Amkor: $1.925B Revenue Forecast & Advanced Packaging Expansion

Amkor Technology’s Q2 2025 Performance: A Deep Dive

Amkor Technology, a leading provider of outsourced semiconductor packaging and test services, recently reported its financial results for the second quarter of 2025. The earnings call provided valuable insights into the company’s performance, strategic initiatives, and future outlook.

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Q2 2025: Key Financial Highlights

Amkor reported a second-quarter revenue of $1.51 billion, marking a significant 14% increase compared to the previous quarter. This growth was broad-based, with all end markets demonstrating double-digit sequential growth. The company’s gross profit stood at $182 million, resulting in a gross margin of 12%.

Several factors influenced the company’s financial performance during the quarter. Preparation costs of approximately $25 million were incurred in anticipation of a robust seasonal increase in the third quarter and the launch of multiple new High-Density Fan-Out products. Additionally, the ramp-up of operations in Vietnam had a notable impact, reducing the gross margin by approximately 125 basis points. Amkor anticipates that the Vietnam facility’s utilization will improve in the second half of 2025, positively impacting gross margins.

Strategic Initiatives and Investments

Amkor is strategically investing in advanced packaging and test capabilities to capitalize on emerging opportunities in the semiconductor industry. These investments include expanding test operations in Korea and developing a new facility in Arizona. The first phase of the turnkey test expansion in Korea is projected to be operational by the end of the year, with the second phase following in the first half of 2027. These expansions will enhance Amkor’s ability to meet the growing demand for advanced packaging and testing solutions.

CEO Guillaume Marie Jean Rutten emphasized the company’s technology leadership, highlighting the accelerated development of artificial intelligence (AI) as a major driver of change in the computing domain. He noted that AI is significantly impacting technology requirements, the rate of innovation, and regional requirements for manufacturing facilities. Amkor is well-positioned to benefit from these trends, with its expertise in advanced packaging technologies.

Q3 2025 Outlook and Guidance

Looking ahead to the third quarter of 2025, Amkor anticipates continued strong growth. The company expects revenue to be between $1.875 billion and $1.975 billion, representing a sequential growth of 27% at the midpoint. Gross margin is projected to be between 13% and 14.5%. Operating expenses are estimated at around $125 million for the third quarter, and the full-year effective tax rate is expected to be approximately 20%. Net income is forecast to be between $85 million and $120 million, resulting in earnings per share (EPS) between $0.34 and $0.48. The company’s capital expenditure (CapEx) forecast for 2025 remains unchanged at $850 million.

The company anticipates a strong third quarter, driven by the launch of next-generation premium-tier smartphones. Amkor’s advanced packaging solutions are essential for these devices, contributing to the company’s revenue growth.

Financial Position and Capital Allocation

Amkor maintains a strong financial position, with ample liquidity to support its strategic initiatives. As of June 30, the company’s cash and short-term investments totaled $2 billion, and total liquidity was $3.1 billion. Total debt stood at $1.6 billion, resulting in a debt-to-EBITDA ratio of 1.5x.

During the second quarter, Amkor replaced its $600 million credit agreement with a new $1 billion revolver and executed a $500 million term loan. These actions provide the company with increased financial flexibility and access to capital.

Amkor also announced plans to rationalize its manufacturing footprint, specifically considering its seven factories in Japan. This initiative aims to align capacity with market conditions and improve profitability. More details on these plans are expected to be shared in the next earnings call.

Q&A Session Highlights

During the question-and-answer session, analysts inquired about various aspects of Amkor’s business, including gross margin dynamics, long-term manufacturing footprint, and the sustainability of growth. Management addressed these questions directly, providing valuable insights into the company’s operations and strategic direction.

• Gross Margin: Management acknowledged that the ramp-up of operations in Vietnam and transitions in Korea are impacting gross margins. However, they expect these impacts to diminish as utilization improves and the manufacturing base transitions.
• 2.5D Program: Management confirmed the importance of 2.5D technology and noted that the program was impacted earlier in the year due to trade restrictions. The company is now focused on High-Density Fan-Out technology, with the first products launched this year.
• Demand Pull-In: Management stated that they did not observe significant signs of demand pull-in, although some last-minute spot orders were seen in the automotive sector.
• On-Device AI: Management recognized the potential for content gains related to on-device AI in communications, noting that customers are exploring semiconductor solutions such as Fan-Out and High-Density Fan-Out for communication applications.

Risks and Concerns

Despite the positive outlook, Amkor faces several risks and concerns. Management acknowledged the “dynamic” market conditions, export controls, and trade policy as ongoing risks. Underutilized manufacturing assets, particularly in Japan, continue to constrain profitability. The Vietnam ramp-up is currently impacting gross margin, although improvements are expected as utilization increases. Management is also closely monitoring material cost trends, especially in high-end substrates, and proactively working with suppliers to secure capacity and price stability.

Final Thoughts

Amkor Technology’s Q2 2025 earnings call highlighted the company’s strong sequential revenue growth, robust demand across all end markets, and significant advancements in advanced packaging and test capabilities. The company anticipates a substantial revenue increase in Q3, supported by new smartphone launches and continued expansion in high-performance computing. While navigating supply chain and cost challenges, particularly with the Vietnam and Japan facilities, management remains focused on optimizing its manufacturing footprint and leveraging technology differentiation to sustain long-term growth and shareholder value.