AMKR Q1 Earnings Call: Advanced Packaging Drives Results Amid Tariff and Market Uncertainty

Semiconductor packaging and testing company Amkor Technology (NASDAQ: AMKR) reported Q1 CY2025 results exceeding the market’s revenue expectations, but sales fell by 3.2% year on year to $1.32 billion. The company expects next quarter’s revenue to be around $1.43 billion, close to analysts’ estimates. Its GAAP profit of $0.09 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Amkor’s Q1 performance reflected management’s focus on advanced packaging technologies and the strength of its communications and computing segments. CEO Giel Rutten highlighted that communications revenue exceeded expectations, while computing demand was driven by high-performance and AI-related projects. The company’s ongoing investment in research and development, particularly for RDL and 2.5D technologies, was cited as a key factor impacting margins. Rutten explained, “EPS was $0.09, impacted by higher R&D costs, including accelerated development in RDL technology for additional programs scheduled to ramp this year.”

Looking ahead, Amkor’s guidance for Q2 is shaped by continued strength in computing, new smartphone socket launches, and recovery in automotive and industrial end markets. Management emphasized that tariff and trade policy changes remain a significant source of uncertainty, with Rutten stating that Amkor’s global footprint provides some insulation, but shifts in customer demand patterns could occur. CFO Megan Faust said, “We will continue to monitor the environment and prudently evaluate our investments.”

Key Insights from Management’s Remarks

Management’s remarks on the call centered on the company’s technology roadmap, market-specific trends, and ongoing strategic investments. The focus was on adapting to industry cycles and trade policy risks, while leveraging strengths in advanced packaging and customer relationships.

• Advanced Packaging Expansion: Amkor is ramping investment in RDL (Redistribution Layer) and 2.5D packaging, citing growing demand in high-performance computing and AI. The company confirmed plans to expand turnkey test solutions at its K5 campus in Korea, with the first phase set to be operational by the end of 2025.
• Arizona Facility Plans: Construction for a new advanced packaging plant in Arizona is scheduled to begin in the second half of 2025. Management is considering accelerating the timeline and scaling up capacity, especially as U.S. semiconductor manufacturers expand operations domestically.
• Communications Segment Developments: The new SiP (System-in-Package) socket for next-generation smartphones is on track for production by June. Management expects communications revenue to increase sequentially, supported by premium-tier smartphone innovation and AI moving to edge devices.
• Computing Market Dynamics: Growth in the computing segment was fueled by data center, networking, and PC customers. Amkor is ramping with a second customer in 2.5D technology and starting production on RDL-based devices for AI CPUs, while export controls and trade regulations introduce uncertainty to demand forecasts.
• Automotive and Consumer Trends: Automotive and industrial markets are showing signs of recovery, driven by demand for ADAS (Advanced Driver Assistance Systems) and infotainment. In consumer markets, wearables and connected devices are key growth drivers, with Amkor leveraging its advanced SiP technology and new Vietnam facility.

Drivers of Future Performance

Management’s outlook for the next quarter and year is shaped by evolving customer demand in computing, communications, and automotive, as well as the potential impacts of tariffs and trade restrictions. The company’s focus on advanced packaging technology, regional expansion, and customer partnerships underpins its strategy.

• Tariff and Trade Regulation Risks: Management is monitoring evolving tariffs and export controls, which could affect customer build plans and overall demand, especially in communications and computing segments.
• Capacity and Technology Investments: The company is maintaining its $850 million capital expenditure plan to expand advanced packaging and test capacity, particularly supporting high-performance computing and next-generation smartphone programs.
• Customer Program Launches: Growth in Q2 and the second half of the year will depend on successful ramps of new smartphone sockets, continued strength in computing (including AI and data center projects), and a recovery in automotive and consumer device markets.

Top Analyst Questions

• Charles Shi (Needham): Asked if Q2 strength was due to customers accelerating orders ahead of tariffs. Management responded they did not observe any pull-ins and attributed growth to line optimization and demand in computing and communications.
• Ben Reitzes (Melius Research): Inquired about the impact of the new smartphone socket on communications seasonality and margins. Management expects margins to expand with higher utilization but cited volume uncertainty due to tariffs and macro factors.
• Randy Abrams (UBS): Asked about the Arizona facility’s timeline and potential acceleration. CEO Giel Rutten said Amkor is exploring ways to speed up construction and scale capacity in response to domestic semiconductor demand.
• Peter Peng (JPMorgan): Sought clarification on 2.5D segment prospects amid export controls. Management is optimistic about additional design wins and expects new devices in production, while noting demand visibility is limited by regulatory changes.
• Steve Barger (KeyBanc): Questioned whether higher costs from shifting programs to avoid tariffs would be passed on to customers. Rutten said each case is negotiated individually, considering long-term customer partnerships and cost impacts.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will monitor (1) progress on the Arizona facility’s construction and potential acceleration, (2) the ramp and revenue contribution of new advanced packaging programs in communications and computing, and (3) the impact of evolving tariff and trade policies on customer demand and supply chain strategies. We will also track developments in automotive and consumer device markets as Amkor executes on its technology and capacity investments.

Amkor currently trades at a forward P/E ratio of 10.6×. Should you load up, cash out, or stay put? The answer lies in our free research report.

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