Amkor projects Q3 2025 revenue midpoint of $1.925B while expanding advanced packaging and test capacity
Jul. 28, 2025 11:34 PM ET
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Earnings Call Insights: Amkor Technology (AMKR) Q2 2025
Management View- CEO Guillaume Marie Jean Rutten reported second quarter revenue of $1.51 billion, a 14% sequential increase, stating "all end markets showing double-digit sequential growth." Rutten highlighted that "communications grew 15% sequentially driven by the iOS ecosystem," and pointed to a "major milestone in the quarter... the launch of the first High-Density Fan-Out product in high-volume production for our lead customer." Rutten also emphasized Amkor's technology leadership, noting, "the accelerated development of AI is significantly changing the computing domain in terms of technology requirements, rate of innovation and regional requirements for manufacturing facilities."
- Rutten described the company’s investments in advanced packaging and test, including the expansion of test operations in Korea and plans for a new Arizona facility, stating, "Phase 1 of the Turnkey test expansion [in Korea] projected to be operational by the end of this year and Phase 2 following in the first half of 2027."
- CFO Megan Faust stated, "Second quarter revenue was $1.51 billion, exceeding the high end of our guidance range... gross profit was $182 million, and gross margin was 12%." Faust highlighted the impact of preparation costs for Q3, "approximately $25 million in preparation costs for both the robust seasonal increase in Q3... as well as launching multiple new High-Density Fan-Out products." Faust also noted, "Vietnam will impact our gross margin. In Q2, the impact was approximately 125 basis points, and we expect this will improve in the second half of 2025 as we optimize utilization."
- Faust detailed financing moves, stating, "we replaced our $600 million credit agreement with a new $1 billion revolver and executed a $500 million term loan. As of June 30, cash and short-term investments were $2 billion and total liquidity was $3.1 billion."
- Faust announced plans to "rationalize our manufacturing footprint, specifically considering our 7 factories in Japan to align capacity with market conditions... We will share more details on these plans at our next earnings call."
Outlook- Faust provided Q3 2025 guidance: "We expect revenue between $1.875 billion and $1.975 billion, representing growth of 27% sequentially at the midpoint... Gross margin is expected to be between 13% and 14.5%... operating expenses of around $125 million for the third quarter and a full year effective tax rate of around 20%. Net income is expected to be between $85 million and $120 million, resulting in EPS between $0.34 and $0.48. Our CapEx forecast for 2025 remains unchanged at $850 million."
- Rutten stated, "we expect a strong third quarter, driven by the launch of the next-generation premium tier smartphones."
Financial Results- Q2 revenue was $1.51 billion, gross profit was $182 million, and gross margin was 12%, including "approximately $25 million in preparation costs" and a "nonroutine $32 million benefit due to a contingent payment related to our 2017 NANIUM acquisition."
- Operating income was $92 million with an operating income margin of 6.1%. Net income was $54 million, and EPS was $0.22, with $16 million and $0.07 attributable to the contingent payment. EBITDA was $259 million, with EBITDA margin at 17.1%.
- Cash and short-term investments were $2 billion, total liquidity was $3.1 billion, and total debt was $1.6 billion, with a debt-to-EBITDA ratio of 1.5x.
Q&A- Joseph Lawrence Moore, Morgan Stanley: Asked about "gross margin in the September quarter" and long-term margin outlook. Rutten responded that "elements relate very much through a transition in our manufacturing base," citing Vietnam ramp-up and Korea transitions, while Faust added, "the flow-through is actually a little bit better than last year's Q3, but the story is really the same. It's an unfavorable product mix in Q3."
- James Edward Schneider, Goldman Sachs: Asked about "the ramp ... for your 2.5D program." Rutten replied, "2.5D is important... impacted in the earlier part of the year because of some trade restrictions... Next-generation technology is High-Density Fan-Out... we have launched the first products this year."
- Kaykin Peng, JPMorgan: Asked if Q3 guidance was impacted by "pull-in of demand." Rutten said, "we didn't get signs that there was active pull-in ongoing... some last minute spot orders" were seen in automotive, but not in communications.
- Benjamin Alexander Reitzes, Melius Research: Asked about "comps guidance versus normal seasonality in the 3Q" and iOS business. Rutten confirmed "the ramp-up of that socket is included in our third quarter outlook and will be included in our fourth quarter outlook."
- Randy Abrams, UBS: Inquired about "evaluating content gains... for the on-device AI to communications." Rutten noted, "customers... are looking to the implications of the semiconductor solutions... a Fan-Out solution, certainly for communication and a High-Density Fan-Out solution... could be one of the solutions for communication also."
Sentiment Analysis- Analysts pressed on gross margin dynamics, long-term manufacturing footprint, and the sustainability of growth, with a neutral to slightly positive tone reflecting curiosity about operational transitions and future opportunities.
- Management maintained a confident tone in prepared remarks, highlighting "strong revenue growth," "technology differentiation," and a "clear strategic focus." In Q&A, management addressed restructuring and cost optimization directly, showing transparency regarding challenges but emphasizing future improvements and strategic wins, such as "lead customers" and "new product launches."
- Compared to the previous quarter, management’s tone showed increased confidence, with Q2 results "well above expectations" and improved outlook, while analysts probed more into operational transitions.
Quarter-over-Quarter Comparison- Guidance for Q3 2025 projects significantly higher sequential growth than the previous quarter’s outlook.
- Strategic focus has shifted to executing capacity expansion for advanced packaging and test, especially in Korea and the U.S., as opposed to broader footprint expansion in the prior quarter.
- Key metric changes include a rise in revenue from $1.32 billion in Q1 to $1.51 billion in Q2, and projected Q3 revenue midpoint increased markedly.
- Management’s confidence appears stronger, with explicit mention of "all end markets showing double-digit sequential growth" and successful execution of new product ramps.
- Analysts' line of questioning shifted from concern about macro uncertainty and tariffs in Q1 to operational execution and margin optimization in Q2.
Risks and Concerns- Management mentioned "dynamic" market conditions, export controls, and trade policy as ongoing risks.
- Underutilized manufacturing assets, especially in Japan, continue to "constrain profitability," with plans underway to "rationalize our manufacturing footprint."
- Vietnam ramp-up is currently impacting gross margin but is expected to improve as utilization rises.
- Management is closely monitoring material cost trends, especially in high-end substrates, and proactively working with suppliers to secure capacity and price stability.
Final Takeaway
Amkor Technology’s Q2 2025 call emphasized 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 jump in Q3 supported by new smartphone launches and continued expansion in high-performance computing. Management is navigating persistent supply chain and cost challenges, particularly with the Vietnam and Japan facilities, but remains focused on optimizing its manufacturing footprint and leveraging technology differentiation to sustain long-term growth and shareholder value.
Read the full Earnings Call Transcript |
