AMKOR TECHNOLOGY, INC.

Amkor Technology, Inc. is the world's largest U.S. headquartered outsourced semiconductor assembly and test service provider (OSAT) and a global leader in outsourced semiconductor packaging and test services. The company operates in the semiconductor industry, which is cyclical and impacted by broad economic factors such as worldwide gross domestic product and consumer spending. Key structural forces shaping competition include the accelerating adoption of artificial intelligence applications, growing demand for smart mobile and connected devices, the proliferation of semiconductor devices into automotive systems, the adoption of heterogeneous integration, the growth of advanced system-in-package modules, the continued build out of 5G infrastructure, and digitalization driving expansion of data generation and storage. The semiconductor industry has experienced significant and sometimes prolonged cyclical upturns and downturns in the past.

The outsourced semiconductor packaging and test market is highly competitive, and geopolitical trade tensions have increased competition from Chinese firms supporting a China-for-China supply chain. Amkor faces competition from established packaging and test service providers primarily located in Asia, including ASE Technology, JCET Group and Powertech Technology. Additionally, the company competes with contract foundries and electronic manufacturing service providers or contract electronics manufacturers, which offer certain types of advanced packaging. Amkor's IDM customers also evaluate its services and scale against their own in-house capabilities. Key competitive factors in the market include advanced packaging technology, geographic location of services, manufacturing scale and expertise, customer co-development and innovation, investment in new technology and capacity, quality and reliability, price, and cycle time. Amkor believes it is competitive in these areas.

Amkor generates revenue by providing turnkey packaging and test services including wafer bump, wafer probe, wafer back-grind, package design, packaging, burn-in, system level and final test and drop shipment services. The company provides these services to integrated device manufacturers (IDMs), fabless semiconductor companies, original equipment manufacturers (OEMs) and contract foundries. Substantially all of the company's revenue is recognized as services are rendered, which generally occurs over the course of two to three weeks. Revenue is recognized over time as services are rendered because the services create or enhance the customer's wafer, utilizing an input method (cost incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date.

Amkor offers a broad range of advanced and mainstream packaging and test services. Advanced Products include flip chip, memory, wafer-level processing and related test services, and generated net sales of $5,556 million ¹ in 2025, representing 82.8% ² of total net sales. Advanced Products include packaging types such as flip-chip chip-scale packages (FC CSP), flip chip ball grid array (FCBGA), memory packages, and wafer-level package products including wafer-level CSP, wafer-level fan-out (WLFO), Silicon Photonics (SiPh), Co-Packaged Optics (CPO), and high density fan-out (HDFO). Mainstream Products use wirebond interconnect technology and include leadframe packages, substrate-based wirebond packages, and micro-electro-mechanical systems (MEMS) packages, generating net sales of $1,152 million ³ in 2025, representing 17.2% ⁴ of total net sales. Advanced SiP modules, which combine multiple semiconductor and other electronic components into a single package, had net sales of approximately $3,080 million ⁵ in 2025, $3,085 million ⁶ in 2024, and $2,955 million ⁷ in 2023, and are mostly included in Advanced Products depending upon the interconnect technology used.

Test Services complement the wafer and packaging services across Advanced and Mainstream Products, offering customers the cycle time and cost advantages of co-located turn-key services. These services include wafer level test, package level test, burn-in test, system level test, and test development services. The company's end market distribution for 2025 was Communications (smartphones, tablets) at 46% ⁸, Computing (data center, infrastructure, PC/laptop, storage) at 20% ⁹, Automotive, industrial and other (ADAS, electrification, infotainment, safety) at 19% ¹⁰, and Consumer (AR & gaming, connected home, home electronics, wearables) at 15% ¹¹.

In 2025, Amkor began construction of the first phase of the Arizona Facility, which will have approximately 1.8 million square feet of space, with manufacturing expected to begin in the first half of 2028. The company continued to scale production in its Vietnam facility, which opened in 2024. In May 2025, Amkor entered into a $1.0 billion ¹² senior secured revolving credit facility (the 2025 Revolving Credit Facility) that replaced an existing revolving credit facility, which includes an uncommitted optional accordion of up to $200.0 million ¹³. In June 2025, the company amended the 2025 Revolving Credit Facility agreement and created a new tranche of term loans (the Term A Loans) with an aggregate principal amount of $500.0 million ¹⁴. In July 2025, a portion of the proceeds were used to redeem $125.0 million ¹⁵ of the 6.625% Senior Notes due September 2027 and repay the remaining $98.0 million ¹⁶ of term loans at Amkor Assembly & Test (Shanghai) Co., Ltd. In September 2025, the company issued $500.0 million ¹⁷ of 5.875% Senior Notes due October 2033, with proceeds used for the redemption of the outstanding $400.0 million ¹⁸ aggregate principal amount of the 2027 Notes and general corporate purposes. In November 2025, the Board of Directors approved a quarterly dividend of $0.08352 ¹⁹ per share, a 1% increase from the rate set in November 2024. In 2025, the company paid total cash dividends of $81.9 million ²⁰. In December 2024, the Commerce Department awarded Amkor up to $407 million ²¹ in direct funding pursuant to the CHIPS Act for the Arizona Facility. In July 2025, the enactment of the One Big Beautiful Bill Act increased the investment tax credit rate under the CHIPS Act from 25% to 35% for qualified property placed in service after 2025.

Net sales increased $390.3 million ²² or 6.2% ²³ to $6,708.0 million ²⁴ in 2025 from $6,317.7 million ²⁵ in 2024, primarily due to higher sales across all end markets. Gross margin decreased to 14.0% ²⁶ in 2025 compared to 14.8% ²⁷ in 2024, primarily due to increased overhead and employee compensation costs, partially offset by higher factory utilization and a gain recognized on the sale of certain machinery and equipment. Operating income margin increased to 7.0% ²⁸ in 2025 from 6.9% ²⁹ in 2024, primarily due to the net amount recognized for a cash receipt subject to bankruptcy proceedings related to the Nanium acquisition and the incremental costs incurred in 2024 during start-up at the Vietnam Facility, partially offset by the decrease in gross margin. Net income attributable to Amkor was $373.9 million ³⁰ in 2025, compared to $354.0 million ³¹ in 2024. Diluted EPS was $1.50 ³² in 2025 versus $1.43 ³³ in 2024.

Management expects that 2026 capital expenditures will be approximately $2.5 billion to $3.0 billion ³⁴, with the increase from 2025 primarily due to the construction of the Arizona Facility.

A key growth vector is the expansion of Amkor's manufacturing footprint, particularly with the construction of the Arizona Facility, which began in the second half of 2025. Manufacturing is expected to begin in the first half of 2028. This investment is intended to strengthen the company's ability to serve customers seeking to regionalize their supply chains and enhance participation in U.S. semiconductor initiatives. The company also continues to scale production in its Vietnam facility, which opened in 2024, further increasing capacity and operational flexibility in Asia.

Another major growth vector is the focus on key end markets, including high-performance computing (HPC) and artificial intelligence (AI), automotive, IoT, and mobile communications. The company is collaborating with industry leaders as smartphones transition to include artificial intelligence and as increasing semiconductor content in automobiles drives demand for advanced packaging to enable safety features such as ADAS, in-car computing, radar, and digital cockpit features. The computing end market increased 16% ³⁵ in 2025 compared to 2024, primarily driven by strength in AI related PC devices and networking infrastructure. The automotive and industrial end market increased 8% ³⁶ in 2025 compared to 2024, primarily due to strong advanced content growth for ADAS applications.

Gross margin decreased to 14.0% ³⁷ in 2025 compared to 14.8% ³⁸ in 2024, primarily due to increased overhead and employee compensation costs, partially offset by higher factory utilization driven by the increase in net sales and a gain recognized on the sale of certain machinery and equipment. Gross margin for 2025 was also constrained by the ramp up of production at the Vietnam Facility, which is in the early stages of high-volume manufacturing. Since a substantial portion of the costs at the company's factories is fixed, there tends to be a strong relationship between revenue levels and gross margin.

In 2025, capital expenditures totaled $904.6 million ³⁹, or 13.5% ⁴⁰ of net sales, compared to $743.8 million ⁴¹, or 11.8% ⁴² of net sales in 2024. Spending was primarily focused on investments in advanced packaging and test equipment and the Arizona Facility. Management expects that 2026 capital expenditures will be approximately $2.5 billion to $3.0 billion ⁴³. The company expects to receive approximately $300 million ⁴⁴ of advance payments over a two-year period, all of which will require standby letters of credit upon receipt.

In 2025, the company paid total quarterly cash dividends of $81.9 million ⁴⁵. In November 2025, the Board of Directors approved a quarterly dividend of $0.08352 ⁴⁶ per share, a 1% increase from the rate set in November 2024. In November 2022, the company announced its intention to return 40 percent to 50 percent ⁴⁷ of cumulative free cash flow generated over time, beginning 2022, in the form of dividends and stock repurchases.

The company faces headwinds from the cyclical nature of the semiconductor industry, which has experienced significant and sometimes prolonged cyclical upturns and downturns in the past. The company's business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors such as worldwide gross domestic product and consumer spending. Additionally, the company faces risks from restrictive trade barriers, export controls, tariffs, customs and duties, particularly the BIS Regulations applicable to the sale of U.S. semiconductor technology in China, which have created uncertainty and could impact the company's business and the businesses of its customers.

The company faces constraints from the ramp up of production at the Vietnam Facility, which is in the early stages of high-volume manufacturing and constrained gross margin in 2025. The company also faces risks from changes in global trade policy, including tariffs and related trade actions announced by the U.S. and other countries, the degree of which impact on the business, financial condition and results of operations will depend on future developments, which are uncertain.

A significant portion of Amkor's revenues is concentrated with a small group of customers, with the ten largest customers accounting for 72% ⁴⁸ of net sales in 2025, and direct sales to Apple and Qualcomm accounting for 29.8% ⁴⁹ and 11.1% ⁵⁰ of net sales, respectively. The loss of a significant customer or a reduction in orders could materially and adversely affect the business. The company faces substantial competition from established packaging and test service providers primarily located in Asia, including ASE Technology, JCET Group and Powertech Technology, as well as from foundries and contract manufacturers. The company's operations are subject to risks from international trade restrictions, including the BIS Regulations which limit the ability to sell certain semiconductor technology to customers in China, and the company's competitors may be exempt from these regulations by virtue of being non-U.S. manufacturers. The company has a substantial amount of debt, with a total debt balance of $1,445.2 million ⁵¹ as of December 31, 2025, of which $162.4 million ⁵² was classified as a current liability and $956.2 million ⁵³ was collateralized indebtedness, which could limit operating flexibility and increase vulnerability to adverse economic conditions. The company's business is dependent on the cyclical and volatile semiconductor industry, and downturns could harm performance.

Management's message emphasizes that Amkor's primary financial objective is profitable sales growth, built on providing industry-leading packaging and test technologies, expanding the global manufacturing footprint including new investments in the U.S., and deepening strategic partnerships with leading semiconductor companies. Management believes these three pillars position the company to capture growth across high-value markets. Management expects that 2026 capital expenditures will be approximately $2.5 billion to $3.0 billion ⁵⁴, with the increase from 2025 primarily due to the construction of the Arizona Facility. The company expects to receive approximately $300 million ⁵⁵ of advance payments over a two-year period. Management believes that cash flow from operating activities, together with existing cash and cash equivalents, short-term investments and availability under credit facilities, will be sufficient to fund working capital, capital expenditures, dividend payments, debt service, debt repurchases and other financial requirements for at least the next 12 months.