Amkor Technology, Inc. (AMKR) | The Buildout — AI Infrastructure
The Verdict
Amkor Technology is an outsourced semiconductor assembly and test provider — an OSAT — and in its own 10-K description 'the world's largest U.S. headquartered outsourced semiconductor assembly and test service provider.' It works after the wafer: it takes finished silicon, packages it into a protective housing, connects it to the outside world, manages thermal and electrical performance, and tests the result. Its advanced packaging platforms — 2.5D silicon interposers, high-density fan-out, and system-in-package structures — matter because advanced packaging has moved onto the critical path of system performance. That is how an assembly and test company ends up inside the AI data-center supply chain: AI processors pass through back-end packaging and test, and Amkor supplies those steps.
| Market Cap | — |
| Revenue (TTM) | $7.5B |
| Revenue Growth | +17.9% |
| EBITDA Margin (TTM) | 17.8% |
| Net Debt | $35M |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Q2 2026 revenue rose 26% year over year to a record $1.9B, above the high end of guidance, and H1 2026 revenue was up 26% year over year.
- Gross margin moved from 14.2% in Q1 2026 to 16.8% in Q2, with Q3 guided to 18.5%-19.5%; the CFO attributed the Q3 step predominantly to product mix.
- Computing set a new quarterly record, up 20% sequentially, and is guided to accelerate to nearly +30% in Q3 on AI data-center demand and the HDFO CPU ramp.
- Arizona Phase 1 is 'fully committed,' with customer commitments surpassing the 33,000 square meters of cleanroom planned; Phase 2 lifts the campus to about 93,000 square meters and total investment to $12B.
- Two anchor structures are signed: a 10-year TSMC advanced packaging agreement and a multi-year NVIDIA partnership carrying a prepayment received in 2027 and earned back over 5 to 10 years.
What We’re Watching
- Communications, the largest end market, is guided to decline high single digits sequentially in Q3 2026 — a departure from typical seasonality — and management expects no typical Q4 lift.
- The SiP migration from Korea to Vietnam is a multi-quarter headwind management says is 'not a one-quarter dynamic' and will extend into Q4 2026 and the first half of 2027.
- Arizona is guided to dilute operating income margin by 1%-2% beginning in 2027, improving in 2028; 2028 also carries Arizona gross-margin dilution from underutilized manufacturing.
- Customer concentration remains steep: Apple 29.8% and Qualcomm 11.1% of FY2025 net sales, with the ten largest customers at 72%.
The thesis is strengthening on the business. Management kept or raised its operating promises across the two calls in evidence — the CPU ramp began in Q2 as guided, CapEx and tax rate were reaffirmed, and the 2.5D customer count rose from 'over half a dozen' to 11 — though it lowered the full-year communications outlook. Two anchor customers signed multi-year structures, and total company revenue printed above the midpoint of guidance in Q1 and above the high end in Q2. What tempers it is that management itself disclosed a 2027-2028 cost air pocket: if current-year gross margin and EPS are already near the 2028 Investor Day targets, the question is whether 2026 is a base or a peak. The open question: does the mix rotation prove durable enough to hold the new margin level through the Arizona dilution window?
Earnings Beat
Amkor's Q2 2026 revenue was a record $1.9B, up 26% year over year and 13% sequentially, above the high end of guidance. Gross margin was 16.8%, up more than 250 basis points sequentially, and operating income was $200M at a 10.5% margin. Computing set a new quarterly record, up 20% sequentially, while communications grew 6% sequentially and Android revenue declined 20%.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.9B | $1.7B | $1.5B | +25.6% |
| Gross margin | 16.8% | 14.2% | 12.0% | +480bps |
| EBITDA | $380M | $271M | $251M | +51.3% |
| EPS | $0.70 | $0.33 | $0.22 | +217.2% |
| Network utilization | High 70s | Low 70s | n/a | — |
Revenue increased 26% year-on-year … record first half. Gross margin expanded 360 basis points. Operating income more than doubled and earnings per share more than tripled compared to the first half of 2025.— Megan Faust, CFO, 2026-07-27
Management tone: On the Q2 2026 call, management reset the communications outlook lower while raising the compute and margin frame. Communications guidance moved from a full-year 'high single-digit plus' growth framing to a high-single-digit sequential decline in Q3; in the same session management pulled the compute ramp forward in confidence and set a gross-margin guide at or above the high end of the prior H2 framing. Management volunteered an Arizona margin-dilution headwind into a question that invited a clean beat narrative, and declined to call the SiP headwind a one-quarter event.
Management Guidance
For Q3 2026, management guided revenue of $1.95B-$2.05B, gross margin of 18.5%-19.5%, operating expenses of about $140M, net income of $180M-$205M and EPS of $0.72-$0.82. Segment guides for the quarter: communications down high single digits sequentially, computing up nearly 30% sequentially, automotive and industrial up mid-single digits, and consumer up mid-teens percent. For FY2026, the effective tax rate is reaffirmed at about 20% and CapEx at $2.5B-$3B, split 65%-70% facilities and 30%-35% HDFO, test and other advanced packaging.
Trajectory
Revenue has moved up through the two quarters in evidence: $1.68B in Q1 2026 to a record Q2, with Q3 guided to $1.95B-$2.05B. Gross margin ran 14.2% in Q1, 16.8% in Q2, and is guided to 18.5%-19.5% in Q3. The driver is mix. The CFO attributed roughly two-thirds of the Q2 expansion to volume and utilization and one-third to favorable product mix, and called the Q3 step 'predominantly' product mix from 'a very steep accelerated ramp in our compute portfolio.' Average network utilization moved from the 50s in Q1 2025 to the high 70s in Q2 2026, with several technology platforms at full capacity.
The Model
The model projects FY+1 revenue of $7,633M with EBITDA of $1,504M (19.7% margin), and FY+2 revenue of $8,700M with EBITDA of $1,844M (21.2% margin). The near-term anchor is the compute ramp: the HDFO data-center CPU program began ramping in Q2 2026, and management expects four 2.5D and four HDFO products to launch this year. The FY+2 step reflects continued scaling of the compute portfolio alongside the Arizona revenue cadence management has described — modest revenue in 2028, scaling in 2029.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $6.7B | $7.6B | $8.7B |
| YoY Growth | — | +13.8% | +14.0% |
| EBITDA | $1.1B | $1.5B | $1.8B |
| EBITDA Margin | 16.5% | 19.7% | 21.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 2.4% above analyst consensus.
For Q3 2026, management guided revenue of $1.95B-$2.05B, gross margin of 18.5%-19.5%, operating expenses of about $140M, net income of $180M-$205M and EPS of $0.72-$0.82. Segment guides for the quarter: communications down high single digits sequentially, computing up nearly 30% sequentially, automotive and industrial up mid-single digits, and consumer up mid-teens percent. For FY2026, the effective tax rate is reaffirmed at about 20% and CapEx at $2.5B-$3B, split 65%-70% facilities and 30%-35% HDFO, test and other advanced packaging.
What Could Go Right — and Wrong
- Computing sustains the guided nearly +30% sequential growth and the HDFO CPU program scales through the second half of 2026 and into 2027.
- Gross margin holds at the guided 18.5%-19.5% level into 2027, showing the mix rotation is durable enough to absorb the Arizona build.
- Communications recovers in the first half of 2027 as the SiP migration headwind rolls off.
- Arizona Phase 1 hits its construction and qualification milestones and customer commitments keep exceeding planned cleanroom capacity.
- Additional customer funding arrangements are signed beyond the ones already executed, deepening the longer-horizon visibility management describes.
- Compute growth falls short of the guided nearly +30% sequential rate while communications is already declining, leaving no base business to absorb the gap.
- Memory supply constraints persist beyond the current frame, keeping communications and Android revenue depressed.
- The Arizona air pocket proves deeper or longer than the guided 1%-2% operating margin dilution beginning in 2027.
- The loss or reduction of Apple (29.8%) or Qualcomm (11.1%) revenue, or a scaling-back of the NVIDIA or TSMC commitments.
- Competitors scale in the same direction — ASE doubling its LEAP revenue, TSMC and Intel adding advanced packaging capacity — and compress pricing.
Looking Ahead
Over the next 12 months the evidence points to a compute-led cadence against a declining communications base. Management guides computing to accelerate to nearly +30% sequentially in Q3 2026 while communications declines high single digits, and expects the SiP migration headwind to roll off through the first half of 2027. Korea's new Songdo building is scheduled for completion at the end of 2026 to support data-center demand going into 2027. Arizona Phase 1 construction is planned for completion in 2027, the year the NVIDIA prepayment is received and the guided 1%-2% operating margin dilution begins.
- Q3 2026Q3 2026 results — Tests computing's ~+30% sequential guide and the 18.5%-19.5% gross margin guide.
- Through 20262026 product launches — Four 2.5D and four HDFO products management expects to launch this year.
- Q4 2026Communications Q4 seasonality — Management expects no typical seasonal lift in communications even into Q4.
- End 2026Korea Songdo completion — New assembly and test building scheduled to complete for 2027 data-center demand.
- 2027Arizona Phase 1 completes — Also when the NVIDIA prepayment is received and 1%-2% margin dilution begins.
- H1 2027SiP headwind rolls off — The Korea-to-Vietnam migration drag is guided to extend into early 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.3B | $6.7B | $7.5B | +6.2% |
| Gross Margin | 14.8% | 13.7% | 15.5% | 103bps |
| EBITDA | $1.0B | $1.1B | $1.3B | +7.4% |
| EBITDA Margin | 16.4% | 16.5% | 17.8% | +18bps |
| Net Income | $354M | $374M | $556M | +5.6% |
| Free Cash Flow | $345M | $191M | $516M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)15.5%
- EBITDA Margin (TTM)17.8%
- Net Margin (TTM)7.5%
- ROIC10.9%
- FCF Conversion39.0%
- SBC / Revenue0.0%
The Company
Amkor Technology is an outsourced semiconductor assembly and test provider — an OSAT — and, in its own 10-K description, 'the world's largest U.S. headquartered outsourced semiconductor assembly and test service provider and … a global leader in outsourced semiconductor packaging and test services.' It comes after the wafer: it takes finished silicon from foundries, chip designers and integrated device manufacturers, packages it and tests it. Its portfolio spans advanced packaging, wafer-level processing and system-in-package solutions for smartphones, data centers, artificial intelligence, automobiles and wearables. As advanced packaging moves onto the critical path of system performance, that back-end step has become a gating function for AI data-center processors.
Amkor reports as a single operating segment and organizes operations around two product groups: Advanced Products (flip chip, memory, wafer-level processing and related test) and Mainstream Products (leadframe, substrate-based wirebond and MEMS). Revenue is reported across four end markets — communications, computing, automotive and industrial, and consumer. Manufacturing and R&D span China, Japan, Korea, Malaysia, Philippines, Portugal, Taiwan and Vietnam, with Arizona under construction. Korea is the largest existing site by square footage; the Arizona Phase 1 build is approximately 1.8 million square feet.
Business Segments
Competitive Landscape
Amkor's 10-K names established packaging and test providers primarily located in Asia as its competition, 'including ASE Technology, JCET Group and Powertech Technology.' TSMC and Intel also appear as advanced-packaging competitors building capacity in the same direction. The relationships are multi-role: TSMC appears as customer, partner, supplier of front-end wafers and competitor, while Intel appears as an EMIB collaboration partner and a competitor — a set of roles the source material treats as a structural feature of Amkor's position rather than an inconsistency. Neighbor read-throughs describe ASE scaling its advanced-packaging business.
- ASE TechnologyNamed in the 10-K as a direct competitor; a neighbor read-through describes it as capacity constrained, tracking LEAP revenue ahead of $3.5B and aiming to double in 2027 with CapEx raised to about $10.5B.
- JCET GroupNamed in the 10-K as a competitor among established packaging and test providers primarily located in Asia.
- Powertech TechnologyNamed in the 10-K as a competitor among established packaging and test providers primarily located in Asia.
- TSMCAppears in the supply-chain wiring set as a competitor (CoWoS/InFO against Amkor's HDFO/S-Connect) while also being a 10-year advanced packaging partner and a supplier of front-end wafers.
- IntelAppears in the supply-chain wiring set as a competitor (EMIB/Foveros against Amkor's HDFO/S-Connect) while also collaborating with Amkor on outsourced EMIB assembly.
Supply Chain
Amkor sits mid-to-downstream in the semiconductor value chain — after the foundry, before the system maker. It sources leadframes, laminate substrates and bonding and gold wire from a limited group of suppliers, and its customer base is highly concentrated.
More on AMKR: Earnings recap