Amkor Technology (AMKR) Q4 FY2025 Earnings Call Transcript

Date: February 9, 2026 | Source: LSEG Edited Transcript (via Amkor IR, ir.amkor.com)

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Operator (Diego): Good day, ladies and gentlemen, and welcome to the Amkor Technology fourth-quarter and full-year 2025 earnings conference call. My name is Diego, and I will be your conference facilitator today. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to Jennifer Jue, Head of Investor Relations. Ms. Jue, please go ahead.

Jennifer Jue (VP, Investor Relations and Finance): Good afternoon, and welcome to Amkor's fourth-quarter 2025 earnings conference call. Joining me today are CEO, Kevin Engel; and CFO, Megan Faust. Our earnings press release was filed with the SEC this afternoon and is available on the Investor Relations page of our website, along with the presentation slides that accompany today's call.

During this presentation, we will use non-GAAP financial measures, and you can find the reconciliation to the comparable GAAP financial measures in the slides. We will make forward-looking statements today based on our current beliefs, assumptions, and expectations. Please refer to our press release for a disclaimer on forward-looking statements and our SEC filings for a discussion of the risk factors and uncertainties that may affect our future results.

I will now turn the call over to Kevin.

Kevin Engel (President, CEO and Director): Thank you, Jennifer. Good afternoon, everyone, and thank you for joining us today. Before I get to results, I want to begin by saying how honored I am to speak with you for the first time as a CEO of Amkor. I'm grateful to the Board for placing their confidence in me to lead the company into the next phase of our journey. I want to acknowledge Giel for his leadership and vision, which guided us to where we are today.

Having spent more than two decades with Amkor, I've seen firsthand the strength of our people, the trust of our customers, and the ability to evolve with the industry, adapting with agility and executing through market transitions in periods of uncertainty. Amkor is an exceptional organization with a team dedicated to delivering customer value and advancing leading-edge technologies.

My leadership approach is grounded in transparency, disciplined execution, and a strong customer focus. I'm energized to lead Amkor as we enter the next chapter of growth.

I'll turn to our fourth-quarter performance. Amkor delivered strong fourth-quarter results to close out a dynamic year. Q4 revenue was $1.89 billion, and EPS was $0.69 outperforming the high end of our guidance. All end markets exceeded expectations with the largest upside coming from communications, driven primarily by strong iOS demand.

For the full year, revenue grew 6% to $6.7 billion. Computing continued its multiyear acceleration. Automotive delivered strong advanced content growth. Consumer demand improved, and communication stabilized with a key socket gain. Our team executed exceptionally well, navigating shifts in market conditions, a fluid geopolitical environment with agility and precision, which enabled us to deliver strong fourth-quarter results.

As we look back on 2025, it was a year marked with meaningful progress across each pillar of our strategy. We delivered record advanced and computing revenue driven by deep customer engagements across AI and HPC. We successfully ramped our first high density fan out programs into high volume production, expanding across multiple customers and positioning our platform for strong tailwinds in 2026.

Operationally, we made solid progress in Vietnam, reaching breakeven in Q4. We also broke ground on our Arizona campus, with construction of Phase 1 now underway. Collectively, these accomplishments strengthened our strategic position, expanded our global footprint, and reinforced our alignment with the fastest-growing megatrends shaping the semiconductor industry.

Now, let me share an update on our strategic initiatives. Our strategy remains firmly grounded and well aligned with current market dynamics. As we move into the next phase of growth, we see opportunities to further strengthen our execution while staying anchored in our three strategic pillars: first, elevate our technology leadership; second, expand our geographic footprint; and third, enhance strategic partnerships and focus markets. These pillars have been central to our progress and will continue to shape our path forward as we support accelerated demand for advanced packaging and deliver greater resiliency, flexibility, and value to our customers.

On technology leadership, we will continue to invest in advanced packaging platforms, including HDFO, flip chip, and test, which are critical to next-generation AI and high performance computing.

In 2026, our focus is on launching new programs across these platforms. We have two additional programs and final qualification for HDFO supporting AI data centers in addition to the two HDFO PC devices we've discussed previously.

Our Korea team is preparing for launching both programs into high volume in the second half of the year. The majority of our 2026 equipment investment is focused on HDFO and tests. As AI and HPC demand continues, we are well-positioned to enable the next wave of advanced products.

We are expanding our footprint to provide customers with diversified regional options for advanced packaging and test. Our presence across Asia, Europe, and soon the US, gives customers meaningful supply chain flexibility.

In 2026, our priorities include meeting construction milestones of our Arizona facility, expanding advanced packaging capacity in Korea and Taiwan, and continuing to scale in Vietnam. The ongoing ramp in Vietnam, including the migration of SIP products from Korea, is expected to free up manufacturing space in Korea for HDFO and test growth. This provides needed flexibility until our Arizona facility comes online.

We're also working closely across the ecosystem with foundries, fabless companies, IDMs, and OEMs to align technology road maps and scale capacity. In 2026, our focus is on enhancing these partnerships with clear milestones and investment commitments.

For example, one of the HDFO CPU devices ramping this year includes customer commitments to support our capacity investment, demonstrating how tightly our three pillars come together to support AI market expansion. Across all three pillars, we remain focused on margin improvement driven by operational excellence, optimization in Japan, Vietnam ramp-up efficiencies, a more favorable pricing environment, and a sustained mix shift towards high-value advanced packaging. We look forward to sharing more details at the Investor Day in May.

For full year 2026, we expect revenue growth to be driven by continued acceleration in computing with expected to grow over 20% and continued strong growth in advanced automotive. The remainder of our business is expected to grow in the single digits. We continue to monitor export control and trade policies as well as dynamics around substrates, advanced silicon, and memory supply. We have considered these items in our guidance for Q1.

With a strong technology roadmap, targeted capital investments, and deep customer partnerships, Amkor is well-positioned to enable the industry's next wave of innovation.

I will now turn the call over to Megan to provide more details on our fourth-quarter performance and near-term outlook.

Megan Faust (CFO, EVP): Thank you, Kevin, and good afternoon, everyone. Fourth-quarter revenue was $1.89 billion, down 5% sequentially and up 16% year on year. The sequential decline reflected typical seasonal trends in communications and consumer, following strong Q3 builds, partially offset by continued strength in advanced automotive.

In communications, revenue grew 28% year on year in Q4 and 1% for the full year, reflecting a stronger footprint in the current generation of iOS phones and healthy demand across both iOS and Android ecosystems.

Computing revenue increased 6% year on year in the fourth quarter and 16% for the full year, driven by strength in AI-related PC devices and networking infrastructure.

Automotive and industrial revenue increased 25% year on year in Q4 and 8% for the full year, driven by strength in advanced automotive content for ADAS applications. Mainstream automotive continued a gradual recovery in Q4, marking the third-consecutive quarter of sequential growth.

In consumer, revenue declined 10% year on year in the fourth quarter reflecting the product life cycle of a high-volume wearable product introduced in the second half of 2024. For full year, consumer grew 9% with growth driven by both a full year of the wearable product and a broad improvement across traditional consumer applications.

Gross profit for the quarter was $315 million, which included a benefit of approximately $30 million from asset sales as noted in guidance for the quarter. Gross margin was 16.7%. Operating expenses for the quarter were $130 million. Operating income was $185 million, and operating income margin was 9.8%.

Our effective tax rate for the quarter was 4.8%, primarily due to discrete tax benefits related to the recognition of deferred tax assets. Net income was $172 million resulting in EPS of $0.69. EBITDA was $369 million, and EBITDA margin was 19.5%.

Now, let's turn to our full-year performance. 2025 revenue increased 6% to $6.7 billion. All end markets grew, and we achieved record revenue in the computing end market. Advanced packaging revenue also set a new record, growing 7% year on year, driven by growth in computing, automotive, and consumer.

Full-year gross profit was $939 million, and gross margin was 14%, which includes a 90-basis-point headwind from the ramp up of our Vietnam facility. Operating income was $467 million, and operating income margin was 7%.

Our full-year effective tax rate was 15.4%, lower than anticipated due to the discrete tax benefits recognized in the fourth quarter. Net income for the year was $374 million, resulting in EPS of $1.50. EBITDA was $1.16 billion, and EBITDA margin was 17.3%.

Capital expenditures for 2025 were $905 million, lower than our guidance due to the timing of cash payments for our Arizona facility. These investments remain in our plan and will shift into 2026. Full-year free cash flow was $308 million.

Throughout 2025, we proactively positioned our balance sheet without its strength and flexibility, meaningfully enhancing liquidity. At year end, we held $2 billion in cash and short-term investments, and total liquidity was $3 billion, a 30% increase from the prior year. Total debt was $1.4 billion, and debt to EBITDA ratio was 1.2 times.

Now, turning to our outlook, Q1 2026 revenue is expected to be between $1.6 billion and $1.7 billion, representing a 25% year-on-year increase at the midpoint. We see strong growth year on year in communications, computing, and the automotive and industrial end markets.

Gross margin is projected to be between 12.5% and 13.5%. We expect operating expenses to increase to approximately $135 million as we continue to invest in R&D for anticipated growth. Our full-year effective tax rate is expected to be around 20%. Net income is forecasted to be between $45 million and $70 million resulting in EPS between $0.18 and $0.28, a strong start to the year.

2026 CapEx is expected to increase to a range of $2.5 billion to $3 billion. 65% to 70% is projected for facility expansion, including Phase 1 of our Arizona campus. About 30% to 35% is projected for HDFO, test, and other advanced packaging capacity. The remaining spend is projected for R&D and quality programs.

In closing, our fourth-quarter and full-year 2025 results reflect Amkor's focus and discipline on executing our strategic pillars. We enter 2026 with strong momentum, a clear strategy, and an investment agenda to enable our next chapter of growth.

This concludes our prepared remarks. We will now open the call up for your questions. Operator?

Questions & Answers

Steve Barger (KeyBanc Capital Markets): Thanks. I'll echo the congratulations to you, Kevin.

Megan Faust (CFO, EVP): Hi, Steve. Great question. So we are seeing great ramp in '26 as far as our visibility today. And we see that continuing in Q1, which usually is the lowest quarter. So that's really good foundation. As it relates to the whole year, if you think about with or without, I think you've nailed it. There will be a product mix story in Vietnam related to the products that we have there, which is SIP. But what we will have is, I would say, fall through to the bottom line as it relates to that business. So we are going to have, I would say, not meaningful gross margin impact, and it's more about product mix at that point going forward.

Steve Barger (KeyBanc Capital Markets): Got it, thank you. We get this question a lot from investors, and just any light you could shed on that would be great.

Kevin Engel (President, CEO and Director): Yeah, not a whole lot more color I can give there. I can -- obviously, compute in general, it exited '25 at about 20% of revenue. That's about all I want to talk about. But definitely, we're going to continue to see accelerated growth in that AI data center/even PC area.

Operator: Thank you. And at this time, I am showing no further questions. I would like to turn the call back over to Kevin for closer remarks.

Kevin Engel (President, CEO and Director): Thank you. Now, let me give a quick recap of our key messages. 2025 was a pivotal year for Amkor. We delivered strong results, advanced our strategic initiatives, and we positioned -- we strengthened our position in the fastest-growing areas of the semiconductor industry.

As we enter 2026, we are doing so with strong momentum, a clear strategy, and deep engagements with partners across the ecosystem. Our first-quarter guidance is $1.65 billion reflecting a 25% year-on-year growth rate.

I'm confident in our ability to execute with discipline and for Amkor to enable and capture the next wave of advanced packaging growth. Thank you for joining the call today.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

*Note: Transcript sourced from LSEG edited transcript (Event Transcript, AMKR.OQ — Q4 2025 Amkor Technology Inc Earnings Call, February 9, 2026 / 10:00PM GMT). ©2026, LSEG.*