Amkor Technology Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Fox - Fox Advisors LLC - Analyst : I was wondering if you could talk a little bit more about how we think about capacity additions? If you've changed any plans given the sort of the slower demand in some of your core markets into next year or whether we should consider anything different like how underutilization charges progress from this level into like the first part of next year? And then I had a follow-up.

Question: Steven Fox - Fox Advisors LLC - Analyst : That's helpful. And then on the underutilization charges going forward?

Question: Steven Fox - Fox Advisors LLC - Analyst : Great. That's helpful. And then some of the comments led into my follow-up, which was specifically on auto, depending on the company and the supply chain we talk to, it seems like there's different impacts from what's going on in the auto supply chain. Is there any way you can narrow down what you're seeing relative to what you saw in 90-day that maybe is on the disappointing side?

Question: Steve Barger - KeyBanc Capital Markets Inc - Analyst : For the uncertainty on the premium-tier smartphone build plan, how's your visibility into early 2025 relative to what you would normally see at the end of October? Or can you give us any commentary on what mobile progression could look like next year?

Question: Steve Barger - KeyBanc Capital Markets Inc - Analyst : I appreciate that commentary. And for the $100 million range between the high end and the low end of the 4Q revenue guide, is the phone build plan, the primary swing factor you built into that forecast? Or is there something else that is hard to nail down at this point?

Question: Steve Barger - KeyBanc Capital Markets Inc - Analyst : That's great. So it sounds like communication is the only one that you can expect to be down sequentially for 4Q?

Question: Steven Fox - Fox Advisors LLC - Analyst : As we kind of look into the first half of next year, how would you categorize your business versus seasonal trends? It sounds like the communications could continue to be tracking below and then the consumer, it sounds like you might be ramping up. That so like how would we think about your business going into the first half of next year?

Question: Steven Fox - Fox Advisors LLC - Analyst : Got it. And then moving more towards the AI. So AI -- accelerated makes sense, rapidly rising, right? I mean we think that it could probably be close to half of the overall market sometime in the next one or two years. Can you just talk about your engagement with some of these other hyperscalers and how you think about customer diversification?

Question: Craig Ellis - B Riley Securities Inc - Analyst : Giel and Megan, I wanted to start just by going a little bit further into the question that Peter asked on dynamics in the first half. Megan, how do we think about gross margins as we go into the first half, the auto and industrial business would continue to increase. And if we have strength in parts of the compute business like traditional server applications, but if communications has more of a downward bias just given seasonality in the iOS ecosystem. Does that put upward pressure on gross margin? Or are there other things going on we should be aware of?

Question: Craig Ellis - B Riley Securities Inc - Analyst : That's helpful. And then maybe a longer-term question for Giel and it's more on calendar '25. Not looking for guidance here, Giel. But as we think about 2024, we had numerous real meaningful programs. We had ARM-based PCs. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 9:00PM, AMKR.OQ - Q3 2024 Amkor Technology Inc Earnings Call We had a real nice wearables program that has legs into next year and then we had 2.5D AI. As you think about 2025, what are some of the things you're starting to see or maybe have closed in the funnel that would offer similar types of benefit to help grow the business and expand the same.

Question: Craig Ellis - B Riley Securities Inc - Analyst : That's very helpful. And if I could sneak in one more. Could you help us just with milestones as we think about the further ramp next year in Vietnam as we go through 2025? What are some key signposts we should look for? And then how should we look at the progress you would expect to make ramping up Arizona next year? Thanks for all the help, team.

Question: Randy Abrams - UBS Group AG - Analyst : I wanted to ask the first question, two separate things. First on the Arizona, the new additional expansion. Could you go through just the additional technologies you're taking on or the additional relationship you have with the SMC to ramp up? And any change in your expectations for the Arizona project. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 28, 2024 / 9:00PM, AMKR.OQ - Q3 2024 Amkor Technology Inc Earnings Call And then the second question is on the test business. How you see the opportunity for AI GPUs if you have that process chain to do the final test that burn in the system level test to do some of those for final test?

Question: Randy Abrams - UBS Group AG - Analyst : Okay. And maybe a quick follow-up. I guess just in your pursuit, does it look like potential or it's still a bit further out? Just curious how close it is to the engagements. And then the question was more broadly, I think you commented the investment in CapEx for now on track. If you could give a view into '25 on either a capital intensity basis or how you see absolute dollars. And I'm curious if any panel-level packaging, how soon you see the development converting to handle some of the larger dies or more advanced projects on panel level?

Question: Tom Diffely - D. A. Davidson & Co - Analyst : I was curious, what do you think drove the sooner ramp or the ramp of the iOS phone last year, a quarter before normal.

Question: Tom Diffely - D. A. Davidson & Co - Analyst : Okay. And then you also mentioned there was a substrate issue during the quarter. Maybe a little more color on that?

Question: Tom Diffely - D. A. Davidson & Co - Analyst : Okay. And then maybe as a follow-up, Megan, when you look at the Vietnam facility ramping up, the burden associated with that, is that going to be a step function? Or is that going to slowly ramp over time?

Question: Tom Diffely - D. A. Davidson & Co - Analyst : Great. And then as a follow-up question, slightly unrelated. I remember, I think it was last quarter you had mentioned a bit of an HBM shortage, which was causing a slight delay in the timing of the ramp. And you had expected that to pick up and normalize, I believe, in August. And did you see this happen in -- what are your expectations relative to your initial thoughts there? Is it going higher or lower?

Question: Joe Moore - Morgan Stanley & Co LLC - Analyst : I wonder if you could talk about, you mentioned kind of a stabilization in automotive and industrial. What's your visibility there? And your customers are seeing sort of mix trends, but they have pretty high balance sheet inventory and distribution inventory as well. So just what's your visibility into that business going forward?