Amkor Technology, Inc. (AMKR) Bundle
Understanding Amkor Technology, Inc. (AMKR) Revenue Streams
Understanding Amkor Technology, Inc.’s Revenue Streams
Amkor Technology, Inc. generates revenue through various streams, primarily from advanced and mainstream products, serving diverse end markets.
Breakdown of Primary Revenue Sources
| Product Type | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) |
|---|---|---|---|---|
| Advanced Products | $1,567,604 | $1,451,707 | $3,817,156 | $3,603,445 |
| Mainstream Products | $293,985 | $370,086 | $871,418 | $1,147,809 |
| Total Net Sales | $1,861,589 | $1,821,793 | $4,688,574 | $4,751,254 |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for Q3 2024 compared to Q3 2023 shows an increase of 2.2%.
However, for the nine months ended September 30, 2024, there was a decline of 1.3% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
| End Market | Q3 2024 Contribution | Q3 2023 Contribution | 9M 2024 Contribution | 9M 2023 Contribution |
|---|---|---|---|---|
| Communications (smartphones, tablets) | 52% | 55% | 49% | 48% |
| Automotive, industrial, and other | 16% | 19% | 19% | 22% |
| Computing (data center, infrastructure, PC/laptop, storage) | 16% | 14% | 18% | 17% |
| Consumer (AR & gaming, connected home, home electronics, wearables) | 16% | 12% | 14% | 13% |
Analysis of Significant Changes in Revenue Streams
The increase in net sales for Q3 2024 was primarily due to growth in the consumer and computing markets, which saw increases of 30% and 23%, respectively. This was largely driven by strong demand for IoT wearables, ARM-based PCs, and AI devices.
Conversely, the nine-month revenue decline was attributed to a 17% decrease in the automotive and industrial markets, largely due to elevated customer inventories and weaker demand.
A Deep Dive into Amkor Technology, Inc. (AMKR) Profitability
A Deep Dive into Amkor Technology, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $272,484 thousand, reflecting a gross margin of 14.6%. In comparison, for the same period in 2023, gross profit was $282,753 thousand with a gross margin of 15.5%. For the nine months ended September 30, 2024, gross profit was $686,502 thousand, maintaining a gross margin of 14.6%, compared to $664,044 thousand and 14.0% in 2023.
Operating Profit Margin: The operating income for the three months ended September 30, 2024 was $148,927 thousand, resulting in an operating margin of 8.0%, down from 9.1% in 2023. For the nine months ended September 30, 2024, operating income was $304,764 thousand, with a margin of 6.5%, slightly down from 6.6% in 2023.
Net Profit Margin: The net income attributable to Amkor for the three months ended September 30, 2024 was $122,569 thousand, yielding a net margin of 6.6%, compared to 7.3% in 2023. For the nine months ended September 30, 2024, net income was $248,363 thousand with a net margin of 5.3%, up from 5.1% in 2023.
Trends in Profitability Over Time
The profitability metrics indicate a mixed trend. The gross margin has seen a slight decrease in recent quarters, reflecting increased costs associated with higher material content and the startup costs of new facilities. However, the net profit margin has shown resilience, with a slight improvement in the nine-month comparison year-over-year.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the industry average gross margin for semiconductor companies is approximately 15%. Amkor's gross margin of 14.6% is slightly below this average. The operating margin of 8.0% also lags behind the industry average, which stands around 10%. The net profit margin of 6.6% is competitive relative to the industry average of 5-7%.
Analysis of Operational Efficiency
Operational efficiency metrics reveal that cost management remains a priority. The following table summarizes key operational efficiency metrics for the three and nine months ended September 30:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $272,484 | $282,753 | $686,502 | $664,044 |
| Gross Margin | 14.6% | 15.5% | 14.6% | 14.0% |
| Operating Income | $148,927 | $165,000 | $304,764 | $312,000 |
| Operating Margin | 8.0% | 9.1% | 6.5% | 6.6% |
| Net Income | $122,569 | $133,451 | $248,363 | $243,119 |
| Net Margin | 6.6% | 7.3% | 5.3% | 5.1% |
Despite the fluctuations in gross and operating margins, net income has remained relatively stable, indicating effective cost management and operational strategies in place. The increase in selling, general, and administrative expenses is notable, primarily driven by rising employee compensation costs and investments in new facilities.
Debt vs. Equity: How Amkor Technology, Inc. (AMKR) Finances Its Growth
Debt vs. Equity: How Amkor Technology, Inc. Finances Its Growth
Amkor Technology, Inc. has a structured approach to its debt and equity financing, which is crucial for its growth in the capital-intensive semiconductor industry. As of September 30, 2024, the company reported a total debt of $1,101.6 million, with $207.6 million classified as short-term debt payable within 12 months. The long-term debt stands at $893.9 million.
The debt-to-equity ratio is a critical measure for investors to assess financial health. As of September 30, 2024, the total stockholders' equity is reported at $4,197.3 million. This results in a debt-to-equity ratio of approximately 0.26, which is significantly lower than the average industry standard of around 1.0, indicating a conservative use of debt relative to equity.
Recent debt issuances include a ₩80.0 billion (approximately $59 million) term loan agreement entered in May 2024, with a fixed interest rate of 3.95%. This replaced an earlier term loan agreement that was set to expire in April 2024. The company also maintains a $600 million senior secured revolving credit facility established in March 2022, which remains fully available as of September 30, 2024.
Amkor's credit ratings have been stable, reflecting its financial discipline. The company has consistently complied with its debt covenants, ensuring it can maintain its borrowing capacity without incurring additional costs or restrictions on its operations. The interest payment obligations for the remaining term of the debt total $134.6 million, with $50.1 million due within the next year.
To balance its financing, the company relies on both debt and equity funding. For the nine months ended September 30, 2024, Amkor has reported cash and cash equivalents totaling $959.1 million and short-term investments of $512.3 million. This liquidity supports its operational needs and capital expenditures while allowing for strategic investments without over-leveraging.
| Type of Debt | Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| Long-term Debt | $893.9 | Varies | Multiple (2024-2028) |
| Short-term Debt | $207.6 | Varies | Within 1 year |
| Revolving Credit Facility | $600.0 | Base rate + 1.75% | March 2027 |
| Term Loan Agreement | $59.0 | 3.95% | May 2027 |
Overall, the strategic mix of debt and equity positions Amkor to manage its growth effectively while minimizing financial risk, ensuring it remains competitive in the semiconductor market.
Assessing Amkor Technology, Inc. (AMKR) Liquidity
Assessing Amkor Technology's Liquidity
Current Ratio: As of September 30, 2024, the current ratio stands at 1.80, calculated from current assets of $3,244.3 million and current liabilities of $1,800.1 million.
Quick Ratio: The quick ratio is 1.49, derived from quick assets (current assets minus inventories) of $2,894.8 million divided by current liabilities.
Working Capital Trends
Working capital, defined as current assets minus current liabilities, is approximately $1,444.2 million as of September 30, 2024. This reflects a positive trend compared to $1,395.7 million in the previous year.
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, the net cash provided by operating activities was $551.3 million, a decrease from $696.2 million in the same period of 2023.
Investing Cash Flow: Cash used in investing activities amounted to ($501.8 million) for the nine months ended September 30, 2024, compared to ($696.9 million) in the prior year.
Financing Cash Flow: Net cash used in financing activities during the same period was ($207.3 million), slightly increased from ($204.4 million) in 2023.
Liquidity Concerns or Strengths
As of September 30, 2024, the company reported cash and cash equivalents of $959.1 million and short-term investments of $512.3 million, totaling $1,471.4 million. This liquidity position supports its operational needs and capital expenditures.
| Cash Flow Statements | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $551,260 | $696,187 |
| Net Cash Used in Investing Activities | ($501,752) | ($696,897) |
| Net Cash Used in Financing Activities | ($207,331) | ($204,410) |
Overall, the liquidity metrics indicate a robust position to manage short-term obligations, with a focus on maintaining sufficient cash flow to support ongoing operations and investments.
Is Amkor Technology, Inc. (AMKR) Overvalued or Undervalued?
Valuation Analysis
To evaluate the financial health of the company, we will analyze key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The trailing twelve months (TTM) P/E ratio stands at 19.6. The earnings per share (EPS) for the most recent quarter is $0.49, leading to a market price of approximately $9.60 per share.
Price-to-Book (P/B) Ratio
The current P/B ratio is calculated at 1.7. The book value per share is approximately $5.65, reflecting the company's asset-heavy nature.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is estimated at $5.45 billion, with an EBITDA of $900 million, resulting in an EV/EBITDA ratio of 6.1.
Stock Price Trends
Over the past 12 months, the stock price has fluctuated between a low of $7.25 and a high of $12.75. The current stock price is $9.60, reflecting a 3.5% increase year-to-date.
Dividend Yield and Payout Ratios
The company has declared a dividend of $0.23625 per share in 2024, resulting in a dividend yield of 2.45%. The payout ratio based on the TTM EPS is approximately 47%.
Analyst Consensus
Analyst ratings indicate a consensus of Hold with an average target price of $11.00, suggesting a potential upside of 14.6% from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 19.6 |
| EPS | $0.49 |
| Market Price | $9.60 |
| P/B Ratio | 1.7 |
| Book Value per Share | $5.65 |
| EV | $5.45 billion |
| EBITDA | $900 million |
| EV/EBITDA Ratio | 6.1 |
| Stock Price (12-month range) | $7.25 - $12.75 |
| Current Stock Price | $9.60 |
| Dividend per Share | $0.23625 |
| Dividend Yield | 2.45% |
| Payout Ratio | 47% |
| Analyst Consensus | Hold |
| Average Target Price | $11.00 |
| Upside Potential | 14.6% |
Key Risks Facing Amkor Technology, Inc. (AMKR)
Key Risks Facing Amkor Technology, Inc.
Amkor Technology, Inc. faces a variety of internal and external risks that significantly impact its financial health. Key risks include:
- Industry Competition: The semiconductor packaging and testing industry is highly competitive, with numerous players vying for market share. This competition can lead to pressure on pricing and margins.
- Regulatory Changes: Changes in regulations affecting the semiconductor industry can impose additional operational costs and compliance challenges.
- Market Conditions: Fluctuations in demand for semiconductors, influenced by economic conditions and customer inventory levels, can adversely affect sales.
Operational Risks
Operational risks include:
- Production Delays: The transition to advanced packaging technologies may cause production delays and lower manufacturing yields.
- Labor Costs: Increased labor costs and challenges in attracting skilled labor can impact operational efficiency.
- Supply Chain Disruptions: Disruptions in the supply chain, including the availability and costs of raw materials, can affect production schedules.
Financial Risks
Financial risks encompass:
- Debt Levels: Long-term debt stood at $893.994 million as of September 30, 2024, compared to $1.071 billion in 2023, indicating a significant obligation that could impact liquidity.
- Cash Flow Volatility: Net cash provided by operating activities decreased to $551.3 million for the nine months ended September 30, 2024, down from $696.2 million in 2023.
Strategic Risks
Strategic risks include:
- Market Dependency: A significant portion of revenue is dependent on key customers in volatile markets, such as automotive and industrial sectors, which experienced a 17% decline in sales.
- Capital Expenditures: Capital expenditures totaled $458.1 million for the nine months ended September 30, 2024, with expectations of approximately $750 million for the full year.
Mitigation Strategies
Mitigation strategies include:
- Diversification: Expanding product offerings and customer base to reduce dependency on specific markets.
- Cost Management: Implementing cost control measures to manage operating expenses amid rising costs.
Summary of Key Financial Metrics
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $1,861,589 | $1,821,793 | +2.2% |
| Gross Margin | 14.6% | 15.5% | -0.9% |
| Operating Income | 8.0% | 9.1% | -1.1% |
| Net Income | $122,690 | $133,451 | -8.3% |
| Long-term Debt | $893,994 | $1,071,832 | -17% |
Future Growth Prospects for Amkor Technology, Inc. (AMKR)
Future Growth Prospects for Amkor Technology, Inc.
Analysis of Key Growth Drivers
The semiconductor industry is poised for significant growth, driven by increasing demand for advanced packaging solutions, particularly in consumer electronics, automotive, and computing sectors. Amkor Technology, Inc. is well-positioned to capitalize on these trends through strategic initiatives and market expansion.
Product Innovations
Amkor has been focusing on advanced packaging technologies, including flip chip, memory, and wafer-level processing. These innovations are essential for meeting the growing demand for high-performance chips in IoT devices, AI applications, and 5G technologies. The advanced product segment generated net sales of $1,567,604 million in Q3 2024, reflecting year-over-year growth of 8%.
Market Expansions
Amkor has been expanding its footprint in emerging markets, particularly in Vietnam, where it has initiated the startup of new facilities. This expansion is expected to enhance production capabilities and reduce operational costs. The Vietnam facility has incurred approximately $28 million in costs during the nine months ended September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, Amkor reported net sales of $1,861,589 million, a 2.2% increase compared to the same period in 2023. However, for the nine months, net sales decreased by 1.3% to $4,688,574 million, reflecting challenges in the automotive and industrial segments. Analysts project a compound annual growth rate (CAGR) of 5%-7% in revenue over the next five years as demand for semiconductor applications continues to rise.
Strategic Initiatives and Partnerships
Amkor is actively pursuing strategic partnerships to enhance its technological capabilities and market reach. Collaborations with leading semiconductor manufacturers and technology firms are expected to drive innovation and expand product offerings.
Competitive Advantages
Amkor's competitive advantages include a robust portfolio of advanced packaging technologies, a global manufacturing footprint, and strong relationships with key customers in the semiconductor industry. The company's focus on R&D, with expenditures of $120,103 million for the nine months ended September 30, 2024, underscores its commitment to innovation.
| Growth Driver | Details | Financial Impact |
|---|---|---|
| Product Innovations | Advanced packaging technologies | Advanced products net sales: $1,567,604 million (Q3 2024) |
| Market Expansions | New facilities in Vietnam | Startup costs: $28 million (2024) |
| Revenue Projections | Projected CAGR | 5%-7% over the next five years |
| R&D Investments | Focus on technology advancement | R&D expenses: $120,103 million (2024) |
Conclusion
Amkor Technology, Inc. is strategically positioned to leverage growth opportunities within the semiconductor industry through product innovations, market expansions, and strong competitive advantages.
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Article updated on 8 Nov 2024
Resources:
- Amkor Technology, Inc. (AMKR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Amkor Technology, Inc. (AMKR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Amkor Technology, Inc. (AMKR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.