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What changed in AMKOR TECHNOLOGY, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMKOR TECHNOLOGY, INC.'s 2023 and 2024 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 2024 report.

+254 added−277 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-16)

Top changes in AMKOR TECHNOLOGY, INC.'s 2024 10-K

254 paragraphs added · 277 removed · 216 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+9 added−18 removed80 unchanged
Biggest changeOne of our priorities is developing highly integrated SiP modules, such as DSMBGA packages, to reduce material and processing costs and minimize form factor for wearables and mobile devices. Another important focus area is the development of wafer-level and panel-level packages for chips in 2D and 3D system implementations.
Biggest changeOur development of Panel Level Fan Out (“PLFO”) technology will permit higher economies of scale for fan-out package devices manufactured on a panel versus wafer basis. Another key area is developing highly integrated SiP modules, such as DSMBGA or double-sided molded land grid array packages, to reduce material and processing costs and minimize form factor for wearables and mobile devices.
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.
HUMAN CAPITAL RESOURCES 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.
Packaging and test service providers, on the other hand, can typically use their assets to support a broad range of customers and multiple end markets, potentially generating more efficient use of their production assets and a more cost-effective solution. STRATEGY AND COMPETITIVE STRENGTHS Strategy Amkor is a leader in advanced packaging technology in the outsourced assembly and test market.
Packaging and test service providers, on the other hand, can typically use their assets to support a broad range of customers and multiple end markets, potentially generating more efficient use of their production assets and a more cost-effective solution. STRATEGY AND COMPETITIVE STRENGTHS Strategy Amkor is a leader in advanced packaging technology in the outsourced semiconductor assembly and test market.
Our packaging and test services are designed to meet application and chip-specific requirements, including: the required type of interconnect technology; size; thickness; and electrical, mechanical and thermal performance. We provide turnkey packaging and test services including semiconductor wafer bump, wafer probe, wafer back-grind, package design, packaging, system-level and final test and drop shipment services.
Our packaging and test services are designed to meet application and chip-specific requirements, including: the required type of interconnect technology; size; thickness; and electrical, mechanical and thermal performance. We provide turnkey packaging and test services including wafer bump, wafer probe, wafer back-grind, package design, packaging, system-level and final test and drop shipment services.
In addition, we believe that as semiconductor technology continues to achieve smaller device geometries with higher levels of integration, speed and performance, packages will increasingly require wafer-level Chip Scale Packaging (“CSP”), WLFO, SWIFT and flip chip interconnect solutions, advanced SiP products and medium and higher power density packages and modules.
In addition, we believe that as semiconductor technology continues to achieve smaller device geometries with higher levels of integration, speed and performance, packages will increasingly require wafer-level Chip Scale Packaging (“CSP”), 6 Table of Contents WLFO, SWIFT and flip chip interconnect solutions, advanced SiP products and medium and higher power density packages and modules.
We work with our customers and our suppliers to develop proprietary process technologies to enhance our existing capabilities, reduce time-to-market, improve quality and lower costs. We believe that our focus on research and product development will enable us to enter new markets early, capture market share and promote the adoption of our new package formats as industry standards.
We work with our customers and our suppliers to develop proprietary process technologies to enhance our existing capabilities, reduce time-to-market, improve quality and lower costs. We believe that our focus on research and product development will enable us to enter new markets early, capture market share and promote the adoption of new package formats.
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.
We have designed and developed several state-of-the-art package formats and technologies such as Double-Sided, Molded Ball Grid Array (“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.
One of our more successful leadframe package offerings is the Micro LeadFrame family of quad flat no lead packages. These packages offer cost effective, miniaturized solutions for multiple analog power and signal chain applications. Power discrete devices use a leadframe as the package carrier and primarily use wirebond interconnect technology.
One of our more successful leadframe package offerings is the Micro LeadFrame family of quad flat no lead packages. These packages offer cost effective, miniaturized solutions for multiple analog power and signal chain applications. 9 Table of Contents Power discrete devices use a leadframe as the package carrier and primarily use wirebond interconnect technology.
We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal, memory, sensors and radio frequency-semiconductor devices. We believe that the breadth of our design, packaging and test services is important to customers seeking to limit the number of their suppliers.
We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal, memory, sensors and radio frequency-semiconductor devices. We believe that the breadth of our design, packaging and test services is important to customers who seek to limit the number of their suppliers.
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.
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. Amkor also uses human capital initiatives to support our broad geographic footprint.
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.
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.
Below is a description of our test services: Wafer Level Test: Wafer level test is a manufacturing step performed while a wafer is still in its full form and before being singulated for further package processing. Package Level Test: Package level test is performed on a product or products that have been assembled in a package.
Below is a description of our test services: Wafer Level Test: Wafer level test is a manufacturing step performed while a wafer is still in its full form and before being singulated for further package processing. 10 Table of Contents Package Level Test: Package level test is performed on a product or products that have been assembled in a package.
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.
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 11 Table of Contents automotive features including ADAS, infotainment, optical sensors and electric vehicles. In addition, we are developing high power modules involving SiC-based devices.
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: 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.
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: 2024 2023 2022 End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers): Communications (smartphones, tablets) 48 % 50 % 44 % Computing (data center, infrastructure, PC/laptop, storage) 19 % 16 % 16 % Automotive, industrial and other (ADAS, electrification, infotainment, safety) 18 % 21 % 20 % Consumer (AR & gaming, connected home, home electronics, wearables) 15 % 13 % 20 % 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.
Two of our most popular traditional leadframe package types are small outline integrated circuit and quad flat package, commonly known as “dual” and “quad” products, respectively, based upon the number of sides from which the leads extend.
Two of our most popular traditional leadframe package types are small outline IC and quad flat package, commonly known as “dual” and “quad” products, respectively, based upon the number of sides from which the leads extend.
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.
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 our customer.
This trend has led many semiconductor companies and OEMs to view packaging and test as enabling technologies requiring the technological innovation expertise found in the leading outsourced assembly and test companies. At the same time, these companies are often looking to reduce their internal manufacturing and research and development costs for packaging and test solutions.
This trend has led many semiconductor companies and OEMs to view packaging and test as enabling technologies that can benefit from the technological innovation expertise found in the leading outsourced assembly and test companies. At the same time, these companies are often looking to reduce their internal manufacturing and research and development costs for packaging and test solutions.
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. As of December 31, 2023, Amkor employed 28,700 employees, of whom approximately 96%, 3% and 1% resided in the Asia-Pacific region, Europe and the United States, respectively.
We believe that our efforts to motivate, retain and support the growth of qualified employees is reflected in the long average tenure of many of our key employees. As of December 31, 2024, Amkor employed 28,300 employees, of whom approximately 96%, 3% and 1% resided in the Asia-Pacific region, Europe and the United States, respectively.
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.
In 2024, 2023 and 2022, we had net sales of approximately $3,085 million, $2,955 million and $2,930 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.
These include integrated technologies such as advanced SiP, wafer-level fan-out (“WLFO”), Silicon Wafer Integrated Fan-out Technology (“SWIFT”), High Density Fan-Out (“HDFO”) and redistribution layer (“RDL”) solutions which enable very thin, very small products that combine application processors, memory, baseband and other peripheral integrated circuits (“ICs”).
These include integrated technologies such as advanced SiP, wafer-level fan-out (“WLFO”), Silicon Photonics (“SiPh”) and Co-Package Optics (“CPO”), Silicon Wafer Integrated Fan-out Technology (“SWIFT”), High Density Fan-Out (“HDFO”) and redistribution layer (“RDL”) solutions which enable very thin, very small products that combine application processors, memory, baseband and other peripheral ICs.
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.
Our global workforce spans 12 countries, reflecting various cultures, backgrounds, ages, genders and ethnicities. Our employees in France, Germany, the Philippines, Singapore, Taiwan and the United States are not represented by any union.
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.
For the Year Ended December 31, 2024 2023 2022 (In millions, except percentage of net sales) Advanced Products $ 5,175 81.9 % $ 5,033 77.4 % $ 5,368 75.7 % Mainstream Products 1,143 18.1 % 1,470 22.6 % 1,724 24.3 % Total net sales $ 6,318 100.0 % $ 6,503 100.0 % $ 7,092 100.0 % 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 believe that we compete favorably with respect to each of these elements. INTELLECTUAL PROPERTY We maintain an active program to protect and derive value from our investment in technology and the associated intellectual property rights. Intellectual property rights that apply to our various products and services include patents, copyrights, trade secrets and trademarks.
INTELLECTUAL PROPERTY We maintain an active program to protect and derive value from our investment in technology and the associated intellectual property rights. Intellectual property rights that apply to our various products and services include patents, copyrights, trade secrets and trademarks.
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.
Certain employees at our factories in China, Japan, Korea, Malaysia, Portugal and Vietnam are members of a union, and we operate subject to collective bargaining agreements that we have entered into with these unions.
We do not believe that capital expenditures or other costs attributable to compliance with environmental laws and regulations or green initiatives will have a material adverse effect on our business, liquidity, results of operations, financial condition or cash flows. We are also committed to responsible environmental practices that go beyond legal requirements in conducting our business.
We do not believe that capital expenditures or other costs attributable to compliance with environmental laws and regulations or green initiatives will have a material adverse effect on our business, liquidity, results of operations, financial condition or cash flows.
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.
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.
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.
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.
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.
Together, these direct and extended support teams deliver an array of services to our customers. 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.
We are collaborating with industry leaders as smartphones transition to 5G and drive semiconductor growth through the adoption of new wireless standards, integration of a broad range of applications, enhanced features, and higher performance requirements to support increased data processing.
We are collaborating with industry leaders as smartphones transition to include artificial intelligence and drive semiconductor growth through the adoption of new wireless standards, integration of a broad range of applications, enhanced features, and higher performance requirements to support increased data processing. The trend to greater functionality drives miniaturization and innovation enabled by advanced packaging.
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.
Amkor has 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 and industry partners; • 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.
Handlers are used to transfer individual or small groups of packaged ICs to a tester. Test equipment is generally a more capital-intensive activity than packaging, and test equipment tends to have longer delivery lead times than most types of packaging equipment. We focus our capital expenditures on standardized tester platforms to maximize test equipment utilization where possible.
Test equipment is generally a more capital-intensive activity than packaging, and test equipment tends to have longer delivery lead times than most types of packaging equipment. We focus our capital expenditures on standardized tester platforms to maximize test equipment utilization where possible. In some cases, our customers will consign test equipment to us.
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.
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 8 Table of Contents other state-of-the-art packaging technologies. These products are used as system memory or platform data storage in all of our end markets.
Another focus for development is integrated multi-die solutions, including multichip modules and high-density WLFO solutions, which enable package level integration of different types and levels of silicon technologies for high performance computing, networking and data center applications. This is accomplished by combining processors and other chiplets into one packaged module.
These multi-chip modules and high-density WLFO solutions enable package level integration of different types and levels of silicon technologies for high performance computing, networking and data center applications. This is accomplished by combining processors and other chiplets into one packaged module. Through die partitioning and heterogeneous integration, these modules provide higher functionality at lower total product cost.
These wafer-level chip-scale packages and WLFO packages are increasingly the preferred package type for many applications in IoT and mobile devices, including processors, power management integrated circuits (“PMICs”), display drivers and antenna package products. Our development of Panel Level Fan Out (“PLFO”) technology will permit higher economies of scale for fan-out package devices manufactured on a panel versus wafer basis.
Another important priority is the development of wafer-level and panel-level packages for 2D and 3D implementations. These wafer-level chip-scale packages and WLFO packages are increasingly the preferred package type for many applications in IoT and mobile devices, including processors, power management integrated circuits (“PMICs”), display drivers and antenna package products.
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.
We also compete with the internal semiconductor packaging and test capabilities of many of our customers, foundries and contract manufacturers. 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.
These services also enable early engagement with our customers in the product design phases for maximum compatibility with manufacturing. Our 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.
Our 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.
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.
Increasing battery voltage, higher voltage power converters, onboard chargers, automotive inverter components and microcontrollers also require innovative power packaging solutions. • IoT wearables within the consumer end market are evolving in multiple applications, such as hearables, watches and augmented reality and virtual reality devices.
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.
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. Handlers are used to transfer individual or small groups of packaged ICs to a tester.
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.
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.
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.
We have dedicated employees engaged in research and development for new semiconductor packaging and test technologies, making us a technology leader in areas such as 2.5D, advanced flip chip, fine pitch bumping, 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.
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.
We also support our largest multinational customers from multiple office locations to ensure that we are aligned with their global operational and business requirements. 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.
In addition, we maintain a variety of other packaging equipment, including mold, singulation, ball attach and wafer backgrind, along with numerous other types of manufacturing equipment.
In addition, we maintain a variety of other packaging equipment, including mold, singulation, ball attach 12 Table of Contents and wafer backgrind, along with numerous other types of manufacturing equipment. A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packages.
The use and storage of chemicals and materials are subject to various laws and regulations governing waste disposal, water discharge, emissions into the atmosphere and employee health and safety.
The use and storage of chemicals and materials are subject to various laws and regulations governing waste disposal, water discharge, emissions into the atmosphere and employee health and safety. We make continuous efforts to comply with these environmental laws and regulations, including environmental management systems, safety training for employees and pollution control at our factories.
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.
Wafer-level Package Products : We offer three types of wafer-level packages: wafer-level CSP; WLFO; SiPh and CPO; 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.
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.
Our research and development employees are based in Korea, Portugal, the United States and other locations in Asia. In 2024, 2023 and 2022, we incurred $163.0 million, $177.5 million and $149.4 million, respectively, of research and development expense. SALES AND MARKETING Our sales offices are located throughout Asia, Europe and the United States.
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.
CUSTOMERS Our customers include many of the largest semiconductor companies in the world. Our ten largest customers accounted for 72% of our net sales in 2024. Direct sales to Apple and Qualcomm accounted for 30.8% and 10.2% of our net sales, respectively, for the year ended December 31, 2024.
Applications for WLFO packages include power management, transceivers, radar and specialty silicon. • SWIFT, also known as high-density fan-out, can either replace the laminate substrate with a thinner structure or reduce the complexity of the substrate by housing the dense interconnects in the SWIFT structure, allowing for a less expensive substrate that provides a high level of performance with a balanced cost structure.
Amkor has supported previous generations of SiPh packaging needs and is aligned with the market to support its future needs, through chip on wafer, chip on chip and other advanced packaging solutions. • SWIFT, also known as high-density fan-out, can either replace the laminate substrate with a thinner structure or reduce the complexity of the substrate by housing the dense interconnects in the SWIFT structure, allowing for a less expensive substrate that provides a high level of performance with a balanced cost structure.
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.
In addition, 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 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.
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.
Growth in the semiconductor industry is being driven primarily by advanced packaging within the secular growth markets of high-performance computing (“HPC”), automotive, IoT and mobile communications.
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.
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.
By concentrating our research and development on our customers’ needs for innovative packages, increased performance, higher density, smaller size and lower cost, we gain opportunities to enter markets early, successfully compete for new products and promote our new package offerings as industry leading technology.
By concentrating our research and development on our customers’ needs for innovative packaging solutions for increased performance, higher density, smaller size and lower cost, we gain opportunities to enter markets early and compete for new business. A significant area of focus is on integrated multi-die solutions, including 2.5D, SWIFT and S-Connect.
We are engaged in continuing efforts to comply with these environmental laws and regulations, including the establishment of environmental management systems, safety training for employees and installation of pollution control equipment at our factories. In the future, we may be subject to changes to existing environmental regulations or new green initiatives required by our customers, investors, governments or other stakeholders.
In the future, we may be subject to changes to existing environmental regulations or new green initiatives required by our customers, investors, governments or other stakeholders.
To provide comprehensive sales and customer service, we typically assign our customers a direct support team consisting of an account manager, technical program manager, test program manager and both field and factory customer support representatives. We also support our largest multinational customers from multiple office locations to ensure that we are aligned with their global operational and business requirements.
Our support personnel manage and promote our packaging and test services and provide key customer and technical support. To provide comprehensive sales and customer service, we typically assign our customers a direct support team consisting of a sales manager, assembly and test technical program managers and both field and factory customer support representatives.
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.
Advanced Packaging Technology Leadership We are a leader in developing and deploying advanced semiconductor packaging and test solutions.
The trend to greater functionality drives miniaturization and cost reduction enabled by advanced packaging. • Increasing semiconductor content in automobiles is driving increased demand for advanced packaging to enable the proliferation of safety features such as advanced driver assistance systems (“ADAS”) and radar and digital cockpit features such as infotainment displays and telematics.
We believe Amkor is well positioned in each of these end markets. • HPC supporting artificial intelligence and increasing demand for improved networking speed and storage within data centers, cloud computing, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market. • Increasing semiconductor content in automobiles is driving increased demand for advanced packaging to enable the proliferation of safety features such as advanced driver assistance systems (“ADAS”) and radar and digital cockpit features such as infotainment displays and telematics.
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.
We intend to continue to leverage our investment in advanced technology to meet the demand for these services in high growth markets. Selectively Grow Our Geographically Diverse Footprint through Strategic Investments We aim to strengthen our leadership position and market share through strategic investment in our geographically diverse manufacturing footprint.
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.
Integration of multiple functions into small form factors, such as processors, sensors and connectivity devices, relies on innovation in advanced packaging. • Within the communications end market, we have a strong position across multiple device functionalities within premium and high tier smartphones.
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.
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.
We are building and utilizing manufacturing lines which support multiple customers and increase factory utilization through more sophisticated planning processes and more intensive efficiency improvement activities.
Optimize Utilization of Existing Assets Another key factor in our success is the optimization of asset utilization. We build and utilize manufacturing lines which support multiple customers, and we increase factory utilization through sophisticated planning processes and intensive efficiency improvement activities. Competitive Strengths The outsourced semiconductor packaging and test market is very competitive.
The principal elements of competition in the outsourced semiconductor packaging and test services market include price, available capacity, flexibility, quality, customer service and support, new product introduction experience, cycle time, reputation and reliability, customer satisfaction, technological expertise and innovation, breadth of packaging and test services offered, including turnkey services, and the ability to invest in capacity, geographic location and scale of manufacturing.
The key competitive factors in the outsourced semiconductor packaging and test services market are: 13 Table of Contents • Advanced packaging technology • Geographic location of services • Manufacturing scale and expertise • Customer co-development and innovation • Investment in new technology and capacity • Quality and reliability • Price • Cycle time We believe we are competitive in these areas.
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.
We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories. 14 Table of Contents AVAILABLE INFORMATION Amkor files annual, quarterly and current reports, proxy statements and other information with the SEC.
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Item 1. Business OVERVIEW Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services.
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Item 1. Business OVERVIEW Amkor is the world’s largest U.S. headquartered OSAT (outsourced semiconductor assembly and test) service provider. Since its founding in 1968, Amkor has pioneered the outsourcing of integrated circuit (“IC”) packaging and test services and is a strategic manufacturing partner for the world’s leading semiconductor companies, foundries, and electronics original equipment manufacturers (“OEMs”).
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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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Amkor provides turnkey manufacturing services for the communication, computing, automotive and industrial and consumer markets, including smartphones, data centers, artificial intelligence, electric vehicles and wearables. Amkor’s operational base includes production facilities, research and development centers and sales and support offices located in key electronics manufacturing regions in Asia, Europe and the United States.
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The transition by leading edge customers to newer packaging and test equipment platforms typically frees up capacity in existing, previously installed equipment. As part of our strategy, we are focused on developing a second wave of customers to utilize these assets more effectively over a longer period of time.
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Our primary financial objective is profitable sales growth.
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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.
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We believe our broad geographic footprint provides customers with multiple options to mitigate risk and diversify their supply chains. For example, in 2024, we began delivering advanced SiP and memory packages from the Vietnam Facility and acquired the land for our planned Arizona Facility, where construction is expected to begin in the second half of 2025.
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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.
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Some FCBGA products incorporate 2.5D technology, which 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.
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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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Applications for WLFO packages include power management, transceivers, radar and specialty silicon. • SiPh and CPO allow for the integration of fiberoptic interconnects both within a package and within the server architecture to reduce power consumption, heat generation and improve performance.
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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.
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We also purchase wafer bumping equipment to facilitate our flip chip and wafer level packaging services such as 2.5D and HDFO, which is used for HPC and artificial intelligence systems. Wafer bumping equipment includes sputter and spin coaters, electroplating equipment, reflow ovens and other types of equipment.
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A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packages, with equipment used in traditional wirebond packaging being easier to redeploy than the equipment used in advanced packaging. We also purchase wafer bumping equipment to facilitate our flip chip and wafer level packaging services.
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COMPETITION The outsourced semiconductor packaging and test market is highly competitive, geopolitical trade tensions have increased competition from Chinese firms supporting a China-for-China supply chain. We face competition from established packaging and test service providers primarily located in Asia, including ASE Technology, JCET Group and Powertech Technology.
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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.
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Additionally, we compete with contract foundries, such as TSMC, and electronic manufacturing service providers or contract electronics manufacturers, including Universal Scientific Industrial and Luxshare, which offer certain types of advanced packaging. Our IDM customers also evaluate our services and scale against their own in-house capabilities.
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These environmental practices include: • Certification of our factories worldwide to International Organization for Standards (“ISO”) framework 14001, widely recognized as the standard for effective environmental management systems. • Measurement and independent verification of greenhouse gases (“GHGs”) generated by our factories worldwide.

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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: 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.
Biggest changeThe following is a list of some of these risks: Risks Related to Our Business, Operations and Industry • 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; • competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including foundries and contract manufacturers; • our substantial investments in equipment and facilities to support the demand of our customers; • 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; • 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; 15 Table of Contents • difficulty funding our liquidity needs; and • challenges with integrating diverse operations.
A significant portion of our sales are to customers within the automotive industry. The automotive industry is cyclical, and, as a result, our customers in the automotive end-market are sensitive to changes in general economic conditions, inflationary pressure, disruptive innovation and end-market preferences, which can adversely affect sales of our products and, correspondingly, our results of operations.
A significant portion of our sales is to customers within the automotive industry. The automotive industry is cyclical, and, as a result, our customers in the automotive end-market are sensitive to changes in general economic conditions, inflationary pressure, disruptive innovation and end-market preferences, which can adversely affect sales of our products and, correspondingly, our results of operations.
Our internal controls over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, fraud or corruption. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
Our internal controls over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls and fraud or corruption. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
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.
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; 27 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.
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.
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 conflicts 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; 18 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.
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.
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.
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.
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 28 Table of Contents negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.
As a result, we expect to develop, acquire and implement new manufacturing processes and packaging technologies and tools in order to respond to competitive industry conditions and customer requirements. Technological advances may lead to rapid and significant price erosion and may make our existing packages less competitive or our existing inventories 26 Table of Contents obsolete.
As a result, we expect to develop, acquire and implement new manufacturing processes and packaging technologies and tools in order to respond to competitive industry conditions and customer requirements. Technological advances may lead to rapid and significant price erosion and may make our existing packages less competitive or our existing inventories 25 Table of Contents obsolete.
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.
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; 23 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.
Our liquidity is affected by, among other factors, volatility in the global economy and credit markets, the performance of our business, our capital expenditures and other investment levels, other uses of our cash, including any payments of dividends and purchases of stock under any stock repurchase program, any acquisitions or investments in joint ventures and any decisions we might make to either repay debt and other long-term obligations out of our operating cash flows or refinance debt at or prior to maturity with the proceeds of debt or equity financings.
Our liquidity is affected by, among other factors, volatility in the global economy and credit markets, the performance of our business, our capital expenditures and other investment levels, other uses of our cash, including any payments of dividends and purchases of stock under any stock repurchase program, any acquisitions or investments in joint ventures and any decisions we might make to either repay debt and 22 Table of Contents other long-term obligations out of our operating cash flows or refinance debt at or prior to maturity with the proceeds of debt or equity financings.
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.
A major disruption or shutdown of any such factory could completely impair our ability to perform those services or require us to 31 Table of Contents 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.
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 operating results and cash flows have varied and may vary significantly as a result of factors that we cannot control. 17 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.
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.
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 2025 and thereafter may vary materially and will depend on several factors.
The voting agreement for the Convert Shares terminates upon the earliest of (i) such time as the Kim family no longer beneficially owns any of the Convert Shares, (ii) consummation of a change of control (as defined in the voting agreement) or (iii) the mutual agreement of the Kim family and Amkor. Mr.
The voting agreement for the Convert Shares terminates upon the earliest of (i) such time as the Kim family no longer beneficially owns any of the Convert Shares, (ii) consummation of a change of control (as defined in the voting agreement) or (iii) the mutual agreement of the Kim family and Amkor. Ms.
Kim and his family and affiliates, acting together, have the ability to effectively determine or substantially influence matters submitted for approval by our stockholders by voting their shares or otherwise acting by written consent, including the election of our Board of Directors.
Kim and her family and affiliates, acting together, have the ability to effectively determine or substantially influence matters submitted for approval by our stockholders including the election of our Board of Directors, by voting their shares or otherwise acting by written consent.
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, our business, financial condition, results of operations and cash flows could be materially and adversely affected by natural disasters and other calamities. 32 Table of Contents Item 1B. Unresolved Staff Comments None.
We compete against established competitors in the packaging and test business as well as internal capabilities of IDMs and face competition from new competitors, including foundries. The outsourced semiconductor packaging and test services market is very competitive.
We compete against established competitors in the packaging and test business as well as internal capabilities of IDMs and face competition from new competitors, including foundries and contract manufacturers. The outsourced semiconductor packaging and test services market is very competitive.
Summary of Risk Factors An investment in our common stock involves various risks, and you are urged to carefully consider all of the matters discussed in Part I, Item 1A of this Form 10-K under the caption “Risk Factors” (in addition to those discussed under this 15 Table of Contents “Summary of Risk Factors” section) in considering our business and prospects.
Summary of Risk Factors An investment in our common stock involves various risks, and you are urged to carefully consider all of the matters discussed in Part I, Item 1A of this Form 10-K under the caption “Risk Factors” (in addition to those discussed under this “Summary of Risk Factors” section) in considering our business and prospects.
The anticipated customer demand for which we have made capital investments may not materialize, and our sales may not adequately cover fixed costs, resulting in reduced profit levels or even significant losses, either of which may materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.
The anticipated customer demand for which we have made capital investments may not materialize, and our sales may not 20 Table of Contents adequately cover fixed costs, resulting in reduced profit levels or even significant losses, either of which may materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.
Increased regulation of and restriction on the use of hazardous substances may impact our supply chain due to decreased availability, 32 Table of Contents necessitate changes in our packaging processes, require us to seek substitutes that may not be readily available in the marketplace or eliminate the use of such hazardous substances although there may not be a technically feasible alternative.
Increased regulation of and restriction on the use of hazardous substances may impact our supply chain due to decreased availability, necessitate changes in our packaging processes, require us to seek substitutes that may not be readily available in the marketplace or eliminate the use of such hazardous substances although there may not be a technically feasible alternative.
Risks Related to Our Common Stock • the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval; and 16 Table of Contents • the possibility that we may decrease or suspend our quarterly dividend. Risks Related to Human Capital and Management • difficulty attracting, retaining or replacing qualified personnel.
Risks Related to Our Common Stock • the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval; and • the possibility that we may decrease or suspend our quarterly dividend. Risks Related to Human Capital and Management • difficulty attracting, retaining or replacing qualified personnel.
These expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies. Certain of the Company’s 25 Table of Contents competitors may be exempt from the BIS Regulations by virtue of being non-U.S. manufacturers.
These expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies. Certain of the Company’s competitors may be exempt from the BIS Regulations by virtue of being non-U.S. manufacturers.
Additionally, if Amkor is unable to align its environmental, health and safety practices with shifting customer preferences, we could suffer reputational harm, which could have a material and adverse effect on our business, results of operations, liquidity and cash flows.
Additionally, if Amkor is unable to align its environmental, health and 30 Table of Contents safety practices with shifting customer preferences, we could suffer reputational harm, which could have a material and adverse effect on our business, results of operations, liquidity and cash flows.
Our failure to qualify new processes, maintain quality standards or acceptable production yields, if significant and prolonged, could result in the loss of customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto.
Our failure to qualify new processes, maintain quality standards or acceptable production yields, if significant and prolonged, could result in the loss of customers, increased costs of production, delays, substantial amounts of returned 21 Table of Contents goods and claims by customers relating thereto.
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.
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.
Additionally, the quantity and price of our products sold to customers in the 22 Table of Contents automotive end-market could decline despite continued growth in such end-market. Lower sales to customers in the automotive end-market may have a material adverse effect on our business and results of operations.
Additionally, the quantity and price of our products sold to customers in the automotive end-market could decline despite continued growth in such end-market. Lower sales to customers in the automotive end-market may have a material adverse effect on our business and results of operations.
Our business and financial condition has been adversely affected, and could be adversely affected in the future, by natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions. We have significant packaging and test services and other operations in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore, Taiwan and the Vietnam Facility.
General Risk Factors Our business and financial condition has been adversely affected, and could be adversely affected in the future, by natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions. We have significant packaging and test services and other operations in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore, Taiwan and Vietnam.
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.
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; • international trade disputes, geopolitical tensions, increasing protectionism and economic nationalism leading to increasing export restrictions, trade barriers, tariffs, and other changes in trade policy; • 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 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 24 Table of Contents • 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.
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.
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, 72% of our net sales for the year ended December 31, 2024.
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.
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.
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.
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.
Any decrease or suspension of dividend payments could cause our stock price to decline. 30 Table of Contents Risks Related to Human Capital and Management We face risks trying to attract, retain or replace qualified employees to support our operations.
Any decrease or suspension of dividend payments could cause our stock price to decline. Risks Related to Human Capital and Management We face risks trying to attract, retain or replace qualified employees to support our operations.
There can be no assurance that other countries in which we market our services will protect our intellectual property rights to the same extent as the U.S. Our competitors may develop, patent or gain access to know-how and technology similar or superior to our own.
There can be no assurance that other countries in which we market our services will protect our intellectual property rights to the same extent as the United States. Our competitors may develop, patent or gain access to know-how and technology similar or superior to our own.
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 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 Susan Y.
For example, as seen in the automotive end market in 2020, the Covid-19 pandemic and restrictions imposed by governmental authorities to mitigate the spread of Covid-19 in our customers’ end markets may decrease demand for our customers’ products and services, thereby adversely impacting their demand for our services.
For example, as seen in the automotive end market in 2020, the Covid-19 pandemic and restrictions imposed by governmental authorities to mitigate the spread of Covid-19 decreased demand for our customers’ products and services, thereby adversely impacting their demand for our services.
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.
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 16 Table of Contents number of semiconductor devices, such as communications, computing, automotive and industrial or consumer electronics, could have a material adverse effect on our business and operating results.
Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such as worldwide gross domestic product and consumer spending. 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.
Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such as worldwide gross domestic product and consumer spending. The semiconductor industry has experienced significant and sometimes sudden and prolonged downturns in the past.
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.
Our business may suffer if the cost, quality or supply of materials or equipment changes adversely. 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.
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”).
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 we operate in have enacted laws based on the Pillar Two Model Rules effective in 2024.
As of December 31, 2023, our total debt balance was $1,203.5 million, of which $131.6 million was classified as a current liability and $679.7 million was collateralized indebtedness at our subsidiaries. We may consider investments in joint ventures, increased capital expenditures, refinancings or acquisitions which may increase our indebtedness.
As of December 31, 2024, our total debt balance was $1,159.5 million, of which $236.0 million was classified as a current liability and $639.5 million was collateralized indebtedness at our subsidiaries. We may consider investments in joint ventures, increased capital expenditures, refinancings or acquisitions which may increase our indebtedness.
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.
National, regional, and local governments may implement public health measures to mitigate the spread of such outbreaks 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.
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.
In October 2023, we completed the initial phase of construction for the Vietnam Facility. While manufacturing has begun at the Vietnam Facility, there can be no assurance that the actual scope, costs or benefits of the project will be consistent with our current expectations.
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.
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.
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.
For example, we continue to further integrate information technology systems in our facilities in Japan 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.
We could suffer adverse tax and other financial consequences if there are changes in tax laws or taxing authorities do not agree with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or if we are required to establish or adjust valuation allowances on deferred tax assets.
In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition. 29 Table of Contents We could suffer adverse tax and other financial consequences if there are changes in tax laws or taxing authorities do not agree with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or if we are required to establish or adjust valuation allowances on deferred tax assets.
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.
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, foundries or contract manufacturers for packaging and 19 Table of Contents 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.
Our sales may decline if any of our customers are sued on a product liability claim. We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our customers’ products.
We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our customers’ products.
Risks Related to Regulatory, Legal and Tax Challenges • 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; • maintaining an effective system of internal controls; • any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or any requirements to establish or adjust valuation allowances on deferred tax assets; and • environmental, health and safety liabilities and expenditures.
Risks Related to Regulatory, Legal and Tax Challenges • maintaining an effective system of internal controls; • any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or any requirements to establish or adjust valuation allowances on deferred tax assets; • environmental, health and safety liabilities and expenditures; and • conditions and obligations in connection with the receipt of government awards and incentives.
Risks Related to Our International Sales and Operation s • dependence on international factories and operations, and risks relating to trade restrictions and regional conflict; and • significant severance plan obligations associated with our manufacturing operations in Korea.
Risks Related to Our International Sales and Operation s • dependence on international factories and operations, and risks relating to trade restrictions and regional conflict.
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.
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.
Risks Related to Our Business, Operations and Industry Our packaging and test services are used in volatile industries, and industry downturns, and declines in global economic and financial conditions could harm our performance.
General Risk Factors • natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions. Risks Related to Our Business, Operations and Industry Our packaging and test services are used in volatile industries, and industry downturns and declines in global economic and financial conditions could harm our performance.
Further, if our packages are delivered with defects, we could incur additional development, repair or replacement costs or suffer other economic losses, and our credibility and the market’s acceptance of our packages could be harmed. If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
Further, if our packages are delivered with defects, we could incur additional development, repair or replacement costs or suffer other economic losses, and our credibility and the market’s acceptance of our packages could be harmed.
If we were to experience an unusually high incidence of warranty claims, we could incur significant costs and our business could be materially and adversely affected. In addition, we are exposed to the product and economic liability risks and the risk of negative publicity affecting our customers.
We receive warranty claims from our customers from time to time in the ordinary course of our business. If we were to experience an unusually high incidence of warranty claims, we could incur significant costs and our business could be materially and adversely affected.
If we experience a significant loss of IDM or foundry business, it could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows, especially during a prolonged industry downturn.
If we experience a significant loss of IDM or foundry business, it could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows, especially during a prolonged industry downturn. We face competition from foundries, such as TSMC and Samsung, which offer full turnkey services from silicon wafer fabrication through packaging and final test.
Kim and members of his family can effectively determine or substantially influence the outcome of all matters requiring stockholder approval. As of December 31, 2023, James J. Kim, the Executive Chairman of our Board of Directors, Susan Y.
Kim and members of her family can effectively determine or substantially influence the outcome of all matters requiring stockholder approval. As of December 31, 2024, Susan Y. Kim, the Chairman of our Board of Directors and members of the Kim family and affiliates owned approximately 132.1 million shares, or approximately 54%, of our outstanding common stock.
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.
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.
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.
Global pandemics and the spread of infectious diseases may impact 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 such outbreaks.
If our packages fail, our business may be exposed to warranty claims, product return and liability risks, economic damage claims and negative publicity. We receive warranty claims from our customers from time to time in the ordinary course of our business.
We may face warranty claims, product return and liability risks, economic damage claims and negative publicity if our packages fail . Our packages are incorporated into a number of end products. If our packages fail, our business may be exposed to warranty claims, product return and liability risks, economic damage claims and negative publicity.
On October 7, 2022 and October 17, 2023, the U.S. Bureau of Industry and Security announced export control regulations applicable to Chinese acquisition of U.S. semiconductor technology (collectively, the “BIS Regulations”).
In recent years, the U.S. Bureau of Industry and Security announced new export control regulations applicable to the sale of U.S. semiconductor technology in China (collectively, the “BIS Regulations”).
Such restrictions may also affect end-user demand in each geography where our customers sell their products and services, which may materially and adversely affect demand for our services, our operating results and financial condition. 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.
Such restrictions may also affect end-user demand in each geography where our customers sell their products and services, which may materially and adversely affect demand for our services, our operating results and our financial condition.
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”).
The Kim family also has options to acquire approximately 0.6 million shares. If the options are exercised, the Kim family’s total ownership would be an aggregate of approximately 132.7 million shares, or approximately 54% of our outstanding common stock.
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.
We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore, Taiwan and Vietnam. 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.
As of December 31, 2023, the Kim family owns 39.6 million Convert Shares. The Convert Shares owned by the Kim family are subject to a voting agreement.
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”). As of December 31, 2024, the Kim family owns 39.6 million Convert Shares. The Convert Shares owned by the Kim family are subject to a voting agreement.
Furthermore, fire, severe weather, earthquakes, flooding and tsunamis in the past have impacted the supply of specialty chemicals, substrates, silicon wafers, equipment and other supplies to the electronics industry. In addition, we purchase the majority of our materials on a purchase order basis.
For example, the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence created extended lead times for some materials and equipment, and furthermore, fire, severe weather, earthquakes, flooding and tsunamis in the past have impacted the supply of specialty chemicals, substrates, silicon wafers, equipment and other supplies to the electronics industry.
The IT systems in our factories are at varying levels of sophistication and maturity as the factories have different sets of products, processes and customer expectations. Some of our key software has been developed by our own programmers, and this software may not be easily integrated with other software and systems.
The information technology systems in our factories are at varying levels of sophistication and maturity as the factories have different sets of products, processes and customer expectations.
Our inability to attract, retain, motivate and train qualified new personnel could have a material adverse effect on our business. Risks Related to Regulatory, Legal and Tax Challenges We may face warranty claims, product return and liability risks, economic damage claims and negative publicity if our packages fail . Our packages are incorporated into a number of end products.
Our inability to attract, retain, motivate and train qualified new personnel could have a material adverse effect on our business. Risks Related to Regulatory, Legal and Tax Challenges If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
Removed
General Risk Factors • health conditions or pandemics, such as the Covid-19 pandemic, impacting labor availability and operating capacity, capital availability, the supply chain and consumer demand for our customers’ products and services; and • natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions.
Added
In addition, we purchase the majority of our materials on a purchase order basis.
Removed
New variants or the potential re-emergence of the Covid-19 pandemic or the occurrence of other epidemics or pandemics, and the imposition of related public health measures and travel and business restrictions, may materially and adversely impact our business, financial condition, operating results and cash flows.
Added
We also face competition from contract manufacturers and electronic manufacturing service providers, many of which are larger than us, have lower cost structures, and may be willing or able to sell their services at lower margins. These competitors have increased and could increase pricing and competitive pressures.
Removed
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.
Added
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. We make significant investments in equipment and facilities in order to service the demand of our customers.
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
In addition, we are exposed to the product and economic liability risks and the risk of negative publicity affecting our customers. Our sales may decline if any of our customers are sued on a product liability claim.
Removed
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.
Added
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.
Removed
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.
Added
Some of our key software has been developed by our own programmers, and this software may not be easily integrated with other software and systems. 26 Table of Contents From time to time, we make additions or changes to our information technology systems.
Removed
To the extent the impact of such disruptive events continues or worsens, we anticipate having greater difficulty obtaining, or waiting longer to obtain, certain equipment, supplies and other materials necessary for performance of our services or necessary to increase the services we provide to customers.
Added
While the Pillar Two Model Rules did not have a material impact on our 2024 results, additional countries where we operate, including Singapore, have adopted Pillar Two Model Rules effective in 2025. Enactment of this legislation is expected to adversely affect our effective tax rate, tax payments and conditional reduced tax rates.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed9 unchanged
Biggest changeEach Global Information Security Team member has more than 15 years of experience working for large enterprises in the 35 Table of Contents information technology and information security space. This includes, but is not limited to, expertise in data infrastructure, operations and information security and risk and compliance.
Biggest changeGlobal Information Security Team members have multiple years of experience working for large enterprises in the information 33 Table of Contents technology and information security space. This includes, but is not limited to, expertise in data infrastructure, operations and information security and risk and compliance.
Our Global Information Security Team assesses, identifies and manages cybersecurity risks to the Company, including by: • Assessing, identifying and managing cybersecurity risks to our information systems: We assess, identify and manage cybersecurity risks to our information systems, including by: (i) establishing and maintaining a governance structure that includes policies, procedures and processes designed to manage cybersecurity threats and cybersecurity incidents; (ii) conducting ongoing risk assessments, including to identify and assess cybersecurity risks; (iii) developing and implementing an overall risk management strategy, which includes cybersecurity risks; (iv) overseeing, identifying and managing risks from cybersecurity threats associated with our use of third-party service providers and our supply chain; and (v) engaging external experts, including cybersecurity assessors, consultants and auditors to evaluate and test our cybersecurity measures and risk management processes; and • Establishing a program to assess and help mitigate cybersecurity threats: We are committed to establishing a program to assess and help mitigate cybersecurity threats through: (i) conducting employee training on cybersecurity risks and best practices; (ii) implementing measures to classify and protect data; and (iii) taking steps to be aware of and address new cybersecurity threats, including through the receipt of threat information from third-parties that helps us proactively prevent and detect cybersecurity threats.
Our Global Information Security Team assesses, identifies and manages cybersecurity risks to the Company, including by: • Assessing, identifying and managing cybersecurity risks to our information systems: We assess, identify and manage cybersecurity risks to our information systems, including by: (i) establishing and maintaining a governance structure that includes policies, procedures and processes designed to manage cybersecurity threats and cybersecurity incidents; (ii) conducting ongoing risk assessments, including to identify and assess cybersecurity risks; (iii) developing and implementing an overall risk management strategy, which includes cybersecurity risks; (iv) overseeing, identifying and managing risks from cybersecurity threats associated with our use of third-party service providers and our supply chain; and (v) engaging external experts, including cybersecurity assessors, consultants and auditors to evaluate and test our cybersecurity measures and risk management processes; and • Establishing a program to assess and help mitigate cybersecurity threats: We have established a program to assess and help mitigate cybersecurity threats through: (i) conducting employee training on cybersecurity risks and best practices; (ii) implementing measures to classify and protect data; and (iii) taking steps to be aware of and address new cybersecurity threats, including through the receipt of threat information from third-parties that helps us proactively prevent and detect cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed1 unchanged
Biggest change(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.
Biggest change(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. During 2024, we acquired land for the Arizona Facility. We anticipate beginning construction of the new facility in the second half of 2025.
We believe that our existing properties are in good condition and suitable for the conduct of our business and that the productive capacity of such properties is substantially being utilized or we have plans to utilize it.
Our executive offices, which are leased, are located in Tempe, Arizona and Singapore. We believe that our existing properties are in good condition and suitable for the conduct of our business and that the productive capacity of such properties is substantially being utilized or we have plans to utilize it.
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.
Approximate Facility Size (Square Feet) Owned Leased Total China (1) 1,398,000 — 1,398,000 Japan 1,489,000 286,000 1,775,000 Korea 4,476,000 — 4,476,000 Malaysia (1) 433,000 — 433,000 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) 1,467,000 — 1,467,000 Total all facilities 11,647,000 859,000 12,506,000 (1) Land is leased.
Removed
High-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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed3 unchanged
Biggest changeThe 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
Biggest changeThe following table sets forth the cumulative total returns included in the preceding Stock Performance Graph for the years ended December 31, 2019 through 2024: For the Year Ended December 31, 2019 2020 2021 2022 2023 2024 Amkor Technology, Inc. $ 100.00 $ 116.30 $ 192.55 $ 188.13 $ 263.98 $ 209.15 S&P Midcap 400 100.00 113.66 141.80 123.28 143.54 163.54 PHLX Semiconductor 100.00 153.66 219.51 142.94 238.72 287.31 Item 6. 36 Table of Contents
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.
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 73 holders of record of our common stock as of February 14, 2025.
PURCHASES 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.
PURCHASES 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, 2024: 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 5,083 $ 25.47 — $ — November 1 - November 30 45 26.48 — — December 1 - December 31 755 26.28 — — Total 5,883 $ 25.58 — (a) Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with share-based compensation awards issued to employees. 35 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.
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.
DIVIDEND POLICY Our Board of Directors has adopted a dividend policy pursuant to which we currently pay a regular quarterly cash dividend on our common stock. We currently anticipate that we will continue to pay regular quarterly cash dividends in the future.
Removed
DIVIDEND POLICY In October 2020, our Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. Each quarter since the adoption of this dividend policy, the Company has declared and paid a quarterly dividend.

Item 7. Management's Discussion & Analysis

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

68 edited+15 added−16 removed40 unchanged
Biggest changeResults 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.
Biggest changeIn 2024, we paid total cash dividends of $178.6 million. 38 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 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales: Materials 55.1 % 55.1 % 51.4 % Labor 9.9 % 9.9 % 10.0 % Depreciation 8.5 % 8.9 % 8.0 % Other manufacturing costs 11.7 % 11.6 % 11.8 % Gross margin 14.8 % 14.5 % 18.8 % Selling, general and administrative 5.3 % 4.5 % 4.0 % Research and development 2.6 % 2.7 % 2.1 % Operating income 6.9 % 7.2 % 12.7 % Net income attributable to Amkor 5.6 % 5.5 % 10.8 % Net Sales Change 2024 2023 2022 2024 over 2023 2023 over 2022 (In thousands, except percentages) Net sales $ 6,317,692 $ 6,503,065 $ 7,091,585 $ (185,373) (2.9) % $ (588,520) (8.3) % The $185.4 million decrease in net sales in 2024 compared to 2023 was primarily due to lower sales in our automotive and industrial and communications end markets, partially offset by growth in the computing and consumer end markets.
There can be no assurance that we will generate the necessary net income or operating cash flows, or be able to borrow sufficient funds, to meet the funding needs of our business beyond the next twelve months due to a variety of factors, including the cyclical nature of the semiconductor industry and other factors discussed in Part I, Item 1A of this Form 10-K.
There can be no assurance that we will generate the necessary net income or operating cash flows, or be able to borrow sufficient funds, to meet the funding needs of our business beyond the next 12 months due to a variety of factors, including the cyclical nature of the semiconductor industry and other factors discussed in Part I, Item 1A of this Form 10-K.
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.
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) $250.0 million plus a variable amount equal to 37.5% of our consolidated accounts receivable balance. As of December 31, 2024, we had availability of $600.0 million.
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.
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 HPC, automotive, IoT and mobile communications, selectively growing our scale and scope through strategic investments and optimizing utilization of existing assets.
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.
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. 45 Table of Contents Valuation of Inventory. We order raw materials based on customers’ forecasted demand.
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.
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.
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.
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.
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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section includes comparisons of certain 2024 financial information to the same information for 2023.
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.
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. 44 Table of Contents Revenue Recognition.
However, in the event taxable income falls short of current expectations, we may need to establish a valuation allowance against such deferred tax assets. We have valuation allowances on certain U.S. federal net operating losses and U.S. foreign tax credit carryforwards expected to expire unused and on select deferred tax assets in certain foreign jurisdictions.
However, in the event taxable income falls short of current expectations, we may need to establish a valuation allowance against such deferred tax assets. We have valuation allowances on certain U.S. foreign tax credit carryforwards expected to expire unused and on select deferred tax assets in certain foreign jurisdictions.
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.
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 12 months.
Recently Issued Standards For information regarding recently adopted and recently issued accounting standards, see Note 1 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Recently Issued Standards For information regarding recently adopted and recently issued accounting standards, please refer to Note 1 to our Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
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.
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, 2024, we had cash and cash equivalents and short-term investments of $1,646.5 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, 2023, the purchase obligations were $408.5 million, with $402.0 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, 2024, the purchase obligations were $476.8 million, with $425.1 million payable within 12 months.
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.
Included in our cash and short-term investments balances as of December 31, 2024, is $1,407.9 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.
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.
Ultimately, the amount of our 2025 capital expenditures will depend on several factors including, among others, the timing and implementation of any capital projects under review, including the commencement of construction for the Arizona Facility, 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.
If we were to distribute this offshore cash to the U.S. as dividends from our foreign subsidiaries, the dividends generally would not be subject to U.S. federal income tax, but the distributions may be subject to foreign withholding and state income taxes.
If we were to distribute this offshore cash to the United States as dividends 41 Table of Contents from our foreign subsidiaries, the dividends generally would not be subject to U.S. federal income tax, but the distributions may be subject to foreign withholding and state income taxes.
Certain of our debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities. These restrictions are determined in part by our covenant compliance and on calculations based upon cumulative net income and do not currently have a material impact on our ability to make dividend payments or stock repurchases.
These restrictions are determined in part by our covenant compliance and on calculations based upon cumulative net income and do not currently have a material impact on our ability to make dividend payments or stock repurchases.
In 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.
In 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, 2024 was as follows: For the Year Ended December 31 2024 2023 2022 (In thousands) Operating activities $ 1,088,868 $ 1,270,020 $ 1,098,756 Investing activities (800,324) (951,910) (1,007,169) Financing activities (260,432) (149,207) 55,597 43 Table of Contents Operating activities: Our cash flow provided by operating activities for the year ended December 31, 2024 decreased by $181.2 million compared to the year ended December 31, 2023, primarily due to changes in working capital and lower operating profits.
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.
Financing activities: The net cash used in financing activities for the year ended December 31, 2024 and 2023 was primarily due to the payments of our dividends, payments of finance lease obligations and net debt repayments. We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources.
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 decrease was primarily due to lower sales in our automotive and industrial and communications end markets, partially offset by growth in the computing and consumer end markets. Gross margin increased to 14.8% in 2024 compared to 14.5% in 2023.
Servicing our current and future customers may require that we incur significant operating expenses and make significant investments in equipment and facilities, which are generally made in advance of the related revenues and without firm customer commitments.
Servicing our current and future customers may require that we incur significant operating expenses and make significant investments in equipment and facilities, which are generally made in advance of the related revenues and without firm customer commitments. In December 2024, we signed a Direct Funding Agreement with the U.S.
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.
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.
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.
In 2024, our capital expenditures totaled $743.8 million, or 11.8% of net sales, compared to $749.5 million, or 11.5% of net sales in 2023. Our spending was primarily focused on investments in advanced packaging and test equipment.
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.
Gross Profit and Gross Margin Change 2024 2023 2022 2024 over 2023 2023 over 2022 (In thousands, except percentages) Gross profit $ 933,212 $ 943,153 $ 1,329,987 $ (9,941) $ (386,834) Gross margin 14.8 % 14.5 % 18.8 % 0.3 % (4.3) % Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead.
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.
Net cash provided by operating activities was $1,088.9 million for the year ended December 31, 2024, compared to $1,270.0 million for the year ended December 31, 2023. This decrease was primarily due to changes in working capital and lower operating profits.
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.
Research and Development Change 2024 2023 2022 2024 over 2023 2023 over 2022 (In thousands, except percentages) Research and development $ 162,951 $ 177,473 $ 149,429 $ (14,522) (8.2) % $ 28,044 18.8 % Research and development activities are focused on developing new packaging and test services and improving the efficiency and capabilities of our existing production processes.
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.
In 2024, our capital expenditures totaled $743.8 million or approximately 11.8% of net sales, which are primarily focused on investments in advanced packaging and test equipment. We expect that our 2025 capital expenditures will be approximately $850 million, approximately 5% to 10% of which we expect to spend on the construction of the Arizona Facility.
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.
In 2024, we paid total cash dividends of $178.6 million, and we currently anticipate that we will continue to pay quarterly cash dividends in the future.
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.
For the Year Ended December 31 2024 2023 2022 (In thousands) Net cash provided by operating activities $ 1,088,868 $ 1,270,020 $ 1,098,756 Payments for property, plant and equipment (743,796) (749,467) (908,294) Proceeds from sale of and grants for property, plant and equipment 14,203 13,032 3,148 Free cash flow $ 359,275 $ 533,585 $ 193,610 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.
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.
For discussion of 2023 results in comparison with 2022 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 16, 2024. Overview Amkor is the world’s largest US headquartered OSAT (outsourced semiconductor assembly and test) service provider.
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.
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 expected revenues and without firm customer commitments.
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.
We will continue to make prudent investments, and we will closely manage capacity expansion and control costs in response to any changes in market conditions. 2024 Financial Summary Our net sales decreased $185.4 million or 2.9% to $6,317.7 million in 2024 from $6,503.1 million in 2023.
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.
As of December 31, 2024, we had debt of $1,159.5 million, with $236.0 million payable within 12 months. As of December 31, 2024, the interest payment obligations, based on stated coupon rates for fixed rate debt and interest rates applicable at December 31, 2024 for variable rate debt, were $134.0 million during the remaining term of the debt.
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.
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.
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.
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.
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.
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.
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.
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. We intend to continue to leverage our investments in advanced technology to meet the demand for these services in high growth markets.
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.
The changes in foreign currency (gain) loss, net for the 2024 compared to the 2023 were primarily due to the lower net costs associated with foreign exchange forward contracts. 40 Table of Contents Income Tax Expense Change 2024 2023 2022 2024 over 2023 2023 over 2022 (In thousands, except percentages) Income tax expense $ 75,481 $ 81,710 $ 89,890 $ (6,229) $ (8,180) Effective tax rate 17.5 % 18.4 % 10.5 % 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.
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.
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.
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.
As of December 31, 2024, we had cash and cash equivalents and short-term investments of $1,133.6 million and $513.0 million, respectively.
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.
In November 2024, our Board of Directors approved a quarterly dividend of $0.08269 per share, a 5% increase from the rate set in November 2023. The Board of Directors also approved a special cash dividend of $0.40546 per share.
The increase was 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.
The increase was primarily due to increased employee compensation costs and costs incurred during start-up at the Vietnam Facility, partially offset by a reduction in bad debt expense. In 2024, the costs incurred during start-up at the Vietnam Facility increased approximately $16 million compared to 2023.
Historical trends indicate there has 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. The semiconductor industry has experienced significant and sometimes prolonged cyclical upturns and downturns in the past.
Historical trends indicate there has been a strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles. The semiconductor industry has experienced significant and sometimes prolonged 37 Table of Contents 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.
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.
Under these arrangements, we sell receivables to a financial institution for cash at a discount to the face amount. 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.
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.
Other Income and Expense Change 2024 2023 2022 2024 over 2023 2023 over 2022 (In thousands, except percentages) Interest expense $ 64,945 $ 59,000 $ 58,563 $ 5,945 10.1 % $ 437 0.7 % Interest income (65,541) (48,458) (12,762) (17,083) 35.3 % (35,696) >100% Foreign currency (gain) loss, net 8,856 18,361 (1,572) (9,505) (51.8) % 19,933 >(100)% Loss on debt retirement — — 464 — — % (464) (100.0) % Other (821) (2,457) (4,439) 1,636 (66.6) % 1,982 (44.6) % Total other expense, net $ 7,439 $ 26,446 $ 40,254 $ (19,007) (71.9) % $ (13,808) (34.3) % Interest expense increased in 2024 compared to 2023, primarily due to a decrease in capitalized interest for the Vietnam Facility and an increase in our finance lease obligation balance.
Any such transaction may be made in the open market, through privately negotiated transactions or otherwise, and would be subject to the terms of our indentures and other debt agreements, market conditions and other factors. Our subsidiary in Korea maintains an unfunded severance plan that covers certain employees who were employed prior to August 1, 2015.
Any such transaction may be made in the open market, through privately negotiated transactions or otherwise, and would be subject to the terms of our indentures and other debt agreements, market conditions and other factors. We lease certain machinery and equipment, office space and manufacturing facilities.
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.
The decrease in our operating income margin was primarily due to increased employee compensation costs and costs incurred during start-up at the Vietnam Facility, partially offset by the increase in our gross margin discussed above and a reduction in bad debt expense.
Investing activities: Our cash flow used in investing activities for the year ended December 31, 2023 decreased by $55.3 million compared to the year ended December 31, 2022, primarily due to decreased payments related to property, plant and equipment and decreased net payments for foreign exchange forward contracts, offset by higher net payments for short-term investments.
Investing activities: Our cash flow used in investing activities for the year ended December 31, 2024 decreased by $151.6 million compared to the year ended December 31, 2023, primarily due to lower net payments for short-term investment activity.
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.
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.
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.
As of December 31, 2024, our foreign subsidiaries also had $60.0 million available to be borrowed under term loan credit facilities. 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.
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.
These factoring arrangements can be reduced or eliminated at any time due to market conditions and changes in the creditworthiness of customers. For the year ended December 31, 2024 and 2023, we sold accounts receivable totaling $158.6 million and $253.9 million, net of discounts and fees of $0.4 million and $1.3 million, respectively. We operate in a capital-intensive industry.
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.
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.
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.
During 2024, 2023 and 2022, our subsidiaries in Korea and Singapore operated under various conditional reduced tax rates. Beginning in 2024, our subsidiary in Vietnam also operated under a conditional reduced tax rate.
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.
As of December 31, 2024, our total remaining operating lease obligations and finance lease obligations were $98.5 million and $204.4 million, 42 Table of Contents respectively, with $30.9 million and $65.7 million payable within 12 months, respectively. The lease obligations represent our future minimum lease payments including interest payments.
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.
As we continue to increase production of these higher material cost products, there could be an impact on our profitability, depending on overall utilization.
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, 2024, we estimate that repatriation of this foreign cash and short-term investments would generate withholding taxes and state income taxes of approximately $48 million. For certain accounts receivable, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash flows.
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.
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. Certain of our debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities.
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.
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, lease obligations and other funding needs.
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.
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 are an industry leader in developing and commercializing advanced packaging and test technologies, which we believe provide substantial value to our customers. Advanced packages, which account for a significant portion of mobile phone semiconductor value, are the preferred choice in the high-end smartphone market.
We are an industry leader in developing and commercializing advanced packaging and test technologies, which we believe provide substantial value to our customers. Our primary financial objective is profitable sales growth.
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.
Our broad geographic footprint, including our manufacturing presence in multiple countries across Asia, in Portugal and our headquarters in the United States, is a key differentiator and positions us well to support evolving global supply chains, including initiatives to regionalize supply chains. We began delivering advanced packages from the Vietnam Facility in the third quarter of 2024.
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.
Research and development expenses decreased in 2024 compared to 2023 primarily due to the utilization mix of assets shared with manufacturing and projects moving into production, partially offset by new development projects in packaging technologies.
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.
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. In addition, the conditional reduced tax rates granted to certain operations are expected to be adversely impacted by the enactment of the Pillar Two Model Rules effective in 2025.
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 the extension of the estimated useful life of our test equipment from five years to seven years and net favorable foreign currency exchange rate movements, offset by the decrease in net sales and resulting lower factory utilization. Operating income margin decreased to 6.9% in 2024 from 7.2% in 2023.
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.
In addition, we receive a 25% investment tax credit on qualified investments in U.S. semiconductor manufacturing under the CHIPS Act. For additional information, please refer to Note 1 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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 build and utilize manufacturing lines which support multiple customers, and we increase factory utilization through sophisticated planning processes and intensive efficiency improvement activities. Our customers include most of the world’s largest semiconductor companies, and over the last five decades we have developed long-standing relationships with many of these companies.
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. As a supplier in the semiconductor industry, our business is cyclical and impacted by broad economic factors.
We believe that our production excellence, including high quality, reliability and predictability, has been a key factor in our success in attracting and retaining customers. As a supplier in the semiconductor industry, our business is cyclical and impacted by broad economic factors.
Removed
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.
Added
High performance computing supporting artificial intelligence and increasing demand for improved networking speed and storage within data centers, cloud computing, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market.
Removed
We intend to continue to leverage our investments in advanced technology to meet the demand for these services in high growth markets.
Added
Increasing semiconductor content in automobiles is driving increased demand for advanced packaging to enable the proliferation of safety features such as ADAS and radar and digital cockpit features such as infotainment displays and telematics. The IoT wearables within our consumer end market are evolving in multiple applications, such as hearables, watches and augmented reality and virtual reality devices.
Removed
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.
Added
Integration of multiple functions into small form factors, such as processors, sensors and connectivity devices, relies on innovation in advanced packaging. Within our communications end market, we have a strong position across multiple device functionalities within premium and high tier smartphones.
Removed
We expect macroeconomic conditions to be challenging in the first half of 2024.
Added
We are collaborating with industry leaders as smartphones transition to include artificial intelligence and drive semiconductor growth through integration of a broad range of applications, enhanced features and higher performance requirements to support increased data processing.
Removed
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.
Added
In addition, we are progressing plans to build an advanced packaging and test facility in Arizona and were awarded up to $407 million in direct funding by Commerce pursuant to the CHIPS Act to support the facility, conditioned on, among other things, the achievement of certain construction and production milestones.
Removed
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.
Added
We acquired the land for the Arizona Facility in 2024 and expect to begin construction in the second half of 2025. We believe our broad geographic footprint provides customers with multiple options to mitigate risk and diversify their supply chains. Another key factor in our success is the optimization of asset utilization.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+1 added−1 removed6 unchanged
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
Biggest changeA change in interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows but will not have a material impact on the fair value of the instrument. 47 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, 2024: 2025 2026 2027 2028 2029 Thereafter Total Fair Value ($ in thousands) Fixed rate debt $ 144,529 $ 130,662 $ 638,995 $ 94,020 $ 21,756 $ — $ 1,029,962 $ 1,017,507 Average interest rate 1.8 % 1.9 % 5.8 % 2.0 % 2.1 % — % 4.3 % Variable rate debt $ 91,500 $ 43,000 $ — $ — $ — $ — $ 134,500 $ 133,873 Average interest rate 5.2 % 5.3 % — % — % — % — % 5.2 % Total debt maturities $ 236,029 $ 173,662 $ 638,995 $ 94,020 $ 21,756 $ — $ 1,164,462 $ 1,151,380 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. 48 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, 2023 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, 2024 to assess the potential impact of fluctuations in exchange rates for all foreign denominated sales and operating expenses.
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.
For the year ended December 31, 2024, 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.
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.
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.
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.
We performed a sensitivity analysis of our foreign currency exposure as of December 31, 2024, to assess the potential impact of fluctuations in exchange rates for all foreign denominated assets and liabilities.
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 and taking into account our foreign currency forward contracts, our income before taxes as of December 31, 2024 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, 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.
Assuming that all foreign currencies appreciated 10% against the U.S. dollar, our operating income for the year ended December 31, 2024 would have been approximately $148 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.
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, 2024, approximately 90% of our net sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Japanese yen.
Our investment portfolio consists of various security types and maturities, with a significant portion of our portfolio having maturity of one year or less. Our primary objective with our investment portfolio is to invest available cash while preserving capital and meeting liquidity needs.
Interest Rate Risk We have interest rate risk with respect to our available-for-sale debt investments. Our investment portfolio consists of various security types and maturities, with our portfolio primarily having maturities of one year or less. Our primary objective with our investment portfolio is to invest available cash while preserving capital and meeting liquidity needs.
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.
The effect of foreign exchange rate translation for these entities, inclusive of our foreign currency forward contracts, was a loss of $8.8 million and $3.8 million for the years ended December 31, 2024 and 2023, respectively, and was recognized as an adjustment to equity through other comprehensive income (loss).
We have foreign currency exchange rate risk associated with the remeasurement of monetary assets and liabilities on our Consolidated Balance Sheets that are denominated in currencies other than the functional currency.
In order to reduce our exposure to foreign currency gains and losses, we use natural hedging techniques and forward contracts to mitigate foreign currency risk. 46 Table of Contents We have foreign currency exchange rate risk associated with the remeasurement of monetary assets and liabilities on our Consolidated Balance Sheets that are denominated in currencies other than the functional currency.
Foreign Currency Risk The U.S. dollar is our reporting and functional currency for our subsidiaries, except for our Japan operations, where the Japanese yen is the functional currency. In order to reduce our exposure to foreign currency gains and losses, we use natural hedging techniques and forward contracts to mitigate foreign currency risk.
Foreign Currency Risk The U.S. dollar is our reporting and functional currency for our subsidiaries, except for our Japan operations, where the Japanese yen is the functional currency.
Removed
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.
Added
To mitigate this impact, we started to hedge certain net investment positions in foreign subsidiaries by entering into foreign currency forward contracts that are designated as hedges of net investments beginning in April 2024.

Other AMKR 10-K year-over-year comparisons