Amkor Forecasts $1.375B-$1.475B Q2 2025 Revenue, Driven by Communications and Computing Growth

Insights from the Earnings Call: Amkor Technology (AMKR) First Quarter 2025

Management View

CEO Giel Rutten emphasized that the revenue for Q1 2025 amounted to $1.32 billion, which aligns with the high end of their projections, largely due to better-than-predicted outcomes in the communication sector. Nonetheless, earnings per share were affected by increased research and development expenses linked to the advancement of RDL technology.
The firm is concentrating on key strategies such as reinforcing its position as a leader in cutting-edge packaging technologies, broadening its global presence, and partnering with top semiconductor businesses.
Advanced packaging and photonic solutions, such as co-packaged optics, remain key areas for development. The K5 site in Korea will see an expansion of the comprehensive testing facilities, aiming to achieve full operational capability by 2027.
Chief Financial Officer Megan Faust stated that the first-quarter gross margin was 11.9%, indicating underused factory capacities along with increased research and development costs. The operating income amounted to $32 million, whereas the net income totaled $21 million.
Amkor has allocated a capital expenditure budget of $850 million for 2025, with 5%-10% designated specifically for their Arizona site. The investments will concentrate on cutting-edge packaging techniques and testing solutions.

Outlook

The projected revenue for Q2 2025 is estimated to fall within the range of $1.375 billion to $1.475 billion, indicating an approximate 8% rise from the previous quarter when averaged out. The gross margin is anticipated to lie between 11.5% and 13.5%, showcasing minor enhancements in how factories are being utilized.
The anticipated operational expenditures for the second quarter are expected to reach approximately $125 million. The company’s capital expenditure strategy for the entire year remains unaltered.
The anticipated net income for the second quarter is projected to be between $17 million and $57 million, corresponding to an earnings per share (EPS) of $0.07 to $0.23.
The firm is tracking the effects of tariffs and changes in trade rules; however, present activities continue to be mostly untouched thanks to its broad distribution across various production sites.

Financial Results

In the first quarter, revenues fell to $1.32 billion, marking a 3% decrease compared to the previous year. The performance across major market segments was inconsistent.
- Revenue from communications fell by 19% compared to the previous year because of reduced sales within the iOS ecosystem; however,sequential growth is expected in Q2.
- The computing sector saw a 21% increase in revenue compared to the previous year, fueled by high demand for AI-GPU products in areas such as data centers, networking, and personal computers.
- Automotive and industrial sales dropped 6% compared to the previous year but stayed steady from the last quarter.
- Customer earnings rose by 23% compared to the previous year, driven by the adoption of sophisticated SiP technology in wearable devices; however, a stagnant sequential growth rate is anticipated for Q2.
In the first quarter, EBITDA amounted to $197 million, reflecting an EBITDA margin of 14.9%. The total liquidity as of the end of this period reached $2.2 billion.

Q&A

Charles Shi, Needham: Asked about Q2 growth strength and potential impacts from tariff pull-ins. CEO Rutten explained that Q2 growth is driven by communication and computing markets, with no observed pull-ins related to tariffs.
Ben Reitzes from Melius Research asked about the seasonal trends in the communications sector for the second half of the year and how they might affect profit margins. The Chief Financial Officer, Faust, anticipates an increase in gross margins during this period because of higher efficiency levels.
Randy Abrams from UBS asked about the expansion of the Arizona facility and cooperation with TSMC. The CEO, Rutten, highlighted their intention to speed up and expand operations, aiming for synergy between their technological capabilities and those of TSMC.
Peter Peng from JPMorgan raised concerns about the growth of the computing segment due to export restrictions. The CEO, Rutten, emphasized continuing efforts to broaden their portfolio, mentioning new initiatives like AI GPUs, RDLs, and co-packaged optics programs.

Sentiment Analysis

Experts showed guarded enthusiasm, concentrating on the effects of tariffs and the potential for a rebound in the second half of the year. The queries highlighted worries about export restrictions and stockpile levels within the auto industry.
The management kept an even-handed approach, stressing adaptability along with the implementation of long-term strategies. They frequently used terms like "confident" and "robust" when talking about their project pipelines and market position.
In comparison to the prior quarter, the management's tone became more composed, indicating stronger outcomes for Q1 and evident momentum heading into Q2’s expansion areas.

Quarter-over-Quarter Comparison

The revenue dropped from $1.63 billion in the fourth quarter of 2024 to $1.32 billion in the first quarter of 2025, illustrating typical seasonal patterns along with persistent issues within the automotive and communication sectors.
The gross margin decreased from 15.1% to 11.9%, primarily due to reduced sales volume and higher spending on research and development.
Management kept consistent messaging, reaffirming their belief in the anticipated rebound during the second half of the year, specifically within the sectors of communications and computing.
The analysts' sentiment became somewhat more optimistic, indicating better understanding of the primary growth factors.

Risks and Concerns

Tariffs and trade rules continue to create uncertainties, especially within the realms of communications and computing industries.
Export restrictions on AI GPUs are affecting customer behavior, potentially leading to fluctuations in computer segment sales volumes.
The resurgence of the automotive market is not guaranteed, as the desire for typical products continues to be restrained.
Higher research and development expenses along with idle manufacturing facilities persistently strain profit margins.

Final Takeaway

Amkor Technology announced that their Q1 2025 revenues were toward the higher range of expectations, thanks largely to robust performances in communication and computing sectors. They anticipate further sequential expansion for Q2, bolstered by advancements in packaging and testing services. Despite ongoing difficulties within the automotive sector and certain restricted computing markets, leadership continues to express confidence in both their long-term strategies and widespread geographical presence.

Review the complete earnings call transcript here.