Amkor Technology Inc (NASDAQ:AMKR) Q3 2020 Earnings Conference Call - Final Transcript

Oct 26, 2020 • 05:00 pm ET

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Amkor Technology Inc (NASDAQ:AMKR) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Giel Rutten

to decline this year, the introduction of 5G capability and the proliferation of high-end features has helped to expand our footprint, particularly in the RF domain, and in modems, sensors and peripheral devices.

Third quarter performance in the automotive market was better than expected, with a low single-digit sequential growth. Advanced products for automotive were up double-digit sequentially. Here we saw a majority of our customers ramp up their orders throughout the quarter. The one exception was in Japan, which has been slower to recover and where we expect Q3 to be the trough quarter.

We also had another solid quarter in the consumer end-markets, with significant growth of 9% sequentially and 70% year-over-year. We continued to invest in capacity and technology to drive manufacturing, scale and innovation in our advanced SiP solutions. This allows us to capitalize on opportunities in the consumer IoT and other growth markets. We're also expanding our engineering teams by adding experts in areas like RF and system test to enable full turnkey support to our customers.

Our revenue performance in the computing end-market was in line with expectations, with sequential growth of 3% and a solid year-on-year increase of 21%. We saw good performance in all applications, including data center, infrastructure, storage and personal computing. Following a strong second quarter, our memory business was flat sequentially and was up 6% year-on-year. Finally, our test business grew almost 10% year-over-year in Q3, as we continued to focus on expanding test attach rates.

The continued strong demand of advanced products resulted in a high utilization of our wafer level, flip-chip and SiP production line. Several factories delivered record output in this third quarter. Utilization rates in our leadframe and wirebond lines improved slightly towards the end of the quarter, reflecting signs of recovery in the automotive end-markets, where we do 40% of our leadframe and wirebond business.

Our manufacturing organization continues to do an excellent job across factories to meet the growing customer demands, while also maintaining necessary containment measures to mitigate the impact of the COVID-19 pandemic. All factories achieved excellent quality performance in the third quarter, with the lowest quality instant level for over three years. This resulted in several positive customer endorsements. Our procurement team has been able to limit supply chain disruptions for components and material supply.

Now let me turn to our fourth quarter outlook. We are expecting the fourth quarter to be another solid quarter, with revenue of $1.3 billion at the midpoint of our guidance. This represents a year-on-year increase of over 10% in Q4 and over 20% for the full year of 2020. Performance will depend in part on the successful launch of next-generation phone models and a continued recovery of the automotive market, especially in Japan.

On capex, we expect to spend this year approximately $550 million, with the potential to increase up to $575 million. The potential 5% increase is depending on new opportunities in advanced SiP that could begin ramping in the first half of