Randy Abrams

Randy Abrams sought additional color on Amkor Technology's single-digit growth outlook for non-advanced packaging segments, including the puts and takes for communications (iOS vs. Android, SiP programs), consumer, and automotive and industrial markets. He also asked about the margin outlook, specifically the Q1 impact of leverage and one-time events, and the full-year incremental leverage from the mix shift towards advanced packaging and stronger compute growth.

Answer

CEO Kevin Engel provided market insights: flat phone units for comms with potential benefit from premium tier, slightly down PC units offset by AI/Arm-based shifts, flat overall car sales with increased semi content driving advanced automotive growth, and consumer driven by sentiment. CFO Megan Faust explained that Q1's 13% gross margin guide is impacted by a Q4 asset sale, but sequential flow-through would otherwise align with the 30% model. She noted Q1 also faces material content and currency headwinds. For the full year, she anticipates achieving 30% incremental flow-through from profit initiatives.

Randy Abrams asked for more color on the single-digit growth outlook for non-advanced packaging segments, specifically communications (iOS vs. Android), SiP programs, and automotive/industrial. He also questioned the Q1 margin outlook, including the impact of one-time items, and the incremental leverage expected from stronger compute growth as advanced packaging ramps.

Answer

CEO Kevin Engel noted that phone units are projected flat, but a shift to premium tiers benefits Amkor in communications. PC units are slightly down, but AI and Arm-based shifts benefit Amkor. Automotive and industrial see flat overall car sales, but hybrid/EV migration increases semi-content, leading to slow mainstream recovery and strong advanced auto growth. CFO Megan Faust explained that the Q1 gross margin guide (13% midpoint) is impacted by a Q4 asset sale, but sequential flow-through would otherwise align with the 30% model. She cited material content and currency headwinds year-over-year, and expects full-year profit initiatives to achieve 30% incremental flow-through.

Randy Abrams inquired about Amkor's compute opportunities, including the pipeline for AI and networking, the start of high-density fan-out shipments, and the potential utilization of Co-S s capacity. He also asked for an update on the system-in-package (SiP) pipeline for next year, particularly regarding communication gains and consumer segment developments.

Answer

CEO Giel Rutten confirmed the first high-density fan-out product shipped, with two more lined up, signaling a solid foundation for future growth. He noted a short-term moderation in 2.5D but a stronger long-term pipeline. For SiP, the communication socket was performing as expected, while the consumer end product was undergoing a predicted sequential decline due to cyclicality, with new product launches anticipated.

Randy Abrams inquired about Amkor's compute opportunities, including the pipeline for AI and networking, the start of high-density fan-out shipments, and the potential utilization of Co-op S capacity. He also asked for an update on the system-in-package (SiP) pipeline for next year, focusing on communication gains and consumer trends.

Answer

President and CEO Giel Rutten confirmed shipping the first high-density fan-out product, with two more lined up, viewing it as a solid foundation for future growth. He noted a slight short-term moderation in 2.5D (Co-op S) but a stronger long-term pipeline. For SiP, he stated the communication socket is performing as expected, with the full-year outlook in line with earlier guidance. On the consumer side, he noted a predicted sequential decline for an existing product but expressed encouragement for future product launches.

Randy Abrams from UBS Group AG asked about midterm content opportunities from on-device AI in communications and followed up on rising material costs and whether Amkor is entering a larger CapEx cycle with its investments.

Answer

CEO Giel Rutten explained that Amkor is working with lead customers on next-generation solutions for AI at the edge, noting high-density fan-out could be a key technology. On materials, he sees potential future constraints on high-end substrates and is proactively working with suppliers. CFO Megan Faust addressed capital spending, confirming continued investment in advanced packaging in 2026. She noted that while the Arizona factory groundbreaking is planned for H2 2025, government grant payments will lag, potentially increasing CapEx in 2026 and 2027.

Randy Abrams questioned Amkor's opportunity with its Arizona expansion given TSMC's increased U.S. investment, asking about the potential to accelerate the timeline or scale. He also asked for updates on the ramp of RDL interposer technology and the company's participation and timing for co-packaged optics.

Answer

CEO Giel Rutten described TSMC's U.S. expansion as a significant opportunity for Amkor, prompting an evaluation to potentially accelerate and scale up its own Arizona facility, possibly with a greater focus on compute technologies. He confirmed the Arizona construction is on track to begin in H2 2025. For advanced technologies, Rutten noted that co-packaged optics are already in production with a lead data center customer, and RDL interposer programs are ramping this year.

Randy Abrams requested a detailed allocation of the $850 million CapEx plan for 2025 and asked about the potential impact of tariffs on shipment timing or geographic shifts in assembly.

Answer

CFO Megan Faust detailed the $850M CapEx: 70% for capacity (HPC, advanced SiP, test), 25% for facilities (including 5-10% for Arizona), and 5% for quality/R&D. CEO Giel Rutten stated that the tariff situation is vague, but the more significant recent impact came from U.S. restrictions on AI-related exports to China, which creates uncertainty but could benefit Amkor due to its compliance capabilities.

Randy Abrams asked for more details on the Arizona expansion and the TSMC relationship, the company's opportunity and strategy for AI GPU final test, the CapEx outlook for 2025, and the timeline for panel-level packaging to handle advanced projects.

Answer

CEO Giel Rutten explained the MOU with TSMC is to create a seamless Asia-to-U.S. supply chain for mutual customers by standardizing advanced packaging technologies, noting the Arizona factory will not be captive to TSMC. He stated Amkor is actively pursuing opportunities in AI device testing to help de-risk the current concentrated supply chain. CFO Megan Faust indicated that 2025 capital intensity is expected to remain in the low teens, with investments in 2.5D capacity and panel-level packaging development at the Portugal facility.

Randy Abrams of UBS inquired about the outlook for 28-nanometer demand, the strategy for filling new P6 capacity, and the like-for-like pricing environment. He also asked for details on the Singapore fab's CapEx, ramp schedule, and UMC's opportunities in the AI sector, particularly concerning silicon interposers.

Answer

President Jason Wang stated that 28nm wafer shipments are expected to pick up in Q2, supported by OLED drivers and other applications. He confirmed pricing will remain firm post-Q1 adjustments but with flexibility in competitive situations. Mr. Wang noted the Singapore P3 fab ramp will now start in January 2026, with CapEx peaking in 2024. Regarding AI, he explained UMC's focus is on data transmission and power management, targeting a 10-20% addressable market. While cautious on expanding current interposer capacity, the company is advancing other 3D-IC solutions like wafer-to-wafer hybrid bonding.