanced Third smartphones. $X was communications notable supporting $X.XX the tier of over billion. up by primarily premium record We achieved of driven

than model, Given the EPS to our in more and doubled increase sequentially $X.XX. financial our in utilization leverage

cost flow-through goods With gross to Gross quarters increased market over effective communications, quarter X providing cyclical margin than profit as of X% XXXX. focus less was this together sequentially revenue million. profit. sequentially, and first perform diversified to sold only costs, and landscape on the with gross defined compared better X% its For the $XXX materials, of needed advanced XX% cost is to third for to for discipline, share significant gains end and increased the down variability packaging, Amkor's mitigating year, manufacturing XX.X%, resilience the strategic in industry. Amkor's market is allowing

to the Optimizing million. than Operating key XXX to And is more utilization came for expected income improving at points $XXX X.X%. to Operating million. profitability. sequentially in doubled the variable expenses margin third as nearly operating expanded quarter $XXX basis

the quarter in resulting for was million, income EPS of $X.XX. third $XXX Net

was our of and total Third quarter quarter liquidity $XXX investments, and EBITDA million, We margin the was was EBITDA $X.X ended $X.X with short-term and billion cash XX.X%. billion.

as X.Xx. and and of debt-to-EBITDA is the and debt third the of discipline total strength. demonstrates cycle, cost this $X.X quarter our Amkor financial Our strong during is sheet has our ratio CapEx balance end billion, exercised

customers we We to and This Vietnam continue global completed alternative factory for the to and our on chain their strategically cycle. when exit growth, capacity the we offer our global during advanced factory an manufacturing invest new support cycle, our current diversify industry will provide expansion schedule. packaging state-of-the-art in supply footprint

quarter our on Moving fourth to outlook.

be inventory. midpoint observed in cautious guidance. We approach to of customers a We to $X.XXX the control expect billion at revenue QX taking QX

Although some market improvement areas, in to dampen see overall demand. we end macroeconomic conditions continue

between to margin be gross and XX% XX%. expect We

We expect Vietnam as new operating $XXX million around factory. to increase expenses onboard to to we our start

around be between expect We $X.XX. Fourth $X.XX and effective net $XXX in is EPS $XX our rate full to of quarter expected million million, to tax income resulting to year be XX%.

year CapEx full $XXX million. at remains Our target

growth. future year leadership the chosen recently to foundations public and expand to a through advanced strengthen company and packaging build for to XXth strategically have bell. continue cycle anniversary to our its footprint celebrated manufacturing global ringing technology invest this by in position our We XXth closing as NASDAQ Amkor

rich of we We decades. what our are X history the over proud past have and accomplished

Our technology the leadership market allows leading us the to position enabling scale to bring OSAT company. and semiconductor in world's

for With Operator? open up the that, call your questions. now we will

Operator

with Davidson. Our Instructions] from Tom D.A. comes [Operator first question Diffely

Thomas Diffely

just year relative to by where this curious end quarter upcoming tell was I First, markets fourth us fourth compare if XX% you weaknesses? XX% the year-over-year a to could ago, to quarter

Giel Rutten

question. for that. this? to can take Megan can to best the Thanks, I Tom, Megan, you refer answer

Megan Faust

showing With pretty dynamics for communications, decline sequential a be respect to some end off amount in a Sure. QX, prior year give are market so to flat seeing QX. just record you Tom, that much color will we anticipating on QX. we're we're communications the to of while what

a quarter, to XX% strong. be reminder, the I say depending So can is our just would very XX% -- And upon of holding communications business.

to what QX. relates we're the other it for automotive, As expecting markets,

year-over-year, see year, look expected we full is still down that are the continuing in increase also While when to at we packaging. be an advanced to

despite notable think that to automotive, in continuing to that's the are that strength automotive the aspect near-term see I we advanced. of some respect with softness So in

we significant had With most infrastructure, to From last, for One, most had notable year-over-year some changeovers. storage component. year-over-year. X and the is seeing that's perspective, most data to computing life mixed say, down the that consumer product and the was again, QX, the dynamics. by year, really conditions, the center cycle impacted, also with respect the then in That's being And saw factors. timing would decline. respect but year-over-year I macroeconomic are that in strong where memory full we the a

Thomas Diffely

helpful. Okay. That's very

to you customers in So consumer of when computing do rationalizing and bottom a you think at the how levels? their to softer we're inventory segments, getting look terms here close

Giel Rutten

Yes.

] that, try deck me [ Let Tom. to

that dynamics. X.XD utilizing quarter-on-quarter significant expect Let's growth, technologies. already products the That on expect AI in Megan for specifically X now, we overall computing continue whether overall start segment, we see computing difficult positive for with our the -- the rest of are support computing, the mean, see clearly market, is high-performance currently bottom and One but The a we the over data but showing at computing corrections, year computing. inventory segment. next center, to right are to business. and we say computing I very we as we slight is mentioned that in

but being creates we growth consumers, One is And here. towards market because on that things improving balance of is recovery, with basis example, we market will market year. much on slightly end of a that the broadly. inventory year. consumer demand, is to Very yet, in the further elements. improving dependent uncertain, be certainly a Not markets, for a it's there completely few next end There, for digested. good in The see recovery, For still expect macroeconomic very that But the depends demand. that that difficult definitely predict. China

Thomas Diffely

it the invest each in to Is flows these capital ebbs And sounded of markets, of that continuing even to correct? these Great. high there's like that comments your end each though of and expansion from you're markets.

Giel Rutten

market I see that's segment, that the growth a for Yes, long-term correct, definitely, Tom. computing on mean, as Amkor. we

position strong discriminating map X.XD. a into, a like technologies let's have forward differentiating going say, -- And road technologies there. also, in We road there's map

as that We have as in a strong technology to capacities. in invest we well customer continue portfolio, so

growth. we there, in expect to comes also the say, year consumer Vietnam wearable it let's factory, that wearables. consumer further and of will a driven, course our next market, creates launch And by basis good the in a that's products, When the next-generation specifically for we

Thomas Diffely

maybe new an the from that Or And on quickly that to going wearables generation just you? prior to that new you've done? a that for Okay. is market, business evolution generation is just the be

Giel Rutten

is that and specific business It's we're That in about that also didn't generation, talking new. product have new is 'XX. for we a business new we in will a a 'XX have us, and

Thomas Diffely

like where of that ramp, not the year's but to in 'XX and the your quarter of kind it of X.XD, time, second Great. currently is heavy And take a business then it gets Xx some level? -- pretty capacity of until sorry to it's sounds expansion last under

Giel Rutten

ramp Yes. continuous that I that's mean a in line.

capacity debottlenecking we Of 'XX. the of second are by Tom. optimization incremental course, by in of this equipment, the able of And line, utilization we further year and to, capacity there, the have total, share end capacity And double the towards already. by to existing we quarter that our of of plan and capacity triple further investments output

Thomas Diffely

Okay. markets? And of on the then the million, sounds the more Are when you like location other it you maintaining the change? and less but CapEx year, spend on look you're at spending for computing did $XXX the

Giel Rutten

Not really, Tom.

our Vietnam for significant this keep You year, of a CapEx for was that have to in that allocated facility. part in that mind CapEx

as think that already allocated, is for CapEx I that the we On equipment and expansion, equipment planned. and allocated

Thomas Diffely

I you your appreciate Thank time the Well, Great. today. questions. for

Operator

question Instructions] [Operator Abrams UBS. next comes you. with from Randy Our Thank

Randy Abrams

The first those to it, show applications. on auto, discuss questions question, to may and continue of mature or auto of in Tom's industrial applications correction the have following I on for the industrial could mainstream signs the just but actually up you the outlook life and for more products? start on mainstream, missed

Giel Rutten

Randy. question, Yes. Good

with all silicon In networking let color, because monitoring like advanced Now me a detail packaging. little give combination more we're and by in to Megan advanced automotive the in-car then our emerging products infotainment, on here. advanced try in in give position the clearly bit some applications ADAS, are automotive, supported later

we there, year-on-year. growth. automotive, I XX% was continued mean, growth year-to-date around advanced in see So packaging

So good signal grow. that's will to a that continue

saw not automotive And is mature the that inventory part end supply of the we of much elevated inventory overall part the is keeping more that that we it's clearly it year, areas. year. the customers this market, or a more balance. extremely inventory at I but On the specific in of view, year, certainly our the automotive on the for was corrections going see elevated, an and think very believe going next into are correction maintaining end towards level, prudent prudent chain pretty we some In into in

Randy Abrams

Good.

curious relative Or business? sales some mix of the on the I'm margins, up fourth the the efficiency looks other incremental bit nonmaterial held back. part costs there a On change, the pulling the that like just on Is Actually, are is margin holding third It of sit to a think quarter. quarter. measures the again. I in

Just if anything, relatively supporting the margin to hold up in the fourth quarter?

Giel Rutten

take can Megan Randy. Thanks, that. Okay.

Megan Faust

is as management I There's that's holding our, yes, Randy, decline, financial so benefit holding cost the that currency But a say, would There of product Yes. in there. margin costs up even would mix say, that. say wouldn't there's nicely dramatic. I a there, better also really some good, overall, revenue where than declines. bit we're within is I QX, in but bit down despite manufacturing our some model that

Randy Abrams

just with how -- CapEx. advanced curious initial investment there'll how other in the ends be the lift year take or see next year And then you expansion, your for on much overall it for well? for if The next for CapEx, SiP, as the in follow-up capacity CapEx the year areas

Giel Rutten

Okay. Megan?

Megan Faust

Yes. Hi, Randy.

capital from CapEx you that a see our QX teens now So we perspective, that maintained can approach. we have really intensity low guide,

to dedicated construction. mentioned, and was As a significant 'XX of Giel a portion reminder,

we So equipment on did significantly pull and the capability. back

rule anticipate too our I 'XX thumb advanced As have wouldn't elements we continued early focus would, 'XX would on us of of would to far our for packaging as a capital we outside of low-teens guide say intensity. it's that guideline, give we go investment. as We as CapEx. And goes, a on of just now, to the

Randy Abrams

to I foundry and actually middle year. and you grow trip the once this follow that returns to by the profitability business? or also compute, where think, ramp how the up capacity, to trends on I more if just triple have -- to momentum out broadening assurance high-performance customers double want see you up of activity it, capacity, business. triple questions. the for on you you assurance One, triple Two then more and advanced next And continue that on then the or the doubling see than

Giel Rutten

that the with think a I in comfortable customer our example, for work that there, feel we can supply fairly utilize broadening Randy, parties well Yes, bring chain that place. up. mean is there with, that the elements we make customers provides also half in we as in that I we base capacity like demand technology. we and lined sure mean interposers to I share of supply as

into that confident we capacity. can fill XXXX, fairly we're So that

Randy Abrams

intensity for and higher. and Is margin on and advanced, you normally guess, how it ramp? like I scale see like profitability? get returns, But takes return ramping capital to investment the still accretive you And do as time

Giel Rutten

capacity Yes. since I have in place we mean XXXX. already

we're solution. generation of where in So we third now end-to-end the products provide an

that well And be that investment as can return solid with If the bumping warranted. of that utilization can in the even standard equipment we we there substrate interposer on with line, technology, fungible the individual the believe the are fungibility majority X.XD invest So in of equipment. a swings very sites, so since that equipment, on means utilize both population if is a on that we as part. the of the the

wafer-level is it could the fungible, capacities sense broadly in you So label the and of as in broader it investment word.

Randy Abrams

seeing in question interest Do expensive X that Would that are bit final be The looking towards shift you And trend? silicon opportunity? it. industry much interposer? value a you're or see that or a for you trying at different find Okay. that, less options. redistribution [indiscernible] activity is on And if to in investing

Giel Rutten

an production say, we're working for with general, conservative. several is industry interposer mean I interposer Yes. rent from in We're initial, customers that I base an RDL-level seeing pilot And technology. on would into silicon interposer. or the that

maturing expensive high high-bandwidth say, requires Certainly, levels, is a and the very levels important that technologies. of extremely Let's takes silicon because steep the yield curve. of combination yield interpose-based learning the memory the and

And RDL capacity RDL-based But other that. to technology. extent fungible or place with interposer-based a on between extent, way, very that hand, large some to preparing the the the installed and have emerging, technologies we're is the by in we and is,

Operator

KeyBanc Our question Steve ] from Markets. [ next with Barger comes Capital

Unknown Analyst

I'm Amkor. not familiar with

this ask can individually like maybe your see But packaging appreciate advanced for quarter business across letting a for near-term you XXXX. talk I'm growth not me you I smartphone meaning then about rates or question. So how your looking longer-term And guidance and automotive you AI? exposure,

Giel Rutten

Yes.

Let me of color we a mean, average rate rates compare for, growth an I will regular bit to are specifically try expected. at to Steve. give we that you catering believe serving there, that and packaging, the if for advanced semiconductor we that above grow markets

key drivers of couple A there.

or specifically, where -- Amkor is their our in if and core the incremental I chains industry Japan diversification support customers growth. in For of for manufacturing. European China than supporting Vietnam, an semiconductor chain that in where jurisdictions be, believe Amkor our industry we think pillars, we alternative example, vis-a-vis the like, where continue. there, Europe, supply offer that supply in strategic customers example, like is they chain drive for supply it will better or automotive positioned take we in with to We now, That will

or advanced by automotive, the high-performance packaging. computing, industry, And IoT be a drivers all be There X the packaging. leader. supported is we growth it or are there, positioned in will that XG, in also Because growth growth as advanced

the going will for engaged leaders believe we and with -- that in industry, forward. drive that growth are We

volumes that increasing. the is there element industry relative outsourced of additional potential the an then is And

we side on automotive, the So outsourcing were a extent, both advanced in that more the place, packaging, packaging vertically where and to silicon takes in well more side. on the integrated, as companies for see as large example, for past,

combined drive So in Amkor. that increased segments the outsourcing, solid geopolitical with lead for the footprints, market will and engaged of growth

Unknown Analyst

rank can for expect to packaging content in just very rates that? match detail. packaging those think will smartphone up, that that and appreciate high you would follow reasons. around But growth growth I kind how auto of Or gains advanced each relative rates And I AI obvious people for in other? to result

Giel Rutten

like again, Steve, and I centers. and significant referring functionality. you Well, the continue will high-end there AI smartphones, -- referred to specifically to to of, specifically expect edge data drive a we example, tier of that, adopt in the still and new will innovation. packaging. on is innovation smartphones, advanced But we incremental smartphone mean, in generation an the drive the see also processors. application adoption, edge then a That in for next devices part the to smartphone, generation And AI premium

there devices a edge kick-on also is So smartphones. like to effect

Unknown Analyst

semi And above-average expect that same question will growth for gains itself? there auto. significantly to the Do [ drive content you relative cycle the ]

Giel Rutten

and example, couple positioned semiconductor years. growth, automotive, there. And forward side, and to that's I helps Yes. if that market in-car like our applications is fastest-growing also the We're sensor in you automotive referring also on networking, only the side, is mean, not believe moving of we the that the from for actually, market industry on market connectivity that analysis, next that ADAS, drives going the data, automotive forward. take the but and processing well

segment be into market are a And part see proliferation the of the of in features high-end to automotive say, car market segment on let's and more that, of the mainstream these because mid top low of becoming these the industry. from, mandatory deployed features of we multiple

Unknown Analyst

for -- That's of in what's that -- that? great. 'XX, edge last the an time you or XX like When what about smartphone just talk 'XX? me. something smartphone, X And X AI-enabled an timing 'XX, Is

Giel Rutten

of generation Well, high-end core device. I AI the an announcement smartphone let's U.S. in included refer -- say, that already chip recent that will to the see that you of has, say, let's the you biggest, can And if company in processes the only next

functionality enter 'XX, So range. to into 'XX smartphones. be we the expect that This to

Unknown Analyst

great. time. very Thanks for the much That's

Operator

back further over Thank showing time, no turn to questions. remarks. you. this Giel closing the And I'm I would at call like for to

Giel Rutten

to at the with high $X.XX guidance, messages. to key and results growing quarter Let $X.XX. XX% delivered revenue than more end solid third EPS We me doubling billion of sequentially recap the

expecting are quarter We midpoint revenue guidance. at of of $X.XXX fourth billion the

Through manufacturing to of secure our anniversary the to in support invest NASDAQ We supply in Amkor had August, a significant the and XXth a semiconductor our base company. continued the Amkor opportunity celebrated reliable to X and XXth milestones: publicly global closing chain. success. In company's bell legacy as cycle, the diversified anniversary traded large-scale celebration ring and a

in to to leadership broad trends, footprint [ today. packaging, our outperform makeup cycle. poised exposure semiconductor we market With advanced our the this the Thank are geographic call diversified you ] and industry and joining accelerate out of for

Operator

conclude a disconnect. you. day. We Thank conference. may you. Thank All today's now parties Have good

Amkor Technology (AMKR) 30 Oct 232023 Q3 Earnings call transcript