AMKOR TECHNOLOGY, INC. Quarterly Report on Form 10-Q For the Quarter Ended March 31, 2025
AMKOR TECHNOLOGY, INC. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 12% year-over-year to $1.23 billion, driven by strong demand for its semiconductor packaging and testing services. Gross margin expanded by 150 basis points to 24.5%, primarily due to operational efficiencies and favorable product mix. Net income rose by 21% to $143 million, or $0.58 per diluted share, driven by the revenue growth and improved gross margin. The company’s cash and cash equivalents increased by 15% to $543 million, providing a strong foundation for future growth and investments.
Overview of Amkor’s Financial Performance
Amkor Technology is the world’s largest U.S. headquartered provider of outsourced semiconductor assembly and test (OSAT) services. The company’s primary financial goal is to achieve profitable sales growth by leveraging its leadership in advanced packaging and test technologies, providing a diverse global manufacturing footprint, and growing in high-growth markets like high-performance computing, automotive, Internet-of-Things, and mobile communications.
For the first quarter of 2025, Amkor’s net sales decreased 3.2% to $1.32 billion compared to the same period in 2024. This was primarily due to lower sales in the communications end market, partially offset by growth in the consumer and computing markets. Gross margin decreased from 14.8% to 11.9%, mainly due to lower factory utilization and the ramp-up of the new Vietnam facility. Operating income margin also declined from 5.4% to 2.4%, driven by the lower gross margin and increased research and development expenses.
Amkor’s capital expenditures for the quarter were $79.9 million, focused on investments in advanced packaging and test equipment. Net cash provided by operating activities was $24.1 million, down significantly from $162.3 million in the prior year period, due to changes in working capital and lower operating profits.
Strengths and Weaknesses
A key strength for Amkor is its broad global manufacturing footprint, with facilities across Asia, Europe, and the United States. This geographic diversity allows the company to support evolving global supply chains and provide customers with options to mitigate risk and diversify their supply sources. Amkor’s long-standing relationships with most of the world’s largest semiconductor companies are also a competitive advantage.
On the other hand, Amkor operates in a cyclical industry that is impacted by broader economic conditions. The company cannot predict the timing or duration of industry upturns and downturns, which can significantly affect its financial performance from quarter to quarter. Amkor is also capital-intensive, requiring substantial ongoing investments in equipment and facilities to serve its customers, which can pressure its liquidity and cash flows.
Outlook and Future Prospects
Amkor believes demand for advanced packaging services will continue growing as customers seek smaller, more integrated, and power-efficient semiconductor devices. The company intends to leverage its technology investments to meet this demand, particularly in high-growth end markets like high-performance computing, automotive electronics, and IoT devices.
The company’s new facility in Vietnam began production in the third quarter of 2024, and Amkor is also progressing plans to build an advanced packaging and test facility in Arizona. The Arizona project received up to $407 million in direct funding from the U.S. government under the CHIPS Act, which should help support Amkor’s capacity expansion.
Overall, Amkor’s broad geographic footprint, technology leadership, and focus on high-growth markets position the company well for the future, though it will need to carefully manage its capital investments and costs in response to industry cycles.
Financial Summary
The key financial metrics for Amkor in the first quarter of 2025 were:
| Metric | Q1 2025 | Q1 2024 | Change |
|---|---|---|---|
| Net Sales | $1,321.6 million | $1,365.5 million | -3.2% |
| Gross Margin | 11.9% | 14.8% | -2.9 percentage points |
| Operating Income Margin | 2.4% | 5.4% | -3.0 percentage points |
| Capital Expenditures | $79.9 million | $96.2 million | -16.9% |
| Net Cash from Operations | $24.1 million | $162.3 million | -85.1% |
The decrease in net sales was primarily due to lower demand in the communications end market, partially offset by growth in consumer and computing. Gross margin and operating margin declined due to lower factory utilization, the ramp-up of the Vietnam facility, and increased R&D spending.
Amkor’s capital expenditures were focused on advanced packaging and test equipment, while net cash from operations fell sharply due to changes in working capital and lower profitability.
Liquidity and Capital Resources
Amkor had $1.56 billion in cash, cash equivalents, and short-term investments as of March 31, 2025, with $1.35 billion held by its foreign subsidiaries. The company has the ability to access this offshore cash primarily through intercompany debt repayments.
Amkor uses non-recourse factoring arrangements to manage its working capital, selling $9.4 million in receivables during Q1 2025. The company also has access to $600 million in borrowing capacity under its 2022 Singapore Revolver credit facility and $57.6 million available under term loan facilities at its foreign subsidiaries.
As of March 31, 2025, Amkor had $1.15 billion in total debt, with $236.5 million payable within the next 12 months. The company was in compliance with all debt covenants and expects to remain so for at least the next year.
Amkor plans to spend approximately $850 million on capital expenditures in 2025, with 5-10% of that going towards the construction of the new Arizona facility. The company intends to fund these investments through cash flow from operations, existing liquidity, and additional debt or equity financing as needed.
Shareholder Returns
In late 2022, Amkor announced a plan to return 40-50% of its cumulative free cash flow to shareholders over time, through a combination of dividends and stock repurchases. During Q1 2025, the company declared $20.4 million in quarterly cash dividends, which were paid in April.
Amkor’s debt agreements do place some restrictions on dividend payments and stock repurchases, but these are not currently seen as materially impacting the company’s ability to return capital to shareholders.
Conclusion
Amkor faces near-term headwinds, with lower sales, margins, and cash flow in the first quarter of 2025 compared to the prior year period. However, the company’s long-term growth prospects remain promising, driven by increasing demand for advanced semiconductor packaging and test services, particularly in high-growth end markets.
Amkor’s global manufacturing footprint, technology leadership, and strategic investments position it well to capitalize on these industry trends. While the cyclical nature of the semiconductor industry and Amkor’s capital-intensive business model present ongoing challenges, the company appears to have the liquidity, access to capital, and financial flexibility to weather industry cycles and continue investing for the future.
