Q3 2023 Amkor Technology Inc Earnings Call
Speaker 1: transcript
Speaker 1: Good day ladies and gentlemen and welcome to the AMCORE technology third quarter 2023 earnings conference call. My name is Diego and I will be your conference facilitator today. At this time I'll participate in the conference.
Good day, ladies and gentlemen, and welcome to the core technology third quarter 2023 earnings Conference call. My name is Diego and I will be your conference facilitator today.
At this time all participants are in a listen only mode. After the speaker's remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded.
Speaker 1: transcript
Speaker 1: I would now like to turn the call over to Jennifer Jew, head of an investigation.
I would now like to turn the call over to Jennifer Ju head of Investor Relations Ms. Zhu. Please go ahead.
Speaker 2: transcript
Speaker 2: Thank you, operator. Good afternoon, everyone. And thank you for joining us for AMCORS 3rd quarter, 2023, earnings conference call.
Thank you operator, good afternoon, everyone and thank you for joining us for M of course third quarter 2023 earnings conference call.
Speaker 2: transcript
Speaker 2: Joining me today are heel Routin, Archief Executive Officer, and Megan Faust, Archief Financial Officer.
Joining me today are human Ruetten, our Chief Executive Officer, and Megan Faust, our Chief Financial Officer.
Speaker 2: transcript
Speaker 2: Our earnings press release was filed with the SEC this afternoon and is available on the Investor Relations page of our website, along with the presentation slides that accompany today's call.
Our earnings press release was filed with the FCC. This afternoon and is available on the Investor Relations page of our website along with the presentation slides that accompany today's call.
Speaker 2: transcript
Speaker 2: During this presentation, we will use non- GAAP financial measures, and you can find the reconciliation to the US GAP equivalent on our website.
During this presentation, we will use non-GAAP financial measures and you can find the reconciliation to the U S GAAP equivalent on our website.
Speaker 2: transcript
Speaker 2: We will make forward-looking statements about our expectations for AMCourse Future Performance based on the environment as we currently see it. Of course, actual results could differ.
We will make forward looking statements about our expectations for <unk> future performance based on the environment as we currently see it.
Of course actual results could differ.
Speaker 2: transcript
Speaker 2: Please refer to our press release and SEC filings for information on risk factors, uncertainties, and exceptions that could cause actual results to differ materially from these expectations.
Please refer to our press release and SEC filings for information on risk factors, uncertainties and exceptions that could cause actual results to differ materially from these expectations.
Speaker 2: transcript
Speaker 2: Please note that the financial results discussed today are preliminary, and final data will be included in our form 10Q. And now I'll turn the call over to you.
Please note that the financial results discussed today are preliminary and final data will be included in our Form 10-Q.
And now I'll turn the call over to heal.
Thank you Jennifer.
Speaker 3: transcript
Speaker 3: Good afternoon everyone and thank you for joining the call today.
Good afternoon, everyone and thank you for joining the call today.
Speaker 3: transcript
Speaker 3: M.Core delivered solid results in the third quarter with both revenue and profitability at the high end of guidance.
Called delivered solid results in the third quarter with both revenue and profitability at the high end of guidance.
Speaker 3: transcript
Speaker 3: Revenue of $1.82 billion was up 25% sequentially driven by the growth in advance packaging, supporting the launch of premium tier smartphone.
Revenue of $1.82 billion was up 25% sequentially driven by the growth in advanced packaging supporting the launch of premium tier smartphones.
Speaker 3: transcript
Speaker 3: Year-to-date, revenue of $4.8 billion was down 8% versus prior year, reflecting strong outperformance compared to an estimated semiconductor industry decline of over 15% in that same period.
Year to date revenue of $4 8 billion was down 8% versus prior year.
Selecting strong outperformance compared to an estimated semiconductor industry decline of over 15% in that same period.
Speaker 3: transcript
Speaker 3: Although we observe improvements in certain areas like smartphones and PCs, overall macroeconomic conditions continue to dampen and mark the demand, and inventory levels remain elevated in some markets.
Although we observed improvements in certain areas like smartphones mpc's overall macroeconomic conditions continue to dampen ens market demand and inventory levels remain elevated in some markets.
Speaker 3: transcript
Speaker 3: Looking forward, we remain confident that the secular growth drivers for the industry remain in place, and that MQR is well positioned to outperform the industry with our strategic focus on advanced packaging, ANOA brought geographic footprints. Now let me review the dynamic...
Looking forward, we remain confident that the secular growth drivers for the industry remain in place and that's M cord is well positioned to outperform the industry with our strategic focus on advanced packaging and over a broad geographic footprint.
Now, let me review the dynamics in each of our end markets.
Speaker 3: transcript
Speaker 3: Revenue, within our communication and market, has remained strong throughout this industry cycle, despite overall smart phone units projected to decline for the second year in the row.
Revenue, we now know what the communication end markets remained strong throughout this industry cycle. Despite overall smartphone units are projected to decline for the second you get in at all.
Speaker 3: transcript
Speaker 3: Turquoise revenue said the new records, crossing the 1 billion dollar mark with a sequential growth of 69% and a year-and-year growth of 3%.
Third quarter revenue set a new record.
Crossing the 1 billion dollar mark, but a sequential growth of 16, 9% and a year on year growth of 3%.
Speaker 3: transcript
Speaker 3: M. Coroll is a leading position throughout premium tier smartphones, build on our technology expertise, and our proven track record as a trusted partner for co-developing innovative solutions and delivering operational excellence.
M corner holds a leading position to what premium tier smartphones building all of our technology expertise and a proven track that cost as a trusted partner for co developing innovative solutions and delivering operational excellence.
Speaker 3: transcript
Speaker 3: Our advanced packaging technology supports a wide range of applications and functionality throughout the phone.
Oh, what advanced packaging technology supports a wide range of applications and functionality throughout the phone.
Speaker 3: transcript
Speaker 3: With our advance as IP technology for Heathregene's integration, we enable continuous innovation in phone factor, functionality and performance.
They thought with advanced technologies for Heathrow jeans integration be enable continuous innovation in form factor functionality and performance.
Speaker 3: transcript
Speaker 3: Devices supporting 5G connectivity, RF, camera applications, touch and display controllers, memory and sensors, utilize advanced SAP technology, which drove the communication revenue to new record level.
Devices supporting five G connectivity right.
Graph came out of applications touch and display controllers memory and sensors utilize advanced technologies, which drove the communication revenue to new record levels.
Speaker 3: transcript
Speaker 3: M-Cost-Broad technology portfolio, scale and focus on operational excellence, are key drivers for further growing our footprint in pre-mentier smartphones.
And of course brought the technology portfolio scale and focus on operational excellence are key drivers for further growing our footprint and premium tier smartphones.
Speaker 3: transcript
Speaker 3: Overall revenue from the automotive and industrial end market was flat-suitventually as well as here today.
Overall revenue from the automotive and industrial end market was flat sequentially as well as year to date.
Speaker 3: transcript
Speaker 3: But here today's revenue for advanced packaging in this market is up 15% versus the same period last year.
But year to date revenue for advanced packaging and this market is up 15% versus the same period last year.
Speaker 3: transcript
Speaker 3: Although we have observed some near-term variability in certain applications with ongoing inventory control measures by certain customers, we expect that the trend of increasing semiconductor content per car will continue.
Although we have observed some near term variability in certain applications with ongoing inventory control measures by certain customers. We expect that the trend of increasing semiconductor content per car they'll continue.
Speaker 3: transcript
Speaker 3: Advanced driver assistance systems generate growth in multiple applications.
Advanced driver assistance systems generated growth and multiple applications from came at us and high performance processors to sensors like radar and Lidar.
Speaker 3: transcript
Speaker 3: from cameras and high-performance processors to sensors like radar and LiDAR.
Speaker 3: transcript
Speaker 3: Broden-DV segment is leading innovation in electrification, especially with the introduction of wide band-get materials like silicon carbide and gallium nitripe.
Good old N D V segment, its leading innovation in electrification, especially with the introduction of wide bandgap materials like silicon carbide and gallium nitride.
Speaker 3: transcript
Speaker 3: These materials enable improvements in power efficiency and charging infrastructure.
These materials to enable improvements in power efficiency and charging infrastructure.
Speaker 3: transcript
Speaker 3: As the leading automotive asset, we are strategically expanding our capacity and technology base for automotive solutions, notably in our factories in Europe , Japan and Korea. In support of regional supply chains for critical automotive semiconductors.
As the leading automotive O sets they are strategically expanding our capacity and technology base for automotive solutions, notably in our factories in Europe, Japan, and Korea and supports of regional supply chains for critical automotive semiconductors and.
Speaker 3: transcript
Speaker 3: In these regions we have built a pipeline for future growth by partnering with lead customers for new applications utilizing advanced technology portfolio.
In these regions, we have built a pipeline for future growth by partnering with lead customers for new applications utilizing advanced technology portfolio.
Speaker 3: transcript
Speaker 3: Mixed near-term dynamics impacted our revenue in the computing end market, resulting in a sequential decline of 14%.
Mixed near term dynamics impacted our revenue in the computing end market, resulting in a sequential decline of 14%.
Speaker 3: transcript
Speaker 3: Strong demand for leading edge advanced packaging technology, supporting high performance computing devices for AI, and other data center applications was offset by product lifecycle change offers and access inventory corrections in more mature computing sectors.
Strong demand for leading edge advanced packaging technologies supporting high performance computing devices for AI and all the data center applications was offset by product lifecycle change whole force and excess inventory corrections in more mature computing segments.
Speaker 3: transcript
Speaker 3: MKUR is leading the O-Set supply chain with a deployment of 2.5D technologies, integrating high bandwidth memory and ASIC on interposers, combined with modular touch on subframe.
M code is leaving the old set supply chain with the deployment of two in a heartbeat technologies integrating high bandwidth memory and basic one in proposal.
Combined with module attach on substrates.
Speaker 3: transcript
Speaker 3: to support the strong demand now and in the future. We are optimizing line utilization and expect capacity to double by the end of the year. And with our planned investments coming online by Q2 next year, we will have more than tripled our capacity compared to the second quarter of this year.
To support the strong demand now and in the future without Optum.
Optimizing line utilization and expect the capacity to double by the end of the year.
And we had always planned investments coming online by Q2 next year, we will have more than tripled our capacity compared to the second quarter of this year.
Speaker 3: transcript
Speaker 3: M.Core is well positioned to capitalize on opportunities in the computing markets with our broad advanced packaging portfolio and established relationship with lead customers and founders.
EMCORE is well positioned to capitalize on opportunities in the computing market we have a.
Brought advanced packaging portfolio and established relationship with lead customers in foundries.
Speaker 3: transcript
Speaker 3: Revenue within the consumer and market remains stable sequentially.
Revenue within the consumer and smog remained stable sequentially.
Speaker 3: transcript
Speaker 3: The headwinds impacting the market continue to dampen the mouth.
That's been impacting this market continues to dampen demand.
Speaker 3: transcript
Speaker 3: to reduce consumer spending, access inventory, and product life cycle change overs in the IT wearable markets are still holding back a full recovery.
Reduced consumer spending excess inventory and product lifecycle changeovers in the I T vegetable market are still holding back a full recovery.
Speaker 3: transcript
Speaker 3: Beyond this cycle, we expect the IoT wearable market will diversify and grow. And we are expanding capacity and investing in our advance as IP technology to drive manufacturing scale and innovation.
Beyond the cycle, we expect the Iot wearable market will diversify and grow.
And be on expanding capacity and investing in our advanced technology to drive manufacturing scale and innovation.
Speaker 3: transcript
Speaker 3: We are engaged with multiple customers across a diverse set of products ranging from audio devices, smart watches and the emerging AR VR experience.
We are engaged with multiple customers across a diverse set of products ranging from audio devices smart watches and the emerging a fiat experience.
Speaker 3: transcript
Speaker 3: Within our new Vietnam location, we are qualifying new advanced SAP consumer products that we expect to ramp to high volume in the second half of 2024.
But then our new Vietnam location, we are qualifying new advanced as a piece of consumer products that we expect to ramp to high volume in the second half of 'twenty 'twenty four.
Speaker 3: transcript
Speaker 3: In the third quarter, our manufacturing organization demonstrated operational excellence and supply reliability to support the significant advanced packaging ramp within premium tier smart.
In the third quarter, our manufacturing organization demonstrate that operational excellence and supply reliability to support the significant advance packaging ramp we didnt premium tier smartphones.
Speaker 3: transcript
Speaker 3: The geopolitical dynamics continue to impact the semiconductor supply chain.
Geopolitical dynamics continued to impact the semiconductor supply chain.
Speaker 3: transcript
Speaker 3: With our broad geographic footprints across multiple countries in Asia and in Europe , M. Coruse uniquely positioned to support our customers with reliable and cost-effective an abuttable trace of our radiance!
With our broad geographic footprint across multiple countries in Asia and in Europe, Amcor is uniquely positioned to support our customers with reliable and cost effective manufacturing.
Speaker 3: transcript
Speaker 3: We are actively working with our customers on programs that will support diversifying and de-risking their supply chain.
We are actively working with our customers on programs that will support diversifying and derisking their supply chains.
Speaker 3: transcript
Speaker 3: In the US, we are progressing our discussions to establish an advance packaging and test facility.
In the U S. We.
We are progressing our discussions to establish in advanced packaging and test facility.
Speaker 3: transcript
Speaker 3: We have submitted our pre-application for CHIP's funding and are actively working with customers and partners or long-term commitments to secure a U.S. manufacturing supply.
We have submitted our pre application for chips funding and are actively working with customers and partners are long term commitments to secure a U S manufacturing supply chain.
Speaker 3: transcript
Speaker 3: On October 11th, we held the Grant Opening Ceremony for our Vietnam Manufacturing Site.
On October 11th we held the Grand opening ceremony photo for Vietnam manufacturing sites.
Speaker 3: transcript
Speaker 3: The back-end campus further diversifies and strengthens our broad geographic footprint. And qualifications of new programs is progressing for advanced SIP and memory technology. Vietnam.
The Beckman campus further diversifies and strengthens our broad geographic footprint and qualifications of new programs is progressing for advanced S. I P and memory technology.
He had enormous an attractive location for all of our customers.
Speaker 3: transcript
Speaker 3: We believe that the evolving local semiconductor ecosystem coupled with M-Course Advanced Packaging Scale and Expertise will deliver a cost-effective and reliable manufacturing location. Now let me turn...
We believe that the evolving local semiconductor ecosystem, coupled with M of course advanced packaging scale and expertise.
Cliff in a cost effective and reliable manufacturing location.
Now, let me turn to the fourth quarter outlook.
Speaker 3: transcript
Speaker 3: With the ongoing uncertainties in the markets, we are observing several customers taking a prudent position on infantry to close out the year.
But the ongoing uncertainty in the markets. We are observing several customers, taking a prudent position on inventory to close out the year.
Speaker 3: transcript
Speaker 3: With this backdrop, we are expecting the fourth quarter to be softer and seasonal.
With this backdrop, we are expecting the fourth quarter to be softer than seasonal.
Speaker 3: transcript
Speaker 3: with revenue of $1.675 billion at the midpoint of Kaidan.
Revenue of $1.675 billion at the midpoint of guidance.
Speaker 3: transcript
Speaker 3: Although it has taken longer than anticipated to recover from this industry cycle, we believe that the secular growth drivers for the semiconductor industry remain in place.
Although it is taking longer than anticipated to recover from this industry cycle.
We believe that the secular growth drivers for the semiconductor industry remain in place.
Speaker 3: transcript
Speaker 3: and with our leading technology portfolio, scale and global footprint, M-Core is poised to accelerate as the market recovers.
And with our leading technology portfolio scale and global footprint EMCORE is poised to accelerate as the market recovers.
Speaker 3: transcript
Speaker 3: With that, I will now turn the call over to Megan to provide more detailed financial information. Thank you.
With that I will now turn the call over to Megan to provide more detailed financial information.
Thank you Hugh and good afternoon, everyone.
Speaker 4: transcript
Speaker 4: The third quarter revenue of $1.82 billion was up 25% sequentially.
Third quarter revenue of $1.82 billion was up 25% sequentially.
Speaker 4: transcript
Speaker 4: primarily driven by advanced packaging, supporting the launch of premium tier smartphone.
<unk> driven by advanced packaging supporting the launch of premium tier smartphones.
Speaker 4: transcript
Speaker 4: We achieved notable highlight with communications growing to a quarterly record of over $1 billion.
We achieved notable highlight with communications growing to a quarterly record of over $1 billion.
Speaker 4: transcript
Speaker 4: Given the increase in utilization and leverage in our financial model, our EPS more than doubled sequentially to 54 cents.
Given the increase in utilization and leverage in our financial model, our EPS more than doubled sequentially to 54 cents.
Speaker 4: transcript
Speaker 4: For the first three quarters of this year, Amclaw's revenue is down 8% compared to 2022.
For the first three quarters of this year and of course revenue is down 8% compared to 2022.
Speaker 4: transcript
Speaker 4: Amcourse Market Share Games and Communications, together with its diversified end-market landscape and strategic focus on advanced packaging, is mitigating cyclical variability and providing the resilience needed to perform better than the industry.
And of course market share gains in communications together with its diversified end market landscape.
<unk> strategic focus on advanced packaging is mitigating the clinical variability and providing the resilience needed to perform better than the industry.
Speaker 4: transcript
Speaker 4: Gross margin for the third quarter was 15.5%. And gross profit increased over 50% sequentially to $283 million.
Gross margin for the third quarter was 15, 5%.
And gross profit increased over 50% sequentially to $283 million.
Speaker 4: transcript
Speaker 4: With effective cost discipline, manufacturing costs defined as cost of good sold less materials only increased 3% sequentially, allowing for significant flow through to gross profits.
With effective cost discipline manufacturing costs defined as cost of goods sold less material only increased 3% sequentially, allowing for significant flow through to gross profit.
Speaker 4: transcript
Speaker 4: Optimizing utilization is the key variable to improving profitability.
Optimizing utilization is the key variable to improving profitability.
Speaker 4: transcript
Speaker 4: Operating expenses for the third quarter came in as expected at $116 million.
Operating expenses for the third quarter came in as expected at $116 million.
Speaker 4: transcript
Speaker 4: operating income more than doubled sequentially to $167 million. And operating margin expanded nearly 400 basis points to 9.1%.
Operating income more than doubled sequentially to $167 million and operating margin expanded nearly 400 basis points to nine 1%.
Speaker 4: transcript
Speaker 4: Net income for the third quarter was $133 million, resulting in EPS a 54 cent.
Net income for the third quarter was $133 million, resulting in EPS of <unk> 54 cents.
Speaker 4: transcript
Speaker 4: Third quarter, Ibadah was $333 million. And Ibadah margin was 18.3%.
Third quarter, EBITDA was $333 million and EBITDA margin was 18, 3%.
Speaker 4: transcript
Speaker 4: We ended the quarter with $1.2 billion of cash and short-term investment. And our total liquidity was $1.9 billion.
We ended the quarter with $1 $2 billion of cash and short term investments.
And our total liquidity with $1 $9 billion.
Speaker 4: transcript
Speaker 4: Our total debt as of the end of the third quarter is $1.1 billion. And our debt to Ibadal ratio is 0.9 times.
Our total debt as of the ended the third quarter is $1 $1 billion and our debt to EBITDA ratio is <unk> nine times.
Speaker 4: transcript
Speaker 4: Amcore has exercised cost and CapEx discipline during the cycle. And our strong balance sheet demonstrates financial strength.
Amcor has exercised cost and capex discipline during this cycle.
And our strong balance sheet demonstrates financial strength.
Speaker 4: transcript
Speaker 4: We continue to invest strategically in our global manufacturing footprint during the industry's cycle.
We continue to invest strategically in our global manufacturing footprint during the industry cycle.
Speaker 4: transcript
Speaker 4: and we completed our new Vietnam factory on schedule.
And we completed our new Vietnam factory on schedule.
Speaker 4: transcript
Speaker 4: This state-of-the-art factory will support advanced packaging growth, offer our customers an alternative to diversify their global supply chain, and provide for capacity expansion when we exit the current cycle.
This state of the art factory will support advanced packaging growth.
Offer our customers an alternative to diversify their global supply chain.
And provide for capacity expansion when we exit the current cycle.
Speaker 4: transcript
Speaker 4: Moving on to our fourth quarter outlook. We expect Q4 revenue to be $1.675 billion at the midpoint of guidance.
Moving on to our fourth quarter outlook, we expect Q4 revenue to be 167 $5 billion at the midpoint of guidance.
Speaker 4: transcript
Speaker 4: We observe customers taking a cautious approach in Q4 to control inventory.
We observed customers, taking a cautious approach in Q4 to control inventory.
Speaker 4: transcript
Speaker 4: Although we see improvement in some areas, overall macroeconomic conditions continue to dampen and market demand.
Although we see improvement in some areas overall macroeconomic condition continued to dampen end market demand.
Speaker 4: transcript
Speaker 4: We expect gross margin to be between 14 and 16%.
We expect gross margin to be between 14 and 16%.
Speaker 4: transcript
Speaker 4: We expect operating expenses to increase to around $120 million as we start to onboard our new Vietnam factory.
We expect operating expenses to increase to around $120 million as we start to onboard our new Vietnam factory.
Speaker 4: transcript
Speaker 4: We expect our full year effective tax rate to be around 17%.
We expect our full year effective tax rate to be around 17%.
Speaker 4: transcript
Speaker 4: Force-coordinate income is expected to be between $80 and $120 million, resulting in EPS of 32 to 49 cents.
Fourth quarter net income is expected to be between 80 and $120 million.
Belting and EPS of 32% to 49%.
Speaker 4: transcript
Speaker 4: A full year KEPEX target remains at $750 million.
Our full year Capex target remains at $750 million.
Speaker 4: transcript
Speaker 4: We have chosen to continue to invest strategically through this cycle, to expand our global manufacturing footprint and strengthen our technology leadership position in advanced packaging to build foundations for future growth.
We have chosen to continue to invest strategically through this cycle to expand our global manufacturing footprint.
And strengthened our technology leadership position in advanced packaging to build foundations for future growth.
Speaker 4: transcript
Speaker 4: Amcore recently celebrated its 50th-SIP anniversary and 25th year as a public company by ringing the NASDAQ closing bell.
Amcor recently celebrated its 15th anniversary.
<unk> 25th year as a public company by ringing the NASDAQ closing bell.
Speaker 4: transcript
Speaker 4: We are proud of our rich history and what we have accomplished over the past five decades.
We are proud of our rich history, and what we have accomplished over the past five decades.
Speaker 4: transcript
Speaker 4: Our scale and leadership position in the OSAT market allows us to bring enabling technology to the world's leading semiconductor company.
Our scale and leadership position in the us that market allows us to bring enabling technology to the world leading semiconductor company.
Speaker 4: transcript
Speaker 4: With that, we will now open the call up for your question. Operator.
With that we will now open the call up for your question.
Operator.
Thank you.
And we will now conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker 1: transcript
Speaker 1: If you would like to ask a question, please press star one on your telephone keypad.
Confirmation tone will indicate that your line is in the question queue.
Speaker 1: transcript
Speaker 1: You may press the star key followed by the number 2 if you would like to remove your question from the queue. For participants using speaker equipment, it means...
You May press the Star key followed by the number two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, while we poll for questions.
Okay.
Speaker 1: transcript
Speaker 1: Our first question comes from Tom Difflee with DA Davis.
Our first question comes from Tom definitely with D. A Davidson. Please state your question.
Speaker 5: transcript
Speaker 5: Yes, good afternoon. Thank you for the questions. First, I was curious if you could just compare a year ago, fourth quarter to this upcoming fourth quarter by NMarket, to tell us where the relative, 10 to 50% year of year week.
Yes. Good afternoon. Thank you for the questions.
I was curious if you could just compare.
A year ago fourth quarter to this upcoming fourth quarter by end markets to tell us where the relative you know, 10% to 15% year over year weaknesses.
Operator: Good day ladies and gentlemen, and welcome to the Amkor Technology 3rd quarter 2023 earnings conference call. My name is Diego and I will be your conference facilitator today. At this time, all participants are in a listen only mode.
Speaker 4: transcript
And thanks, Tom for the question and best refer to Megan to to answer that Megan can you take this sure hi, Tom.
Just to give you some color on end market dynamics for what we're seeing in Q4 with respect to communications, while we are showing a sequential decline off of a record Q3.
Operator: After the speakers remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded.
Jennifer Jue: I would now like to turn the call over to Jennifer Jue, Head of Investor Relations. Miss Jue, please go ahead. Thank you operator. Good afternoon. Good afternoon, everyone, and thank you for joining us for Amkor's 3rd quarter 2023 earnings conference call.
Speaker 4: transcript
Speaker 4: That communications amount where anticipating will be pretty much flat to the prior year Q4. So I would say holding very strong. And just to remind our communications is, you know, depending upon the quarter can be 40 to 50% of our business.
Communications amount, we're anticipating will be pretty much flat to the prior year Q4, So I would say are holding very strong.
And just a reminder, communications as you know it depending upon the quarter can be 40% to 50% of our business.
Jennifer Jue: Joining me today, our heel, Rutten, our chief executive officer and Megan Faust, our chief financial officer. Our earnings press release was filed with the SEC this afternoon and is available on the investor relations page of our website along with the presentation slides that accompany today's call. During this presentation, we will use non-gap financial measures and you can find the reconciliation to the US gap equivalent on our website.
Speaker 4: transcript
Speaker 4: As it relates to the other markets, automotive, what we're expecting for Q4, well that is expected to be down year over year. When we also look at the full year, we are still continuing to see an increase in advanced packs.
As it relates to the other markets automotive and what we're expecting for Q4.
Well that is expected to be down year over here. When we also look at the full year and we are still continuing to see an increase in advanced packaging and so I think that's been notable aspect with respect to automotive that despite some of that near term softness in automotive.
Speaker 4: transcript
Speaker 4: So I think that's the notable aspect with respect to automotive that despite some of that near-term softness and automotive we are continuing to...
Jennifer Jue: We will make forward looking statements about our expectations for Amkor's future performance based on the environment as we currently see it. Of course, actual results could differ. Please refer to our press release and SEC filings for information on risk factors, uncertainties, and exceptions that could cause actual results to differ materially from these expectations.
We are continuing to see strength in the advanced.
Speaker 4: transcript
Speaker 4: From a computing perspective, that's had some mixed dynamics with respect to Q4 again down year over year. We are seeing for the full year strong in the data center and infrastructure, where we really saw the most notable year over year within the memory and storage.
From a computing perspective that touch some mixed dynamics.
With respect to Q4 again down year over year, and we are seeing for the full year strong in the datacenter and infrastructure, where we really saw the most notable year over year within the memory and storage component.
Jennifer Jue: Please note that the financial results discussed today are preliminary and final data will be included in our form 10Q.
Speaker 4: transcript
Speaker 4: And then last consumer that had the most significant year over year decline. That's two factors. One that is being impacted, I would say the most, by the macroeconomic conditions, but also timing with respect to product life cycle change over.
And then last consumer that had the most significant year over here.
Giel Rutten: And now I'll turn the call over to heel. Thank you Jennifer.
Decline.
That's two factors one that is being impacted I would say the most by the macro economic conditions, but also timing with respect to product lifecycle changeovers.
Giel Rutten: Good afternoon, everyone, and thank you for joining the call today. Amkor delivered solid results in the 3rd quarter with both revenue and profitability at the high end of guidance. Revenue of $1.82 billion was up 25% sequentially driven by the growth in advance packaging, supporting the launch of premium tier smartphones. Here to date, revenue of $4.8 billion was down 8% versus prior year, reflecting strong outperformance compared to an estimated semiconductor industry decline of over 15% in that same period. Although we observe improvements in certain areas like smartphones and PCs, overall market economic conditions continue to dampen end market demand and inventory levels remain elevated in some markets.
Speaker 5: transcript
Speaker 5: Okay, that's very helpful. So when you look at computing and consumer to the software segments, how close do you think we're getting to a bottom here in terms of customers rationalizing their inventory level?
Okay, that's very helpful.
When you look at computing and consumer to the softer segments. How close do you think we're getting to a bottom here in terms of customers rationalizing their inventory levels.
Speaker 3: transcript
Speaker 3: Here let me try to get that tone. Let's start with computing.
Yeah, let me try to take care of that said, Tom and that starts with some edge computing.
Speaker 3: transcript
Speaker 3: I mean, as Megan already mentioned in the computing segment, we see clearly two dynamics. One is on the data center, high performance computing, specifically products for AI.
I mean as Megan already mentioned in the computing segment, we see clearly two dynamics. One is on the data center high performance computing, specifically products for AI utilizing over two and a half dish technology.
Speaker 3: transcript
Speaker 3: utilizing over 2.5D technologies.
Speaker 3: transcript
Speaker 3: That is showing a significant quote from quote, a quote on the expect that to continue and support our overall computing business.
That is true and showing a significant quarter on quarter growth. When would you expect that to continue and support how about overall computing business.
Giel Rutten: Looking forward, we remain confident that the secular growth drivers for the industry remain in place and that Amkor is well positioned to outperform the industry with our strategic focus on advance packaging. And our broad geographic footprints.
Speaker 3: transcript
Speaker 3: The rest of the computing market we expect that
The rest of the computing market, we expect that are difficult to say, but there should be off at the bottom right now, but we should be she currently slight inventory corrections, but we have had a positive for next year and the overall computing segment.
Speaker 3: transcript
Speaker 3: difficult to say whether we are at the bottom right now, but we see currently slight inventory corrections, but we are very positive for next year in the overall computing segment.
Giel Rutten: Now, let me review the dynamics in each of our end markets. Revenue within our communication and market has remained strong throughout this industry cycle, despite overall smartphone units projected to decline for the second year in a row. Third quarter revenue set the new records, crossing the $1.00 billion mark with a sequential growth of 69% and a year-and-year growth of 3%. Inc, also leading position throughout premium tier smartphones, build on our technology expertise and our proven track record as a trusted partner for co-developing innovative solutions and delivering operational excellence.
Speaker 3: transcript
Speaker 3: For consumers, that depends on a few things here. One is end market demand, very much dependent on recovery, for example, of the China market, macroeconomic elements.
For consumers.
It depends on a few things here one is end market demands.
Very much dependent on recovery for example of the China markets microeconomic elements.
Speaker 3: transcript
Speaker 3: There it's slightly difficult to predict the market is still very uncertain, broadly, but with improving consumer demand, we expect that there will be a recovery. Certainly because we see that inventory in that market is being digested, not completely in balance yet, but definitely improving towards the end of the year. And that creates a good basis for further growth next year.
It's it's slightly difficult to predict the market is still very uncertain and broad lease, but with improving consumer demands and we expect that there will be a recovery shortly because we see that inventory in that market is being digested.
I'm not completely imbalanced, yet, but definitely improving towards the end of the es and that creates a good basis for further growth next year.
Giel Rutten: Our advanced packaging technology supports a wide range of applications and functionality throughout the phone. With our advanced SAP technology for heterogeneous integration, we enable continuous innovation in phone factor, functionality and performance. Devices supporting 5G connectivity, RF, camera applications, touch and display controllers, memory and sensors, utilize advanced SAP technology, which drove the communication revenue to new record levels. Amkor's broad technology portfolio, scale and focus on operational excellence are key drivers for further growing over footprint in premium tier smartphones.
Speaker 5: transcript
Speaker 5: Great. And it sounded like from other comments that, even though there's, you know, Edson flows in each of these markets, you continue to invest a couple of expansion to the high ends of each of these markets. Is that correct?
Great and it sounded like from earlier comments that.
Even though there's ebbs and flows in each of these markets you continue to invest capital expansion to the high end of each of these markets is that correct.
Speaker 3: transcript
Speaker 3: Yeah, that's correct. Tom, I mean, definitely on the computing segment, we see that as a long-term growth market for M-Core, we have a strong position in discriminating, differentiating technologies like 2 1.5Ds. And also, there's a roadmap going forward into, let's say, roadmap technology is there. We have a strong customer portfolio, so we continue to invest in that technology as well as in capacity.
Yeah. That's that's correct. So yeah, I mean definitely on the computing segment, we see that as it as a long term growth market for them of course, we have a strong position in and discriminating differentiating technologies like two one off dish and also there's a road map going forward into <unk>.
Let's say a roadmap technologies that we have a strong customer portfolio. So we continue to invest in depth technology as well as hand capacities.
Speaker 3: transcript
Speaker 3: when it comes to the consumer markets, that's driven, let's say, specifically also by the consumer wearables. And there in over Vietnam factory, we will launch in the course of next year a next generation wearable products. And we expect that creates a good basis for further growth.
Giel Rutten: Overall revenue from the automotive and industrial end market was flat sequentially as well as year to date, but year to date revenue for advanced packaging in this market is up 15% versus the same period last year. Although we have observed from near-term variability in certain applications with ongoing inventory control measures by certain customers, we expect that the trend of increasing semiconductor content per car will continue. Advanced driver assistance systems generate growth in multiple applications, from cameras and high-performance processors to sensors like radar and light off. Road in the EV segment is leading innovation in electrification, especially with the introduction of wide band-get materials like silicon carbide and gallium nitride. These materials enable improvements in power efficiency and charging infrastructure.
It comes to the consumer markets and that's driven.
Yeah, Let's say specifically also by the consumer of animals.
And that in all but if you had known factory issue even launch in the course of next year and next generation.
<unk> products and we expect that creates a good basis for us for further growth.
Speaker 5: transcript
Speaker 5: Okay, and maybe just quickly on that wearables market, is that going to be new business for you, or is that just a evolution from the prior generation to the new generation that you've done?
Okay, and maybe just quickly on that Wearables market is that going to be new business for you or is that just an evolution from the prior generation to the new generation that you've done.
Speaker 3: transcript
Speaker 3: That specific product we're talking about is new, it's a new generation and it's also a new business for us. Business that we didn't have in 23s and that we will have in 24.
That specific product, we're talking about as it is new.
It's a new generation and it's also a new business for us business that we didn't have in 'twenty three and we will have in 'twenty four.
Speaker 5: transcript
Speaker 5: Right. And then it sort of takes me a bit of time, but the capacity expansion in two and a half D, it sounds like that business is currently under a pretty heavy ramp, but it's not till the second quarter of 24 where it gets to, you kind of three Xs of last year's level.
Great and then sorry.
Makes me, what's your time, but the capacity expansion in two and a half D. It sounds like that business is currently under a pretty heavy ramp, but it's not until the second quarter of 24, where it gets to your kind of the three.
Giel Rutten: As the leading automotive OSAT, we are strategically expanding our capacity and technology base for automotive solutions, notably in our factories in Europe, Japan and Korea, in support of regional supply chains for critical automotive semiconductors. In these regions, we have built a pipeline for future growth by partnering with lead customers for new applications utilizing advanced technology portfolio.
<unk> of last year's level.
Speaker 3: transcript
Speaker 3: I mean, that's a continuous ramp in that line. Of course, we have existing capacity there, Tom. And by debottling that capacity and optimization of the utilization of the line, we are able to double capacity and output by the end of this year already.
Yeah, I mean, that's a continuous ramp and that's in that line and of course, we have existing capacity that Tom.
And by Debottlenecking that capacity and optimization of the utilization of the line, we are able to double our capacity and output by the end of this year already and I'm by further investments offer incremental equipment. The share further plan to in total triple.
Speaker 3: transcript
Speaker 3: and I'm by further infestment of incremental equipment.
Speaker 3: transcript
Speaker 3: We further plan to in total triple our capacity towards the second quarter of 24.
Giel Rutten: Mixed near-term dynamics impacted our revenue in the computing end market, resulting in a sequential decline of 14%. Strong demand for leading-edge advanced packaging technology, supporting high-performance computing devices for AI and other data-centred applications was offset by product lifecycle change offers and access inventory corrections in more mature computing segments. Emker is leading the OSAT supply chain with a deployment of 2.5D technologies, integrating high bandwidth memory and ASIC on interposers, combined with modular touch on sub-states.
Our capacity to launch the share in the second quarter of 'twenty four.
Speaker 5: transcript
Speaker 5: Okay, and then when you look at the capex for the year, it sounds like you're maintaining this 750, but did the location of a spin change? Are you spending more on computing and less on other markets?
Okay, and then when you look at the Capex for the year it sounds like Youre, maintaining the 750, but did the.
Location of their spend changed are you spending more on computing and less on other markets.
Speaker 5: transcript
Speaker 5: Not really Tom, you have to keep in mind that in that that CapEx for this year a significant part of that CapEx was allocated for over the Vietnam facilities on the CapEx allocated for equipment and equipment expansion. I think that we see we already allocated and that is as planned. I appreciate your time today. Thank you for the questions.
No not really to them and you have to keep in mind that in that's it that's the capex for this year a significant part of that Capex once I'm, okay to photo over the Vietnam facility.
On the Capex allocated for equipment and equipment expansion I think that'd be sure be schiewe already share allocated.
And so that is S plant.
Giel Rutten: To support the strong demand now and in the future, we are optimizing line utilization and expect capacity to double by the end of the year, and with our planned investments coming online by Q2 next year, we will have more than tripled our capacity compared to the second quarter of this year. Amkor is well positioned to capitalize on opportunities in the computing markets with our broad advanced packaging portfolio and established relationship with lead customers and founders.
Great well I appreciate your time today and thank you for the questions.
Thank you.
Thank you just a reminder to ask a question press star one to remove yourself from the queue Press star two.
Our next question comes from Randy Abrams with UBS. Please state your question.
Speaker 6: transcript
Speaker 6: Thank you. The first question actually is following the point on Tom's questions on the app.
Thank you. Thank you the first question.
Actually a follow up.
On Tom's question on the applications.
Speaker 6: transcript
Speaker 6: I may have missed it, but could you discuss for auto industrial and mainstream, just the outlook for those applications to continue the correction or start to share signs of life on more of the mainstream and mature auto and industrial products? Yes.
That's great.
Could you discuss for auto industrial and mainstream just the outlook for those applications to continue the correction or or start to show signs of life.
Giel Rutten: Revenue within the consumer and market remains stable sequentially. The headwinds impacting this market continue to dampen demands, to reduce consumer spending, access inventory and product life cycle changeovers in the IT wearable markets are still holding back a full recovery. Beyond this cycle, we expect the IT wearable market will diversify and grow and we are expanding capacity and investing in our advanced SAP technology to drive manufacturing scale and innovation. We are engaged with multiple customers across a diverse set of products ranging from audio devices, smart watches and the emerging AR VR experience. Within our new Vietnam location, we are qualifying new advanced SAP consumer products that we expect to ramp to high volume in the second half of 2024.
The mainstreaming and mature auto and industrial products.
Yeah. Good question there Andy.
Speaker 3: transcript
Speaker 3: Now let me try to give some color and then make and later on give a little bit more detail here.
So let me try to give some color and then Megan later on give a give a little bit more detail. He is in the automotive we were clearly monitoring our position in advanced products in automotive because the emerging applications like Adas infotainment and car networking are all supported by ads.
Speaker 3: transcript
Speaker 3: In the automotive, we clearly monitoring our position in advanced products in automotive.
Speaker 3: transcript
Speaker 3: because the emerging applications like ADES, infotainment, income networking are all supported by advanced silicon and combination with advanced packaging. So there we see continued growth. I mean, year to date growth in automotive advanced packaging was around 15% year and year. So that's a good signal that will continue to grow on the more mature part of the automotive market.
Silicon in combination with advanced packaging. So that we see continued growth I mean year to date growth in automotive advanced packaging was around 15% year on year. So that's a good signal and that will continue to grow on the more mature part of the automotive markets.
Speaker 3: transcript
Speaker 3: We clearly see that customers are very prudent on keeping inventory or maintaining inventory at an elevated level. Certainly going into the end part of this year and we saw some corrections in specific areas.
We clearly see that customers are fairly prudent.
Keeping inventories or maintaining inventory at an elevated level of assurance. Indeed go into <unk> and it's part of this year and we saw some corrections in specific areas in and out a few its not that the inventory is extremely elevated but it was more prudent correction.
Giel Rutten: In the third quarter, our manufacturing organization demonstrated operational excellence and supply reliability to support the significant advanced packaging ramp within premium tier smartphones.
Speaker 3: transcript
Speaker 3: In our view, it's not that the inventory is extremely elevated, but it was more approved and correction towards the end of the year. And we believe that going into next year, I think the overall supply chain for automotive is pretty much in balance.
Giel Rutten: Geopolitical dynamics continue to impact the semiconductor supply chain. With our broad geographic footprints across multiple countries in Asia and in Europe, MQ is uniquely positioned to support our customers with reliable and cost-effective manufacturing. We are actively working with our customers on programs that will support diversifying and de-risking their supply chains.
At the end of the U S and we believe that's going into next year I think the overall supply chain for automotive is pretty much in balance.
Okay.
Speaker 6: transcript
Speaker 6: on the margins, Kirin, some, the incremental fourth quarter, actually the sales are pulling back, it looks like the margins holding up a bit again. Is there a mix change just to relative to other part of business where I think some of the efficiency measures on the non-material costs that held in third quarter, just if anything, relatively supporting the margin to hold up in fourth quarter?
How did the margins I'm curious if I may the incremental fourth quarter actually the sales are pulling back it looks like the margins holding up a bit again.
Is there a mix change just yet relative to other parts of business or I think some of the efficiency measures on a non material costs.
Giel Rutten: In the US, we are progressing our discussions to establish an advanced packaging and test facility. We have submitted our pre-application for CHIP's funding and are actively working with customers and partners on long-term commitments to secure a US manufacturing supply chain.
The third quarter, just if anything down.
We are supporting the margin to hold up in the fourth quarter.
Okay. Thanks, Randy Megan.
Speaker 4: transcript
Speaker 4: Yeah, hi, Randy. Yes, so Q4, despite some decline, the margin is holding up nicely within our, you know, I would say our financial model, even a bit better than that. There is some product mix in there, but I wouldn't say that that's dramatic. There's also a bit of currency benefit in there, but overall there's really good, I would say cost management, where we're holding manufacturing cost down as that revenue decline.
Giel Rutten: On October 11, we held the grant opening ceremony for our Vietnam manufacturing sites. The back-end campus further diversifies and strengthens our broad geographic footprint and qualifications of new programs is progressing for advanced SAP and memory technology. Vietnam is an attractive location for our customers. We believe that the evolving local semiconductor ecosystem coupled with MQ's advanced packaging scale and expertise will deliver a cost-effective and reliable manufacturing location.
Can take that yeah, hi, Randy yes, so Q4, despite some decline in the margin is holding up nicely within our you know I would say our financial model, even a bit better than that and there is some product mix in there, but I wouldn't say that that's a dramatic and there's also a bit of currency benefit.
And there, but overall theres really good I would say cost management, where we're holding manufacturing cost down as that revenue decline.
Speaker 6: transcript
Speaker 6: And then follow up on CAPEX, curious to how it ends the year for your overall CAPEX and the initial take for next year with the advanced capacity expansion. It will be much less.
Okay.
The follow up on Capex.
And for your overall Capex and then the initial initial take for next year with the advanced capacity expansions.
Giel Rutten: Now, let me turn to the fourth quarter outlook. With the ongoing uncertainties in the markets, we are observing several customers taking a prudent position on inventory to close out the year.
The much left.
Speaker 6: transcript
Speaker 6: or for other investment areas in SIP, how you see the capex for next year as well.
Or for other investment areas and said how do you see the Capex for next year as well.
Giel Rutten: With this backdrop, we are expecting the fourth quarter to be softer than seasonal. With revenue of $1.675 billion at the midpoint of Kaidan.
Speaker 4: transcript
Speaker 4: Okay, Megan. Yeah, hi, Randy. So from a CapEx perspective, you know, now that we have our two four guides, you can see we really maintained that low teams capital intensity approach. As a reminder, and he'll mention the significant portion of 23 was dedicated to construction. So we did pull back significance.
Okay, Megan Yeah, Hi, Randy so from a Capex perspective, you know now that that we have our Q4 guide you can see we really maintained that low teens capital intensity approach and as a reminder, aneel mentioned a significant portion of 'twenty three.
Giel Rutten: All the way to this taken longer than anticipated to recover from this industry cycle, we believe that the secular growth drivers for the semiconductor industry remain in place, and with our leading technology portfolio, scale and global footprint, Amkor is poised to accelerate as the market recovers.
<unk> dedicated to construction. So we did pull back significantly on the equipment and capability as far as 24. It goes it's too early for us to give a guide on 'twenty four capex and we would as we have now continuing to focus on the advanced packaging elements of our investment.
Speaker 4: transcript
Speaker 4: on the equipment and capability. As far as 24 goes, it's too early for us to give a guide on 24 KEPEX. We would, as we have now, continue to focus on the advanced packaging elements of our investment. And I would say just as a guideline, we would anticipate that we wouldn't go outside of our rule of thumb of low-chains capital.
Megan Faust: With that, I will now turn the call over to Megan to provide more detailed financial information. Thank you, Hill, and good afternoon everyone. Third quarter revenue of $1.82 billion was up 25% sequentially, primarily driven by advanced packaging, supporting the launch of premium tier smartphones. We achieved notable highlight with communications growing to a quarterly record of over $1 billion. Given the increase in utilization and leverage in our financial model, our EPS more than doubled sequentially to $0.54.
And I would say just as a guideline we would anticipate you know that we wouldn't go outside of our rule of thumb of low teens capital intensity.
Speaker 6: transcript
Speaker 6: I actually want to follow up on the high performance compute these.
Great.
Just wanted to follow up on the high performance compute the.
Speaker 6: transcript
Speaker 6: ramp up to double and then triple or more than triple by middle of next year. Two questions. One, the profitability and returns on this advanced business.
Ramp up to doubling and tripling triple or more than triple.
Next here.
Two questions one the profitability and returns on this.
Speaker 6: transcript
Speaker 6: and then the assurance on that capacity, where you have the foundry also, doubling capacity, how you see a assurance or just the momentum, once you triple it a few times.
Defense and certainty.
Assurance on that capacity, where you have the foundry also I'm doubling capacity.
Megan Faust: For the first three quarters of this year, Amkor's revenue is down 8% compared to 2022. Amkor's market share gains and communications, together with its diversified end-market landscape and strategic focused on advanced packaging, is mitigating cyclical variability and providing the resilience needed to perform better than the industry. Gross margin for the third quarter was 15.5% and gross profit increased over 50% sequentially to $283 million. With effective cost discipline, manufacturing costs defined as cost of good sold less materials only increased 3% sequentially, allowing for significant flow through to gross profit.
How do you see a shortage or just the momentum once you Triple P C.
Speaker 6: transcript
Speaker 6: and activity for customers, broadening out to continue to grow that.
Trends in activity for customers broadening out to continue to grow that business.
Mhm.
Speaker 3: transcript
Speaker 3: I think we feel fairly comfortable that we can utilize the capacity that we bring in place.
Yeah, Randy I think we feel fairly comfortable and comfortable that that's we can utilize the capacity that we bring in place.
Speaker 3: transcript
Speaker 3: I mean, there we work with customers as well as with, for example, parties in the supply chain that provide elements like interposers to make sure that we have demand and supply lined up.
I mean that we should be worked with customers as well as switch for example.
<unk> into supply chain, that's a that provides elements like in proposals to make sure that we shall have a demand and supply lines lined up.
Speaker 3: transcript
Speaker 3: I mean, there is also a broadening of our customer base in that technology. So we're fairly confident that in 2024 we can fill that.
I mean that is also a broadening of our customer base and that's and that technology should be fairly confident so that's into 'twenty 'twenty four as we can.
We can fill that capacity.
Megan Faust: Optimizing utilization is the key variable to improving profitability. Operating expenses for the third quarter came in as expected at $116 million. Operating income more than doubled sequentially to $167 million, an operating margin expanded nearly 400 basis points to 9.1%. Net income for the third quarter was $133 million, resulting in EPS of 54 cents. Third quarter EBITDA was $333 million, and EBITDA margin was 18.3%. We ended the quarter with $1.2 billion of cash and short-term investment, and our total liquidity was $1.9 billion.
Speaker 6: transcript
Speaker 6: the returns like normally for advanced against the capital intensity higher. But how do you do that?
And good returns like normally for advanced I guess the capital intensity.
But how do you see like return on investment and profitability, that's still ramping and takes time to get scale and Martin.
Speaker 6: transcript
Speaker 6: profitability that's still ramping and takes time to get scale and mark a crease.
Accretive erratic.
Yes.
Speaker 3: transcript
Speaker 3: I mean, we already have a capacity in place since 2017. So we're now in the third generation of products where we provide an end-to-end solutions. So that means both population of the end-to-pose as well as the unsopphated part.
I mean V already and have a capacity in place since our 2017, so but now in the tour generation of products.
It provides an end to end solutions, what it means both population of the Anthropologie that smell S. M D on substrates pots.
Speaker 3: transcript
Speaker 3: if we invest in that technology.
And if we invest in that technology.
Speaker 3: transcript
Speaker 3: The majority of that equipment is fungible with a standard bumping line. So the utilization can be warranted.
The majority of that equipment is fungible that extend the bumping line. So the utilization can be shoot can be brought on to it and even if there are swings on a two and a half decides and we believe that should change the fungibility of the equipment, we can do.
Speaker 3: transcript
Speaker 3: And even if there are swings on the two and a half these sides, we believe that since the fungibility of the equipment, we can utilize that with a very solid return on investment in the individual equipment. So it is brought to be fungible and you could label it as investment in in the in the way full-level capacities in the broader sense of the work.
Megan Faust: Our total debt, as of the end of the third quarter, is $1.1 billion, and our debt to EBITDA ratio is 0.9 times. Amcore has exercised cost and CapEx discipline during this cycle, and our strong balance sheet demonstrates financial strength. We continued to invest strategically in our global manufacturing footprint during the industry cycle, and we completed our new Vietnam factory on schedule. This state-of-the-art factory will support advanced packaging growth, offer our customers an alternative to diversify their global supply chain, and provide for capacity expansion when we exit the current cycle.
<unk> had a very solid return on an investment Indian visuals.
So it has brought be fungible and you could label it as an investment in and wafer level capacities in a broader sense of it.
Speaker 6: transcript
Speaker 6: And final question on it. The inter-poser, Talbin Silk, and the industry is looking at trying to find a bit less expense over different options. Do you see much interest in activity for redistribution inter-poser? And would that be a value shift or opportunity? And are you investing toward?
Okay.
Final question on it.
Okay.
It's all been silicon industry is looking at trying to find a less expensive or different options do you see much interest in activity for redistribution in or would that be a value shaft or opportunity.
And are you investing toward toward that if you're seeing that trend.
Megan Faust: Moving on to our fourth quarter outlook, we expect Q4 revenue to be $1.675 billion at the midpoint of guidance. We observe customers taking a cautious approach in Q4 to control inventory. Although we see improvement in some areas, overall macroeconomic conditions continue to dampen and market demand. We expect growth margins to be between 14 and 16%. We expect operating expenses to increase to around $120 million as we start to onboard our new Vietnam factory.
Speaker 3: transcript
Speaker 3: Yes, we're seeing that that rent from an interposer or silicon interposer base into an RDL level interposer and we're working with several customers on initial, I would say, pilot production for that technology.
Yes, we're seeing that that trends from an input poles that are silicon interpose on base and two were in and out of the L level in proposals.
And to go to work and get that's with.
Having all customers on initial I would say.
Pilots production for that technology.
Speaker 3: transcript
Speaker 3: In general, the industry is conservative.
I mean in general the ship.
The industry is conservative, let's say the maturing of the Interpose base technologies certainly the yield levels is extremely important because the combination of high bandwidth memories and expensive silicon requires very high yield levels and that takes a steep learning curve.
Speaker 3: transcript
Speaker 3: Let's say the maturing of the interpose of base technology, certainly the yield levels is extremely important because the combination of high bandwidth memories and expensive silicon requires very high yield levels and that takes a steep learning curve.
Megan Faust: We expect our full-year effective tax rate to be around 17%. Fourth quarter net income is expected to be between $80 and $120 million, resulting in EPS of 32 to 49 cents. Our full-year TEPEX target remains at $750 million. We have chosen to continue to invest strategically through this cycle to expand our global manufacturing footprint and strengthen our technology leadership position in advanced packaging to build foundations for future growth.
Speaker 3: transcript
Speaker 3: But on the other hand, the RDL-based technology is emerging and we're preparing that. And by the way, the installed capacity that we have in place is to some extent or to a very large extent fungible with between RDL and interposive-based technology. Great. Thank you, on that end.
But on the other hand I'd be out of the algae based technology is emerging and we have been preparing deaths and by debate the installed capacity that we havent place is to some extent up to a very large extent fungible.
Between IPL and <unk> and propose a base to technology.
Great. Thanks, a lot.
Thank you.
Our next question comes from Steve Barger with Keybanc capital markets. Please state your question.
Speaker 7: transcript
Speaker 7: Hey, thanks. I'm not as familiar with M. Corso. I appreciate you letting me ask you a question. And I'm not looking for near-term guidance, like meeting this quarter of 2024. But can you talk about how you see longer-term growth rates for advanced packaging individually across your smartphone exposure, your automotive business, and then maybe AI?
Hey, thanks.
Megan Faust: Amcore recently celebrated its 56th anniversary and 25th year as a public company by ringing the NASDAQ closing bell. We are proud of our rich history and what we have accomplished over the past five decades. Our scale and leadership position in the OSAT market allows us to bring enabling technology to the world's leading semiconductor company.
Not as familiar with <unk>. So I appreciate you letting me ask a question and I'm not looking for near term guidance like meaning this quarter of 2024, but can you talk about how you see longer term growth rates for advanced packaging individually across your smartphone exposure your automotive business and then maybe AI.
Speaker 3: transcript
Speaker 3: Yeah, let me try to give you a bit of color there, Steve. I mean, we believe that the markets that we're serving and catering for specifically for advanced packaging will grow at an above average rate if we compare that to regular semiconductor growth rates expected a couple of key drivers there.
Yeah, Let me, let me try to give you a bit color. This is Steve I mean, we believe that the markets that we're serving in catering for specifically for advanced packaging will grow at an above average rates if we compare.
Operator: With that, we will now open the call-up for your question. Operator. Thank you.
Operator: And we will now conduct our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press the star key followed by the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions.
That's two regular semiconductor.
Growth rates are expected.
A key driver to staff them.
Speaker 3: transcript
Speaker 3: Now for M course specifically, I think if we take our core
For <unk>, specifically I think if we take all of our cohorts.
Speaker 3: transcript
Speaker 3: strategic pillars, this diversification of our supply chain where we support cost.
Strategic pillars. It is diversification of our supply chain, where we support customers and in semi.
Speaker 3: transcript
Speaker 3: in with the chemical doctor supply chains in jurisdictions where they like to be.
Semiconductor supply change in jurisdictions, where they like to beach like for example in Europe are supporting the European automotive industry or in Japan or know for example in Vietnam that we offer customers an alternative supply chain fees are fees that China.
Tom Diffley: Our first question comes from Tom Difflee with DA Davidson, please state your question. Yes, good afternoon. Thank you for the questions.
Speaker 3: transcript
Speaker 3: Like for example in Europe supporting the European automotive industry, or in Japan, or now for example on Vietnam where we offer customers an alternative supply chain, vis-a-vis their China manufacturing.
Megan Faust: First, I'm curious if you could just compare a year ago fourth quarter to this upcoming fourth quarter by NMarket to tell us where the relative 10-15% of your weaknesses. Thanks Tom for the question. I'm best referred to Megan to answer that. Megan, can you take this? Sure, hi Tom. So just to give you some color on NMarket Dynamics for what we're seeing in Q4. With respect to communications, while we are showing us sequential decline off of a record Q3, that communications amount we're anticipating will be pretty much flat to the prior year Q4, so I would say holding very strong.
Manufacturing.
Speaker 3: transcript
Speaker 3: and that will continue we believe that mcore is
That's a little continue we believe that the EMCORE is.
Speaker 3: transcript
Speaker 3: better position than the industry there and that will drive incremental growth.
Our position in the industry, there and that's what will drive incremental growth.
Speaker 3: transcript
Speaker 3: There's also growth in advanced packaging because the growth drivers in the industry be it 5 or 6G, automotive, IOT or eye performance computing, all that growth will be supported by advanced packaging.
There is also growth in advanced packaging, because you know the growth drivers in the industry be it five or six sheesh automotive.
Iot sure I performance computing, all that that growth will be supported by advanced packaging.
Speaker 3: transcript
Speaker 3: And there we are positioned as a leader. We are engaged with the leaders in that industry and we believe that will drive growth growing forward.
And Dan you off positioned as a leader we are engaged for the leaders in that industry and we believe that will drive growth going forward.
Megan Faust: And just to remind our communications, depending upon the quarter, can be 40-50% of our business, as it relates to the other markets, automotive, what we're expecting for Q4, while that is expected to be down year-over-year. When we also look at the full year, we are still continuing to see an increase in advanced packaging. So I think that's the notable aspect with respect to automotive that despite some of that near-term softness and automotive, we are continuing to see strength in the advanced.
Speaker 3: transcript
Speaker 3: And an additional element there is that the relative outsource potential of the industry volumes is increasing. So where companies in the past, for example, an automotive tool, a large extent, were vertically integrated, we see that for advanced packaging, more and more outsourcing takes place, both on the silicon side as well as on the packaging side.
And then an additional element to that is that the relative outsource potential.
Off the ship the industry volumes is increasing so that companies in the past for example in automotive to large extent my phone, particularly integrated we see that for the advanced packaging more and more outsourcing takes place both on the silicon side as well as one of the packaging side.
Speaker 3: transcript
Speaker 3: So increased outsourcing, solid geopolitical footprints, and that combined with engaged in the lead segments of the market will drive growth for M.
So increased outsourcing.
Solid geopolitical footprints and that's combined with our engaged in niche in the segments of the market, we will drive growth for their for Amcor.
Megan Faust: From a computing perspective, that's had some mixed dynamics with respect to Q4 again, down year-over-year. We are seeing for the full year strong in the data center and infrastructure where we really saw the most notable year-over-year within the memory and storage component. And then last consumer that had the most significant year-over-year decline, that's two factors. One, that is being impacted, I would say the most, by the macroeconomic conditions, but also timing with respect to product life cycle changeovers.
Speaker 7: transcript
Speaker 7: I appreciate that detail and just to follow up, I think people would expect very high growth rates for advanced packaging around AI for obvious reasons. But we're packaging content gains in smartphone and auto, result in growth rates that can match that, or how would you rank those kind of relative to the shop?
I appreciate that detail and and just to follow up I think people were expecting very high growth rates for advanced packaging around AI for obvious reasons, but we'll packaging content gains in smartphone and auto result in growth rates that can match that or how would you rank those.
Relative to each other.
Speaker 3: transcript
Speaker 3: Well, specifically in the high end part of smartphone and the premium PS smartphone, we still continue to see significant innovation.
Well, specifically in the share and Steve and the high end part of smartphone in the premium tier smartphone, we still continue to see significant innovation.
Giel Rutten: Okay, that's very helpful. So when you look at computing and consumer to the softer segments, how close do you think we're getting to a bottom here in terms of customers rationalizing their inventory levels? Yeah, let me try to take care that Tom, let's start with computing. I mean, as Megan already mentioned in the computing segment, we see clearly two dynamics. One is on the data center, high-performance computing, specifically products for AI, utilizing over two and a half of these technologies, that is showing a significant quote from quote, a growth, and we expect that to continue and support our overall computing business.
Speaker 3: transcript
Speaker 3: I mean, you refer to AI adoptions specifically in the data centers, but on the edge and then referring to smartphones, we also expect that in edge devices, like smartphones, there is an incremental innovation to adopt AI functionality.
Yeah, I mean, you referred to AI adoption, specifically in the data centers both on the etch and then referring to smartphones. We also expect that in etch devices like smartphones that is an incremental innovation to adopt AI functionality.
Speaker 3: transcript
Speaker 3: That will drive a new generation and a next generation of
That's still drive a new generation in the next generation of for example application processors.
Speaker 3: transcript
Speaker 3: For example, application processors, and that, and again, will drive advanced packaging. So there is a kick-on effect also to edge devices like smartphone.
Processors and that and again, we'll do life advanced packaging. So that is a theres a kick on effect also to edge devices like smartphones.
Speaker 7: transcript
Speaker 7: And same questions for auto. Do you expect that the content gains there will drive, significantly above average growth relative to the semi cycle itself?
And same question for auto do you expect the content gains there will drive.
Significantly above average growth relative to the semi cycle itself.
Giel Rutten: The rest of the computing markets, we expect that difficult to say whether we are at the bottom right now, but we see currently slight inventory corrections, but we are very positive for next year in the overall computing segment. For consumers, that depends on a few things here. One is end market demand, very much dependent on recovery, for example, of the China market, macroeconomic elements. There, it's slightly difficult to predict the market is still very uncertain, broadly, but with improving consumer demand, we expect that there will be a recovery. Certainly, because we see that inventory in that market is being digested, not completely in balance yet, but definitely improving towards the end of the year, and that creates a good basis for further growth next year.
Speaker 3: transcript
Speaker 3: Yes, I mean we believe that automotive actually from our analysis and that's also referring to industry data is that the automotive semiconductor market is the fastest growing market going forward in the next couple of years.
Yes, I mean, we we believe that automotive actually from our analysis and that's also referring to industry data is that the automotive semiconductor market is the fastest growing market going forward in the next couple of years.
Speaker 3: transcript
Speaker 3: We're all positioned there and if you take applications like ADAS
We are well positioned there and you know if you take applications like like a das.
Speaker 3: transcript
Speaker 3: in car networking, connectivity that drives roads and not only on the processing side but also on the sensor side for example.
In car networking connectivity that's drives grout.
And not only on the processing side, but also on the sensor side for example, and that's a that helps and the automotive market moving forward and on top of that we see a proliferation of these features for them. That's a high end part of the automotive market into the more mainstream mid sank meant that low segment.
Speaker 3: transcript
Speaker 3: and that helps the automotive market moving forward.
Speaker 3: transcript
Speaker 3: And on top of that we see a proliferation of these features from
Speaker 3: transcript
Speaker 3: that's a high end part of the automotive market into the more mainstream mid-sankment and low segment of the market. Because multiple of these features are becoming mandatory to be deployed in the car.
If the market because multiple of these features are becoming mandatory to be deployed into Asia and the car industry.
Speaker 7: transcript
Speaker 7: That's great. And just one last one for me. When you talk about an AI enabled smartphone or an edge smartphone, what's the timing of something like that? Is that 2024, 2526?
That's great and just just one last one for me when you talk about then.
Giel Rutten: Great, and it sounds like from other comments that, you know, even though there's, you know, ebbs and flows in each of these markets, you continue to invest capital expansion to the high ends of each of these markets, is that correct? Yeah, that's correct, Tom. I mean, definitely on the computing segment, we see that as a long-term growth market for M-Corp, we have a strong position in discriminating, differentiating technologies like 2.5Ds, and also there's a roadmap going forward into, let's say, a roadmap technology is there, we have a strong customer portfolio, so we continue to invest in that technology, as well as in capacity, when it comes to the consumer markets, that's driven, let's say, specifically also by the consumer wearables, and there, in our Vietnam factory, we will launch in the course of next year, next generation wearable products, and we expect that to create a good basis for further growth.
And AI enabled smartphone or an edge smartphone what what Ty what's the timing of something like that is that 'twenty 'twenty four 'twenty five 'twenty six.
Well.
Giel Rutten: Rout. Okay, and maybe just quickly on that wearables market, is that going to be new business for you, or is that just the evolution from the prior generation to the new generation that you've done? That's specific product we're talking about is new, it's a new generation and it's also a new business for us business that we didn't have in 23 and that we will have in 24. Right. And then it sort of takes me, it's your time, but the capacity expansion into the FD, it sounds like that business is currently under a pretty heavy ramp, but it's not till the second quarter of 24 where it gets to you kind of the 3x of last year's level.
Speaker 3: transcript
Speaker 3: You know, if you, if I can only refer to the recent announcement of the biggest, let's say, smartphone chip company in the US. And you will see that the next generation of that high-end processes already has, let's say, an AI core included in that device. So we expect that to be 24, 25 range, this functionality to enter into the smartphones. So, let's say, the next generation of that high-end processes already has, let's say, a smartphone chip company in the US.
If if if if I can only refer to the recent announcement of the biggest let's face it.
Smartphone chip company in the U S and you'll see that the next generation of that high end processors already has a let's say an AI cough are included in that device. So we expect that to be 'twenty four 'twenty five French.
This functionality to entered into smartphones.
That's great. Thanks, very much for the time.
Speaker 1: transcript
Speaker 1: Okay, thanks, Steve. Thank you. And at this time, I'm showing no further questions.
Okay. Thanks, Steve.
Yeah.
Thank you and at this time I'm showing no further questions.
I'd like to turn the call back over to Neil for closing remarks.
[noise], let me recap the key messages we.
Speaker 3: transcript
Speaker 3: We delivered solid third-quart results at the high end of guidance with revenue growing 25% sequentially to $1.82 billion and EPS more than doubling to 54 cents.
We delivered solid third quarter results at the high end of guidance with revenue growing 25% sequentially to $182 billion and EPS more than doubling to 54 cents.
Speaker 3: transcript
Speaker 3: We are expecting Fort Quarter Revenue of $1.675 billion at the midpoint of guidance.
We are expecting fourth quarter revenue of $1 $675 billion at the midpoint of guidance.
Speaker 3: transcript
Speaker 3: Through this cycle, M.Core continued to invest in a diversified large-scale manufacturing base to support a secure and reliable global semiconductor supply chain.
Through this cycle EMCORE continue to invest in a diversified large scale manufacturing base to support secure and reliable global semiconductor supply chain.
Speaker 3: transcript
Speaker 3: In August , M. Cor had the opportunity to ring the NASDAQ closing bell in celebration of the company's legacy and success. We celebrate the two-
In August Amcor had the opportunity to ring the NASDAQ closing bell in celebration of the company's legacy of success there.
Giel Rutten: Yeah, I mean, that's a continuous ramp in that in that line. Of course, we have existing capacity there, Tom, and by debottling that capacity and optimization of the utilization of the line, we are able to double capacity and output by the end of this year already, and I'm by further investments of incremental equipment. We further plan to in total triple our capacity towards the second quarter of 24.
We celebrated two significant milestones or.
Speaker 3: transcript
Speaker 3: our 55th anniversary and our 25th anniversary has a publicly-traded company.
Over 55th anniversary and over 25th anniversary as a publicly traded company.
Speaker 3: transcript
Speaker 3: With our leadership in advance packaging, our broad geographic footprint, and diversified exposure to industry mega trends, we are poised to all perform the semiconductor market and accelerate out of this cycle. Thank you for joining the call today.
But our leadership in advanced packaging over a broad geographic footprint and diversified exposure to industry Mega trends, we are poised to outperform the semiconductor market and accelerate out of this cycle.
Thank you for joining the call today.
Thank you.
We conclude today's conference all parties May now disconnect have a good day. Thank you.
Megan Faust: Okay, and then when you look at the capex for the year, it sounds like you're maintaining this 750, but did the location of a spend change? Are you spending more on computing and less on other markets? Not really, Tom. You have to keep in mind that in that capex for this year, a significant part of that capex was allocated for over the Vietnam facilities on the capex allocated for equipment and equipment expansion. I think that we already allocated and that is as planned.
Tom Diffley: Well, I appreciate your time today. Thank you for the questions. Thank you.
Operator: Thank you, just a reminder to ask a question. Press star one to remove yourself from the queue. Press star two.
Randy Abrams: Our next question comes from Randy Abrams with UBS.
Giel Rutten: Please state your question. Yes, thank you. The first question actually found on Tom's questions on the applications. Could you discuss for auto industrial and mainstream, just the outlook for those applications to continue the correction or start to share signs of life on more of the mainstream and mature auto and industrial products? Good question, Randy. Now, let me try to give some color and then Megan later on give a little bit more detail here.
Giel Rutten: In the automotive, we're clearly monitoring our position in advanced products in automotive because the emerging applications like ADES, infotainment, income networking are all supported by advanced silicon and combination with advanced packaging. So there we see continued growth, I mean year-to-date growth in automotive advanced packaging was around 15% year-and-year. So that's a good signal that will continue to grow on the more mature part of the automotive markets. But we clearly see that customers are very prudent on keeping inventory or maintaining inventory at an elevated level.
Giel Rutten: Certainly going into the end part of this year and we saw some corrections in specific areas. In our view, it's not that the inventory is extremely elevated but it was more prudent correction towards the end of the year and we believe that going into next year I think the overall supply chain for automotive is pretty much in balance.
Megan Faust: Good. On the margins, Karen Sun, the incremental fourth quarter, actually the sales are pulling back. It looks like the margins holding up a bit again. Is there a mix change? Just sit relative to other part of business, where I think some of the efficiency measures on the non-material costs that held in third quarter, just if anything, relatively supporting the margin to hold up in fourth quarter. Okay, thanks, Randy. Megan, can take this.
Megan Faust: Yeah, hi, Randy. Yes, so Q4, despite some decline, the margin is holding up nicely within our, you know, I would say our financial model even a bit better than that. There is some product mix in there, but I wouldn't say that that's dramatic. There's also a bit of currency benefit in there, but overall, there's really good, I would say, cost management, where we're holding manufacturing costs down as that revenue decline.
Megan Faust: Does follow up on CAPEX, curious to how it ends the year for your overall CAPEX and then the initial take for next year with the advanced capacity expansion? It will be much risk, or for other investment areas in CIP. How do you see the CAPEX for next year as well? Okay, Megan. Hi, Randy. So, from a CAPEX perspective, you know, now that we have our Q4 guide, you can see we've really maintained that low-teams capital intensity approach.
Megan Faust: As a reminder, Enhiel mentioned, a significant portion of 23 was dedicated to construction, so we did pull back significantly on the equipment and capability. As far as 24 goes, it's too early for us to give a guide on 24 CAPEX. We would, as we have now, continue to focus on the advanced packaging elements of our investment. And I would say just as a guideline, we would anticipate, you know, that we wouldn't go outside of our rule of thumb of low-teams capital intensity.
Giel Rutten: I actually want to pull up on the high performance compute the ramp up to double and then triple or more than triple by middle of next year. Two questions. One, the profitability and returns on this advanced business. And then the assurance on that capacity, where you have the foundry also on doubling capacity, how you see assurance or just the momentum, once you triple it, if you see trends in activity for customers, broadening out to continue to grow that business.
Giel Rutten: Yeah, Randy, I think we feel fairly comfortable that we can utilize the capacity that we bring in place. I mean, there we work with customers as well as with, for example, parties in the supply chain that provide elements like interposers to make sure that we have demand and supply lined up. I mean, there is also a broadening of our customer base in that in that technology, so we're fairly confident that in 2024, we can we can fill that capacity.
Giel Rutten: In the returns, like, more or more for advanced, I guess, the capital intensity, but how do you see, like, return on investment and profitability? It's still ramping and takes time to get scale and mark a creative as he ramps the capital. Yes. I mean, we already have a capacity in place since 2017, so we're now in the third generation of products where we provide an end-to-end solutions, so that means both population of the enterprise as well as on substrate part.
Giel Rutten: If we invest in that technology, the majority of that equipment is fungible with a standard bumping line, so the utilization can be warranted and even if there are swings on the two and a half of these sides, we believe that since the fungibility of the equipment, we can utilize that with a very solid return on investment in the individual equipment. So it is broadly fungible and you could label it as investment in a wavful level, capacities in the broader sense of the world.
Giel Rutten: The final question on it, the inter-poser has been silken, the industry is looking at trying to find a bit less expense over different options. Do you see much interest in activity for redistribution inter-poser, and would that be a value shift or opportunity, and are you from an inter-poser or silicon inter-poser base into an RDL level inter-poser, and we're working with several customers on initial pilot production for that technology. In general, the industry is conservative, let's say, the maturing of the inter-poser-based technology, certainly the yield levels is extremely important because the combination of high bandwidth memories and expensive silicon requires very high yield levels, and that takes a steep learning curve.
Giel Rutten: But on the other hand, the RDL-based technology is emerging and we're preparing that, and by the way, the installed capacity that we have in place is to some extent or to a very large extent, fungible with between RDL and inter-poser-based technology.
Giel Rutten: Great. Thank you for your nagging. Thank you.
Steve Barger: Our next question comes from Steve Barger with Keybank Capital Markets. Please state your question. Hey, thanks. I'm not as familiar with M. Corso.
Giel Rutten: I appreciate you letting me ask you a question, and I'm not looking for near-term guidance, like meeting this quarter or 2024, but can you talk about how you see longer-term growth rates for advanced packaging individually across your smartphone exposure, your automotive business, and then maybe AI? Yeah, let me try to give you a bit color there, Steve. I mean, we believe that the markets that we're serving and catering for specifically for advanced packaging will grow at an above average rate if we compare that to regular semiconductor growth rates expected.
Giel Rutten: A couple of key drivers there, you know, for Amkor specifically, I think if we take our core strategic pillars, it is diversification of our supply chain, where we support customers with semiconductor supply chains, in jurisdictions where they like to be, like, for example, in Europe supporting the European automotive industry, or in Japan, or now, for example, in Vietnam, where we offer customers an alternative supply chain, fees of each, their China manufacturing, that will continue. We believe that Amkor is better positioned than the industry there, and that will drive incremental growth.
Giel Rutten: There's also growth in advanced packaging, because, you know, the growth drivers in the industry be it 5 or 6G, automotive, IOT, or eye performance computing, all that growth will be supported by advanced packaging. And there we are positioned as a leader, we are engaged with the leaders in that industry, and we believe that will drive growth growing forward. And an additional element there is that the relative outsource potential of the industry volumes is increasing.
Giel Rutten: So where companies in the past, for example, an automotive to a large extent were vertically integrated, we see that for advanced packaging, more and more outsourcing takes place, both on the silicon side, as well as on the packaging side. So increased outsourcing, solid geopolitical footprint, and that combines with engaged in the lead segments of the market, will drive growth for Amkor. I appreciate that detail.
Giel Rutten: And just to follow up, I think people would expect very high growth rates for advanced packaging around AI for obvious reasons. But we're packaging content gains in smartphone and auto, result in growth rates that can match that, or how would you rank those kind of relative to each other? Well, specifically in the Steve, in the high end part of smartphone and the premium PS smartphone, we still continue to see significant innovation.
Giel Rutten: I mean, you refer to AI adoption specifically in the data centers, but on the edge, and then referring to smartphones, we also expect that at edge devices, like smartphones, there is an incremental innovation to adopt AI functionality. That will drive a new generation and a next generation of, for example, application processors, and that, again, will drive advanced packaging. So there is a kick-on effect also to edge devices, like smartphone. And same questions for Otto.
Giel Rutten: Do you expect that the content gains there will drive, you know, significantly above average growth relative to the semi cycle itself? Yes, I mean, we believe that automotive actually from our analysis and that's also referring to industry data is that the automotive semiconductor market is the fastest growing market going forward in the next couple of years. We're well positioned there and, you know, if we take applications like like ADAS, Incarnate working, connectivity that drives growth and not only on the processing side, but also on the sensor side, for example, and that that helps the automotive market moving forward and on top of that, we see a proliferation of these features from that say, high end part of the automotive market into the more mainstream mid-sankment and low segment of the market because multiple of these features are becoming mandatory to be deployed in the in the car industry.
Steve Barger: That's great. And just just one last one for me, when you talk about an AI enabled smartphone or an edge smartphone, what what's the timing of something like that? Is that 2024 2526? Well, you know, if you if I can only refer to the recent announcement of the biggest, let's say, smartphone ship company in the US, and you will see that the next generation of that high end processes already has, let's say, an AI core included in that device. So we expect that to be 24 25 range, this functionality to enter into the smartphones. That's great. Thanks very much for the time. Okay. Thanks, Steve. Thank you.
Giel Rutten: And at this time, I'm showing no further questions. I would like to turn a call back over to Keel for close remarks. Let me recap the key messages. We delivered solid third quarter results at the high end of guidance with revenue growing 25% sequentially to $1.82 billion and EPS more than doubling to 54 cents. We are expecting fourth quarter revenue of $1.675 billion at the midpoint of guidance. Through this cycle, Mcore continued to invest in a diversified large scale manufacturing base to support a secure and reliable global semiconductor supply chain.
Giel Rutten: In August, Mcore had the opportunity to ring the NASDAQ closing bell in celebration of the company's legacy and success. We celebrated two significant milestones, our 55th anniversary and our 25th anniversary has a publicly traded company. With our leadership in advance packaging, our broad geographic footprint and diversified exposure to industry mega trends, we are poised to all perform the semiconductor market and accelerate out of the site. Thank you for joining the call today. Thank you. We conclude today's conference, all part of today's conference, all part of today's conference, all part of today's conference, all part of today's