Amkor Technology, Inc. (AMKR) Earnings & Analysis

Latest quarter

Amkor reported third-quarter revenue below the consensus by −1.34%, although both the reported figure and estimate rounded to $2.0 billion. Adjusted earnings per share were $0.76, below the consensus estimate of $0.79. Separately, diluted earnings per share rose to $0.77 from $0.51 a year earlier.

Amkor’s filing said revenue increased 0.18% from a year before. Computing and Automotive and Industrial revenue each grew 37% year over year, driven primarily by data center and advanced driver assistance applications. Communications revenue fell 28%, primarily because of the timing of a production transfer from Korea to Vietnam and related preproduction work.

Gross margin rose to 18.3% from 14.3%, which the filing attributed primarily to a greater share of products with lower material content. Operating margin increased to 11.3% from 8.00%, primarily reflecting the higher gross margin. Amkor reported free cash flow of −$61.5 million, compared with −$77.6 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Kevin Engel said Amkor’s flagship high-density fan-out CPU program scaled during the quarter, and another program for a hyperscaler began ramping. He expects two new advanced-packaging programs for networking and data centers to come online in the fourth quarter. Automotive demand, he said, included advanced in-car computing applications such as driver assistance and infotainment.

CFO Megan Faust said Computing revenue increased 25% sequentially, while Communications declined 8%. She attributed the latter to the migration of system-in-package production to Vietnam, memory supply constraints and changes in build patterns. Component shortages also affected premium smartphones and wearable devices, and she expects those conditions to continue in the fourth quarter.

Faust attributed gross-margin expansion primarily to a greater mix of advanced packaging. She said currency headwinds and, to a lesser extent, the July earthquake at Amkor’s Kumamoto facility weighed on margin; the facility returned to full operations during the quarter.

On the call, Engel said customers were planning further ahead and providing advance payments tied to capacity needs. He said moving system-in-package production to Vietnam frees space in Korea for advanced packaging. Amkor has begun construction on new buildings at its Gwangju campus, while its Songdo assembly and test building is scheduled for completion by year-end.

Asked about pricing, Engel said Amkor typically passes cost increases on to customers and cited limited capacity among providers of advanced packages. He said customers in computing were focused on securing capacity for multiyear agreements.

On investment and margins, Faust said spending would step up in 2027 as Amkor expands facilities in Arizona, Korea and Vietnam. She said customer advance payments would support those investments. Asked about the margin effect, she said it was “still too early to tell yet what that impact on margin will be.” Engel said Arizona would have higher building depreciation and labor costs, but Amkor planned to manage those costs through utilization and automation.

Guidance

Amkor narrowed its estimated capital expenditure for FY2026 to around $2.5 billion. CFO Megan Faust said the estimate primarily reflects the timing of construction payments for the company’s Arizona campus.