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What changed in AMKOR TECHNOLOGY, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AMKOR TECHNOLOGY, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+301 added−295 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-22)

Top changes in AMKOR TECHNOLOGY, INC.'s 2023 10-K

301 paragraphs added · 295 removed · 246 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

64 edited+11 added−8 removed84 unchanged
Biggest changeOur test development teams are experienced in a full suite of test engineering disciplines for Memory, Power, RF, Mixed Signal, Analog and digital test solution development. 10 Table of Contents End Markets The following table lists the end markets that use our products and sets forth, for the periods indicated, the percentage of net sales in each end market: 2022 2021 2020 End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers): Communications (smartphones, tablets) 44 % 41 % 41 % Automotive, industrial and other (ADAS, electrification, infotainment, safety) 20 % 21 % 20 % Consumer (AR & gaming, connected home, home electronics, wearables) 20 % 22 % 24 % Computing (data center, infrastructure, PC/laptop, storage) 16 % 16 % 15 % Total net sales 100 % 100 % 100 % RESEARCH AND DEVELOPMENT We believe that technology development is one of the keys to success in the semiconductor packaging and test industry.
Biggest changeEnd Markets The following table lists the end markets that use our products and sets forth, for the periods indicated, the percentage of net sales in each end market: 2023 2022 2021 End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers): Communications (smartphones, tablets) 50 % 44 % 41 % Automotive, industrial and other (ADAS, electrification, infotainment, safety) 21 % 20 % 21 % Computing (data center, infrastructure, PC/laptop, storage) 16 % 16 % 16 % Consumer (AR & gaming, connected home, home electronics, wearables) 13 % 20 % 22 % Total net sales 100 % 100 % 100 % RESEARCH AND DEVELOPMENT We believe that technology development is one of the keys to success in the semiconductor packaging and test industry.
Factory locations also 14 Table of Contents maintain training and development programs that enable the continued learning and growth of our employees, and senior management regularly meets to share and implement best practices among our various facilities. Amkor also uses human capital initiatives to support our broad geographic footprint.
Factory locations also maintain training and development programs that enable the continued learning and growth of our employees, and senior management regularly meets to share and implement best practices among our various facilities. 14 Table of Contents Amkor also uses human capital initiatives to support our broad geographic footprint.
We refer to our flip chip, wafer-level processing and related test services as “Advanced Products” and to our wirebond packaging, power device packaging and related test services as “Mainstream Products.” The following table sets forth, for the periods 7 Table of Contents indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for each service offering.
We refer to our flip chip, wafer-level processing and related test services as “Advanced Products” and to our wirebond packaging, power device packaging and related test services as “Mainstream Products.” The following table sets forth, for the periods indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for each service offering.
Nonetheless, our patents afford an important means of protection for our technologies. Further, to distinguish our products from our competitors’ products, we have obtained certain trademarks and service marks and may promote our particular brands through advertising and other marketing techniques.
Nonetheless, we believe that our patents afford an important means of protection for our technologies. Further, to distinguish our products from our competitors’ products, we have obtained certain trademarks and service marks and may promote our particular brands through advertising and other marketing techniques.
Applications for wafer-level CSP include power management, transceivers, sensors, wireless charging, codecs, and specialty silicon for new or unique functionality. 8 Table of Contents • WLFO packages (also known as low-density fan-out packages) are utilized for ICs where the die surface area is too small to accommodate all of the required bond pads.
Applications for wafer-level CSP include power management, transceivers, sensors, wireless charging, codecs, and specialty silicon for new or unique functionality. • WLFO packages (also known as low-density fan-out packages) are utilized for ICs where the die surface area is too small to accommodate all of the required bond pads.
We are also developing new applications for the automotive market using existing and new package technologies as higher performance compute, energy efficiency, power distribution and sensor content are used to support new automotive features including ADAS, infotainment, optical sensors and electric vehicles. In addition, we are developing high power management modules involving SiC-based devices.
We are also developing new applications for the automotive market using existing and new package technologies as higher performance computing, energy efficiency, power distribution and sensor content are used to support new automotive features including ADAS, infotainment, optical sensors and electric vehicles. In addition, we are developing high power modules involving SiC-based devices.
In addition, we compete with electronic manufacturing service providers or contract electronics manufacturers, including Universal Scientific Industrial (Shanghai) Co., Ltd., that also provide advanced integrated device solutions. Such companies also have 13 Table of Contents developed relationships with most of the world’s largest semiconductor companies, including current or potential customers of Amkor.
In addition, we compete with electronic manufacturing service providers or contract electronics manufacturers, including Universal Scientific Industrial (Shanghai) Co., Ltd., that also provide advanced integrated device solutions. Such companies also have developed relationships with most of the world’s largest semiconductor companies, including current or potential customers of Amkor.
AVAILABLE INFORMATION Amkor files annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Amkor) file electronically with the SEC. The SEC’s website is www.sec.gov . Amkor’s website is www.amkor.com.
The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Amkor) file electronically with the SEC. The SEC’s website is www.sec.gov . Amkor’s website is www.amkor.com.
Wafer bumping equipment includes sputter and spin coaters, electroplating equipment, reflow ovens and other types of equipment. This equipment tends to have longer lead times for delivery and installation than other packaging equipment and is sold in relatively larger increments of capacity. The primary equipment used in the testing process includes testers, handlers and probers.
Wafer bumping equipment includes sputter and spin coaters, electroplating equipment, reflow ovens and other types of 12 Table of Contents equipment. This equipment tends to have longer lead times for delivery and installation than other packaging equipment and is sold in relatively larger increments of capacity. The primary equipment used in the testing process includes testers, handlers and probers.
These trends include: • Growing demand for mobile and connected devices, including the worldwide adoption of “smart” phones, tablets and other Internet-of-Things (“IoT”) devices that can access the internet and provide multimedia capabilities. • An increase in the semiconductor content within electronic products to provide greater functionality and higher levels of performance. • The expansion of 5G infrastructure and 5G enabled devices. 3 Table of Contents • The proliferation of semiconductor devices into well-established end products such as automotive systems for automation and driver assist, electrification and infotainment systems. • An increase in mobility and connectivity capabilities, driving demand for new broadband wired and wireless networking equipment. • Digitalization, driving expansion of data generation and storage. • The adoption of heterogeneous integration (diverse dies positioned close to each other within the same package) to reduce cost, improve yields and deliver required performance in data center computing, artificial intelligence and similar end uses. • The growth of advanced system-in-package (“SiP”) modules (combining multiple semiconductor and other electronic components in a single package) to meet the demand for miniaturization and higher functionality at competitive cost. • The increase in digital format in our environment, from sensors for automobiles (e.g., pressure, radar, LiDAR and image recognition), mobile devices (e.g., 3D motion, temperature, acceleration and imaging), and IoT (e.g., in-home sensing from temperature to weather and wearables).
These trends include: • Adoption of artificial intelligence applications within data centers and edge devices such as smartphones, autonomous vehicles and consumer and industrial devices. • Growing demand for mobile and connected devices, including the worldwide adoption of smartphones, tablets and other Internet-of-Things (“IoT”) devices that can access the internet and provide multimedia capabilities. 3 Table of Contents • An increase in the semiconductor content within electronic products to provide greater functionality and higher levels of performance. • The expansion of 5G infrastructure and 5G enabled devices. • The proliferation of semiconductor devices into well-established end products such as automotive systems for automation and driver assist, electrification and infotainment systems. • An increase in mobility and connectivity capabilities, driving demand for new broadband wired and wireless networking equipment. • Digitalization, driving expansion of data generation and storage. • The adoption of heterogeneous integration (diverse dies positioned close to each other within the same package) to reduce cost, improve yields and deliver required performance in data center computing, artificial intelligence and similar end uses. • The growth of advanced system-in-package (“SiP”) modules (combining multiple semiconductor and other electronic components in a single package) to meet the demand for miniaturization and higher functionality at competitive cost. • The increase in digital format in our environment, from sensors for automobiles (e.g., pressure, radar, LiDAR and image recognition), mobile devices (e.g., 3D motion, temperature, acceleration and imaging), and IoT (e.g., in-home sensing from temperature to weather and wearables).
This wide variety 6 Table of Contents of packaging offerings is necessary to meet the diverse needs of our customers for the optimal combination of performance, size and cost. Utilizing Amkor for its innovative packaging, test and design services enables our customers to focus their resources on semiconductor design and wafer fabrication.
This wide variety of packaging offerings is necessary to meet the diverse needs of our customers for the optimal combination of performance, size and cost. Utilizing Amkor for its innovative packaging, test and design services enables our customers to focus their resources on semiconductor design and wafer fabrication.
For this reason, semiconductor companies and OEMs are leveraging the capabilities of outsourced packaging and test service providers to bring new high quality products to market more quickly. High quality packaging and test service providers enable semiconductor manufacturers to focus their resources on semiconductor design and wafer fabrication.
For this reason, semiconductor companies and OEMs are leveraging the capabilities of outsourced packaging and test service providers to bring new high quality products to market more quickly. 4 Table of Contents High quality packaging and test service providers enable semiconductor manufacturers to focus their resources on semiconductor design and wafer fabrication.
Some of our packages in this category include stacked CSP, wirebond ball grid array packages and plastic ball grid array (“PBGA”) packages. Stacked CSP technology enables the stacking of a wide range of different semiconductor devices to deliver high levels of silicon integration and area efficiency.
Some of our packages in this category include stacked CSP, wirebond ball grid array packages and plastic ball grid array (“PBGA”) packages. 9 Table of Contents Stacked CSP technology enables the stacking of a wide range of different semiconductor devices to deliver high levels of silicon integration and area efficiency.
Growth in the semiconductor industry is being driven primarily by advanced packaging within four key megatrends of 5G, automotive, IoT and high-performance computing (“HPC”). We believe Amkor is well positioned in each of these end markets. • Within our communications end market, we have a strong position across multiple device functionalities within premium and high tier smartphones.
Growth in the semiconductor industry is being driven primarily by advanced packaging within the industry secular growth markets of 5G, automotive, high-performance computing (“HPC”) and IoT. We believe Amkor is well positioned in each of these end markets. • Within our communications end market, we have a strong position across multiple device functionalities within premium and high tier smartphones.
As a result, these 4 Table of Contents companies are increasing their reliance on outsourced providers of semiconductor manufacturing services, including high quality packaging and test solutions. Packaging and test service providers offer a cost-effective solution in a cyclical, capital intensive industry.
As a result, these companies are increasing their reliance on outsourced providers of semiconductor manufacturing services, including high quality packaging and test solutions. Packaging and test service providers offer a cost-effective solution in a cyclical, capital intensive industry.
SWIFT solutions enable high performance in a compact form factor that combines tiled processors, memory, I/O die and other peripheral ICs. Mainstream Products Our Mainstream Products include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems (“MEMS”) packages. These package families use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier.
SWIFT solutions enable high performance in a compact form factor that combines tiled processors, memory, I/O (input/output) die and other peripheral ICs. Mainstream Products Our Mainstream Products use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier and include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems (“MEMS”) packages.
Geographically Diversified Manufacturing Base We have a broad and geographically diverse manufacturing footprint strategically located in seven of the world’s important electronics manufacturing regions.
Geographically Diversified Manufacturing Base We have a broad and geographically diverse manufacturing footprint strategically located in eight of the world’s important electronics manufacturing regions.
Through die partitioning and heterogeneous integration, these modules provide higher functionality at lower total product cost. Our research and development employees are based in Korea, the United States, Portugal and other locations in Asia. At December 31, 2022, we had approximately 700 employees engaged in research and development activities.
Through die partitioning and heterogeneous integration, these modules provide higher functionality at lower total product cost. Our research and development employees are based in Korea, Portugal, the United States and other locations in Asia. At December 31, 2023, we had approximately 950 employees engaged in research and development activities.
MATERIALS AND EQUIPMENT Materials Our materials are used primarily for packaging activities. Our packaging operations depend upon obtaining adequate supplies of materials on a timely basis. The principal materials used in our packaging process are laminate substrates, ICs, capacitors, leadframes and gold wire. The silicon wafer is generally consigned from the customer.
Our packaging operations depend upon obtaining adequate supplies of materials on a timely basis. The principal materials used in our packaging process are laminate substrates, ICs, capacitors, leadframes and gold wire. The silicon wafer is generally consigned from the customer.
We also compete with contract foundries, such as Taiwan Semiconductor Manufacturing Company Limited and Samsung Electronics Co., Ltd., which offer full turnkey services from silicon wafer fabrication through packaging and final test. In addition, we compete with companies that offer test-only services.
We also compete with contract foundries, such as Taiwan Semiconductor Manufacturing Company Limited, which offer full turnkey services from silicon wafer fabrication through packaging and final test. In addition, we compete with companies that offer test-only services.
In 2022, 2021 and 2020, we had net sales of approximately $2,930 million, $2,280 million and $1,885 million, respectively, from our advanced SiP modules, which are mostly included in Advanced Products, depending upon the interconnect technology used in the module. Test Services Our Test Services complement our wafer and packaging services across our Advanced and Mainstream Products.
In 2023, 2022 and 2021, we had net sales of approximately $2,955 million, $2,930 million and $2,280 million, respectively, from our advanced SiP modules, which are mostly included in Advanced Products, depending upon the interconnect technology used in the module. Test Services Our Test Services complement our wafer and packaging services across our Advanced and Mainstream Products.
We intend to continue to leverage our investment in advanced technology to meet the demand for these services in high growth markets. Optimize Utilization of Existing Assets and Broaden Our Customer Base Another key to our success is to optimize the utilization of our existing assets.
We intend to continue to leverage our investment in advanced technology to meet the demand for these services in high growth markets. Optimize Utilization of Existing Assets Another key to our success is to optimize the utilization of our existing assets.
Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon 5 Table of Contents interposers, which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package. In addition, we co-develop with customers high power modules involving gallium nitride (“GaN”) and silicon carbide (“SiC”) based devices.
Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon interposers, which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package, such as 2.5D. In addition, we co-develop with customers high power modules incorporating gallium nitride (“GaN”) and silicon carbide (“SiC”) based devices.
Amkor was a pioneer in the outsourcing of semiconductor packaging and test services, and over the years we have built a leading position by: • Designing and developing innovative packaging and test technologies; • Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution; • Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies; • Collaborating with customers, foundries, original equipment manufacturers (“OEMs”) and equipment and material suppliers; • Focusing on strategic end markets that offer solid growth potential; • Providing a geographically diverse operating base; and • Developing a competitive cost structure through disciplined capital investment.
Amkor was a pioneer in the outsourcing of semiconductor packaging and test services, and over the years we have built a leading position by: • Designing and developing innovative packaging and test technologies focused on advanced packaging solutions in high growth markets, including artificial intelligence; • Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution; • Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies; • Collaborating with customers, foundries, original equipment manufacturers (“OEMs”) and equipment and material suppliers; • Focusing on strategic end markets that offer solid growth potential; • Providing a geographically diverse operating base with manufacturing facilities in multiple countries across Asia and in Europe; and • Developing a competitive cost structure through disciplined capital investment.
We believe we are well-positioned in the outsourced packaging and test services market. The following competitive strengths support our strategy to build upon our industry position and remain a preferred provider of semiconductor packaging and test services. Advanced Packaging Technology Leadership We are a leader in developing and deploying advanced semiconductor packaging and test solutions.
The following competitive strengths support our strategy to build upon our industry position and remain a preferred provider of semiconductor packaging and test services. Advanced Packaging Technology Leadership We are a leader in developing and deploying advanced semiconductor packaging and test solutions.
COMPETITION The outsourced semiconductor packaging and test market is very competitive. We face substantial competition from established packaging and test service providers primarily located in Asia, including companies with significant manufacturing capacity, financial resources, research and development operations, marketing and other capabilities. These companies include ASE Technology Holding Co., Ltd. and JCET Group Co., Ltd.
We face substantial competition from established packaging and test service providers primarily located in Asia, including companies with significant manufacturing capacity, financial resources, research and development operations, marketing and other capabilities. These companies include ASE Technology Holding Co., Ltd. and JCET Group Co., Ltd.
For the Year Ended December 31, 2022 2021 2020 (In millions, except percentage of net sales) Advanced Products $ 5,368 75.7 % $ 4,409 71.8 % $ 3,605 71.4 % Mainstream Products 1,724 24.3 % 1,729 28.2 % 1,446 28.6 % Total net sales $ 7,092 100.0 % $ 6,138 100.0 % $ 5,051 100.0 % Advanced Products Our Advanced Products include flip chip chip scale packages (“FC CSP”), wafer-level packages and flip chip ball grid array (“FCBGA”) packages.
For the Year Ended December 31, 2023 2022 2021 (In millions, except percentage of net sales) Advanced Products $ 5,033 77.4 % $ 5,368 75.7 % $ 4,409 71.8 % Mainstream Products 1,470 22.6 % 1,724 24.3 % 1,729 28.2 % Total net sales $ 6,503 100.0 % $ 7,092 100.0 % $ 6,138 100.0 % Advanced Products Our Advanced Products include flip chip chip scale packages (“FC CSP”), wafer-level packages and flip chip ball grid array (“FCBGA”) packages.
We regularly evaluate such retention programs and our compensation practices generally to ensure they remain competitive and are aligned with local market practices. We look to promote our management-level employees from within Amkor, and we believe that we have been successful in this effort.
Additionally, Amkor has implemented various retention programs to incentivize and retain high-performing employees. We regularly evaluate such retention programs and our compensation practices generally to ensure they remain competitive and are aligned with local market practices. We look to promote our management-level employees from within Amkor, and we believe that we have been successful in this effort.
Our direct support teams are further supported by an extended staff of product, process, quality and reliability engineers, as well as marketing and advertising specialists, information systems technicians and factory personnel.
Our direct support teams are further supported by an extended staff of product, process, quality and reliability engineers, as well as marketing and advertising specialists, information systems technicians and factory personnel. Together, these direct and extended support teams deliver an array of services to our customers.
RBA members agree to follow a uniform Code of Conduct that includes standards of environmental responsibility, and our factories have been subject to independent audits to assess compliance with these standards. • Capital investment and process optimization activities to reduce GHGs include installation of solar photovoltaic panels, replacement of, or improvements to, chiller unit systems and use of light-emitting diode (“LED”) technology.
RBA members agree to follow a uniform Code of Conduct that includes standards of environmental responsibility, and our factories have been subject to independent audits to assess compliance with these standards. • Capital investment and process optimization activities to reduce GHGs include installation of solar photovoltaic panels, replacement of, or improvements to, chiller unit systems and use of light-emitting diode (“LED”) technology. 13 Table of Contents COMPETITION The outsourced semiconductor packaging and test market is very competitive.
However, power applications that require improved thermal and electrical performance will use packaging with copper clip interconnect technology that creates multi die power modules. Substrate-based Wirebond Packages : Substrate-based wirebond packages use wirebond technology to connect a die to a substrate.
However, power applications that require improved thermal and electrical performance will use packaging with copper clip interconnect technology that creates multi die power modules with wafers from silicon carbide and other wide band gap materials. Substrate-based Wirebond Packages : Substrate-based wirebond packages use wirebond technology to connect a die to a substrate.
The bumped wafer is singulated into individual die, and the wafer-level package is then attached directly to the system board. Wafer-level CSP offers one of the lowest total system costs, enabling higher semiconductor content while leveraging the smallest form factor and one of the highest performing, most reliable semiconductor package platforms on the market today.
Wafer-level CSP offers one of the lowest total system costs, enabling higher semiconductor content while leveraging the smallest form factor and one of the highest performing, most reliable semiconductor package platforms on the market today.
With the exception of 2020, where the Covid-19 pandemic caused worldwide gross domestic product levels to decline during a period of strong growth in the semiconductor industry, there has generally been a strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles.
With the exception of 2020, when the Covid-19 pandemic caused worldwide gross domestic product levels to decline during a period of strong growth in the semiconductor industry, there has generally been a strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles. We believe that the general semiconductor market is currently going through a cyclical correction.
In 2022, 2021 and 2020, we incurred $149.4 million, $166.0 million and $140.7 million, respectively, of research and development expense. SALES AND MARKETING Our sales offices are located throughout Asia, Europe and North America. Our support personnel manage and promote our packaging and test services and provide key customer and technical support.
In 2023, 2022 and 2021, we incurred $177.5 million, $149.4 million and $166.0 million, respectively, of research and development expense. 11 Table of Contents SALES AND MARKETING Our sales offices are located throughout Asia, Europe and the United States. Our support personnel manage and promote our packaging and test services and provide key customer and technical support.
Broad Offering of Semiconductor Package Design, Packaging and Test Services Creating successful interconnect solutions for advanced semiconductor devices often poses unique thermal, electrical and mechanical design challenges, and we employ a large number of engineers to solve these challenges.
This involves minimizing the use of harmful materials like lead and optimizing energy and water usage. Broad Offering of Semiconductor Package Design, Packaging and Test Services Creating successful interconnect solutions for advanced semiconductor devices often poses unique thermal, electrical and mechanical design challenges, and we employ a large number of engineers to solve these challenges.
In some cases, our customers will consign test equipment to us. 12 Table of Contents GOVERNMENTAL REGULATIONS As a public company with global operations, we are subject to various federal, state, local, and foreign laws, and our products and services are governed by a number of rules and regulations.
GOVERNMENTAL REGULATIONS As a public company with global operations, we are subject to various federal, state, local, and foreign laws, and our products and services are governed by a number of rules and regulations.
Memory Products: Memory packages consist of either standalone packaging and testing or a combination of NAND Flash, DRAM, or a memory controller IC using a variety of packaging technologies, including FC, SCSP, SiP, PoP and other state-of-the-art packaging technologies. These products are used as system memory or platform data storage in all of our end markets.
Memory Products: Memory packages consist of either standalone packaging and testing or a combination of NAND Flash, DRAM, or a memory controller IC using a variety of packaging technologies, including FC, SCSP, SiP, PoP and other state-of-the-art packaging technologies.
Selectively Grow Our Scale and Scope through Strategic Investments From time to time, we identify attractive opportunities to strengthen our leadership position and market share through expansion of our operations, joint ventures, acquisitions and other strategic investments. For example, we are making preparations to deliver advanced SiP modules and other packaging solutions from a new factory in Bac Ninh, Vietnam.
Selectively Grow Our Scale and Scope through Strategic Investments From time to time, we identify attractive opportunities to strengthen our leadership position and market share through expansion of our operations, joint ventures, acquisitions and other strategic investments. For example, in 2023, we completed construction of the Vietnam Facility, where we will manufacture advanced SiP modules and other packaging solutions.
Together, these direct and extended support teams deliver an array of services to our customers. 11 Table of Contents SEASONALITY Our sales have generally been higher in the second half of the year than in the first half due to consumer buying patterns in the U.S., Europe and Asia and the timing of flagship mobile device launches.
SEASONALITY Our sales have generally been higher in the second half of the year than in the first half due to consumer buying patterns in the U.S., Europe and Asia and the timing of flagship mobile device launches.
For tester platforms that are less standardized, we generally lease test equipment for the expected life cycle of the project.
For tester platforms that are less standardized, we generally lease test equipment for the expected life cycle of the project. In some cases, our customers will consign test equipment to us.
Our employees in France, Germany, the Philippines, Singapore, Taiwan, Vietnam and the U.S. are not represented by any union. Certain employees at our factories in China, Japan, Korea, Malaysia and Portugal are members of a union, and we operate subject to collective bargaining agreements that we have entered into with these unions.
Certain employees at our factories in China, Japan, Korea, Malaysia and Portugal are members of a union, and we operate subject to collective bargaining agreements that we have entered into with these unions. We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories.
With approximately 700 employees, as of December 31, 2022, engaged in research and development for new semiconductor packaging and test technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip, wafer-level processing, advanced SiPs and power modules. We work closely with our customers to develop cost-effective leading-edge packages for the next generation of devices.
With approximately 950 employees, as of December 31, 2023, engaged in research and development for new semiconductor packaging and test technologies, we are a technology leader in areas such as 2.5D, advanced flip chip, fine pitch bumping, wafer-level processing, advanced SiPs and power modules.
Wirebond ball grid array packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and passive component integration together with thermal management solutions.
Wirebond ball grid array packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and passive component integration together with thermal management solutions. They are applicable for a wide range of semiconductors requiring a smaller package size than conventional PBGAs or leadframe packages.
In addition, our broad geographic footprint, including our manufacturing presence in Portugal and our headquarters in the United States, are key differentiators for us and position us to participate in initiatives to regionalize supply chains.
We believe that the Vietnam facility will provide customers with a cost-competitive high-volume manufacturing location that offers supply chain diversification. In addition, our broad geographic footprint, including our manufacturing presence in Portugal and our headquarters in the United States, are key differentiators for us and position us to participate in initiatives to regionalize supply chains.
Burn-In Test: Burn-in test is a process in which components of a system are exercised, monitored and measured in extreme operational conditions such as high temperature, voltage and frequency over time. The purpose of the environmental and operational stress conditions of burn-in testing is to accelerate and screen early life failures and estimate and monitor long-term degradation and ultimate lifetime.
Burn-In Test: Burn-in test is a process in which components of a system are exercised, monitored and measured in extreme operational conditions such as high temperature, voltage and frequency over time.
The traditional delineation between front-end semiconductor manufacturing and packaging is starting to converge. Foundries, and in some cases IDMs, are integrating some packaging activities closer to front-end wafer processes. We work closely with foundry partners to complement these offerings by offering similar wafer-based technologies as well as downstream processing.
The traditional delineation between front-end semiconductor manufacturing and packaging is starting to converge. Foundries, and in some cases IDMs, are integrating some packaging activities closer to front-end wafer processes.
Wafer-level Package Products : We offer three types of wafer-level packages: wafer-level CSP; WLFO; and SWIFT. Wafer-level CSP and WLFO are complementary technologies. Customers can choose between the two package types as their die sizes shrink or grow. • Wafer-level CSP packages (also known as fan-in wafer-level packages) do not utilize a package carrier.
Customers can choose between the two package types as their die sizes shrink or grow. • Wafer-level CSP packages (also known as fan-in wafer-level packages) do not utilize a package carrier. The bumped wafer is singulated into individual die, and the wafer-level package is then attached directly to the system board.
PACKAGING AND TEST SERVICES In general, the semiconductor manufacturing process consists of IC design, wafer fabrication, wafer probe, packaging and final test. The packaging and test services we provide occur subsequent to wafer fabrication, and the wafers that we receive from our customers are generally consigned to us.
The packaging and test services we provide occur subsequent to wafer fabrication, and the wafers that we receive from our customers are generally consigned to us. Advanced Products and Mainstream Products We offer a broad range of advanced and mainstream packaging and test services to our customers.
As part of our effort to attract and motivate employees, Amkor is committed to providing competitive and comprehensive benefits that are designed to enable our employees and their families to live healthier and more secure lives. Additionally, Amkor has implemented various retention programs to incentivize and retain high-performing employees.
HUMAN CAPITAL RESOURCES Employees Amkor believes that its future success is highly dependent upon our continued ability to attract, retain and motivate qualified employees. As part of our effort to attract and motivate employees, Amkor is committed to providing competitive and comprehensive benefits that are designed to enable our employees and their families to live healthier and more secure lives.
CUSTOMERS Our customers include many of the largest semiconductor companies in the world. Our ten largest customers accounted for 65% of our net sales in 2022. Direct sales to Apple Inc. and Qualcomm Technologies, Inc. accounted for 20.6% and 10.1% of our net sales, respectively, for the year ended December 31, 2022.
CUSTOMERS Our customers include many of the largest semiconductor companies in the world. Our ten largest customers accounted for 69% of our net sales in 2023. Direct sales to Apple Inc. accounted for 27.7% of our net sales for the year ended December 31, 2023. MATERIALS AND EQUIPMENT Materials Our materials are used primarily for packaging activities.
Our focus on health and safety is further evident in our response to the Covid-19 pandemic. Because our business involves the manufacturing and testing of physical products, many of our employees have been unable to work from home.
Because our business involves the manufacturing and testing of physical products, many of our employees have been unable to work from home. To keep our employees safe and to maintain operations during the Covid-19 pandemic, we implemented increased health and safety-related measures across our global footprint.
Leverage Our Leadership in Services for Advanced Technologies We are an industry leader in developing and commercializing advanced packaging and test technologies, which we believe provide substantial value to our customers.
We believe that we will continue to achieve that goal and create long-term shareholder value by building on our strength in advanced packaging and executing on the following strategies. 5 Table of Contents Leverage Our Leadership in Services for Advanced Technologies We are an industry leader in developing and commercializing advanced packaging and test technologies, which we believe provide substantial value to our customers.
Advanced SiP modules are used for many applications such as radio frequency (“RF”) and front-end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, NAND memory and solid state drives. Advanced SiP modules are found in many products including smartphones and tablets, automobiles, IoT wearables, high-performance gaming systems, computers and network systems.
The increasing demand for miniaturization and higher functionality at competitive cost is driving the adoption of advanced SiP in new products. Advanced SiP modules are used for many applications such as radio frequency (“RF”) and front-end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, NAND memory and solid state drives.
MEMS packages leverage our expertise in wafer thinning, die stacking, wirebonding and flip chip interconnect to deliver sophisticated products with a very small form factor. Advanced System-in-Package Modules Advanced SiP modules combine multiple semiconductor and other electronic components with different functionalities into a single package. These modules use wirebond, flip chip or wafer-level interconnect technologies.
We also specialize in sensor fusion products which utilize our cavity MEMS platform and combine multiple sensors into a single package. MEMS packages leverage our expertise in wafer thinning, die stacking, wirebonding and flip chip interconnect to deliver sophisticated products with a very small form factor.
To keep our employees safe and to maintain operations during the Covid-19 pandemic, we implemented increased health and safety-related measures across our global footprint. While the long-term impact of the Covid-19 pandemic remains uncertain, we have retained those enhanced measures as part of our commitment to protect the health and safety of our employees.
While the long-term impact of the Covid-19 pandemic remains uncertain, we have retained those enhanced measures as part of our commitment to protect the health and safety of our employees. AVAILABLE INFORMATION Amkor files annual, quarterly and current reports, proxy statements and other information with the SEC.
Increasing battery voltage, higher voltage power converters and automotive inverter components also require innovative power packaging solutions. • The IoT wearables within our consumer end market are evolving in multiple applications, such as watches, health trackers, hearables, biometrics and smart glasses.
Increasing battery voltage, higher voltage power converters, onboard chargers, automotive inverter components and microcontrollers also require innovative power packaging solutions. • Increased data traffic requiring higher networking speed and storage, as well as computing power increases in HPC, artificial intelligence, data centers, cloud computing, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market. • The IoT wearables within our consumer end market are evolving in multiple applications, such as hearables, watches, health trackers and augmented reality and virtual reality devices.
We believe that selective growth through these strategic actions can further strengthen customer relationships, help to maintain and enhance our technological leadership, diversify our revenue streams and improve our profits. Competitive Strengths The outsourced semiconductor packaging and test market is very competitive. We also compete with the internal semiconductor packaging and test capabilities of many of our customers and foundries.
We are making preparations to participate in developing the U.S. semiconductor supply chain and are planning to build an advanced packaging and test facility in Arizona. We believe that selective growth through these strategic actions can further strengthen customer relationships, help to maintain and enhance our technological leadership, diversify our revenue streams and improve our profits.
Test Development Services: Prior to mass production, an integrated manufacturing ready test solution must be developed and deployed. Amkor’s test development services offer both co-development and full development of complete test software and hardware solutions to our customers. These services also enable early engagement with our customers in the product design phases for maximum compatibility with manufacturing.
As advanced packaging proliferates and the integration of more individual components into a SiP grows, system level testing becomes more important. Test Development Services: Prior to mass production, an integrated manufacturing ready test solution must be developed and deployed. Amkor’s test development services offer both co-development and full development of complete test software and hardware solutions to our customers.
We believe that our efforts to motivate, retain and support the growth of qualified employees is reflected in the long average tenure of our key employees. Health and Safety The health and safety of our employees is very important to us and, accordingly, we endeavor to provide comprehensive health benefits to our full-time employees.
Health and Safety The health and safety of our employees is very important to us and, accordingly, we endeavor to provide comprehensive health benefits to our full-time employees. Our focus on health and safety is further evident in our response to the Covid-19 pandemic.
We have designed and developed several state-of-the-art package formats and technologies, including our Double-Sided, Molded Ball Grid Array (“DSMBGA”) SiP platform and multi-chip modules that incorporate silicon interposers between the module chips and substrate.
We have designed and developed several state-of-the-art package formats and technologies such as Double-Sided, Molded Ball Grid Array 6 Table of Contents (“DSMBGA”) SiP and 2.5D. 2.5D technology utilizes high density silicon interposers to enable the integration of high-performance chips, such as high bandwidth memory and graphics processors, into a single package.
PBGA packages are designed for low inductance, improved thermal operation and enhanced surface-mount technology ability. Custom performance enhancements, like ground and power planes, are also available. Micro-Electro-Mechanical Systems Packages : MEMS are miniaturized mechanical and electro-mechanical devices that can sense and provide information about the physical world and sometimes trigger a response.
PBGA packages are used in applications requiring higher pin count than leadframe packages, but typically have lower pin counts than flip chip. PBGA packages are designed for low inductance, improved thermal operation and enhanced surface-mount technology ability. Custom performance enhancements, like ground and power planes, are also available.
System Level Test: System level test identifies defective SiP products that may not otherwise be screened by traditional wafer level, package level or burn-in testing. As advanced packaging proliferates and the integration of more individual components into a SiP grows, system level testing becomes more important.
The purpose of the environmental and operational stress conditions of burn-in testing is to accelerate and screen early life failures and estimate and monitor long-term degradation and ultimate lifetime. 10 Table of Contents System Level Test: System level test identifies defective SiP products that may not otherwise be screened by traditional wafer level, package level or burn-in testing.
We continue to invest in developing the key processes and packages, along with test solutions, required for our customers to deliver advanced integrated and modular solutions to their markets. We are also a developer of environmentally friendly IC packaging, which involves reducing the use of lead and other harmful materials and efficient use of energy and water.
We are committed to advancing our key processes and packages, as well as developing innovative test solutions, required for our customers to deliver advanced integrated and modular solutions to their respective markets. We are also committed to environmental responsibility by creating more sustainable IC packaging.
HUMAN CAPITAL RESOURCES Employees As of December 31, 2022, Amkor employed 31,300 regular full-time employees, of whom approximately 97%, 2% and 1% resided in the Asia-Pacific region, Europe and North America, respectively. Our global workforce spans 12 countries, reflecting various cultures, backgrounds, ages, genders and ethnicities. Of our global employee base, 93% are employed in manufacturing roles.
Our global workforce spans 12 countries, reflecting various cultures, backgrounds, ages, genders and ethnicities. Of our global employee base, 91% are employed in manufacturing roles. Our employees in France, Germany, the Philippines, Singapore, Taiwan, Vietnam and the United States are not represented by any union.
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Integration of multiple functions in small form factors, processors, sensors and connectivity devices depends on innovation in advanced packaging. • Increased data traffic requiring higher networking speed and storage, as well as computing power increases in HPC, data centers, cloud computing, AI, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market.
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The semiconductor industry has experienced significant and sometimes prolonged cyclical upturns and downturns in the past. We cannot predict the timing, strength or duration of any correction, economic slowdown, recession or subsequent economic recovery.
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Our primary financial objective is profitable sales growth. We believe that we will continue to achieve that goal and create long-term shareholder value by building on our strength in advanced packaging and executing on the following strategies.
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Integration of multiple functions into small form factors, such as processors, sensors and connectivity devices, depends on innovation in advanced packaging. Our primary financial objective is profitable sales growth.
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We believe that the Bac Ninh site, which is expected to begin production in the fourth quarter of 2023, will provide customers with a cost-competitive high-volume manufacturing location that offers supply chain diversification.
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We work closely with our customers to develop cost-effective leading-edge packages for the next generation of devices.
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Advanced Products and Mainstream Products We offer a broad range of advanced and mainstream packaging and test services to our customers.
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Competitive Strengths The outsourced semiconductor packaging and test market is very competitive. We also compete with the internal semiconductor packaging and test capabilities of many of our customers and foundries. We believe we are well-positioned in the outsourced packaging and test services market.
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They are applicable for a wide range of semiconductors requiring a smaller package size than conventional PBGAs or leadframe packages. 9 Table of Contents PBGA packages are used in applications requiring higher pin count than leadframe packages, but typically have lower pin counts than flip chip.
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We work closely with foundry partners to complement these offerings by offering similar wafer-based technologies as well as downstream processing. 7 Table of Contents PACKAGING AND TEST SERVICES In general, the semiconductor manufacturing process consists of IC design, wafer fabrication, wafer probe, packaging and final test.
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Examples of MEMS devices include microphones, accelerometers, airbag deployment sensors, gyrometers, magnetometers and humidity, temperature and pressure sensors. We also specialize in sensor fusion products which utilize our cavity MEMS platform and combine multiple sensors into a single package.
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These products are used as system memory or platform data storage in all of our end markets. 8 Table of Contents Wafer-level Package Products : We offer three types of wafer-level packages: wafer-level CSP; WLFO; and SWIFT. Wafer-level CSP and WLFO are complementary technologies.
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Components can include ICs, passive devices (inductors, capacitors, resistors, filters and diplexers), antennas and mechanical parts. The increasing demand for miniaturization and higher functionality at competitive cost is driving the adoption of advanced SiP in new products.
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Micro-Electro-Mechanical Systems Packages : MEMS are miniaturized mechanical and electro-mechanical devices that can sense and provide information about the physical world and sometimes trigger a response. Examples of MEMS devices include microphones, accelerometers, airbag deployment sensors, gyrometers, magnetometers and humidity, temperature and pressure sensors.
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We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories. Amkor believes that its future success is highly dependent upon our continued ability to attract, retain and motivate qualified employees.
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Advanced System-in-Package Modules Advanced SiP modules combine multiple semiconductor and other electronic components with different functionalities into a single package. These modules use wirebond, flip chip or wafer-level interconnect technologies. Components can include ICs, passive devices (inductors, capacitors, resistors, filters and diplexers), antennas and mechanical parts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe following is a list of some of these risks: Company-Specific Risk Factors • dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and financial conditions; • changes in costs, quality, availability and delivery times of raw materials, components and equipment; • fluctuations in operating results and cash flows; • dependence on international factories and operations, and risks relating to our customers’ and vendors’ international operations; • competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including foundries; • our substantial investments in equipment and facilities to support the demand of our customers; • difficulty achieving the relatively high-capacity utilization rates necessary to realize satisfactory gross margins given our high percentage of fixed costs; • our absence of backlog and the short-term nature of our customers’ commitments; • the historical downward pressure on the prices of our packaging and test services; • fluctuations in our manufacturing yields; • our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others, and implement new technologies; • warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business; • restrictive covenants in the indentures and agreements governing our current and future indebtedness; • the possibility that we may decrease or suspend our quarterly dividend; • significant severance plan obligations associated with our manufacturing operations in Korea; and • the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.
Biggest changeThe following is a list of some of these risks: Risks Related to Our Business, Operations and Industry • competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including foundries; • changes in costs, quality, availability and delivery times of raw materials, components and equipment; • fluctuations in operating results and cash flows; • dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and financial conditions; • our substantial investments in equipment and facilities to support the demand of our customers; • difficulty achieving the relatively high-capacity utilization rates necessary to realize satisfactory gross margins given our high percentage of fixed costs; • our absence of backlog and the short-term nature of our customers’ commitments; • the historical downward pressure on the prices of our packaging and test services; • fluctuations in our manufacturing yields; • a downturn or lower sales to customers in the automotive industry; • dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; • difficulty funding our liquidity needs; and • challenges with integrating diverse operations.
Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for outsourced packaging and test services, any downturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as telecommunications, automotive, consumer electronics, or computing, could have a material adverse effect on our business and operating results.
Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for outsourced packaging and test services, any downturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as telecommunications, automotive, computing, or consumer electronics, could have a material adverse effect on our business and operating results.
Generally, our customers do not commit to purchase any significant amount of packaging or test services or to provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount.
Generally, our customers do not commit to purchase any significant amount of packaging or test services or provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount.
There can be no assurance that patents will issue from pending or future applications or that, if patents are issued, the rights granted under the patents will provide us with meaningful protection or any commercial advantage. Any patents we do obtain will eventually expire and may be challenged, invalidated or circumvented.
There can be no assurance that patents will issue from pending or future applications or that, if patents are issued, the rights granted under the patents will provide us with meaningful protection or any commercial advantage. Any patents we do obtain may be challenged, invalidated or circumvented and will eventually expire.
Such events have occurred in the past and may occur in the future. Cybersecurity breaches could result in unauthorized disclosure of confidential information or disruptions to our operations. While we have not experienced a material information security breach, we cannot be sure that such a breach will not occur in the future.
Such events have occurred in the past and may occur in the future. Cybersecurity breaches could result in unauthorized disclosure of confidential information and/or disruptions to our operations. While we have not experienced a material information security breach, we cannot be sure that such a breach will not occur in the future.
In evaluating our ability to recover our deferred tax assets, in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations.
In evaluating our ability to recover our deferred tax assets, in the jurisdiction from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations.
We could also be held liable for damages, including fines, penalties and the cost of investigations and remedial actions, we could be subject to revocation of permits, which may materially and adversely affect our ability to maintain or expand our operations.
We could also be held liable for damages, including fines, penalties and the cost of investigations and remedial actions, and we could be subject to revocation of permits, which may materially and adversely affect our ability to maintain or expand our operations.
Our net sales, gross margin, gross profit, operating income, net income and cash flows have historically fluctuated significantly from quarter to quarter as a result of many of the following factors, over which we have little or no control and which we expect to continue to impact our business: • fluctuations in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as inventory reductions by our customers impacting demand in key markets; • changes in cost, quality, availability and delivery times of raw materials, components, equipment and labor; • inflation, including wage inflation, and fluctuations in commodity prices, including gold, copper and other precious metals; • our ability to achieve our major growth objectives, including transitioning second-wave customers to advanced packages and increasing our share of the automotive and industrial end market; • changes in our capacity and capacity utilization rates; • fluctuations in interest rates and currency exchange rates, including the current rising interest rate environment; • changes in average selling prices which can occur quickly due to the absence of long-term agreements on price; • changes in the mix of the semiconductor packaging and test services that we sell; • fluctuations in our manufacturing yields; • the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test technologies may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials; • the absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity; • the timing of expenditures in anticipation of future orders; • changes in effective tax rates; • the availability and cost of financing; • leverage and debt covenants; • intellectual property transactions and disputes; • warranty and product liability claims and the impact of quality excursions and customer disputes and returns; • costs associated with legal claims, indemnification obligations, judgments and settlements; • political instability, conflicts (such as the ongoing conflict in Ukraine) and government shutdowns, civil disturbances and international events; • environmental or natural disasters such as earthquakes, typhoons and volcanic eruptions; • pandemics or other widespread illnesses that may impact our labor force, operations, liquidity, supply chain and end-user demand for products which incorporate semiconductors, such as the Covid-19 pandemic; • costs of acquisitions and divestitures and difficulties integrating acquisitions; 19 Table of Contents • our ability to attract and retain qualified personnel to support our global operations; • our ability to penetrate new end markets or expand our business in existing end markets; • dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; and • restructuring charges, asset write-offs and impairments.
Our net sales, gross margin, gross profit, operating income, net income and cash flows have historically fluctuated significantly from quarter to quarter as a result of many of the following factors, over which we have little or no control and which we expect to continue to impact our business: • fluctuations in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as inventory reductions by our customers impacting demand in key markets; • changes in cost, quality, availability and delivery times of raw materials, components, equipment and labor; • inflation, including wage inflation, and fluctuations in commodity prices, including gold, copper and other precious metals; • our ability to achieve our major growth objectives, including transitioning second-wave customers to advanced packages and increasing our share of the automotive and industrial end market; • changes in our capacity and capacity utilization rates; • fluctuations in interest rates and currency exchange rates, including the current rising interest rate environment; • changes in average selling prices which can occur quickly due to the absence of long-term agreements on price; • changes in the mix of the semiconductor packaging and test services that we sell; • fluctuations in our manufacturing yields; • the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test technologies may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials; • the absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity; • the timing of expenditures in anticipation of future orders; • changes in effective tax rates; • the availability and cost of financing; • leverage and debt covenants; • intellectual property transactions and disputes; • warranty and product liability claims and the impact of quality excursions and customer disputes and returns; • costs associated with legal claims, indemnification obligations, judgments and settlements; • political instability, conflicts (such as the ongoing conflict in Ukraine and Israel) and government shutdowns, civil disturbances and international events; • environmental or natural disasters such as earthquakes, typhoons and volcanic eruptions; • pandemics or other widespread illnesses that may impact our labor force, operations, liquidity, supply chain and end-user demand for products which incorporate semiconductors, such as the Covid-19 pandemic; 19 Table of Contents • costs of acquisitions and divestitures and difficulties integrating acquisitions; • our ability to attract and retain qualified personnel to support our global operations; • our ability to penetrate new end markets or expand our business in existing end markets; • dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; and • restructuring charges, asset write-offs and impairments.
A disruption to the operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business, and the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence have created extended lead times for some materials and equipment.
A disruption to the operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business. For example, the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence created extended lead times for some materials and equipment.
There has also been an increase in public attention and industry and customer focus on the materials contained in semiconductor products, the environmental impact of semiconductor operations and the risk of chemical releases from such operations, climate change, sustainability and related environmental concerns.
There has also been an increase in regulatory and public attention and industry and customer focus on the materials contained in semiconductor products, the environmental impact of semiconductor operations and the risk of chemical releases from such operations, climate change, sustainability and related environmental concerns.
While our global manufacturing footprint allows us to shift production to other factories without substantial cost or production delays, certain of our services are currently performed using equipment located in one or a subset of our factories.
While our global manufacturing footprint allows us to shift production to other factories without substantial cost or production delays, certain of our services are currently performed using equipment located in one or only a subset of our factories.
Although we have entered into agreements with our Chief Executive Officer and certain other executives that would prevent them from working for, or impose financial penalties for doing business with, our competitors in the event they cease working for us, we cannot assure you that we will be successful in our efforts to retain or replace key employees or in hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth.
Although we have entered into agreements with our Chief Executive Officer and certain other executives that would prevent them from working for, or impose financial penalties for doing business with, our competitors in the event that those executives cease working for us, we cannot assure you that we will be successful in our efforts to retain or replace key employees or in hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth.
The spread of Covid-19 has caused us to modify our business practices (including corporate hygiene protocols at factories, restricting employee travel and employee work locations and cancelling physical participation in meetings, events and conferences) and, while the long-term impact of the Covid-19 pandemic remains uncertain, we have retained those enhanced measures as part of our commitment to protect the health and safety of our employees.
The spread of Covid-19 caused us to modify our business practices (including corporate hygiene protocols at factories, restricting employee travel and employee work locations and cancelling physical participation in meetings, events and conferences) and, while the long-term impact of the Covid-19 pandemic remains uncertain, we have retained certain of those enhanced measures as part of our commitment to protect the health and safety of our employees.
If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S., foreign or international banking system and capital markets (including as a result of rising interest rates, economic downturns or other developments), they may refuse or be unable to fund borrowings under their credit commitments to us. The U.S.
If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the United States, foreign or international banking system and capital markets (including as a result of rising interest rates, economic downturns or other developments), they may refuse or be unable to fund borrowings under their credit commitments to us. The U.S.
In addition, we have significant facilities and other investments in Korea, and there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region. Furthermore, there has been a history of conflict and tension within and among other countries in the region.
We also have significant facilities and other investments in Korea, and there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region. Furthermore, there has been a history of conflict and tension within and among other countries in the region.
In connection with these activities, we may: • incur costs associated with personnel reductions and voluntary retirement programs; • record restructuring charges to cover costs associated with facility consolidations and related cost reduction initiatives; • use a significant portion of our available cash; • incur substantial debt; • issue equity securities, which may dilute the ownership of current stockholders; 30 Table of Contents • incur or assume known or unknown contingent liabilities; and • incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.
In connection with these activities, we may: • incur costs associated with personnel reductions and voluntary retirement programs; • record restructuring charges to cover costs associated with facility consolidations and related cost reduction initiatives; • use a significant portion of our available cash; • incur substantial debt; • issue equity securities, which may dilute the ownership of current stockholders; • incur or assume known or unknown contingent liabilities; and • incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.
The following are some of the risks we face in doing business internationally: • restrictive trade barriers considered or adopted by U.S. and foreign governments applicable to the semiconductor supply chain, including laws, rules, regulations and policies in areas such as national security, licensing requirements for exports, tariffs, customs and duties, including the export rules and regulations applicable to U.S. companies that sell certain semiconductor and chipmaking equipment products to customers in China; • laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; • health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19, and governmental responses thereto; • changes in consumer demand resulting from current or expected inflation or other variations in local economies; • laws, rules, regulations and policies imposed by U.S. or foreign governments in areas such as data privacy, cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, and health and safety; • the payment of dividends and other payments by non-U.S. subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions; • fluctuations in currency exchange rates, particularly the U.S. dollar to Japanese yen exchange rate for our operations in Japan; • political and social conditions, and the potential for civil unrest, terrorism or other hostilities (such as the ongoing conflict in Ukraine); • disruptions or delays in shipments caused by customs brokers or government agencies; • difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions; 20 Table of Contents • difficulty in enforcing contractual rights and protecting our intellectual property rights; • potentially adverse tax consequences resulting from tax laws in the U.S. and in other jurisdictions; and • local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the U.S.
The following are some of the risks we face in doing business internationally: • restrictive trade barriers considered or adopted by U.S. and foreign governments applicable to the semiconductor supply chain, including laws, rules, regulations and policies in areas such as national security, licensing requirements for exports, tariffs, customs and duties, including the export rules and regulations applicable to U.S. companies that sell certain semiconductor and chipmaking equipment products to customers in China; • laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors; • health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19, and governmental responses thereto; • changes in consumer demand resulting from current or expected inflation or other variations in local economies; • laws, rules, regulations and policies imposed by U.S. or foreign governments in areas such as data privacy, cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, and health and safety; • the payment of dividends and other payments by non-U.S. subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions; • fluctuations in currency exchange rates, particularly the U.S. dollar to Japanese yen exchange rate for our operations in Japan; • political and social conditions, and the potential for civil unrest, terrorism or other hostilities (such as the ongoing conflicts in Ukraine and Israel); • disruptions or delays in shipments caused by customs brokers or government agencies; • difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions; • difficulty in enforcing contractual rights and protecting our intellectual property rights; • potentially adverse tax consequences resulting from tax laws in the United States and in other jurisdictions; and • local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the U.S.
Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures and other investments, and the amount of our capital expenditures for 2023 and thereafter may vary materially and will depend on several factors.
Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures and other investments, and the amount of our capital expenditures for 2024 and thereafter may vary materially and will depend on several factors.
This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation involving us, or discouraging a potential acquirer from making a tender offer for our shares, and could also negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.
This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation involving us, or discouraging a potential acquirer from making a tender offer for our shares, and 29 Table of Contents could also negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.
Such operations are or could be subject to: natural disasters, such as earthquakes, tsunamis, typhoons, floods, droughts, volcanoes and other severe weather and geological events, and other calamities, such as fire; the outbreak of infectious diseases (such as Covid-19 and other coronaviruses, Ebola or flu); industrial strikes; government-imposed travel restrictions or quarantines; breakdowns of equipment; difficulties or delays in obtaining materials, equipment, utilities and services; political events or instability; acts of war or armed conflict (such as the ongoing conflict in Ukraine); terrorist incidents and other hostilities in regions where we have facilities; and industrial accidents and other events, that could disrupt or even shutdown our operations.
Such operations are or could be subject to: natural disasters, such as earthquakes, tsunamis, typhoons, floods, droughts, volcanoes and other severe weather and geological events, and other calamities, such as fire; the outbreak of infectious diseases (such as Covid-19 and other coronaviruses, Ebola or flu); industrial strikes; government-imposed travel restrictions or quarantines; breakdowns of equipment; difficulties or delays in obtaining materials, equipment, utilities and services; political events or instability; acts of war or armed conflict (such as ongoing conflicts in Ukraine and Israel); terrorist incidents and other hostilities in regions where we have facilities; and industrial accidents and other events, that could disrupt or even shut down our operations.
Our systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardware failures, interruption or failures of third-party provider systems, computer viruses, attacks by computer hackers, ransomware attacks, telecommunication failures, user errors, 29 Table of Contents malfeasance or catastrophic events.
Our systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardware failures, interruption or failures of third-party provider systems, computer viruses, attacks by computer hackers, ransomware attacks, telecommunication failures, user errors, malfeasance or catastrophic events.
Additionally, if industry conditions deteriorate, we could suffer significant losses, as we have in the past, that could materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows. Our business may suffer if the cost, quality or supply of materials or equipment changes adversely.
Additionally, if industry conditions 17 Table of Contents deteriorate, we could suffer significant losses, as we have in the past, that could materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows. Our business may suffer if the cost, quality or supply of materials or equipment changes adversely.
A major disruption or shutdown of any such factory could completely impair our ability to perform those services or require us to shift them to another location. As a result, our ability to fulfill customer orders may be impaired or delayed, and we could incur significant losses.
A major disruption or shutdown of any such factory could completely impair our ability to perform those services or 33 Table of Contents require us to shift them to another location. As a result, our ability to fulfill customer orders may be impaired or delayed, and we could incur significant losses.
As a result, we could experience adverse changes in pricing, currency risk and potential shortages in equipment in a strong market, any of which could have a material adverse effect on our results of operations. We are a large buyer of gold and other commodity materials, including substrates and copper.
As a result, depending on market conditions, we could experience adverse changes in pricing, currency risk and potential shortages in equipment, any of which could have a material adverse effect on our results of operations. We are a large buyer of gold and other commodity materials, including substrates and copper.
Our operating results and cash flows have varied and may vary significantly as a result of factors that we cannot control. Many factors could have a material adverse effect on our net sales, gross profit, operating results and cash flows or lead to significant variability of quarterly or annual operating results.
Our operating results and cash flows have varied and may vary significantly as a result of factors that we cannot control. 18 Table of Contents Many factors could have a material adverse effect on our net sales, gross profit, operating results and cash flows or lead to significant variability of quarterly or annual operating results.
Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the utilization of our capacity, semiconductor 18 Table of Contents package mix, the average selling price of our services, our ability to manage our capital expenditures and our ability to control our costs including labor, material, overhead and financing costs.
Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the utilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures and our ability to control our costs including labor, material, overhead and financing costs.
We maintain insurance policies for various types of property, casualty and other risks, but we do not carry insurance for all the above referred risks. With regard to the insurance we do maintain, we cannot assure you that it would be 32 Table of Contents sufficient to cover all of our potential losses.
We maintain insurance policies for various types of property, casualty and other risks, but we do not carry insurance for all the above referred risks. With regard to the insurance we do maintain, we cannot assure you that it would be sufficient to cover all of our potential losses.
We obtain the materials and equipment required for the packaging and test services performed by our factories from various vendors. We source most of our materials, including critical materials such as leadframes, laminate substrates 17 Table of Contents and gold wire, from a limited group of suppliers.
We obtain the materials and equipment required for the packaging and test services performed by our factories from various vendors. We source most of our materials, including critical materials such as leadframes, laminate substrates and gold wire, from a limited group of suppliers.
Substantially all of our property, plant and equipment is located outside of the United States, and many of our customers and the vendors in our supply chain are also located outside the U.S.
Substantially all of our property, plant and equipment is located outside of the United States, and many of our customers and the vendors in our supply chain are also located outside the United States.
Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of future sales, we may not be able to adjust costs in a timely manner to compensate for any sales shortfall.
Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of future sales, we may not be 21 Table of Contents able to adjust costs in a timely manner to compensate for any sales shortfall.
We have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry. Our ten largest customers accounted for, in the aggregate, 65% of our net sales for the year ended December 31, 2022.
We have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry. Our ten largest customers accounted for, in the aggregate, 69% of our net sales for the year ended December 31, 2023.
It is difficult to predict the timing, strength or duration of any economic disruption caused by the Covid-19 pandemic or which end markets will experience a slowdown or subsequent economic recovery which, in turn, makes it more challenging for us to forecast our operating results, make business decisions and identify risks that may materially affect our business, sources and uses of cash, financial condition and results of operations.
It is difficult to predict the timing, strength or duration of any economic disruption caused by epidemics or pandemics or which end markets will experience a slowdown or subsequent economic recovery which, in turn, makes it more challenging for us to forecast our operating results, make business decisions and identify risks that may materially affect our business, sources and uses of cash, financial condition and results of operations.
We earn a substantial portion of our income in foreign countries, and our operations are subject to tax in multiple jurisdictions with complicated and varied tax regimes. Tax laws and income tax rates in these jurisdictions are subject to change due to economic and political conditions.
We earn a substantial portion of our income in foreign countries, and our operations are subject to tax in multiple jurisdictions with complicated and varied tax regimes. Tax laws and income tax rates in these jurisdictions are subject to 31 Table of Contents change due to economic and political conditions.
Transitions between different packaging technologies can also impact our capacity utilization if we do not efficiently redeploy our equipment for other packaging and test opportunities. We cannot assure you that we will be 22 Table of Contents able to achieve consistently high-capacity utilization, and if we fail to do so, our gross margins may be negatively impacted.
Transitions between different packaging technologies can also impact our capacity utilization if we do not efficiently redeploy our equipment for other packaging and test opportunities. We cannot assure you that we will be able to achieve consistently high-capacity utilization, and if we fail to do so, our gross margins may be negatively impacted.
Volatility in the banking system and capital markets, as well as any further increase in interest rates or adverse economic, political, public health or other global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities or refinance our debt.
Volatility in the banking system and capital markets, as well as any further increase in interest rates or adverse economic, political, public health or other 23 Table of Contents global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities or refinance our debt.
As a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected by natural disasters and other calamities. Item 1B. Unresolved Staff Comments None.
As a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected by natural disasters and other calamities. 34 Table of Contents Item 1B. Unresolved Staff Comments None.
As a result, at any time and for a variety of reasons, IDMs and foundries may 21 Table of Contents decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.
As a result, at any time and for a variety of reasons, IDMs and foundries may decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.
It is also possible that government agencies in China or in other countries may adopt retaliatory export control rules in response to the new U.S. regulations, which could further impact our business, liquidity, results of operations, financial condition and cash flows.
It is also possible that government agencies in China or in other countries may adopt retaliatory export control rules in response to the BIS Regulations, which could further impact our business, liquidity, results of operations, financial condition and cash flows.
Our substantial indebtedness could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, including our obligations under our indentures to purchase notes tendered as a result of a change in control of Amkor; • increase our vulnerability to general adverse economic and industry conditions; • limit our ability to fund future working capital, capital expenditures, research and development and other business opportunities, including joint ventures and acquisitions; • require us to dedicate a substantial portion of our cash flow from operations to service payments of interest and principal on our debt, thereby reducing the availability of our cash flow to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements; • increase the volatility of the price of our common stock; • limit our flexibility to react to changes in our business and the industry in which we operate; • place us at a competitive disadvantage to any of our competitors that have less debt; • limit, along with the financial and other covenants in our indebtedness, our ability to borrow additional funds; • limit our ability to refinance our existing indebtedness, particularly during periods of adverse credit market conditions when refinancing indebtedness may not be available under interest rates and other terms acceptable to us or at all; and • increase our cost of borrowing. 27 Table of Contents We are exposed to fluctuations in interest rates and changes in credit risk, which could have a material adverse impact on our earnings as it relates to the market value of our investment portfolio.
Our substantial indebtedness could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, including our obligations under our indentures to purchase notes tendered as a result of a change in control of Amkor; • increase our vulnerability to general adverse economic and industry conditions; 28 Table of Contents • limit our ability to fund future working capital, capital expenditures, research and development and other business opportunities, including joint ventures and acquisitions; • require us to dedicate a substantial portion of our cash flow from operations to service payments of interest and principal on our debt, thereby reducing the availability of our cash flow to fund future working capital, capital expenditures, research and development expenditures and other general corporate requirements; • increase the volatility of the price of our common stock; • limit our flexibility to react to changes in our business and the industry in which we operate; • place us at a competitive disadvantage to any of our competitors that have less debt; • limit, along with the financial and other covenants in our indebtedness, our ability to borrow additional funds; • limit our ability to refinance our existing indebtedness, particularly during periods of adverse credit market conditions when refinancing indebtedness may not be available under interest rates and other terms acceptable to us or at all; and • increase our cost of borrowing.
Other national, regional, and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants, or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.
National, regional, and local governments have implemented, and may implement in the future, public health measures to mitigate the spread of Covid-19, the emergence of new variants or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.
Some of our customers are also dependent on a limited number of suppliers for certain materials and silicon wafers. Shortages or disruptions in our customers’ supply channels, including any disruptions arising out of the conflict in Ukraine, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Some of our customers are also dependent on a limited number of suppliers for certain materials and silicon wafers. Shortages or disruptions in our customers’ supply channels, including any disruptions arising out of the conflicts in Ukraine and Israel or other future conflicts, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
From time to time, we make additions or changes to our information technology systems. For example, we continue to further integrate our Japan operations’ information technology systems into our existing systems and processes. We face risks in connection with current and future projects to install or integrate new information technology systems or upgrade our existing systems.
From time to time, 27 Table of Contents we make additions or changes to our information technology systems. For example, we continue to further integrate our Japan operations’ information technology systems into our existing systems and processes. We face risks in connection with current and future projects to install or integrate new information technology systems or upgrade our existing systems.
To the extent required, Amkor would pursue export licenses and authorizations, but there can be no assurances that Amkor would obtain such licenses or authorizations on a timely or cost-effective basis or at all, or that our customers will not reroute business that would have otherwise been given to Amkor to one or more of our competitors as a result of the new restrictions, particularly if our competitors have, or are not required to have, required licenses or authorizations that we have not obtained.
To the extent required, Amkor would evaluate pursuing export licenses and authorizations, but there can be no assurances that Amkor would obtain such licenses or authorizations on a timely or cost-effective basis or at all, or that our customers will not reroute business that would have otherwise been given to Amkor to one or more of our competitors as a result of the BIS Regulations, particularly if our competitors have, or are not required to have, required licenses or authorizations that we have not obtained.
We assess our internal controls and systems on an ongoing basis, and from time-to-time, we update and make modifications to our global enterprise resource planning system. We have implemented several significant enterprise resource planning modules and expect to implement additional enterprise resource planning modules in the future.
We assess our internal controls and systems on an ongoing basis, and from time-to-time, we update and make modifications to our global enterprise resource planning system. We have implemented several significant enterprise resource planning and shop floor management systems and expect to implement additional similar systems in the future.
We face challenges as we integrate diverse operations. We have experienced, and expect to continue to experience, change in the scope and complexity of our operations resulting primarily from existing and future facility and operational consolidations, facility and operational expansions, strategic acquisitions, joint ventures and other partnering arrangements.
We have experienced, and expect to continue to experience, change in the scope and complexity of our operations resulting primarily from existing and future facility and operational consolidations, facility and operational expansions, strategic acquisitions, joint ventures and other partnering arrangements.
The Covid-19 pandemic has impacted, and may impact in the future, our operations and the operations of our customers and suppliers as a result of illness, quarantines, facility closures and travel and logistics restrictions in connection with the outbreak.
The Covid-19 pandemic impacted our operations and the operations of our customers and suppliers as a result of illness, quarantines, facility closures and travel and logistics restrictions in connection with the outbreak.
Once qualified and in production, defective packages primarily result from: • contaminants in the manufacturing environment; • human error; • equipment malfunction; • changing processes to address environmental requirements; • defective raw materials; or • defective plating services. 23 Table of Contents Test is also complex and involves sophisticated equipment and software.
Once qualified and in production, defective packages primarily result from one or more of the following: • contaminants in the manufacturing environment; • human error; • equipment malfunction; • changing processes to address environmental requirements; • defective raw materials; or • defective plating services. Test is also complex and involves sophisticated equipment and software.
We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan and are preparing to offer packaging and test services from a new factory under construction in Vietnam.
We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan and are preparing to offer packaging and test services from the Vietnam Facility.
The OECD, which represents a coalition of member countries, recommended changes to long-standing tax principles related to transfer pricing and has developed model rules including establishing a global minimum corporate income tax tested on a jurisdictional basis (the “Pillar Two Model Rules”). Some countries have already started to implement laws based on the Pillar Two Model Rules.
The OECD, which represents a coalition of member countries, recommended changes to long-standing tax principles related to transfer pricing and has developed model rules including establishing a global minimum corporate income tax tested on a jurisdictional basis (the “Pillar Two Model Rules”).
In the event of a significant layoff or other reduction in our labor force in Korea, our subsidiary in Korea would be required to make lump-sum severance payments under the plan, which could have a material adverse effect on our liquidity, financial condition and cash flows.
The plan covers certain employees that were employed prior to August 1, 2015. In the event of a significant layoff or other reduction in our labor force in Korea, our subsidiary in Korea would be required to make lump-sum severance payments under the plan, which could have a material adverse effect on our liquidity, financial condition and cash flows.
We maintain an investment portfolio of various holdings, types and maturities. Our portfolio includes available-for-sale debt investments, the values of which are subject to market price volatility resulting from interest rate movements, changes in credit risk and financial market conditions.
Our portfolio includes available-for-sale debt investments, the values of which are subject to market price volatility resulting from interest rate movements, changes in credit risk and financial market conditions.
There can be no assurance, however, that the construction will be completed, or that high-volume manufacturing will begin, on that schedule or that the actual scope, costs or benefits of the project will be consistent with our current expectations.
In October 2023, we completed the initial phase of construction for our Vietnam Facility. There can be no assurance, however, that high-volume manufacturing will begin on schedule or that the actual scope, costs or benefits of the project will be consistent with our current expectations.
If such investments suffer market price declines, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the decline is judged to be an impairment, including an allowance for credit loss. We may have difficulty funding liquidity needs.
If such investments suffer market price declines, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the decline is judged to be an impairment, including an allowance for credit loss. Risks Related to Our Common Stock James J.
If we are unable to meet customer orders, we could lose potential and existing customers. Generally, we acquire our equipment on a purchase order basis and do not enter into long-term equipment agreements.
The unavailability of equipment or failures to deliver equipment on a timely basis could delay or impair our ability to meet customer orders. If we are unable to meet customer orders, we could lose potential and existing customers. Generally, we acquire our equipment on a purchase order basis and do not enter into long-term equipment agreements.
The amount of our capital expenditures depends on several factors, including the performance of our business, our assessment of future industry and customer demand, our capacity utilization levels and availability, advances in technology, our liquidity position and the availability of financing.
We make significant investments in equipment and facilities in order to service the demand of our customers. The amount of our capital expenditures depends on several factors, including the performance of our business, our assessment of future industry and customer demand, our capacity utilization levels and availability, advances in technology, our liquidity position and the availability of financing.
We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors, that our customers will not rely on internal sources or foundries for packaging and test services or that our business, liquidity, results of operations, financial condition or cash flows will not be materially and adversely affected by such increased competition.
We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors, that our customers will not rely on internal sources or foundries for packaging and test services or that our business, liquidity, results of operations, financial condition or cash flows will not be materially and adversely affected by such increased competition. 20 Table of Contents We make substantial investments in equipment and facilities to support the demand of our customers, which may materially and adversely affect our business if the demand of our customers does not develop as we expect or is adversely affected.
If we are unable to timely fulfill our customers’ orders, or if we are required to bear the cost of a substantial amount of unused materials, our margins, operating results, financial condition and cash flows could be materially and adversely affected. Historically, there has been downward pressure on the prices of our packaging and test services.
If we are unable to adjust costs in a timely manner, our margins, operating results, financial condition and cash flows could be materially and adversely affected. Historically, there has been downward pressure on the prices of our packaging and test services.
We, our suppliers and our customers have been disrupted by worker illness and absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure and border closures or other travel or health-related restrictions.
The impacts of the Covid-19 pandemic varied by location, by industry and by end market. We, our suppliers and our customers were disrupted by worker illness and absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure and border closures or other travel or health-related restrictions.
Also, the sale or the prospect of the sale of a substantial portion of the Kim family shares may cause the market price of our stock to decline significantly.
Also, the sale or the prospect of the sale of a substantial portion of the Kim family shares may cause the market price of our stock to decline significantly. We may decrease or suspend our quarterly dividend, and any decrease in or suspension of the dividend could cause our stock price to decline.
Additionally, other national, regional, and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.
Other national, regional, and local governments have implemented, and may implement in the future, public health measures in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.
If any third party makes an enforceable infringement claim against us or our customers, we could be required to: • discontinue the use of certain processes or cease to provide the services at issue, which could curtail our business; • pay substantial damages; • develop non-infringing technologies, which may not be feasible; or • acquire licenses to such technology, which may not be available on commercially reasonable terms or at all. 24 Table of Contents We may need to enforce our patents or other intellectual property rights, including our rights under patent and intellectual property licenses with third parties, or defend ourselves against claimed infringement of the rights of others through litigation, which could result in substantial cost and diversion of our resources and may not be successful.
If any third party makes an enforceable infringement claim against us or our customers, we could be required to: • discontinue the use of certain processes or cease to provide the services at issue, which could curtail our business; • pay substantial damages; • develop non-infringing technologies, which may not be feasible; or • acquire licenses to such technology, which may not be available on commercially reasonable terms or at all.
We cannot assure that we will successfully qualify facility changes, that we will complete construction of new facilities in a timely manner or that our customers will not qualify our competitors and move the business for such services. We face risks trying to attract, retain or replace qualified employees to support our operations.
We cannot assure that we will successfully qualify facility changes, that we will complete construction of new facilities in a timely manner or that our customers will not qualify our competitors and move the business for such services. We may have difficulty funding liquidity needs.
The need to develop and maintain advanced packaging capabilities and equipment could require significant research and development, capital expenditures and acquisitions in future years. In addition, converting to new packaging designs or process methodologies could result in delays in producing new package types, which could impact our ability to meet customer orders and materially and adversely impact our business.
In addition, converting to new packaging designs or process methodologies could result in delays in producing new package types, which could impact our ability to meet customer orders and materially and adversely impact our business.
In March 2022, as part of a broad effort to mitigate a rising number of Covid-19 cases in Shanghai, the Chinese government mandated a temporary lockdown of our Shanghai factory. The Shanghai facility reopened during the second quarter and returned to normal operating levels in late June 2022.
For example, as part of a broad effort to mitigate a rising number of Covid-19 cases in Shanghai, the Chinese government mandated a lockdown of our Shanghai factory from March 2022 to June 2022.
In addition to the above factors, restrictive trade barriers adopted by U.S. and foreign governments applicable to the semiconductor supply chain, including the export rules and regulations adopted by the U.S. government in October 2022 regarding the sale of certain semiconductor chip and chipmaking equipment products to customers in China, could impact our business and the businesses of our customers.
The above factors, in addition to the BIS Regulations and other similarly restrictive trade barriers adopted by U.S. and foreign governments applicable to the semiconductor supply chain, could impact our business and the businesses of our customers.
Some employees have accepted previous offers, and future offers to make similar conversions could impact the timing of future payments, reducing our cash flow and materially and adversely affecting our financial condition. James J. Kim and members of his family can effectively determine or substantially influence the outcome of all matters requiring stockholder approval.
Some employees have accepted previous offers, and future offers to make similar conversions could impact the timing of future payments, reducing our cash flow and materially and adversely affecting our financial condition.
We may also take further actions in the future as may be required by government authorities or that we determine to be in the best interests of our employees, customers and suppliers.
We may also take further actions in the future as may be required by government authorities or that we determine to be in the best interests of our employees, customers and suppliers. There is no certainty that such measures will be sufficient to mitigate the future impact of Covid-19, and our ability to perform critical functions could be harmed.
The new regulations place limitations on the ability of companies to export certain advanced computing semiconductor chips, as well as chipmaking equipment, by requiring companies to obtain licenses to export such products and equipment into China. Certain of the Company’s competitors may be exempt from the new regulations by virtue of being non-U.S. manufacturers.
Additionally, the BIS Regulations place limitations on the ability of companies to export certain advanced computing semiconductor chips, as well as chipmaking equipment, by requiring companies to obtain licenses to export such products and equipment into China or other designated countries.
As a result of the risks discussed above, the anticipated benefits of these or other future acquisitions, consolidations and partnering arrangements may not be fully realized, if at all, and these activities could have a material adverse effect on our business, financial condition and results of operations.
As a result of the risks discussed above, the anticipated benefits of these or other future acquisitions, consolidations and partnering arrangements may not be fully realized, if at all, and these activities could have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents Risks Related to Our International Sales and Operation s Our factories and operations, and those of our customers and vendors, are located in various foreign jurisdictions, which exposes us to risks arising from international trade restrictions and regional conflict.
In addition, semiconductor packages have historically utilized metallic alloys containing lead within the interconnect terminals typically referred to as leads, pins or balls, and the European Union’s Restriction of Hazardous 31 Table of Contents Substances in Electrical and Electronic Equipment directive and similar laws in other jurisdictions, including China, impose strict restrictions on the placement into the market of electrical and electronic equipment containing lead and certain other hazardous substances.
The European Union’s Restriction of Hazardous Substances in Electrical and Electronic Equipment directive and similar laws in other jurisdictions, including China, impose strict restrictions on the placement into the market of electrical and electronic equipment containing lead and certain other hazardous substances.
The loss of a significant customer, a business combination among our customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our significant commercial arrangements may result in a decline in our sales and profitability and could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. 28 Table of Contents The demand for our services from each customer is directly dependent upon that customer’s financial health, level of business activity and purchasing decisions, the quality and price of our services, our cycle time and delivery performance, the customer’s qualification of additional competitors on products we package or test and a number of other factors.
The demand for our services from each customer is directly dependent upon that customer’s financial health, level of business activity and purchasing decisions, the quality and price of our services, our cycle time and delivery performance, the customer’s qualification of additional competitors on products we package or test and a number of other factors.
For example, at our foreign facilities we produce liquid waste when semiconductor wafers are diced into chips with the aid of diamond saws, then cooled with running water.
For example, at our foreign facilities we produce liquid waste when semiconductor wafers are diced into chips with the aid of diamond saws, then cooled with running water. In addition, semiconductor packages have historically utilized metallic alloys containing lead within the interconnect terminals typically referred to as leads, pins or balls.
We believe that the general semiconductor market is currently going through a cyclical correction. The semiconductor industry has experienced significant and sometimes sudden and prolonged downturns in the past. If the industry or markets in which we compete experience slower, or even negative growth, our business and results of operations may be materially and adversely affected.
If the industry or markets in which we compete experience slower, or even negative growth, our business and results of operations may be materially and adversely affected.
As of December 31, 2022, James J. Kim, the Executive Chairman of our Board of Directors, Susan Y. Kim, the Executive Vice Chairman of our Board of Directors, and members of the Kim family and affiliates owned approximately 142.0 million shares, or approximately 58%, of our outstanding common stock.
Kim, the Executive Vice Chairman of our Board of Directors, and members of the Kim family and affiliates owned approximately 132.0 million shares, or approximately 54%, of our outstanding common stock. The Kim family also has options to acquire approximately 0.6 million shares.
Federal Reserve raised interest rates several times during 2022 and has signaled further rate increases in the near term.
Federal Reserve has raised interest rates several times during 2022 and 2023.
If we fail to remedy any deficiencies or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.
In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition.
We may consider investments in joint ventures, increased capital expenditures, refinancings or acquisitions which may increase our indebtedness. If new debt is added to our consolidated debt level, the related risks that we face could increase.
If new debt is added to our consolidated debt level, the related risks that we face could increase.
In June 2013, the Kim family exchanged convertible notes issued by Amkor in 2009 for approximately 49.6 million shares of common stock (the “Convert Shares”). The Convert Shares are subject to a voting agreement.
If the options are exercised, the Kim family’s total ownership would be an aggregate of approximately 132.6 million shares, or approximately 54% of our outstanding common stock. In June 2013, the Kim family exchanged convertible notes issued by Amkor in 2009 for approximately 49.6 million shares of common stock (the “Convert Shares”).
Restrictions on our workforce or access to our manufacturing facilities, or similar limitations for our suppliers, or restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls, could limit our capacity to meet customer demand and have a material adverse effect on our business, results of operations and financial condition.
Restrictions on our workforce or access to our manufacturing facilities, or similar limitations for our suppliers, or restrictions or disruptions of transportation in order to contain the spread of Covid-19 caused disruptions to our supply chain in connection with the sourcing of equipment, supplies and other materials, and similar restrictions in the future could limit our capacity to meet customer demand and have a material adverse effect on our business, results of operations and financial condition.
From time to time, increased demand for new equipment may cause lead times to extend beyond those normally required by equipment vendors, and the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence have created extended lead times for some equipment.
From time to time, increased demand for new equipment or supply chain disruptions and economic turbulence may cause lead times to extend beyond those normally required by equipment vendors. In periods of increased demand and reduced availability, equipment suppliers may delay orders or only partially satisfy our equipment orders in the normal time frame.

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Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changeDuring 2022, we began construction for the first phase of a new manufacturing facility in Bac Ninh, Vietnam, which will have approximately 1.9 million square feet of space. High-volume manufacturing is expected to begin in the fourth quarter of 2023. Our executive offices, which are leased, are located in Tempe, Arizona and Singapore.
Biggest changeHigh-volume manufacturing is expected to begin in the second half of 2024. Our executive offices, which are leased, are located in Tempe, Arizona and Singapore.
(2) As a result of foreign ownership restrictions in the Philippines, the land is leased. A portion of the land we lease is owned by realty companies in which we own a 40% interest.
(2) As a result of foreign ownership restrictions in the Philippines, the land is leased. A portion of the land we lease is owned by realty companies in which we own a 40% interest. (3) In October 2023, we completed construction for the first phase of the Vietnam Facility.
Approximate Facility Size (Square Feet) Owned Leased Total China (1) 1,398,000 — 1,398,000 Japan 1,488,000 330,000 1,818,000 Korea 4,439,000 — 4,439,000 Malaysia (1) 386,000 — 386,000 Philippines (2) 765,000 557,000 1,322,000 Portugal 519,000 — 519,000 Taiwan (1) 1,100,000 16,000 1,116,000 Total all facilities 10,095,000 903,000 10,998,000 (1) Land is leased.
Approximate Facility Size (Square Feet) Owned Leased Total China (1) 1,398,000 — 1,398,000 Japan 1,488,000 285,000 1,773,000 Korea 4,440,000 — 4,440,000 Malaysia (1) 386,000 — 386,000 Philippines (2) 765,000 557,000 1,322,000 Portugal 519,000 — 519,000 Taiwan (1) 1,100,000 16,000 1,116,000 Vietnam (1) (3) 1,181,000 — 1,181,000 Total all facilities 11,277,000 858,000 12,135,000 (1) Land is leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−5 removed4 unchanged
Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table provides information regarding repurchases of our common stock during the three months ended December 31, 2022: Period Total Number of Shares Purchased (a) Average Price Paid Per Share ($) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (b) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($) (b) October 1 - October 31 — $ — — $ 91,586,032 November 1 - November 30 — — — 91,586,032 December 1 - December 31 2,843 27.56 — 91,586,032 Total 2,843 $ 27.56 — (a) Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with share-based compensation awards issued to employees.
Biggest changePURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The following table provides information regarding repurchases of our common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased (a) Average Price Paid Per Share ($) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ($) October 1 - October 31 — $ — — $ — November 1 - November 30 — — — — December 1 - December 31 2,949 29.40 — — Total 2,949 $ 29.40 — (a) Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with share-based compensation awards issued to employees. 37 Table of Contents PERFORMANCE GRAPH (1) (1) The preceding Stock Performance Graph is not deemed filed with the SEC and shall not be incorporated by reference in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities LISTING ON THE NASDAQ GLOBAL SELECT MARKET Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMKR.” There were approximately 79 holders of record of our common stock as of February 17, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities LISTING ON THE NASDAQ GLOBAL SELECT MARKET Our common stock is traded on the Nasdaq Global Select Market under the symbol “AMKR.” There were approximately 79 holders of record of our common stock as of February 9, 2024.
In November 2022, our Board of Directors approved a quarterly dividend of $0.075 per share, a 50% increase from the rate set in November 2021. We currently anticipate that we will continue to pay quarterly cash dividends in the future.
In November 2023, our Board of Directors approved a quarterly dividend of $0.07875 per share, a 5% increase from the rate set in November 2022. We currently anticipate that we will continue to pay quarterly cash dividends in the future.
The following table sets forth the cumulative total returns included in the preceding Stock Performance Graph for the years ended December 31, 2017 through 2022: For the Year Ended December 31, 2017 2018 2019 2020 2021 2022 Amkor Technology, Inc. $ 100.00 $ 65.27 $ 129.35 $ 150.44 $ 249.06 $ 243.35 S&P Midcap 400 100.00 88.92 112.21 127.54 159.12 138.34 PHLX Semiconductor 100.00 93.95 153.39 235.71 336.71 219.26 35 Table of Contents Item 6.
The following table sets forth the cumulative total returns included in the preceding Stock Performance Graph for the years ended December 31, 2018 through 2023: For the Year Ended December 31, 2018 2019 2020 2021 2022 2023 Amkor Technology, Inc. $ 100.00 $ 198.17 $ 230.48 $ 381.57 $ 372.81 $ 523.13 S&P Midcap 400 100.00 126.20 143.44 178.95 155.58 181.15 PHLX Semiconductor 100.00 163.26 250.87 358.37 233.37 389.74
Removed
(b) On August 30, 2011, we announced that our Board of Directors had authorized the repurchase of up to $150.0 million of our common stock, exclusive of any fees, commissions or other expenses, under the Stock Repurchase Program.
Removed
On February 1, 2012, we announced that the Board of Directors had authorized an additional $150.0 million for the repurchase of our common stock under the Stock Repurchase Program, resulting in a total repurchase authorization under the Stock Repurchase Program of $300.0 million.
Removed
Pursuant to 34 Table of Contents the Stock Repurchase Program, we made no common stock purchases for the three months ended December 31, 2022, and at December 31, 2022, approximately $91.6 million was available for repurchase.
Removed
Repurchases of our common stock under the Stock Repurchase Program are funded with available cash, and the Stock Repurchase Program may be suspended or discontinued at any time.
Removed
PERFORMANCE GRAPH (1) (1) The preceding Stock Performance Graph is not deemed filed with the SEC and shall not be incorporated by reference in any of our filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+12 added−16 removed42 unchanged
Biggest changeIn addition, we are subject to risks associated with our capital expenditures, including those discussed in Part I, Item 1A of this Form 10-K under the caption “We make substantial investments in equipment and facilities to support the demand of our customers, which may materially and adversely affect our business if the demand of our customers does not develop as we expect or is adversely affected.” Cash Flows Net cash provided by (used in) operating, investing and financing activities for each of the three years ended December 31, 2022 was as follows: For the Year Ended December 31 2022 2021 2020 (In thousands) Operating activities $ 1,098,756 $ 1,121,295 $ 770,033 Investing activities (1,007,169) (943,879) (638,705) Financing activities 55,597 (30,102) (333,719) Operating activities: Our cash flow provided by operating activities for the year ended December 31, 2022 decreased by $22.5 million compared to the year ended December 31, 2021, primarily due to changes in working capital and changes in advanced payments to our vendors and from our customers, partially offset by higher net sales and operating profits. 42 Table of Contents Investing activities: Our cash flow used in investing activities for the year ended December 31, 2022 increased by $63.3 million compared to the year ended December 31, 2021, primarily due to increased payments related to property, plant and equipment and increased net payments for foreign exchange forward contracts, partially offset by higher net proceeds from short-term investments.
Biggest changeIn addition, we are subject to risks associated with our capital expenditures, including those discussed in Part I, Item 1A of this Form 10-K under the caption “We make substantial investments in equipment and facilities to support the demand of our customers, which may materially and adversely affect our business if the demand of our customers does not develop as we expect or is adversely affected.” Cash Flows Net cash provided by (used in) operating, investing and financing activities for each of the three years ended December 31, 2023 was as follows: For the Year Ended December 31 2023 2022 2021 (In thousands) Operating activities $ 1,270,020 $ 1,098,756 $ 1,121,295 Investing activities (951,910) (1,007,169) (943,879) Financing activities (149,207) 55,597 (30,102) Operating activities: Our cash flow provided by operating activities for the year ended December 31, 2023 increased by $171.3 million compared to the year ended December 31, 2022, primarily due to changes in working capital, offset by lower net sales and operating profits.
We define “free cash flow” as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for property, plant and equipment, if applicable. Free cash flow is not defined by U.S. GAAP.
We define “free cash flow” as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of, insurance recovery for and grants for property, plant and equipment, if applicable. Free cash flow is not defined by U.S. GAAP.
Due to the uncertainty regarding the amount and timing of any future cash outflows associated with our unrecognized tax benefits, we are unable to reasonably estimate the amount and period of ultimate settlement, if any, with the various taxing authorities.
Due to the uncertainty regarding the amount and timing of any future cash outflows associated with our unrecognized tax benefits, we are unable to reasonably estimate the amount and timing of ultimate settlement, if any, with the various taxing authorities.
The maximum borrowing capacity under our $600.0 million senior secured revolving credit facility (“2022 Singapore Revolver”) is limited to a base amount equal to the lesser of: (1) $600.0 million; or (2) $250 million plus a variable amount equal to 37.5% of our consolidated accounts receivable balance. As of December 31, 2022, we had availability of $600.0 million.
The maximum borrowing capacity under our $600.0 million senior secured revolving credit facility (“2022 Singapore Revolver”) is limited to a base amount equal to the lesser of: (1) $600.0 million; or (2) $250 million plus a variable amount equal to 37.5% of our consolidated accounts receivable balance. As of December 31, 2023, we had availability of $600.0 million.
We were in compliance with all debt covenants as of December 31, 2022, and we expect to remain in compliance with these covenants for at least the next twelve months. For additional information regarding our debt arrangements, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
We were in compliance with all debt covenants as of December 31, 2023, and we expect to remain in compliance with these covenants for at least the next twelve months. For additional information regarding our debt arrangements, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Available capacity under these arrangements is dependent on the level of our trade accounts receivable eligible to be sold, the financial institutions’ willingness to purchase such receivables and the limits provided by the financial institutions. These factoring arrangements can be reduced or eliminated at any time due to market conditions and changes in the credit worthiness of customers.
Available capacity under these arrangements is dependent on the level of our trade accounts receivable eligible to be sold, the financial institutions’ willingness to purchase such receivables and the limits provided by the financial institutions. These factoring arrangements can be reduced or eliminated at any time due to market conditions and changes in the creditworthiness of customers.
Such valuation allowances are released as the related tax benefits are realized or when sufficient evidence exists to conclude that it is more likely than not that the deferred tax assets will be realized. 44 Table of Contents Valuation of Inventory. We order raw materials based on customers’ forecasted demand.
Such valuation allowances are released as the related tax benefits are realized or when sufficient evidence exists to conclude that it is more likely than not that the deferred tax assets will be realized. Valuation of Inventory. We order raw materials based on customers’ forecasted demand.
There can be no assurance that actual results will not differ from those estimates, including the impact of Covid-19 and any deterioration in the global business and economic environment.
There can be no assurance that actual results will not differ from those estimates, including the impact of any deterioration in the global business and economic environment.
Maintaining an appropriate level of liquidity is important to our business and depends on, among other considerations, the performance of our business, our capital expenditure levels, our ability to repay debt out of our operating cash flows or proceeds from debt or equity financings and our investment strategy.
Maintaining an appropriate level of liquidity is important to our business and depends on, among other considerations, the performance of our business, our capital expenditure levels, our ability to repay debt out of our operating cash flows or proceeds from debt 39 Table of Contents or equity financings and our investment strategy.
The costs related to our technology and product development projects are included in research and development expense until the project moves into production. Once production begins, the costs relating to production become part of the cost of sales, including ongoing depreciation for the equipment previously held for research and development activities.
The costs related to our technology and product development projects are included in research and development expense until the project moves into production. Once 41 Table of Contents production begins, the costs relating to production become part of the cost of sales, including ongoing depreciation for the equipment previously held for research and development activities.
Based on this assessment, we believe that our cash flow from operating activities, together with existing cash and cash equivalents, short-term investments and availability under our credit facilities, will be sufficient to fund our working capital, capital expenditures, dividend payments, debt service, debt repurchases and other financial requirements for at least the next twelve months.
Based on this assessment, we believe that our cash flow from operating activities, together with existing cash and cash equivalents, 42 Table of Contents short-term investments and availability under our credit facilities, will be sufficient to fund our working capital, capital expenditures, dividend payments, debt service, debt repurchases and other financial requirements for at least the next twelve months.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section includes comparisons of certain 2022 financial information to the same information for 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section includes comparisons of certain 2023 financial information to the same information for 2022.
We believe the following critical accounting estimates and policies, which have been reviewed with the Audit Committee of our Board of Directors, affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. 43 Table of Contents Revenue Recognition.
We believe the following critical accounting estimates and policies, which have been reviewed with the Audit Committee of our Board of Directors, affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Revenue Recognition.
For discussion of 2021 results in comparison with 2020 results refer to “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on February 18, 2022. Overview Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services.
For discussion of 2022 results in comparison with 2021 results refer to “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on February 22, 2023. Overview Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services.
Ultimately, the amount of our 2023 capital expenditures will depend on several factors including, among others, the timing and implementation of any capital projects under review, the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity to service anticipated customer demand, equipment lead times and the availability of cash flows from operations or financing.
Ultimately, the amount of our 2024 capital expenditures will depend on several factors including, among others, the timing and implementation of any capital projects under review, the performance of our business, economic and market conditions, the cash needs and 44 Table of Contents investment opportunities for the business, the need for additional capacity to service anticipated customer demand, equipment lead times and the availability of cash flows from operations or financing.
Accordingly, relatively modest increases or decreases in revenue can have a significant effect on margin and on labor and other manufacturing costs as a percentage of revenue, depending on product mix, utilization, foreign currency exchange rate movements and seasonality. We have expanded our business in advanced SiP modules, which tend to have higher material costs than our other products.
Accordingly, relatively modest increases or decreases in revenue can have a significant effect on margin and on labor and other manufacturing costs as a percentage of revenue, depending on product mix, utilization, foreign currency exchange rate movements and seasonality. We have expanded our business in advanced packaging which tends to have higher material costs than our other products.
For certain accounts receivable, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows. Under these arrangements, we sell receivables to a financial institution for 40 Table of Contents cash at a discount to the face amount.
For certain accounts receivable, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows. Under these arrangements, we sell receivables to a financial institution for cash at a discount to the face amount.
In addition, as of December 31, 2022, we had foreign pension plan obligations of $44.7 million, for which the timing and actual amount of impact on our future cash flow is uncertain. For additional information regarding our pension and severance plans, please refer to Note 12 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
In addition, as of December 31, 2023, we had foreign pension plan obligations of $47.1 million, for which the timing and actual amount of impact on our future cash flow is uncertain. For additional information regarding our pension and severance plans, please refer to Note 12 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
As of December 31, 2022, our foreign subsidiaries had $615.0 million available for future borrowings under revolving credit facilities, including the 2022 Singapore Revolver, and $70.3 million available to be borrowed under term loan credit facilities for working capital purposes and capital expenditures.
As of December 31, 2023, our foreign subsidiaries had $615.0 million available for future borrowings under revolving credit facilities, including the 2022 Singapore Revolver, and $69.7 million available to be borrowed under term loan credit facilities for working capital purposes and capital expenditures.
In addition, our broad geographic footprint, including our manufacturing presence in Portugal, and our headquarters in the United States are key differentiators for us and position us to participate in initiatives to regionalize supply chains.
Our broad geographic footprint, including our manufacturing presence in Portugal and our headquarters in the United States, are key differentiators for us and position us to continue to support global supply chains and to participate in initiatives to regionalize supply chains.
Please refer to Note 6 and Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information on our investments and borrowings, respectively. As of December 31, 2022, we had cash and cash equivalents and short-term investments of $1,241.0 million.
Please refer to Note 6 and Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information on our investments and borrowings, respectively. As of December 31, 2023, we had cash and cash equivalents and short-term investments of $1,594.7 million.
For additional information regarding our leases, please refer to Note 9 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. We had off-balance sheet purchase obligations for capital expenditures, long-term supply contracts and other contractual commitments. As of December 31, 2022, the purchase obligations were $582.8 million, with $564.8 million payable within 12 months.
For additional information regarding our leases, please refer to Note 9 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. We had off-balance sheet purchase obligations for capital expenditures, long-term supply contracts and other contractual commitments. As of December 31, 2023, the purchase obligations were $408.5 million, with $402.0 million payable within 12 months.
Our net sales, gross profit, operating income, cash flows, liquidity and capital resources have historically fluctuated significantly from quarter to quarter due to many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item 1A of this Form 10-K. We expect macroeconomic conditions to be weak in 2023.
Our net sales, gross profit, operating income, cash flows, liquidity and capital resources have historically fluctuated significantly from quarter to quarter due to many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item 1A of this Form 10-K.
As of December 31, 2022, the severance liability was $56.2 million, with $7.4 million payable within 12 months. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. For service periods subsequent to August 1, 2015, employees participate in either a defined benefit pension plan or a defined contribution pension plan.
As of December 31, 2023, the severance liability was $47.8 million, with $7.9 million payable within 12 months. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. For service periods subsequent to August 1, 2015, employees participate in either a defined benefit pension plan or a defined contribution pension plan.
Included in our cash and short-term investments balances as of December 31, 2022, is $1,090.4 million held offshore by our foreign subsidiaries. We have the ability to access cash held offshore by our foreign subsidiaries primarily through the repayment of intercompany debt obligations.
Included in our cash and short-term investments balances as of December 31, 2023, is $1,439.6 million held offshore by our foreign subsidiaries. We have the ability to access cash held offshore by our foreign subsidiaries primarily through the repayment of intercompany debt obligations.
For additional information regarding the 2022 Singapore Revolver, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. As of December 31, 2022, we had debt of $1,232.3 million, with $143.8 million payable within 12 months.
For additional information regarding the 2022 Singapore Revolver, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. As of December 31, 2023, we had debt of $1,203.5 million, with $131.6 million payable within 12 months.
For the year ended December 31, 2022, we estimate that repatriation of this foreign cash and short-term investments would generate withholding taxes and state income taxes of approximately $36 million. As of December 31, 2022, our net liability associated with unrecognized tax benefits is $29.6 million.
For the year ended December 31, 2023, we estimate that repatriation of this foreign cash and short-term investments would generate withholding taxes and state income taxes of approximately $48 million. As of December 31, 2023, our net liability associated with unrecognized tax benefits is $27.5 million.
For the year ended December 31, 2022 and 2021, we sold accounts receivable totaling $386.5 million and $464.4 million, net of discounts and fees of $1.1 million and $1.2 million, respectively. We operate in a capital-intensive industry.
For the year ended December 31, 2023 and 2022, we sold accounts receivable totaling $253.9 million and $386.5 million, net of discounts and fees of $1.3 million and $1.1 million, respectively. We operate in a capital-intensive industry.
Capital Returns In 2022, we paid total quarterly cash dividends of $55.1 million, and we currently anticipate that we will continue to pay quarterly cash dividends in the future.
Capital Returns In 2023, we paid total quarterly cash dividends of $74.7 million, and we currently anticipate that we will continue to pay quarterly cash dividends in the future.
Payments for property, plant and equipment can fluctuate based on the timing of purchase, receipt and acceptance of equipment. Financing activities: The net cash provided by financing activities for the year ended December 31, 2022 was primarily due to net debt borrowings in China and Korea, offset by the payments of our quarterly dividends and finance lease obligations.
Payments for property, plant and equipment can fluctuate based on the timing of purchase, receipt and acceptance of equipment. Financing activities: The net cash used in financing activities for the year ended December 31, 2023 was primarily due to the payments of our quarterly dividends and finance lease obligations.
Research and Development Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Research and development $ 149,429 $ 166,037 $ 140,727 $ (16,608) (10.0) % $ 25,310 18.0 % Research and development activities are focused on developing new packaging and test services and improving the efficiency and capabilities of our existing production processes.
Research and Development Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Research and development $ 177,473 $ 149,429 $ 166,037 $ 28,044 18.8 % $ (16,608) (10.0) % Research and development activities are focused on developing new packaging and test services and improving the efficiency and capabilities of our existing production processes.
Income Tax Expense Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Income tax expense $ 89,890 $ 69,459 $ 46,183 $ 20,431 $ 23,276 Effective tax rate 10.5 % 9.7 % 11.9 % 39 Table of Contents Income tax expense, which includes foreign withholding taxes and minimum taxes, reflects the applicable tax rates in effect in the various countries where our income is earned and is subject to volatility depending on the relative mix of earnings in each location.
Income Tax Expense Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Income tax expense $ 81,710 $ 89,890 $ 69,459 $ (8,180) $ 20,431 Effective tax rate 18.4 % 10.5 % 9.7 % Income tax expense, which includes foreign withholding taxes and minimum taxes, reflects the applicable tax rates in effect in the various countries where our income is earned and is subject to volatility depending on the relative mix of earnings in each location.
This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities. Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.
This measure should be considered in addition to, and not as a substitute for, or superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities.
As of December 31, 2022, the interest payment obligations, based on stated coupon rates for fixed rate debt and interest rates applicable at December 31, 2022 for variable rate debt, were $219.6 million during the remaining term of the debt. Interest payment obligations payable within 12 months is $51.4 million.
As of December 31, 2023, the interest payment obligations, based on stated coupon rates for fixed rate debt and interest rates applicable at December 31, 2023 for variable rate debt, were $183.1 million during the remaining term of the debt. 43 Table of Contents Interest payment obligations payable within 12 months is $52.4 million.
Our financial goal is profitable sales growth. To achieve this goal, we are focused on leveraging our leadership position in services for advanced technologies, growing within the industry megatrend markets of 5G, automotive, IoT and HPC, optimizing utilization of existing assets, and selectively growing our scale and scope through strategic investments.
To achieve this goal, we are focused on leveraging our leadership position in services for advanced technologies, providing our customers with a geographically diverse manufacturing footprint, growing within the industry secular growth markets of 5G, automotive, HPC and IoT, optimizing utilization of existing assets, and selectively growing our scale and scope through strategic investments.
Gross Profit and Gross Margin Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Gross profit $ 1,329,987 $ 1,225,554 $ 900,814 $ 104,433 $ 324,740 Gross margin 18.8 % 20.0 % 17.8 % (1.2) % 2.2 % Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead.
Gross Profit and Gross Margin Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Gross profit $ 943,153 $ 1,329,987 $ 1,225,554 $ (386,834) $ 104,433 Gross margin 14.5 % 18.8 % 20.0 % (4.3) % (1.2) % Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead.
However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend upon our results of operations, financial condition, cash requirements, debt restrictions and other factors.
However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend upon our results of operations, financial condition, cash requirements, debt restrictions and other factors. Capital Resources We make significant capital expenditures in order to service the demand of our customers.
In 2022, our capital expenditures totaled $908.3 million, or 12.8% of net sales, compared to $779.8 million, or 12.7% of net sales in 2021. Our spending was primarily focused on investments in advanced packaging and test equipment and a new manufacturing facility in Bac Ninh, Vietnam.
In 2023, our capital expenditures totaled $749.5 million, or 11.5% of net sales, compared to $908.3 million, or 12.8% of net sales in 2022. Our spending was primarily focused on investments in advanced packaging and test equipment and the Vietnam Facility.
For the Year Ended December 31 2022 2021 2020 (In thousands) Net cash provided by operating activities $ 1,098,756 $ 1,121,295 $ 770,033 Payments for property, plant and equipment (908,294) (779,779) (553,021) Proceeds from sale of and insurance recovery for property, plant and equipment 3,148 3,261 3,819 Free cash flow $ 193,610 $ 344,777 $ 220,831 Contingencies, Indemnifications and Guarantees Please refer to Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a discussion of contingencies related to litigation and other legal matters.
Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies. 45 Table of Contents For the Year Ended December 31 2023 2022 2021 (In thousands) Net cash provided by operating activities $ 1,270,020 $ 1,098,756 $ 1,121,295 Payments for property, plant and equipment (749,467) (908,294) (779,779) Proceeds from sale of, insurance recovery for and grants for property, plant and equipment 13,032 3,148 3,261 Free cash flow $ 533,585 $ 193,610 $ 344,777 Contingencies, Indemnifications and Guarantees Please refer to Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a discussion of contingencies related to litigation and other legal matters.
The net cash used in financing activities for the year ended December 31, 2021 was primarily due to dividend payments, partially offset by net debt borrowing in Korea. We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources.
The net cash provided by financing activities for the year ended December 31, 2022 was primarily due to net debt borrowings, offset by the payments of our quarterly dividends and finance lease obligations. We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources.
Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures, which are generally made in advance of the related revenues and without firm customer commitments.
We cannot predict the timing, strength or duration of any correction, economic slowdown, recession or subsequent economic recovery. We operate in a capital-intensive industry. Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures, which are generally made in advance of the related revenues and without firm customer commitments.
Net cash provided by operating activities was $1,098.8 million for the year ended December 31, 2022, compared to $1,121.3 million for the year ended December 31, 2021. This decrease was primarily due to changes in working capital and changes in advanced payments to our vendors and from our customers, partially offset by higher net sales and operating profits.
Net cash provided by operating activities was $1,270.0 million for the year ended December 31, 2023, compared to $1,098.8 million for the year ended December 31, 2022. This increase was primarily due to changes in working capital, offset by lower net sales and operating profits.
The effective tax rate is below the U.S. statutory rate of 21% primarily due to lower tax rates applicable to our operations in some foreign jurisdictions where we earn income.
The effective tax rate is below the U.S. statutory rate of 21% primarily due to lower tax rates applicable to our operations in some foreign jurisdictions where we earn income. The effective tax rate in 2022 includes a $17.8 million tax benefit from the recognition of deferred tax assets we expect to utilize in future years.
In addition, changes in the mix of income from our foreign subsidiaries, expiration of conditional reduced tax rates or changes in tax laws or regulations could result in increased tax expense and effective tax rates in the future.
However, resolution of these matters involves uncertainties, and there can be no assurance that the outcomes will be favorable. In addition, changes in the mix of income from our foreign subsidiaries, expiration of conditional reduced tax rates or changes in tax laws or regulations could result in increased tax expense and effective tax rates in the future.
We believe that a cost-based input method is the most appropriate manner to measure how we satisfy our performance obligations to customers because the effort and costs incurred to package and/or test customer wafers are not linear over the duration of these services. Shipping and handling costs are accounted for as a cost to fulfill our performance obligations to customers.
During the period of providing our services, we generally do not control or take ownership of customers’ wafers, nor do we include the cost of the wafer in our cost calculations. 46 Table of Contents We believe that a cost-based input method is the most appropriate manner to measure how we satisfy our performance obligations to customers because the effort and costs incurred to package and/or test customer wafers are not linear over the duration of these services.
As of December 31, 2022, we had cash and cash equivalents and short-term investments of $959.1 million and $282.0 million, respectively.
As of December 31, 2023, we had cash and cash equivalents and short-term investments of $1,119.8 million and $474.9 million, respectively.
We lease certain machinery and equipment, office space and manufacturing facilities. As of December 31, 2022, our total remaining operating lease obligations and finance lease obligations were $161.4 million and $117.6 million, respectively, with $75.8 million and $60.1 million payable within 12 months, respectively. The lease obligations 41 Table of Contents represent our future minimum lease payments including interest payments.
We lease certain machinery and equipment, office space and manufacturing facilities. As of December 31, 2023, our total remaining operating lease obligations and finance lease obligations were $105.2 million and $118.0 million, respectively, with $36.9 million and $62.3 million payable within 12 months, respectively. The lease obligations represent our future minimum lease payments including interest payments.
To prepare for future growth, we will continue to make prudent investments, including construction in Vietnam, but we will limit capacity expansion generally and control costs in response to changing market conditions. 2022 Financial Summary Our net sales increased $953.3 million or 15.5% to $7,091.6 million in 2022 from $6,138.3 million in 2021.
To prepare for future growth, we will continue to make prudent investments, and we will closely manage capacity expansion and control costs in response to changes in market conditions. 2023 Financial Summary Our net sales decreased $588.5 million or 8.3% to $6,503.1 million in 2023 from $7,091.6 million in 2022.
Factors we consider important which could trigger an impairment review include the following: • significant under-performance relative to expected historical or projected future operating results; • significant changes in the manner of our use of the asset; • significant negative industry or economic trends; and • our market capitalization relative to net book value.
Factors we consider important which could trigger an impairment review include the following: • significant under-performance relative to expected historical or projected future operating results; • significant changes in the manner of our use of the asset; • significant negative industry or economic trends; and • our market capitalization relative to net book value. 47 Table of Contents Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group.
In 2022, we paid total quarterly cash dividends of $55.1 million. 37 Table of Contents Results of Operations The following table sets forth certain operating data as a percentage of net sales for the periods indicated: For the Year Ended December 31 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Materials 51.4 % 46.1 % 45.5 % Labor 10.0 % 12.3 % 13.4 % Other manufacturing costs 19.8 % 21.6 % 23.3 % Gross margin 18.8 % 20.0 % 17.8 % Operating income 12.7 % 12.4 % 9.1 % Net income attributable to Amkor 10.8 % 10.5 % 6.7 % Net Sales Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Net sales $ 7,091,585 $ 6,138,329 $ 5,050,589 $ 953,256 15.5 % $ 1,087,740 21.5 % The $953.3 million increase in net sales in 2022 compared to 2021 was primarily due to higher sales of advanced products across all end markets, partially offset by unfavorable foreign currency exchange rate movements.
Results of Operations The following table sets forth certain operating data as a percentage of net sales for the periods indicated: For the Year Ended December 31 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Materials 55.1 % 51.4 % 46.1 % Labor 9.9 % 10.0 % 12.3 % Other manufacturing costs 20.5 % 19.8 % 21.6 % Gross margin 14.5 % 18.8 % 20.0 % Selling, general and administrative 4.5 % 4.0 % 4.8 % Research and development 2.7 % 2.1 % 2.7 % Operating income 7.2 % 12.7 % 12.4 % Net income attributable to Amkor 5.5 % 10.8 % 10.5 % 40 Table of Contents Net Sales Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Net sales $ 6,503,065 $ 7,091,585 $ 6,138,329 $ (588,520) (8.3) % $ 953,256 15.5 % The $588.5 million decrease in net sales in 2023 compared to 2022 was primarily due to lower sales in our consumer and computing end markets, partially offset by growth in our communications end market.
We utilize an input method (cost incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. During the period of providing our services, we generally do not control or take ownership of customers’ wafers, nor do we include the cost of the wafer in our cost calculations.
We utilize an input method (cost incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date.
In November 2022, our Board of Directors approved a quarterly dividend of $0.075 per share, a 50% increase from the rate set in November 2021.
In November 2023, our Board of Directors approved a quarterly dividend of $0.07875 per share, a 5% increase from the rate set in November 2022. In 2023, we paid total quarterly cash dividends of $74.7 million.
Accordingly, we record customer payments of shipping and handling costs as a component of net sales, and the costs incurred for shipping and handling are then charged to cost of sales. Income Taxes. We operate in and file income tax returns in various U.S. and non-U.S. jurisdictions which are subject to examination by tax authorities.
Shipping and handling costs are accounted for as a cost to fulfill our performance obligations to customers. Accordingly, we record customer payments of shipping and handling costs as a component of net sales, and the costs incurred for shipping and handling are then charged to cost of sales. Income Taxes.
Research and development expenses in 2022 decreased compared to 2021 due to favorable foreign currency exchange rate movements and projects that moved into production, partially offset by new development projects in advanced packaging technologies.
Research and development expenses increased in 2023 compared to 2022 primarily due to additional equipment and overhead costs to support development projects in advanced packaging technologies, partially offset by projects that moved into production.
Other Income and Expense Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Interest expense $ 58,563 $ 51,508 $ 64,168 $ 7,055 13.7 % $ (12,660) (19.7) % Interest income (12,762) (1,065) (5,449) (11,697) >100% 4,384 (80.5) % Foreign currency (gain) loss, net (1,572) 723 9,608 (2,295) >(100)% (8,885) (92.5) % Loss on debt retirement 464 — 3,042 464 100 % (3,042) (100.0) % Other (4,439) (2,799) (806) (1,640) 58.6 % (1,993) >100% Total other expense, net $ 40,254 $ 48,367 $ 70,563 $ (8,113) (16.8) % $ (22,196) (31.5) % Interest expense increased in 2022 compared to 2021, primarily due to an increase in our finance lease obligation balance, an increase in our average outstanding debt and an increase in interest rates throughout the year.
Other Income and Expense Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Interest expense $ 59,000 $ 58,563 $ 51,508 $ 437 0.7 % $ 7,055 13.7 % Interest income (48,458) (12,762) (1,065) (35,696) >100% (11,697) >100% Foreign currency (gain) loss, net 18,361 (1,572) 723 19,933 >(100)% (2,295) >(100)% Loss on debt retirement — 464 — (464) (100.0) % 464 100 % Other (2,457) (4,439) (2,799) 1,982 (44.6) % (1,640) 58.6 % Total other expense, net $ 26,446 $ 40,254 $ 48,367 $ (13,808) (34.3) % $ (8,113) (16.8) % Interest income increased in 2023 compared to 2022, primarily due to higher interest rates on our cash and cash equivalents and available-for-sale debt investment balances.
We believe that any additional taxes or related interest over the amounts accrued will not have a material effect on our financial condition, results of operations or cash flows. However, resolution of these matters involves uncertainties, and there can be no assurance that the outcomes will be favorable.
We believe that we have estimated and provided adequate accruals for potential additional taxes and related interest expense that may ultimately result from such examinations. We believe that any additional taxes or related interest over the amounts accrued will not have a material effect on our financial condition, results of operations or cash flows.
With the continuing trend towards cloud-based computing, innovative advanced packaging solutions are needed to achieve the increased speed, performance and power requirements for this market. We believe that demand for advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smaller device geometries, higher levels of integration and performance and lower power consumption.
In consumer devices, further miniaturization and increasing functionality within IoT devices also require advanced packaging. We believe that demand for advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smaller device geometries, higher levels of integration and performance and lower power consumption.
See Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information about our income tax expense. Liquidity We assess our liquidity based on our current expectations regarding sales and operating expenses, capital spending, dividend payments, stock and debt repurchases, debt service requirements and other funding needs.
Liquidity We assess our liquidity based on our current expectations regarding sales and operating expenses, capital spending, dividend payments, stock and debt repurchases, debt service requirements and other funding needs.
Capital Resources We make significant capital expenditures in order to service the demand of our customers, which are primarily focused on investments in advanced packaging and test equipment and a new manufacturing facility in Bac Ninh, Vietnam. In 2022, our capital expenditures totaled $908.3 million or approximately 12.8% of net sales.
In 2023, our capital expenditures totaled $749.5 million or approximately 11.5% of net sales, which are primarily focused on investments in advanced packaging and test equipment and the Vietnam Facility. We expect that our 2024 capital expenditures will be approximately $750 million.
The tax returns for years where the statute of limitations remains open in all jurisdictions in which we do business are subject to change upon examination. We believe that we have estimated and provided adequate accruals for potential additional taxes and related interest expense that may ultimately result from such examinations.
We operate in and file income tax returns in various U.S. and non-U.S. jurisdictions which are subject to examination by tax authorities. The tax returns for years where the statute of limitations remains open in all jurisdictions in which we do business are subject to change upon examination.
As we continue to increase production of these higher material cost modules, there could be an impact on our profitability, depending on overall utilization.
As we continue to increase production of these higher material cost products, there could be an impact on our profitability, depending on overall utilization. Gross profit and gross margin decreased for 2023 compared to 2022 primarily due to an increase in the mix of products sold with higher material content, the decrease in net sales and resulting lower factory utilization.
The use of advanced packages in automotive applications is also growing, largely due to new, data-intensive applications which require increased pin count and performance. In consumer devices, further miniaturization and the integration of new functionality within IoT devices also require advanced packaging.
The use of advanced packages in automotive applications is also growing, largely due to new, data-intensive applications which require increased pin count and performance. With the continuing trend towards cloud-based computing and the expanding use of artificial intelligence, innovative advanced packaging solutions are needed to achieve the increased performance and power consumption requirements for this market.
The decrease was partially offset by an increase in net sales and net favorable foreign currency exchange rate movements. 38 Table of Contents Selling, General and Administrative Change 2022 2021 2020 2022 over 2021 2021 over 2020 (In thousands, except percentages) Selling, general and administrative $ 283,372 $ 296,084 $ 302,842 $ (12,712) (4.3) % $ (6,758) (2.2) % Selling, general and administrative expenses decreased in 2022 compared to 2021.
Selling, General and Administrative Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In thousands, except percentages) Selling, general and administrative $ 295,393 $ 283,372 $ 296,084 $ 12,021 4.2 % $ (12,712) (4.3) % Selling, general and administrative expenses increased in 2023 compared to 2022.
The conditional reduced tax rates granted to certain operations in the Philippines expired during 2020 and 2021. As these conditional reduced tax rates expire, income earned in these jurisdictions will be subject to higher statutory income tax rates, which may cause our effective tax rate to increase.
As these conditional reduced tax rates expire, income earned in these jurisdictions will be subject to higher statutory income tax rates, which may cause our effective tax rate to increase. See Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information about our income tax expense.
From time to time, we identify attractive opportunities to strengthen our leadership position and market share through expansion of our operations, joint ventures, acquisitions and other strategic investments. For example, we are making preparations to deliver advanced SiP modules and other packaging solutions from a new factory in Bac Ninh, Vietnam.
We build and utilize manufacturing lines which support multiple customers, and we increase factory utilization through sophisticated planning processes and intensive efficiency improvement activities. From time to time, we identify attractive opportunities to strengthen our leadership position and market share through expansion of our operations, joint ventures, acquisitions and other strategic investments.
We believe that the Bac Ninh facility, the first phase of which is expected to begin production in the fourth quarter of 2023, will provide customers with a cost-competitive high-volume manufacturing location that offers supply chain diversification.
We are preparing to deliver advanced SiP modules and other advanced packages from our Vietnam Facility beginning in the second half of 2024, which we believe will provide customers with a cost-competitive high-volume manufacturing location that offers additional supply chain diversification. Another key factor in our success is the optimization of asset utilization.
The decrease in gross margin was primarily due to an increase in the mix of products sold with higher material content and the government-mandated lockdown and related underutilization of our Shanghai factory during the second quarter of 2022. The decrease was partially offset by an increase in net sales and net favorable foreign currency exchange rate movements.
The decrease in gross margin was primarily due to an increase in the mix of products sold with higher material content, the decrease in net sales and resulting lower factory utilization. Operating income margin decreased 550 basis points to 7.2% in 2023 from 12.7% in 2022.
The increase was primarily due to higher sales of advanced products across all end markets, partially offset by unfavorable foreign currency exchange rate movements. Gross margin decreased to 18.8% in 2022 compared to 20.0% in 2021.
The decrease was primarily due to lower sales in our consumer and computing end markets, partially offset by growth in our communications end market. Gross margin decreased to 14.5% in 2023 compared to 18.8% in 2022.
The effective tax rates in 2022 and 2020 include a $17.8 million and $20.2 million income tax benefit, respectively, from the recognition of deferred tax assets we expect to utilize in future years. During 2022, 2021 and 2020, our subsidiaries in Korea and Singapore operated under various conditional reduced tax rates.
During 2023, 2022 and 2021, our subsidiaries in Korea and Singapore operated under various conditional reduced tax rates. The conditional reduced tax rates granted to certain operations in the Philippines expired during 2021.
We intend to continue to leverage our investment in advanced technology to meet the demand for these services in high growth markets. Another key to our success is to optimize the utilization of our assets. We build and utilize manufacturing lines which support multiple customers and increase factory utilization through sophisticated planning processes and intensive efficiency improvement activities.
We intend to continue to leverage our investments in advanced technology to meet the demand for these services in high growth markets.
Removed
We cannot predict the timing, strength or duration of any correction, economic slowdown, recession or subsequent economic recovery. In March 2022, as part of a broad effort to mitigate a rising number of Covid-19 cases in Shanghai, the Chinese government mandated a temporary lockdown of our Shanghai factory.
Added
We expect macroeconomic conditions to be challenging in the first half of 2024.
Removed
The Shanghai facility reopened during the second quarter and returned to normal operating levels in late June 2022, which resulted in higher than seasonal growth in net sales for the third quarter compared to the second quarter.
Added
The decrease in our operating income margin was due to the decrease in our gross margin discussed above along with an increase in research and development expenses, primarily due to additional equipment and overhead costs to support development projects in advanced packaging technologies, partially offset by projects that moved into production.
Removed
Additionally, other national, regional and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and 36 Table of Contents such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.
Added
Operating income margin was also impacted by an increase in selling, general and administrative expenses, primarily due to costs associated with the opening of the Vietnam Facility and increased bad debt expense, partially offset by a reduction in employee compensation costs.
Removed
We also remain subject to industry-wide supply constraints and inflationary price pressures, which have resulted in long lead times, rising prices and supply chain disruptions.
Added
The consumer and computing end markets decreased 38% and 11%, respectively, in 2023 compared to 2022. These end markets were impacted by the cyclical correction of the semiconductor market, product lifecycle changeovers and weaker demand.
Removed
For additional information regarding the potential impact of macroeconomic factors, the Covid-19 pandemic and other risks on our business, results of operations and financial condition, please refer to the “Risk Factors” section in Part I, Item 1A of this Form 10-K. We operate in a capital-intensive industry.
Added
Despite this cyclical correction, communications, our largest end market, grew 4% in 2023 compared to 2022, due to market share gains and the increase in silicon content within premium tier smartphones.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−0 removed9 unchanged
Biggest changeA change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows but does not generally impact the fair value of the instrument. 46 Table of Contents The table below presents the interest rates, maturities and fair value of our fixed and variable rate debt as of December 31, 2022: 2023 2024 2025 2026 2027 Thereafter Total Fair Value ($ in thousands) Fixed rate debt $133,771 $104,027 $110,555 $93,929 $598,948 $50,000 $1,091,230 $1,062,185 Average interest rate 1.3 % 1.4 % 1.7 % 1.8 % 6.0 % 2.1 % 4.0 % Variable rate debt 10,042 48,000 90,500 — — — 148,542 147,559 Average interest rate 3.5 % 5.8 % 5.5 % — % — % — % 5.5 % Total debt maturities $143,813 $152,027 $201,055 $93,929 $598,948 $50,000 $1,239,772 $1,209,744 For information regarding the fair value of our long-term debt, see Note 16 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. 47 Table of Contents
Biggest changeThe table below presents the interest rates, maturities and fair value of our fixed and variable rate debt as of December 31, 2023: 2024 2025 2026 2027 2028 Thereafter Total Fair Value ($ in thousands) Fixed rate debt $ 121,526 $ 131,112 $ 115,655 $ 622,079 $ 74,815 $ — $ 1,065,187 $ 1,055,635 Average interest rate 1.4 % 1.7 % 1.8 % 5.9 % 2.0 % — % 4.2 % Variable rate debt $ 10,098 $ 91,500 $ 43,000 $ — $ — $ — $ 144,598 $ 142,459 Average interest rate 3.2 % 6.1 % 6.8 % — % — % — % 6.1 % Total debt maturities $ 131,624 $ 222,612 $ 158,655 $ 622,079 $ 74,815 $ — $ 1,209,785 $ 1,198,094 For information regarding the fair value of our long-term debt, see Note 16 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K. 49 Table of Contents
Similarly, our sales, cost of sales and operating expenses will decrease if the U.S. dollar strengthens against these foreign currencies. We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2022 to assess the potential impact of fluctuations in exchange rates for all foreign denominated sales and operating expenses.
Similarly, our sales, cost of sales and operating expenses will decrease if the U.S. dollar strengthens against these foreign currencies. We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2023 to assess the potential impact of fluctuations in exchange rates for all foreign denominated sales and operating expenses.
As a result, the analysis is unable to reflect the potential effects of more complex market or other changes that could arise which may positively or negatively affect our results of operations. Our Consolidated Financial Statements are impacted by changes in exchange rates at the entity where the local currency is the functional currency.
As a result, the analysis is 48 Table of Contents unable to reflect the potential effects of more complex market or other changes that could arise which may positively or negatively affect our results of operations. Our Consolidated Financial Statements are impacted by changes in exchange rates at the entity where the local currency is the functional currency.
Assuming that all foreign currencies appreciated 10% against the U.S. dollar and taking into account our foreign currency forward contracts, our income before taxes as of December 31, 2022 would have been approximately $11 million lower, due to the remeasurement of monetary assets and liabilities. In addition, we have foreign currency exchange rate exposure on our results of operations.
Assuming that all foreign currencies appreciated 10% against the U.S. dollar and taking into account our foreign currency forward contracts, our income before taxes as of December 31, 2023 would have been approximately $14 million lower, due to the remeasurement of monetary assets and liabilities. In addition, we have foreign currency exchange rate exposure on our results of operations.
Assuming that all foreign currencies appreciated 10% against the U.S. dollar, our operating income for the year ended December 31, 2022 would have been approximately $133 million lower. There are inherent limitations in the sensitivity analysis presented, primarily the assumption that foreign exchange rate movements across multiple jurisdictions would change instantaneously in an equal fashion.
Assuming that all foreign currencies appreciated 10% against the U.S. dollar, our operating income for the year ended December 31, 2023 would have been approximately $144 million lower. There are inherent limitations in the sensitivity analysis presented, primarily the assumption that foreign exchange rate movements across multiple jurisdictions would change instantaneously in an equal fashion.
The effect of foreign exchange rate translation for these entities was a loss of $10.7 million and $16.8 million for the years ended December 31, 2022 and 2021, respectively, and was recognized as an adjustment to equity through other comprehensive income (loss). Interest Rate Risk We have interest rate risk with respect to our available-for-sale debt investments.
The effect of foreign exchange rate translation for these entities was a loss of $3.8 million and $10.7 million for the years ended December 31, 2023 and 2022, respectively, and was recognized as an adjustment to equity through other comprehensive income (loss). Interest Rate Risk We have interest rate risk with respect to our available-for-sale debt investments.
For the year ended December 31, 2022, approximately 90% of our net sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Japanese yen.
For the year ended December 31, 2023, approximately 90% of our net sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Japanese yen.
For the year ended December 31, 2022, approximately 55% of our cost of sales and operating expenses were denominated in U.S. dollars and were largely for raw materials and costs associated with property, plant and equipment.
For the year ended December 31, 2023, approximately 60% of our cost of sales and operating expenses were denominated in U.S. dollars and were largely for raw materials and costs associated with property, plant and equipment.
We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2022, to assess the potential impact of 45 Table of Contents fluctuations in exchange rates for all foreign denominated assets and liabilities.
We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2023, to assess the potential impact of fluctuations in exchange rates for all foreign denominated assets and liabilities.
Added
A change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows but does not generally impact the fair value of the instrument.

Other AMKR 10-K year-over-year comparisons