Amkor Technology (NASDAQ:AMKR) executives used a Morgan Stanley conference appearance to outline priorities under newly appointed CEO Kevin Engel, emphasizing advanced packaging expansion, customer-driven geographic diversification, and a stepped-up investment plan that includes a major U.S. facility in Arizona. CFO Megan Faust also discussed liquidity, financing flexibility, and the company’s intent to continue returning capital to shareholders even as spending rises.
Strategic pillars and focus areas
Engel said Amkor’s strategy continues to be guided by three “strategic pillars”: elevating technology leadership, expanding its global footprint, and enhancing strategic partnerships with customers. He tied those pillars to growth markets such as AI-related compute, communications, and automotive, and said customer technology roadmaps and packaging-location preferences are central to Amkor’s planning.
Arizona buildout and customer-led commitments
Engel said Amkor’s Arizona investment is being built based on customer demand rather than a “build it and they will come” approach. He described the U.S. plan as supporting a “turnkey flow” for a portion of manufacturing—from silicon through packaging—rather than a wholesale shift of global manufacturing into the U.S.
On construction progress, Engel said Amkor broke ground in October and has completed site grading and begun major concrete work, with plans to “start going vertical” in the coming months. He said construction is expected to be completed around mid-2027, with equipment move-in and production ramp targeted for early 2028.
Engel said Amkor is taking a two-phase approach. Phase I is the building currently under construction, and he said that once fully scaled it would support around 25,000 wafers per month of capacity. Phase II would be roughly the same size and scale.
Asked why Korea alone is not sufficient for geopolitical risk mitigation, Engel described Korea as a “short midterm bridge to the U.S.” He said Korea is supporting accelerating customer demand for geographic diversity and will support the broader Asia ecosystem, while a Portugal facility supports Europe, and the U.S. facility provides longer-term regional support. He also said countries increasingly view AI as tied to national security and want portions of supply chains within their regions.
Regarding customer commitments, Engel said multiple customers—especially in computing—want optionality in the U.S., and he noted that some partnerships have been publicly announced. He said customer agreements can take different forms, including take-or-pay arrangements, upfront capital-related investments, or prepay agreements, depending on the customer.
Capital spending, liquidity, and shareholder returns
Faust said Amkor prepared for the U.S. investment by strengthening its balance sheet, and she cited year-end liquidity exiting 2025 of $3 billion, comprised of $2 billion in cash and short-term investments and a $1 billion unused line of credit.
She also referenced “significant grants and investment tax credits” to support the U.S. expansion, noting the company has outlined $7 billion for the Arizona campus and said that could translate to potentially $2.8 billion in government support.
Faust added that leverage is “really low right now,” citing debt-to-EBITDA of 1.2x, and said the company has “plenty of debt capacity.” She said Amkor will evaluate financing tools and timing based on visibility and shareholder value considerations.
On capital allocation, Faust said priorities include investing in the business—highlighting accelerated investment plans—regional expansion (including Vietnam and Arizona), optimizing debt structure and cost of debt, and continuing to return capital to shareholders. She said Amkor expects to “modestly grow” its dividend even during the investment period.
End-market outlook and supply constraints
Engel said compute is a significant growth driver, and he cited an expectation of about 20% year-over-year growth in compute, which includes PCs and data center. He characterized PC expectations as more modest, with acceleration in AI and data center.
In automotive, Engel differentiated between mainstream wire-bond applications—where he said inventory management at IDMs and OEMs has been a multi-year issue—and more advanced packaging needs for in-car computing, infotainment, and ADAS. He said the advanced segment is growing quickly, while mainstream is beginning to normalize, and he noted three quarters of sequential growth in that mainstream automotive area. He also said this has supported relatively high loading at the company’s Philippines factory.
In communications, Engel said the market outlook was for “single digit growth,” and he said Amkor is not projecting “significant softness.” He cited year-over-year growth in communications in Q1 guidance, attributing it to the tail of a strong launch last year and regaining a socket the company had discussed previously. He also said memory constraints have become a challenge, even though Amkor typically does not procure memory because it is consigned; if memory does not arrive, the company cannot build the part. He described customer prioritization when memory is limited, often favoring premium-tier products where he said Amkor typically has a higher footprint.
Engel also pointed to constraints in advanced-node silicon supply that can create “lumpy loading,” and he cited advanced substrate tightness driven by AI growth. He said customers have been working on dual sourcing and supply-chain options and that the situation is manageable. He also noted uncertainty around potential inflationary pressure tied to oil prices following a newly breaking war, while cautioning it was early to assess impacts.
Advanced packaging growth and margin commentary
On advanced packaging, Engel said Amkor has seen rapid growth in 2.5D packaging tied to GPU-related business and reiterated the company’s view that 2.5D would precede a broader transition toward High-Density Fan-Out (HDFO). He said Amkor has discussed roughly tripling 2.5D revenue this year versus last year.
He said the company views 2.5D and HDFO as a shared capacity bucket because assets can be moved between them. He added that equipment spending—described as roughly a 40% year-over-year increase—was going predominantly to Korea to support HDFO platforms, while the U.S. site is intended to house more advanced packaging technologies.
Faust said targeted margins for High-Density Fan-Out and 2.5D are “well above” corporate margins due to technical complexity, high investment requirements, barriers to entry, limited capable OSAT competitors for full-flow manufacturing, and tight capacity. She noted that early ramps can pressure margins until scale, yields, and utilization improve, and said those dynamics contributed to a Q1 margin impact. She said the company expects margins on two products ramping in the second half to reach expected scale margins by the end of the year.
Faust also said Amkor believes it can achieve “mid to high teens gross margins in the second half” based on current line of sight, citing a favorable mix shift toward higher-value advanced packaging. She said utilization is a key profitability lever given the company’s fixed-cost model.
She added that in a low-utilization environment, Amkor is using the opportunity to streamline mainstream operations in Japan, including closing one factory and moving the business to other sites. She also said Vietnam reached a milestone of breakeven in Q4 and had a 90 basis point impact on 2025 gross margins, with benefits expected into 2026 as the company expects to double revenue there.
Engel and Faust both emphasized that investment timing and pacing are heavily influenced by customer pull, including customers wanting Amkor to move faster in the U.S. Engel said Amkor plans to provide additional longer-term targets and visibility at an investor day in May.
About Amkor Technology (NASDAQ:AMKR)
Amkor Technology, Inc (NASDAQ:AMKR) is a leading provider of outsourced semiconductor packaging and test (OSAT) services, supporting integrated device manufacturers and semiconductor foundries worldwide. The company offers a broad range of advanced packaging solutions, including wafer bumping, flip chip, system-in-package and ball grid array technologies, designed to meet the performance, power and form-factor demands of applications across consumer electronics, automotive, communications and industrial markets.
In addition to packaging, Amkor delivers comprehensive test services such as wafer probing, final test, system-level test and digital, analog and mixed-signal testing, enabling customers to accelerate time-to-market and reduce total costs.
