Amkor Technology Reports 3.2% Decline in Q1 2025 Net Sales to $1.32 Billion

Amkor Technology, Inc. reported a decline in financial performance for the first quarter of 2025, with net sales totaling $1.32 billion, a decrease of 3.2% from $1.37 billion in the same period of 2024. The company's gross profit also fell to $157.6 million, down from $201.6 million, resulting in a gross margin of 11.9%, compared to 14.8% a year earlier. This decline in profitability was attributed to lower sales in the communications end market, which saw a 19% decrease, primarily due to reduced content in premium smartphones. However, growth was noted in the consumer and computing markets, which increased by 23% and 21%, respectively.

Operating income for the quarter was reported at $31.5 million, significantly lower than the $73.1 million recorded in the previous year, leading to an operating income margin of 2.4%, down from 5.4%. The decrease in operating income was influenced by increased research and development expenses, which rose by 19.6% to $45.7 million, as the company focused on developing new advanced packaging technologies. Additionally, selling, general, and administrative expenses decreased to $80.4 million from $90.3 million, reflecting reduced costs associated with the startup of the Vietnam Facility.

In terms of operational metrics, Amkor's total assets as of March 31, 2025, were $6.92 billion, slightly down from $6.94 billion at the end of 2024. The company maintained a strong liquidity position with cash and cash equivalents of $1.06 billion and short-term investments of $505.2 million. However, net cash provided by operating activities dropped to $24.1 million from $162.3 million in the prior year, primarily due to changes in working capital and lower operating profits. The company also reported capital expenditures of $79.9 million, down from $96.2 million, focusing on investments in advanced packaging and test equipment.

Strategically, Amkor is progressing with its plans to build a new advanced packaging and test facility in Arizona, having acquired the land in 2024 and expecting to begin construction in the second half of 2025. The project is supported by a $407 million funding award from the U.S. Department of Commerce under the CHIPS Act, contingent on meeting specific construction and production milestones. The company has also begun delivering advanced packages from its Vietnam Facility, which commenced operations in the third quarter of 2024.

Looking ahead, Amkor anticipates continued demand for advanced packaging services driven by trends in high-performance computing, automotive applications, and the Internet of Things. However, the company acknowledges the cyclical nature of the semiconductor industry and the potential impact of economic conditions on its operations. Amkor's management remains focused on optimizing asset utilization and managing costs while navigating the challenges posed by market fluctuations and competitive pressures.