AMKOR TECHNOLOGY, INC. Q3 FY2026 earnings call

• Strategic Partnerships: Customers are making long-term commitments and providing advance payments tied to future capacity, giving AMCOR visibility and confidence to accelerate capital spending above historical norms.
• Technology Leadership: The flagship HDFO CPU program is scaling, with an additional hyperscaler program ramping in Q3. Two new 2.5D programs in networking and data centers are expected online in Q4. Customer engagement has broadened to include architectural design and test strategy.
• Geographic Expansion: Phase two of the Arizona Advanced Packaging Campus ($12 billion total investment) will break ground late 2027. Korea’s Gwangju campus broke ground on two new buildings to support HDFO for NVIDIA and other data center customers. Vietnam is becoming the SIP Center of Excellence, allowing redeployment of cleanroom space in Korea for advanced packaging.
• Operational Resilience: The Kumamoto, Japan facility returned to full operations within the quarter after a July earthquake impact. Automation in Vietnam is improving equipment utilization and quality assurance.

AMCOR reported total revenue of $1.99 billion in Q3 2026, with gross margins expanding to 18.3% and operating margins reaching 11.3%. The Computing segment achieved record revenue of approximately $1.0 billion (estimated ~50% of total), growing 25% sequentially, driven by the scaling of the flagship HDFO CPU program and new data center initiatives. This segment contributed significantly to margin expansion due to a richer mix of high-value advanced packaging. The Automotive and Industrial segment also hit record revenue, increasing 7% sequentially on strong demand for ADAS and industrial applications, contributing robustly to the top line. The Communications segment saw revenue decline 8% sequentially due to memory supply constraints and component shortages affecting premium smartphones, while Consumer revenue rose 10% sequentially but is expected to decline mid-teens in Q4 due to similar headwinds.

• Q4 Revenue: Expected between $1.9 billion and $2.0 billion.
• Q4 Gross Margin: Expected between 18% and 19%.
• Q4 Operating Expenses: Approximately $140 million.
• Q4 Net Income: Forecasted between $160 million and $185 million, resulting in EPS of 65–75 cents.
• Full-Year Tax Rate: Expected in the high teens percent due to discrete tax benefits.
• CapEx: Narrowed estimated 2026 spend to around $2.5 billion, primarily reflecting timing of Arizona construction payments. A step-up in CapEx is expected in 2027, driven by facilities in Arizona, Korea, and Vietnam. Specific 2027 guidance will be provided in February.

• Component Shortages: Ongoing shortages affecting premium tier smartphones and IoT wearable devices are creating headwinds for Communications and Consumer segments.
• Memory Supply Constraints: Impacting build patterns and potentially slowing growth in communications and consumer applications.
• Foreign Currency Headwinds: Unfavorable FX impacts noted in Q3.
• Natural Disasters: The July earthquake at the Kumamoto, Japan facility had a minor unfavorable impact of ~60 basis points on gross margin, though operations have normalized.
• Market Volatility: Weakness in Android smartphone markets and potential seasonality shifts in Apple launch cycles pose risks to the Communications segment.

Q: How should investors view the division of the $3B Nvidia prepayments between Korea and Arizona regarding margin profiles and asset fungibility?

A: Kevin Engel explained that Korea is ramping immediately with short-term asset fills and midterm Songdo campus openings, while Arizona ramps later (late 2028). While Arizona costs may be higher due to labor and depreciation, heavy utilization and automation will mitigate this, keeping long-term margin deltas minimal. He emphasized that advanced packaging assets are highly fungible across different customer programs, reducing risk if specific AI programs change.

Q: What is driving the trajectory of computing revenue growth into 2027, and how does it compare to prior expectations?

A: Kevin Engel clarified that the 25% sequential growth in Q3 was not due to supply constraints but rather the time required to load the complex 300+ step HDFO process pipeline. Looking ahead, he expects over 30% year-over-year growth in computing from 2025 to 2026, driven by data center offsetting soft PC demand. He anticipates similar or higher growth rates into 2027 as capacity expands in Korea and data center engagements ramp.

Q: How are rising substrate/material costs and tight capacity influencing pricing power and the SIP business rebound?

A: Kevin Engel stated that AMCOR manages cost pressures by passing them through to customers, supported by limited competition in advanced packaging which allows for attractive pricing structures. Regarding SIP, he acknowledged short-term headwinds from migration gaps to Vietnam but confirmed a strong rebound pipeline. However, he noted that SIP pricing is less likely to drive significant margin acceleration compared to advanced packaging, focusing instead on maintaining returns through cost recovery.

Q: What is the long-term outlook for CapEx intensity and its impact on gross margins given the massive Arizona and Korea expansions?

A: Megan Faust indicated that CapEx will remain elevated through 2027-2029, peaking at up to 15% of the $12B Arizona project in 2027 alone, plus significant Korea investments. Depreciation is expected to rise mid-teens percent in 2026 and further in 2027. However, she highlighted that product mix shift toward high-margin compute growth (~30%+) should offset these fixed cost increases, preserving margin expansion despite the heavy capital cycle.

Q: How does the weakness in Communications/Consumer sectors affect overall earnings trajectory and asset utilization?

A: Kevin Engel and Megan Faust emphasized that AMCOR’s diversified portfolio cushions market dynamics; strength in Compute and Automotive offsets weakness in Communications and Consumer. They expect asset utilization levels to continue rising over time, even with troughs in specific end-markets. They are optimistic about long-term growth in both sectors, noting that ARM migration helps offset PC challenges, and that inventory controls in automotive are improving.