Amkor Technology, Inc. (AMKR)

How it makes money

Amkor is paid a service fee per unit packaged and tested, on purchase orders rather than long-term contracts. Because the customer's wafer is consigned, Amkor generally does not take ownership of the silicon; the materials it buys and bills for are laminate substrates, leadframes, bonding wires, capacitors and similar package components, which together were $3,700 million of cost of sales in 2025, the largest single cost line. The model is capital-intensive and fixed-cost heavy: depreciation in cost of sales was $585 million and capital expenditures $905 million in 2025, so profitability depends heavily on keeping factories highly utilised. The filing states that Amkor has no backlog, that customer commitments are short-term, and that average selling prices have historically faced downward pressure.

Revenue by segment

Amkor's advantage is scale and a qualified, geographically diverse manufacturing footprint. Building an OSAT network costs billions — $905 million of capital expenditure in 2025 alone — and each package must be qualified with the customer before volume production, which takes time and makes switching mid-programme awkward. The filing presents the footprint as a key differentiator, letting Amkor qualify a product at several sites, absorb large fast-turn orders and support customers regionalising supply chains, and it points to five decades of relationships with most of the world's leading semiconductor companies. The advantage is narrow rather than wide because the company itself discloses the counterweights: no backlog, short-term customer commitments, no long-term pricing agreements, continued downward pressure on selling prices, competition from larger OSATs, from foundries that bundle packaging with wafers, from IDMs' in-house capacity and from state-subsidised Chinese rivals.

Demand tracks the semiconductor cycle almost one for one, and Amkor sits at the end of it, so orders arrive late and disappear quickly. The company itself describes the industry as cyclical by nature, driven by world GDP and consumer spending, and prone to sudden downturns in which it faces reduced demand and excess capacity. With no backlog and short-term commitments, a quarter's sales depend on that quarter's demand, while the underlying structural drivers pull the other way: more silicon content per car for ADAS and electrification, data-centre and AI processors needing 2.5D and high-density fan-out packaging, and miniaturisation in wearables and smartphones. Sales are also seasonal, generally higher in the second half because of consumer buying patterns and flagship phone launches, with a first-quarter dip after the December holidays.

Key risks

• Dependence on a cyclical, volatile semiconductor industry — The company states that the semiconductor industry is cyclical by nature and has experienced sudden and prolonged downturns, during which Amkor has seen reduced demand, excess capacity and lower sales. It cites the Covid-19 disruption to automotive and industrial demand in 2020 and the 2019 smartphone inventory correction as examples.
• No backlog and no committed customer demand — Amkor discloses that it has no backlog and that customer commitments are short term, so quarterly sales depend substantially on demand in that same quarter. If demand falls and costs cannot be adjusted in time, margins, results and cash flows may be materially harmed.
• Downward pressure on selling prices — The filing states that prices for packaging and test services have historically fallen and that the company expects this downward pressure on average selling prices to continue and to intensify during business downturns. It typically has no long-term contracts allowing it to impose price adjustments.
• High fixed costs and capacity utilisation — Because a high percentage of its costs are fixed, Amkor says it must achieve relatively high capacity utilisation to earn satisfactory gross margins, and cannot assure that it will do so consistently. It also makes substantial investments in equipment and facilities ahead of customer demand, which may harm the business if that demand does not develop as expected or the equipment cannot be redeployed efficiently.
• Concentration on a few customers and end markets — The company lists dependence on key customers and concentration of customers in certain end markets, such as mobile communications and automotive, among its principal risks, and warns that the loss of certain customers or reduced orders or pricing from existing ones may materially affect its operations and financial results. A downturn or lower sales to automotive customers is flagged separately.
• International operations, trade restrictions and Chinese competition — Almost all production is outside the United States, exposing Amkor to trade barriers, export controls, tariffs, customs and duties and regional conflict. It is still evaluating the impact of export restrictions, which may have direct and indirect material adverse effects on revenues and results in China and elsewhere, and it notes increased competition from Chinese companies benefiting from government support, subsidies, lower cost of capital and preferential sourcing.
• Reliance on a limited group of material and equipment suppliers — Amkor sources most of its critical materials — leadframes, laminate substrates and bonding wire — from a limited group of suppliers and buys most of them on a purchase-order basis. A disruption at one supplier can extend lead times, while commodity price swings in gold, silver and copper may compress gross margin if they cannot be passed on to customers.
• Substantial indebtedness and restrictive covenants — The risk summary lists the company's substantial indebtedness, restrictive covenants in the indentures and agreements governing current and future debt, the effect of interest rate increases on variable rate borrowings, and difficulty funding liquidity needs. It also notes the possibility that the quarterly dividend could be decreased or suspended.

Top customers account for 72% of revenue

The ten largest customers accounted for 72% of net sales in fiscal 2025. Direct sales to Apple were 29.8% of net sales and to Qualcomm 11.1%, so a single customer represents close to three dollars in every ten. Amkor lists dependence on key customers among its risk factors and warns that losing one, or receiving reduced orders or prices from an existing one, may materially affect its operations and financial results.