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AMKOR TECHNOLOGY, INC. (AMKR)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $1.63B and diluted EPS was $0.43, both in line with company guidance; gross margin expanded 50 bps sequentially to 15.1% on mix, though revenue fell 13% QoQ and 7% YoY due to a weaker smartphone build pattern and a temporary SiP socket gap in the latest iOS phones .
  • Computing set a full-year record ($1.2B) on AI GPUs and ARM-based PCs, but near-term 2.5D volumes are below prior expectations given an accelerated customer transition and tightened U.S. export controls to China; management remains confident in diversification (new 2.5D customer) and next-gen RDL interposer ramps .
  • Q1 2025 guidance: revenue $1.225–$1.325B, gross margin 10–13%, EPS $0.01–$0.17; full-year 2025 CapEx ~$850M (5–10% for Arizona), with tax rate rising to ~20% under Pillar Two; Vietnam ramp is a ~100 bps headwind early in 2025 that tapers to breakeven OI by year-end .
  • Strategic catalysts: CHIPS preliminary funding ($407M) to support Arizona advanced packaging, expanded partnership with TSMC for CoWoS/InFO in Arizona, and Lightmatter collaboration on 3D photonics; dividend raised 5% and $100M special dividend paid Dec-23-2024 .

What Went Well and What Went Wrong

  • What Went Well

    • “Advanced SiP reached a record of $3.1B” and computing revenue hit $1.2B for 2024, driven by AI GPUs and ARM-based PCs; full-year EBITDA was $1.09B and FCF $359M .
    • Strategic footprint and funding: new Vietnam facility ramped; secured $407M CHIPS funding for Arizona; expanded partnerships with TSMC and Infineon to support advanced packaging and automotive power modules .
    • Mix aided Q4 margin: gross margin rose to 15.1% (+50 bps QoQ), with operating margin at 8.3% despite Vietnam ramp burden; EBITDA was $302M (18.5% margin) .

  • What Went Wrong

    • Communications end-market fell 25% QoQ in Q4 on deviating build pattern and a temporary SiP socket loss in latest iOS phones; total 2024 communications revenue declined 7% .
    • Automotive/Industrial weakened: Q4 revenue down 8% QoQ; full-year A&I down 16% with 7 consecutive YoY declines from a 2022 peak, driven by mainstream products softness and tight customer inventory .
    • 2.5D near-term lower than expected due to accelerated next-gen GPU transition and late-2024 U.S. China export restrictions impacting planned device shipments; Vietnam ramp burdened margins (~80–100 bps) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Net Sales ($USD Millions)$1,752 $1,862 $1,629
Gross Margin (%)15.9% 14.6% 15.1%
Operating Income ($USD Millions)$159 $149 $134
Operating Margin (%)9.1% 8.0% 8.3%
Net Income Attributable to Amkor ($USD Millions)$118 $123 $106
Diluted EPS ($USD)$0.48 $0.49 $0.43
EBITDA ($USD Millions)$326 $309 $302

Segment and Mix

MetricQ4 2023Q3 2024Q4 2024
Advanced Products Net Sales ($USD Millions)$1,430 $1,568 $1,357
Mainstream Products Net Sales ($USD Millions)$322 $294 $272
Packaging Services (%)89% 90% 88%
Test Services (%)11% 10% 12%
Top Ten Customers (% of Sales)71% 74% 73%
End-Market: Communications (%)56% 52% 44%
End-Market: Computing (%)13% 16% 21%
End-Market: Auto/Industrial/Other (%)19% 16% 17%
End-Market: Consumer (%)12% 16% 18%

Balance Sheet and Cash Flow KPIs

MetricQ4 2023Q4 2024
Cash and Short-term Investments ($USD Millions)$1,595 (cash $1,119.8; ST inv $474.9) $1,646.5 (cash $1,133.6; ST inv $513.0)
Total Debt ($USD Millions)$1,203.5 (LT $1,071.8; ST/current $131.6) $1,159.5 (LT $923.4; ST/current $236.0)
Net Cash from Operations (FY) ($USD Millions)$1,270 $1,089
Free Cash Flow (FY) ($USD Millions)$534 $359

Notes:

  • YoY: Revenue -7.0%; EPS -10.4%; Gross margin -80 bps vs Q4’23; QoQ: Revenue -12.5%; EPS -12.2%; Gross margin +50 bps vs Q3’24, based on cells above .
  • Depreciation life extension benefited Q4 EPS by ~$0.05 and FY EPS by ~$0.20 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Billions)Q4 2024$1.60–$1.70 Actual $1.629 Met range
Gross Margin (%)Q4 202413.5–15.5 Actual 15.1 At high end
Diluted EPS ($USD)Q4 2024$0.28–$0.44 Actual $0.43 Near high end
Net Sales ($USD Billions)Q1 2025N/A$1.225–$1.325 New guide
Gross Margin (%)Q1 2025N/A10–13 New guide
Diluted EPS ($USD)Q1 2025N/A$0.01–$0.17 New guide
OpEx ($USD Millions)Q1 2025N/A~$120 New guide
Effective Tax Rate (%)FY 2025N/A~20 New guide
CapEx ($USD Millions)FY 2025N/A~$850 New guide
DividendQ4 2024$0.07875/qtr$0.08269/qtr; $0.40546 special (paid 12/23/24) Raised + Special

Earnings Call Themes & Trends

TopicQ2 2024 (7/29)Q3 2024 (10/28)Q4 2024 (2/10)Trend
AI/2.5D growthTripled 2.5D capacity; full-year 2.5D revenue to quadruple vs 2023; HBM constraints tempered sequential growth Record advanced SiP; 2.5D ramps in line; planning incremental 2025 capacity 2.5D volumes below prior expectations due to accelerated next-gen GPU transition and China restrictions; diversifying to new customer and RDL Near-term softer, multi-customer and tech diversification underway
ARM-based PCsNew programs ramp; sequential growth Continued strength; record computing Record computing in 2024; still mild growth expected in 2025 Secular positive, building from low base
Communications (iOS/Android)Stronger-than-seasonal iOS build; Android +20% YoY 4Q guided down on deviating seasonality; 75% of 4Q weakness from seasonality; 25% device changeover Q4 down 25% QoQ; temporary SiP socket gap; confidence in regaining in 3Q25 Weak H1’25; recovery H2’25 with socket regain
Automotive & IndustrialTrough expected in Q2; gradual recovery Stable to slightly up; inventory correction prolonged Q4 -8% QoQ; full-year -16%; mainstream weak, advanced auto mid-teens growth in 2025 Bottoming; advanced auto positive, mainstream uncertain
Vietnam rampQualification done; production start Q3; COGS burden moving from OpEx ~60–100 bps burden; breakeven OI exiting 2025 ~80 bps in Q4; ~100 bps in Q1; taper to breakeven OI by YE25 Temporary margin headwind improving over 2025
U.S. strategy (CHIPS/TSMC)Preliminary memorandum of terms: up to $400M CHIPS; Arizona ground in 2H25; spend concentrated ’26–’27 MOU: TSMC to contract advanced packaging in Arizona (CoWoS, InFO) $407M CHIPS; technology alignment and partnerships reaffirmed Execution milestones ahead; ecosystem strengthening
Tariffs/export controls—Seasonality/device changeover primary; limited short-term tariff impact U.S. rulemaking tightened in Dec ’24; export restrictions impacting AI products; compliance burden but potentially beneficial Regulatory headwinds in near term

Management Commentary

  • “In 2024, weakness in the automotive and industrial and communications end markets contributed to a full year decline. In contrast, we achieved record revenue in our computing end market with growth in ARM-based PCs and AI devices.” – CEO Giel Rutten .
  • “Advanced packaging revenue increased 3% year-over-year and advanced SiP reached a record of $3.1 billion… The computing end market reached a record of $1.2 billion.” – CEO prepared remarks .
  • “Dynamics within the AI data center supply chain…accelerated transition to a new AI GPU product family, together with new trade restrictions have resulted in an adjusted near-term outlook.” – CEO .
  • “Fourth quarter gross margin was 15.1%. Gross margin increased 50 basis points from Q3 primarily due to a change in product mix… Vietnam facility… had approximately 80 basis points of burden.” – CFO .
  • “We expect gross margin to be between 10% and 13% [Q1], OpEx around $120 million, and our effective tax rate to increase to around 20% due to new global tax regulations.” – CFO .

Q&A Highlights

  • Communications SiP socket gap and recovery: Management expects to regain the socket in next-gen iOS phones ramping in Q3 2025; Q4 impact was primarily build pattern; Q1 YoY decline of ~7% driven mainly by communications .
  • Margin trajectory: Incremental flow-through now 30–40% given higher materials mix; Vietnam is ~100 bps burden in Q1, tapering to breakeven OI by YE25 .
  • Automotive outlook: Advanced packaging for ADAS/infotainment expected to grow mid-teens in 2025; mainstream auto appears at trough with gradual recovery, timing uncertain .
  • AI compute supply chain: Near-term 2.5D volumes lower due to accelerated next-gen GPU transition and China restrictions; ramping second 2.5D customer; first programs on next-gen RDL interposer in low-volume production .
  • CapEx allocation: ~$850M in 2025; ~70% to capacity/capability (HPC next-gen RDL/bridge, advanced SiP, test), ~25% facilities including 5–10% Arizona; CHIPS grant timing tied to milestones and not assumed in 2025 .

Estimates Context

  • Attempted to retrieve S&P Global consensus (Revenue, EPS, # of estimates) for Q4 2024 and near-term periods; data was unavailable due to system limit (“Daily Request Limit Exceeded”). As a result, no Wall Street consensus comparisons can be provided for this quarter. We anchor comparison to company guidance and actuals instead [GetEstimates error].
  • Where estimates may adjust: Communications and compute segments are likely to see downward near-term revisions on 2.5D and iOS socket dynamics, partially offset by margin resilience and visibility into H2’25 recovery for communications and continued ARM PC adoption .

Key Takeaways for Investors

  • Near-term softness, H2 setup: Q1 2025 guide ($1.225–$1.325B, 10–13% GM, $0.01–$0.17 EPS) reflects communications headwinds and Vietnam burden; management expects above-seasonal H2’25 recovery as iOS content normalizes and socket returns .
  • AI packaging mix shift: 2.5D volumes temporarily below prior expectations due to product transitions and export restrictions, but diversification is underway (second customer, RDL interposer ramps) to sustain HPC growth and improve margin mix over time .
  • Margin resilience: Despite lower revenue, Q4 gross margin improved to 15.1%; Vietnam headwind (~80–100 bps) will fade across 2025; incremental flow-through model reset to 30–40% given higher materials content .
  • Capital deployment and ecosystem build: 2025 CapEx ~$850M, focused on next-gen HPC (RDL/bridge), advanced SiP and test; Arizona facility aligned with TSMC (CoWoS/InFO) and backed by ~$407M CHIPS, with spend concentrated in 2026–2027 .
  • Auto dichotomy: Advanced auto packaging (ADAS/infotainment) growing mid-teens in 2025 while mainstream remains uncertain; inventory normalization expected to gradually support recovery .
  • Shareholder returns: Quarterly dividend increased 5% and special $100M dividend paid in Dec 2024; liquidity strong ($1.6B cash/ST investments; debt-to-EBITDA ~1.1x) .
  • Regulatory sensitivity: Tightened U.S. export controls in late 2024 affected near-term AI device shipments; compliance burden could confer competitive advantage over non-approved firms, but visibility remains limited .