Q4 2023 Amkor Technology Inc Earnings Call

Good day, ladies and gentlemen.

Operator: Good day, and welcome to Amkor. The Bulletproof Executive 2013, Have a wonderful year, 2000. My name is Diego, and I... At this time, all participants are in. To conclude today's speaker's remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded. Thank you. I would now like to turn the call over to you.

Diego: And welcome to the EMCORE technology fourth quarter and full year 2023 earnings Conference call. My name is Diego and I'll be your conference facilitator today.

Diego: At this time all participants are in a listen only mode.

Diego: After the Speakers' remarks, we will conduct a question and answer session.

Diego: As a reminder, this conference is being recorded.

Diego: I would now like to turn the call over to Jennifer do you head of Investor Relations. Mr. <unk>. Please go ahead.

Speaker: Thank you, operator. Good afternoon, everyone, and thank you for joining us for Amkor's fourth quarter and full year 2023 earnings conference call. Joining me today are Heal Rutan, 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-GAAP financial measures, and you can find the Reconciliation to the U.S. GAAP Equivalent on our website. 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.

Jennifer: Thank you operator, good afternoon, everyone and thank you for joining us for <unk> fourth quarter and full year 2023 earnings conference call joining.

Jennifer: Joining me today are healed routine, our chief Executive Officer, and Megan Faust, our Chief Financial Officer.

Jennifer: 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.

Jennifer: 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.

Jennifer: We will make forward looking statements about our expectations for <unk> future performance based on the environment as we currently see it.

Jennifer: Of course actual results could differ.

Speaker: 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 note that the financial results discussed today are preliminary, and final data will be included in our Form 10-K. Now, I'd like to turn the call over to Heal. Thank you, Jennifer.

Jennifer: 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.

Jennifer: Please note that the financial results discussed today are preliminary and final data will be included in our Form 10-K.

Jennifer: And now I'd like to turn the call over to heal.

Heal: Thank you Jennifer and good afternoon, everyone and thank you for joining the call today.

Heal Rutan: Good afternoon, everyone, and thank you for joining the call today. After a strong third quarter, Amkor delivered solid fourth-quarter performance with revenue of $1.75 billion and EPS of $0.48, both at or above the high end of guidance. For full year 2023, revenue of $6.5 billion was down 8% from prior years, better than the double-digit semi-market decline. Weak macroeconomic conditions, excess inventory, and growing geopolitical tensions made 2023 a challenging year for Amkor, but several highlights also made it an exciting year. We celebrated our 55th anniversary and our 25th anniversary as a U.S. listed public company.

Heal: After a strong third quarter for EMCORE delivered solid fourth quarter performance with revenue of $1 $75 billion and EPS of 48 cents.

It's at or above the high end of guidance.

Heal: For full year 2023 revenue of $6 $5 billion was down 8% from prior year better than the double digit semi market decline.

Heal: Weak macroeconomic conditions excess inventory and growing geopolitical tensions may 2023, a challenging year for amcor.

Heal: But several highlights also made that an exciting E S.

We celebrated our 55th anniversary and almost 25th anniversary as a U S listed public company.

Heal Rutan: We had the grand opening of our new Vietnam factories, and we announced our plan for an advanced packaging and test facility in the United States. In this challenging business environment, Amkor elevated its leadership position by maintaining focus on its three strategic pillars. Our technology leadership in advanced packaging enabled us to gain market share in premium tier smartphones and grow in 2.5D technology for AI products and in ADAS and power solutions for automobiles. Our continued investments in a global manufacturing footprint offer our customers a secure and reliable semiconductor manufacturing supply chain. And our engagements in the secular growth market are strengthened by longstanding partnerships with lead customers in key markets like AI, high performance computing, and automotive. Now, let me review the dynamics in each of our end markets.

Heal: We had the grand opening of our new Vietnam factory, and we announced our plan for an advanced packaging and test facility in United States.

Heal: In this challenging business environment M cord elevate that its leadership position by maintaining focus on its three strategic pillars.

Heal: Our technology leadership in advanced packaging enabled us to gain market share in premium tier smartphones and grow in two and a half day technology for AI products and in a dozen power solutions for automotive.

Heal: Our continued investments in our global manufacturing footprint offers our customers a secure and reliable semiconductor manufacturing supply chain.

Heal: And our engagements and the secular growth market strengthened by long standing partnerships with lead customers in key markets like AI and high performance computing and automotive.

Heal: Now, let me review the dynamics in each of our end markets.

Heal: Revenue on all of the communication markets increased 4% for full year 2023, setting a new annual records.

Heal Rutan: Revenue on our communication market increased 4% for full year 2023, setting a new annual record. This record was achieved despite overall smartphone units declining for the second year in a row. Marketshare gains within the iOS ecosystem drove this increase by utilizing our advanced SIP technology. Amkor holds a leading position through our premium tier smartphones, built on our technology expertise and our proven track record as a trusted partner for co-developing innovative solutions and delivering operational excellence.

Heal: This record was achieved despite overall smartphone units declining for a second you had a neuro.

Market share gains within the iOS ecosystem drove this increase by utilizing over advance as IP technology.

Heal: M code also leading position throughout premium tier smartphones built on our technology expertise and our proven track record as a trusted partner for co developing innovative solutions and delivering operational excellence.

Heal: For 2024th we expect a modest low single digit increase in the phone units with further improvement in the Android supply chain during the year.

Heal Rutan: For 2024, we expect a modest, low single-digit increase in phone units with further improvement in the Android supply chain during the year. Revenue in our automotive and industrial business declined 4% for full year 2023. Advanced Packaging revenue increased 6% year-on-year, driven by ADAS and industrial applications.

Heal: Revenue in our automotive and industrial business declined 4% for full year 2023.

Advanced packaging revenue increased 6% year on year, driven by Adas and industrial applications.

Heal Rutan: We continue to see growth in high-power silicon carbide solutions for electrical vehicles, utilizing our unique package capability in our Japan factory. Our qualified manufacturing lines in multiple geographies, such as Korea, Japan, and Portugal, and our broad technology portfolio, ranging from advanced packaging, wire bond, and power, are important differentiators. In 2023, we continue to invest in capacity and capability in this market, specifically for silicon carbide in our Japan and Portugal factories. However, revenue from the computing end market decreased 11% year on year. The robust demand for leading-edge advanced packaging supporting AI and HPC applications partly offsets the decreases in PC and storage applications. Amkor leads the OSET supply chain in 2NRFD technology for AI devices, integrating high-bandwidth memory and ASIC on interposer combined with modular touch on substrate.

Heal: We continue to see growth in high power Silicon carbide solutions for electrical vehicles utilizing over a unique package capability and our Japan factory.

Heal: Our qualified manufacturing lines in multiple geographies, such as Korea, Japan post to go and have a broad technology portfolio, ranging from advanced packaging wire bond and power unimportant different shapes.

Heal: In 2023, we continue to invest in capacity and capability in this market specifically for silicon carbide in all of Japan, and Portugal factories.

Heal: Revenue from the computing end market decreased 11% year on year.

Heal: The robust demand for leading edge advanced packaging supporting a I N E. H B C applications, partially offset the decreases in B C and storage applications.

Heal: Coral Leach the Oaks had supply chain into an off the technology for the AI devices integrating high bandwidth memory in a sick and then suppose should combine to at module attach on substrates.

Heal Rutan: To support the strong demand for AI devices, we doubled capacity ending 2023, and with our planned investments coming online in the second quarter of 2024, we will have more than tripled our capacity compared to the second quarter of 2023. We expect the 2.5D demand will continue to increase in 2024, and we plan to support our customers in line with market growth. The consumer end market declined 38% for the full year.

Heal: To support the strong demand for AI devices be doubled capacity exiting 2023 and made our plant investments coming online in the second quarter of 2024, we will have more than tripled our capacity compared to the second quarter of 2023.

We expect it to an off demand will continue to increase in 2024, and we plan to support our customers in line with market growth.

Heal: The consumer end market declined 38% for the full year.

Heal Rutan: Multiple headwinds, including reduced consumer spending, excess inventory, and product changeovers in the IoT wearable market drove the decline. Within consumer electronics, we support a broad portfolio of solutions for IoT wearables, as well as traditional consumer products. We are engaged in next-generation products with our lead customers that will ramp production in the course of 2024. During the fourth quarter, our manufacturing organization focused on optimizing capacity for 2.5D technology in Korea and on qualifying advanced SIP and memory technologies in Vietnam. Geopolitical dynamics continue to impact the semiconductor supply chain. Globally, our customers are evaluating their supply chain strategies to reduce risk and secure a resilient and cost-effective manufacturing base. Amkor's broad geographic footprint is a key differentiator and positions us uniquely to support our customers and to benefit from this shifting global supply chain in Asia, where we recently opened our new Vietnam Manufacturing Campus.

Heal: Multiple headwinds, including reduced consumer spending excess inventory and product changeovers in the Iot wearable market and drove the decline.

Heal: We didnt consumers, we support a broad portfolio of solutions for Iot Wearables as well as the traditional consumer products.

Heal: We are engaged in the next generation product with our lead customers that will ramp production in the course of 2024.

Heal: During the fourth quarter, our manufacturing organization focused on optimizing capacity for two and a half need technology in Korea, and then qualifying advanced as a piece of memory technology in Vietnam.

Heal: Geopolitical dynamics continue to impact the semiconductor supply chain.

Heal: Globally, our customers are evaluating their supply chain strategies to reduce risk and to secure a resilient and cost effective manufacturing base.

Heal: And of course, a broad geographic footprint is a key differentiator and positions us uniquely to support our customers and to benefit from these shifting global supply chains.

In Asia, who recently opened our new Vietnam manufacturing campus.

Heal Rutan: In Japan, we are expanding R&D and manufacturing capability to offer a secure supply chain for automotive semiconductors, including silicon carbide. In Europe, we are partnering with lead customers and foundries to support a seamless European automotive supply chain with investments in technology for MEMS, wafer-level fan-out, flip-chip, and silicon carbide power devices at our Portugal factory. In the U.S., with the support of major customers and partners, we recently announced our plans to build an advanced packaging and test facility in Arizona. We are in discussion with the CHIPS Program Office on funding and continue to work on establishing a facility to provide high-volume, leading-edge technologies to support critical markets such as high-performance computing, automotive, and communication. Now, let me turn to our first quarter outlook.

Heal: In Japan, we are expanding R&D and manufacturing capability to offer a secure supply chain for automotive semiconductors, including silicon carbide.

In Europe, we are partnering with lead customers on foundries to support a seamless European automotive supply chain with investments in technology for Mems wafer level fan out flip chip and silicon carbide power devices and our political factories in.

Heal: In the U S with support of major customers and partners, we recently announced our plans to build an advanced packaging and test facility in Arizona.

Heal: We are in discussion with the chips program office on funding and continue to work on establishing a facility to provide high volume leading edge technologies to support critical markets, such as high performance computing automotive and communications.

Heal: Now, let me turn to our first quarter outlook.

Heal Rutan: We expect the first quarter to be impacted by two main factors. First, after a record 2023, we expect a more than seasonal decline in our iOS-related business. Secondly, we observe continued weakness in the automotive and industrial end market due to inventory corrections, specifically for microcontrollers and ADAS applications. We expect first quarter revenue of $1.35 billion, which represents a year-on-year decline of 8%.

Heal: We expect the first quarter to be impacted by two main factors first after a record 2023, we expect to more than seasonal decline and how about I O S related business.

Heal: Secondly, you observe continued weakness in the automotive and industrial end market due to inventory corrections, specifically for Microcontrollers and Adas applications.

Heal: We expect first quarter revenue of 1.35 billion. This represents a year on year decline of 8%.

Heal Rutan: For the full year of 2024, we foresee the first half of the year to remain muted, but we anticipate a strong second half recovery with growth higher than typical seasonality. This second half accelerated growth is supported by additional 2.5G capacity coming online mid-year, a meaningful ramp-up of a new consumer wearable program, and further rebalancing of inventories within Android, automotive, memory, and PCs. We believe that the secular growth drivers for the semiconductor industry will remain in place.

Heal: For the full year of 2024 before see the first half of the year to remain muted, but anticipate a strong second half recovery, but growth higher than typical seasonality.

Heal: Second half accelerated growth is supported by additional two one off the capacity coming online mid year.

Meaningful ramp of a new consumer wearable program and further rebalancing of inventories, but in androids automotive memory Mpc's.

Heal: We believe that the secular growth drivers for the semiconductor industry remain in place and made our leading technology portfolio scale and global footprint, we are confident to accelerate as the industry exits the current cycle.

Megan Faust: And with our leading technology portfolio, scale, and global footprints, we are confident to accelerate as the industry exits the current cycle. With that, I will now turn the call over to Megan to provide more detailed financial information. Thank you, Heal, and good afternoon, everyone.

Heal: With that I will now turn the call over to Megan to provide more detailed financial information.

Megan Faust: Thank you Neil and good afternoon, everyone.

Megan Faust: Fourth quarter revenue of $1.75 billion was down 4% sequentially. This was slightly softer than historical seasonality and was driven by customer inventory control, particularly within the automotive and industrial, and computing end markets. Although revenue declined sequentially, gross margin for the fourth quarter improved 40 basis points to 15.9% as a result of continued disciplined cost management. Fourth quarter gross profit was $279 million. Operating expenses for the quarter came in as expected at $120 million, and included onboarding costs to prepare our new Vietnam facility for high-volume manufacturing later this year. Operating income was $159 million, and operating income margin remained flat sequentially at 9.1%.

Megan Faust: Fourth quarter revenue of $1 $75 billion was down 4% sequentially.

Megan Faust: This was slightly softer than historical seasonality and was driven by customer inventory control, particularly within the automotive and industrial and computing end markets.

Megan Faust: Although revenue declined sequentially gross margin for the fourth quarter improved 40 basis points to 15, 9% as a result of continued disciplined cost management.

Megan Faust: Fourth quarter gross profit was $279 million.

Megan Faust: Operating expenses for the quarter came in as expected at $120 million and include Onboarding costs to prepare our new Vietnam facility for high volume manufacturing later this year.

Megan Faust: Operating income was $159 million and operating income margin remained flat sequentially at nine 1%.

Megan Faust: Net income for the fourth quarter was $118 million, resulting in EPS of 48 cents.

Megan Faust: Net income for the fourth quarter was $118 million, resulting in EPS of $0.48. Fourth quarter EBITDA was $326 million, and EBITDA margin was 18.6%. Now, let's turn to our full year 2023 performance. Revenue of $6.5 billion was down 8% year-on-year.

Megan Faust: Fourth quarter, EBITDA was $326 million and EBITDA margin was 18, 6%.

Megan Faust: Now, let's turn to our full year 2023 performance.

Megan Faust: Revenue of $6 $5 billion was down 8% year on year.

Megan Faust: While a down year, this is an outperformance compared to the semiconductor industry. Gross margin for the year was 14.5%, and gross profit was $943 million. During times of lower utilization, it is critical to manage our manufacturing costs to preserve profitability. Our disciplined approach resulted in a 10% reduction in both labor and other manufacturing costs. Net income for the year was $360 million, resulting in EPS of $1.46.

Megan Faust: Well I'll, let down here this is an outperformance compared to the semiconductor industry.

Megan Faust: Gross margin for the year was 14, 5% and gross profit was $943 million.

Megan Faust: During times of lower utilization it is critical to manage our manufacturing costs to preserve profitability.

Megan Faust: Our disciplined approach resulted in a 10% reduction in both labor and other manufacturing cost.

Megan Faust: Net income for the year was $360 million, resulting in EPS of $1.46.

Megan Faust: EBITDA was $1.13 billion, and EBITDA margin was 17.4%. CapEx for 2023 was $749 million, and 11.5% capital intensity. We reduced our equipment spend by approximately 45% from 2022, while continuing to invest in our global manufacturing footprint by completing the construction of our new Vietnam facility. Our financial performance showed great resilience in 2023. We achieved record-free cash flow of $534 million, reflecting efficient operations.

Megan Faust: EBITDA was $1.13 billion and EBITDA margin was 17, 4%.

Megan Faust: Capex for 2023 was $749 million and 11, 5% capital intensity.

Megan Faust: We reduced our equipment spend by approximately 45% from 2022.

While continuing to invest in our global manufacturing footprint by completing construction of our new Vietnam facility.

Megan Faust: Our financial performance showed great resilience in 2023.

Megan Faust: We achieved record free cash flow of $534 million, reflecting efficient operations.

Megan Faust: Our financial strength allows us to continue to invest in our future growth, both in technology development to support leading-edge advanced packaging solutions as well as in our manufacturing footprint. Our geographically diversified portfolio of factories has proven to be a key differentiator in supporting regionalization of supply chains. We ended the year with $1.6 billion of cash and short-term investments and total liquidity of $2.3 billion.

Megan Faust: Our financial strength allows us to continue to invest in our future growth both in technology development to support leading edge advanced packaging solution.

As well as our manufacturing footprint.

Megan Faust: Our geographically diversified portfolio with factories has proven to be a key differentiator and supporting regionalization of supply chain.

Megan Faust: We ended the year with $1 $6 billion of cash and short term investments and total liquidity of $2 $3 billion.

Megan Faust: Our total debt as of the end of the year is $1.2 billion, and our debt to EBITDA ratio is 1.1 times. Moving on to our first quarter outlook, we expect Q1 revenue of around $1.35 billion, representing a year-on-year decline of 8%. With the continued industry cycle and Q1 being the seasonally lowest quarter, profitability will be constrained given underutilization, and we expect gross margin to be between 11.5 and 14 percent. We expect Q1 operating expenses of around $130 million, which includes an annual reset of employee compensation levels as well as costs to support the onboarding of our new Vietnam factory. We anticipate a higher level of operating expense in the first half of 2024 until we begin high-volume manufacturing in Vietnam projected for the second half of this year. We expect our full year effective tax rate to be around 18 percent.

Megan Faust: Our total debt as of the end of the year is $1 $2 billion and our debt to EBITDA ratio is 1.1 times.

Moving onto our first quarter outlook, we expect Q1 revenue of around $1.35 billion, representing a year on year decline of 8%.

Megan Faust: With the continued industry cycle, and Q1 being the seasonally lowest quarter profitability will be constrained given under utilization and we expect gross margin to be between 11, five and 14%.

Megan Faust: We expect Q1 operating expenses of around $130 million.

Megan Faust: Which includes an annual reset of employee compensation levels as well as costs to support the onboarding of our new Vietnam factory.

Megan Faust: We anticipate a higher level of operating expense in the first half of 'twenty 'twenty four until we began high volume manufacturing in Vietnam projected for the second half of this year.

Megan Faust: We expect our full year effective tax rate to be around 18%.

Megan Faust: First quarter net income is expected to be between $8 million and $48 million, resulting in EPS of $0.03 to $0.19. Our CapEx forecast for 2024 is around $750 million. Our investments will focus on key advanced packaging technology solutions, specifically 2.5D in the computing market and advanced SIP supporting the consumer market, as well as the expansion of certain factories. We recently announced our plans to build an advanced packaging and test facility in the United States. We are in the early planning stages and do not expect a material CapEx spend for this project in 2024.

Megan Faust: First quarter net income is expected to be between 8 million and $48 million, resulting in EPS of 3% to 19%.

Our capex forecast for 2024 is around $750 million.

Megan Faust: Our investments will focus on key advanced packaging technology solution, specifically, two and a half D. In the computing market and advanced Sap's supporting the consumer market as well as expansion of certain factories.

Megan Faust: We recently announced our plans to build an advanced packaging and test facility in the United States.

Megan Faust: We are in the early planning stages and do not expect a material capex spend for this project in 2024.

Megan Faust: We have a target to be ready for high-volume manufacturing in approximately 2 to 3 years. We are excited to see the technological advancements in the industry and believe the secular growth drivers are in place. Amkor is a technology leader with decades of experience.

We have a target to be ready for high volume manufacturing and approximately two to three years.

We are excited to see the technology advancements in the industry and believe the secular growth drivers are intact.

Megan Faust: Amcor is a technology leader with decades of experience.

Megan Faust: Our culture of operational excellence, coupled with the broadest geographic footprint of all OSETs, positions us well to support the world's leading semiconductor companies. With that, we will now open the call to your questions. Operator.

Megan Faust: Our culture of operational excellence, coupled with the broadest geographic footprint of all of that positions us well to support the world's leading semiconductor companies.

Speaker Change: With that we will now open the call up for your questions.

Speaker Change: Operator.

Speaker Change: Thank you and at this time, we will conduct a question and answer session.

Operator: And at this time, we'll conduct our questions. If you would like to ask a question, please press star 1 on your telephone. You may press star 2 if you would like to, all participants using the speaker.

Speaker Change: If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up a handset before pressing the star keys.

Heal Rutan: One moment, please, while we... Our first question comes from Craig Ellis with B. Reilly Securities. Yeah, thanks so much for taking the question. And Gil and Megan, congratulations on Calendar 23's year of accomplishment. The first thing I wanted to do was just follow up on some of the communications comments regarding the seasonal first quarter decline. So, I think a lot of us have seen data points that the Android market is starting to recover. Obviously, the iOS market faces significant challenges every year. Can you just go into a little bit more detail on what some of the puts and takes are inside of that segment and help us understand what's leading to the above seasonal decline? Greg, yes, let me start doing that, and Megan can give some more details later on.

Speaker Change: Please while we poll for questions.

Speaker Change: Our first question comes from Craig Ellis with B Riley Securities. Please state your question.

Craig Ellis: Yeah. Thanks, so much for taking the question and keel on Mega and congratulations on calendar 'twenty three share of accomplishment.

Craig Ellis: The first thing I wanted to do is just follow up on some of the communications comments regarding the above seasonal first quarter decline. So.

Craig Ellis: I think a lot of us have seen data points at the Android market is starting to recover obviously the iOS market faces significant calendar. Once you seasonality every year can you just go into a little bit more detail on what some of the puts and takes are inside of that segment in and help us understand what's leading to the above.

Craig Ellis: Seasonal decline.

Hello, Greg, Yes, let me start doing that and making that can kind of lays on gift for some more details.

Heal Rutan: What we see in the first quarter are a couple of dynamics here. First of all, the first quarter comes on the back of a record 2023 and actually a record fourth quarter in 2023. We see a seasonal correction in the first quarter that is higher than normal but is at the same order of magnitude as what we have seen in 2023. If we take iOS and Android, I mean, both ecosystem revenue from both ecosystems is down.

Greg: What we see in the first quarter a couple of dynamics here first of all in the first quarter comes on the back of a record 2023 and actually a record.

Greg: Fourth quarter in 2023.

Greg: And we see a seasonal correction in the first call tariff that is higher than normal but is at the same order of magnitude as what we have seen in 2023.

Greg: If we take iOS and Android I mean vote ecosystem revenue from both ecosystems as is down.

Heal Rutan: Android in line with expectation, with some uptake in Q4, but still a decline in Q1. In the iOS ecosystem, we see an above seasonal correction. There are a couple of elements that are resulting in that above seasonal correction in the iOS ecosystem.

Greg: And right in line with expectation.

Greg: With some uptick in Q4, but still a decline in Q1 in the iOS ecosystem received an above seasonal correction. There are a couple of Oh elements that said that's off resulting in that above seasonal correction in the iOS ecosystem first of all we had accelerated bills.

Heal Rutan: First of all, we had accelerated bills in the fourth quarter for some specific SIP programs, and that was corrected in the first quarter. And we see some forecast corrections for system and package programs, and that results from product mix and some operational yield improvements on existing products. All in all, I think that that results in an above-average correction for communication in the first quarter. That's very helpful, Kiel.

Greg: In the fourth quarter for some specific programs.

Greg: Programs.

Greg: And that's is correct. It's in in the fourth in the first quarter.

Greg: And we see some forecasts forecast corrections for system in package programs.

Greg: And that results from product mix and some operational yield improvements on existing products. All in all I think that that results in an above average correction for for communication in the first quarter.

That's very helpful.

Speaker Change: Yeah, Okay, if I could move on and ask a longer term question on the product business encouraging to hear the teams view for the second half of 'twenty 'twenty four being above seasonal but in light of what we're hearing from some.

Heal Rutan: Okay, if I could move on and ask a longer-term question on the broader business. It's encouraging to hear the team's view for the second half of 2024 being above seasonal, but in light of what we're hearing from some analog bellwethers about murky visibility and areas like auto and industrial. Can you just list the three or four things that are giving you confidence that the second half can be above seasonal? And are you saying that your businesses across the different markets will be out of the cyclical correction by then? Yeah, first, let me refer to your first part of the question, the industrial and automotive corrections that we've indeed seen starting Q4 and moving further into Q1. We expect these corrections to relate specifically to these two market segments, industrial and automotive, and then very specifically also to the microcontroller segments in both markets.

Speaker Change: Analog bellwether sibelle murky visibility in areas like auto and industrial can you just list the three or four things that are giving you confidence that the second half.

Can be above seasonal and and are you, saying that.

Speaker Change: Your businesses across the different end markets will be out of the cyclical cyclical correction buyback. Thank you.

Speaker Change: Yeah first let's let me refer to your first part of the question is the share industrial and automotive corrections that'd be if indeed seen start in Q4 and moving further into Q1, we expect that these corrections related to specifically these two market segments.

Speaker Change: Our industrial and automotive and then very specifically also for the microcontroller segments in both markets. We expect that to continue our share in the first quarter and going into the second quarter. However, you know after our conversation with <unk>.

Megan Faust: We expect that to continue certainly in the first quarter and go into the second quarter. However, you know, after conversations with key customers on Amkor's side, we expect a more balanced inventory situation going into the second half of the year, and with that balanced inventory, we expect a recovery in these businesses. No, we are not exposed to some of the more commoditized markets, so we are only exposed in our wire bonds and lead frame business, mostly to automotive microcontrollers. So, Craig, just to build on your second part of the question as far as what gives us confidence for that higher-than-second-half growth, we are going to have incremental capacity online to support the 2.5D business, so we're anticipating further growth there, as well as So, those are two other factors that I would say, coupled with Heal's comments.

Speaker Change: Customers on Emco side, we expect more balanced inventory situation going into the second half of the years and with that balanced inventory, we expect a recovery of the said these businesses.

Speaker Change: No we are not exposed to some of the <expletive> the more the more commoditized markets.

So we are only exposed for all of our wire bonds and lead frame business to mostly to automotive microcontrollers.

Speaker Change: So Craig just to build on your second part of the question as far as what gives us confidence for that higher than second half growth and we are going to have incremental capacity online to support the two and a half D business. So we're anticipating further growth there as well as ramping in a can.

Speaker Change: Sumer Iot product in the second half. So those are two other factors that I would say coupled with Hill's comments as far as our anticipation that we'll probably start to see further inventory balancing within memory N. P. C and just to kind of give some context on the shape.

Megan Faust: As far as our anticipation, we'll probably start to see further inventory balancing within memory and PC. And just to kind of give some context on the shape of 2024, you know, we're expecting the second half to be as strong or stronger than 2022. So, back in our peak 2022 growth year, the second half had 30% growth over the first half, and given the dynamics we're seeing with the muted first half, we see the second half could be as strong or stronger. That's really helpful, Culler. If I could sneak in one more,

Speaker Change: <unk> of 'twenty 'twenty, four you know where.

We're expecting the second half could be as strong or stronger than 2022. So back in our peak 2022 growth here. The second half was it had 30% growth over the first half and given the dynamics, we're seeing with a muted first half.

Speaker Change: We see the second half could be as strong or stronger.

Speaker Change: That's really helpful color, if I could sneak in one more I appreciate.

Megan Faust: I appreciated the additional disclosure in the press release regarding costs of sales breakout with respect to gross margin and how we got to levels over the last couple quarters and last couple years. Megan, is that a disclosure that you plan to continue to provide? And as we think about those inputs, any change to how we think about the revenue upside and downside fall through versus prior plus and minus 40% commentary? Sure, yeah, the disclosures we've included in our press release, we would expect to continue that going forward, Craig, and I would say no change in our expectations in the financial model for, you know, generally an incremental flow through of around 40%. Looking at full year 23, this was a bit higher on a down year. We were under pressure with increasing material content, and that's what caused that flow through to be different.

Speaker Change: Appreciated the additional disclosure in the press release regarding <unk>.

Cost of sales breakout with respect to gross margin.

Speaker Change: And how we get to levels over the last couple of quarters and last couple of years, making us how to disclose your plan to continue to provide them and as we think about those inputs any change to how we think about.

Speaker Change: The the revenue upside and downside fall through versus prior plus and minus 40% commentary. Thank you.

Speaker Change: Sure Yeah. The disclosures we've included in our press release, we would expect to continue that going forward Craig.

Speaker Change: And I would say no change in our expectations and the financial model for you know generally an incremental flow through of around 40% I'm looking at full year 'twenty. Three this was a bit higher on a down year and we were under pressure with increasing material content and that's what.

Speaker Change: Cost that flow.

Speaker Change: Slow through to be different I would point to there was still a.

Megan Faust: I would point out that there was still a healthy reduction in manufacturing costs, which we would characterize as cost of goods sold, less materials, reducing 6.6% on a decrease in revenue of 8%. Looking at Q1, very good flow through, less than 40% on the decrease in revenue, which does demonstrate disciplined cost management. And our next question comes from Randy Abrams. Okay, yes, thank you.

Healthy reduction in manufacturing costs, which we would characterize as cost of goods sold last many facts or excuse me materials.

Speaker Change: Reducing six 6% on a decrease in revenue with 8% I'm looking at Q1 very good flow through less than 40% on the down revenue, which does demonstrate disciplined cost management.

Thank you and our next question comes from Randy Abrams with UBS. Please state your question.

Randy Abrams: Okay, yes. Thank you.

Heal Rutan: The first question I wanted to follow up on Craig's question about the second half, half on half. I was curious just in between the second quarter, I think one gets the communications coming off below seasonal, if you expect corrections to extend in the second quarter or that starts to pick up. And then maybe just broadly on the second quarter, if you could remind us what a normal, I think there's always a range, what a normal Q2 looks like, and if you see seasonal pick-up off the lower first quarter. Okay, Randy. Let me try to give some color to these elements.

The first question I wanted to follow up it was good color to Craig's question on the second half half on half I was curious just between.

Randy Abrams: The second quarter, I think what gets the communications coming off below seasonal if you expect correction extended in the second quarter or that starts to pick up.

Randy Abrams: And then maybe just broadly on the second quarter, if you could remind us what a normal I think there's always a range where the normal Q2 looks like and if you see a seasonal pick up off the lower first quarter.

Speaker Change: Okay, Randy let me try to give some color on these on these elements first of all related to the second half communication business.

Heal Rutan: First of all, related to the second half communication business, you know, there were identifiable, let's say, reasons for higher than seasonal correction in the first quarter. We expect that our overall position in the market is strong. We have a very strong product pipeline and deep engagements with lead customers. So, in the second half of this year, with the new phone ranges coming online there, we expect an above average growth rate because we also see that the Android market will continue to recover during the course of this year. So overall, we're very confident with the second half of this year's ramp for communication. And Randy, just as a reminder of what our typical second quarter seasonality would be, that can range anywhere from flattish to up low single digits. I would say it's pretty difficult to give that level of precision for Q2 at this time. We're not guiding the second quarter, so that's why we gave the commentary on the first half and second half. Yeah, it sounds like it's still conservative given auto industrial. And usually, we get the flagship and second half, so it's more second half weighted.

Speaker Change: Yeah.

Randy Abrams: Defiable, let's say.

Randy Abrams: The reasons for higher than seasonal correction in the first quarter, we expect that our that our overall position in the market is strong we have a very strong product pipeline and deep engagements with lead customers. So in the second half of this year, it's the new phone range.

Randy Abrams: Just coming online this we expect a and above average growth rates because we also see that the Android market will continue to recover in the course of this year.

Randy Abrams: So overall, we are very sure confidant, which are where the second half of this year for a ramp for for communications.

Speaker Change: And Randy just as a reminder of what our typical second quarter seasonality would be that can range anywhere from flattish to up low single digits I would say, it's pretty difficult to get that level of precision for Q2 at this time, we're not guiding second quarter. So that's why we.

Speaker Change: The commentary on the first half second half shape.

Randy Abrams: Okay, Yeah, it sounds like still conservative given auto industrial.

Randy Abrams: And usually we get the flagship in second half so more second half weighted okay.

Heal Rutan: Okay. The question I had, okay. The second question I had was on the CapEx where it looks at similar levels and remains lower capital intensity than the historical. The equipment ramped quite a bit in 2023. How would the mix shift between equipment versus construction?

Speaker Change: The question I had okay.

Speaker Change: Question I had just on the Capex, where it looks like similar levels and remaining lower capital intensity than the historical.

Speaker Change: The equipment ramp quite a bit in 2023 would how would the mix shift between equipment versus construction and do you still have ongoing.

Heal Rutan: Do you still have ongoing Vietnam or other build outs? Or does the shift continue to be... growth and equipment within that 750 mix? Yeah, that's a good observation, Randy.

Speaker Change: E com or other build outs or does it continue to.

Speaker Change: Growth had equipment within that 750 mix.

Speaker Change: Yeah, that's a good observation Randy so for this year capex spend with <unk>.

Heal Rutan: So, for this year's CAPEX, we see a shift from the initial profile that we have in 2023 with a large part of our CAPEX related to facilities and the, let's say, building of our Viadom factory. In 2024, it will be reversed. We will significantly increase our CAPEX for equipment and reduce the CAPEX for buildings and facilities. So, in the second half, our CAPEX for equipment will increase by about 50% on a year-on-year basis, based on opportunities that we see in the market. Megan, any details?

Speaker Change: See a shift from the initial profile that would be up in 2023 with a large part of our capex related to facilities and the ship lets.

Speaker Change: Let's say building of our Vietnam factory in 'twenty 'twenty four it will be reversed we will significantly increase our capex for equipment and reduce their capex for our buildings and facilities. So the second half of our Capex will increase for it.

Speaker Change: And about 50% on a year on year basis.

Speaker Change: Based on opportunities that we see in the market, making any share Dps Randy.

Megan Faust: Yeah, Randy, so hopefully that explains that the equipment portion of our CapEx spend is going to increase approximately 50% in 2024. We do have some, I would say, facility expansions that are more localized to Portugal, as well as Taiwan, and we are also planning to expand Vietnam in another module, an additional module. But generally, the shift, as he'll mention, will move more towards machinery and equipment. That will primarily be focused on advanced packaging, as we've mentioned, our 2.5D capacity coming online mid-year, as well as advanced SIP. Okay. Hey, that's great.

Speaker Change: Hopefully that explains that the equipment portion of our Capex spend is going to increase approximately 50% in 2024, we do have some I would say facility expansions that are more localized to Portugal, as well as Taiwan and also.

Expanding our planning to expand to Vietnam and module.

Speaker Change: An additional module, but generally these shipped as Hugh mentioned will move more towards machinery and equipment that will primarily be focused on advanced packaging them as we've mentioned, our two and a half the capacity coming online midyear as well as advanced S. P.

Speaker Change: Okay, Hey, that's great for the advanced packaging, where I think you've had that plan to triple by mid year.

Heal Rutan: And for the advanced packaging, I think you've had that plan to triple by mid-year. I'm curious if you're getting any indications for further capacity increases, so once you bring that on, the lead times are quite long, so are you making, do you see any need for further step-up to continue to ramp beyond that tripling, or do you think we're catching up to demand and starting to stabilize? Yeah. Now we have a fairly strong product pipeline and project pipeline for 2.5D, diversifying our customer base, but also our service portfolio going into the years, so we expect after the tripling of capacity that will come online by the end of the second quarter that we will continue to invest in line with market demand, and like we normally do, we have all the elements in place in order to ramp up where needed and as needed without being too specific here at this point in time. To ask a question, press star 1.

Speaker Change: Yes.

Speaker Change: Are you getting any indications for further capacity increase for once you bring that on.

The lead times are quite long so.

Speaker Change: Are you, making or do you see any need for further step up to continue to ramp beyond that tripling or or do you think we're catching up to demand and starts to stabilize.

Speaker Change: Yeah no.

We have a fairly strong product pipeline and project pipeline for two and a half dish.

Speaker Change: Diversifying our customer base, but also our surface portfolio going into the years should we expect after the tripling of capacity that will come online by the end of the second quarter, That's where you will continue to invest in line with market demand.

Speaker Change: And you know like we normally do we have all the elements in place in order to ramp up that need it and that's needed without being too specific here at this point in time.

Speaker Change: Thank you and just a reminder to ask a question press star one or.

Heal Rutan: Our next question comes from Ben Retzes with... Yeah, hi, thanks. Neil and Megan, if the second half of the year ramps up to be like 2022, is there anything that would impede you from getting to similar gross margins as that time in the second half of 2022 this year if it's a similar type of performance? Well Ben, let me hand that question to Megan, making one remark on that. I mean, I would say the fundamentals are still in place to get back to that level.

Our next question comes from Ben Reitzes with Malleus Research. Please state your question.

Ben Reitzes: Yes, hi, thanks.

Ben Reitzes: And Megan.

Ben Reitzes: If the second half of the year ramps to be late 2022 is there any anything that would.

And Peter you from getting to similar gross margins at that time in the second half of 2022. This year, if it's a similar.

Ben Reitzes: That type of performance.

Ben Reitzes: <unk>.

Peter: Well, Ben let me hand that question to to Megan.

<unk> bunk remark on that I mean, I would say the fundamentals are still in place to get back to that level, you know our profitability and gross margins are very much determined by utilization of our lines that are currently running.

Heal Rutan: You know, our profitability and gross margins are very much determined by the utilization of our lines. We're currently running at a utilization level, let's say below 65%. And, you know, with business coming online, we expect that that could go back to 2022 levels when we were running at 85%. Now, I hand over to Megan to give her view.

Peter: Running out the utilization level, let's say below 65% and ER beds with business coming online, we expect that that could go back to 2022 laterals. When we were running at 85% utilization levels, but no. Let me, let me hand over to Megan to give her view.

Megan Faust: Yeah, Hi, Ben so as far as the second half ramp we would expect to have our.

Megan Faust: Yeah, hi Ben. So as far as the second half ramp, we would expect to have our financial model of incremental flow through the gross margin and possibly expect a better flow through given we've been really tightening up during this cycle. So as far as he'll mention, it will depend on how the utilization progresses in that second half. I wouldn't expect that we would be at the same levels of utilization at the second half of 24 compared to the second half of 20. I'm sorry, I missed that at the end. Would you think you would be or would not be the same?

Megan Faust: The financial model of incremental flow through to gross margin.

Megan Faust: And possibly expect a better flow through given we've been really tightening up during the cycle and so as far as Hugh mentioned it will depend on how the utilization progressive in that second half I wouldn't expect that we would be at the same levels of utilization at the second half of 'twenty four compare.

Megan Faust: To the second half of 'twenty two.

Speaker Change: I'm, sorry, I missed that at the end you would you would think you would be or would not be at the same yes. So you're pointing to R. 22 gross margin of 18, 8% and that in spite of Science Hill said peak utilization levels.

Megan Faust: Yeah, so you're pointing to our 22 gross margin of 18.8%. And that implied, as Heal said, peak utilization levels that we were experiencing at the height of, you know, our growth. So depending upon how the 24 year shapes up and where we're starting at in the first half, I wouldn't anticipate that we would be achieving an 85% utilization by the second half of 24. Okay, I got it. I'm sorry to make you have to repeat it.

Speaker Change: You know that we were experiencing at the height of of you know our growth so depending upon how the 24 year shapes up and where we're starting out in the first half I wouldn't anticipate that we would be achieving an 85% utilization by the second half of 'twenty four.

Speaker Change: Okay, I got it I'm, sorry to make you repeat it.

No.

Heal Rutan: The other question is around your CHIPS Act pre-application and potential application. Is there any news about that? I understand that you mentioned that you may have, you know, you're not going to spend a lot on the announced facility, but is there a chance that we get some news around the CHIPS Act and their ability to help you guys out with the domestic supply chain here in the U.S.? First, to the second part of your question, Ben, we are continuing full speed with preparation for the U.S. facilities, specifically optimizing the factory design, align So it's not that nothing is happening there on the execution side.

Speaker Change: The other question is around your chips act at a pre application and potential application is there any news around that I understand that you mentioned that you may have.

Speaker Change: Youre not going to spend a lot on the announced facility, but is there a chance that we get some news around chips act and their ability to help you guys out.

Speaker Change: With the domestic supply chain here in the U S.

Speaker Change: Yeah first of all your second class a second part of your question Ben.

Speaker Change: Continuing full speed with preparation for the U S facility, specifically, you know optimizing the facts redesign aligning with our customer base on loading and technology requirement on working with contractors to plan out the building cycle. So it's not that.

Speaker Change: Nothing is happening there on the execution side with respect to the chipset office I think they're going to add after the pre application. We are preparing to final application have you working closely with <unk> should the chips office, where we have multiple communication points on that on a weekly <unk>.

Heal Rutan: With respect to the CHIPS office, I think we're going there after the pre-application. We're preparing the final application, and we're working closely with the CHIPS office, where we have multiple communication points on a weekly, bi-weekly basis. So we expect that full application will go in soon. Thank you. This is Tom Diffely with D8.

Ricky basis. So we expect that full application will go in soon.

Speaker Change: Thank you.

Thank you and our next question comes from Tom <unk> with D. A Davidson. Please state your question.

Heal Rutan: Yes, good afternoon. Thank you for taking my question. Hill, maybe first, when you look at 2024, below seasonal first half, above seasonal second half, what's the view for the full year on a year-of-year basis? Well, Tom, that is not so easy to answer, because certainly in the first half, and Megan already alluded to that, we still see significant uncertainties. You know, we don't guide for the second quarter, for example. But for the second half of the year, we clearly see, you know, significant opportunities for further ramp-up. Megan already gave them to me.

Tom: Hi, Yes, good afternoon, and thank you for taking my question, maybe first when you look at 2024 and below seasonal first half above seasonal second half Where's kind of the the view for the full year on a year over year basis at this point.

Tom: I will tell him that is that it's a not so easy to to answer because they have certainly in the first half of Megan already alluded to that.

Tom: We see still significant uncertainties.

You know, we don't guide for the second quarter for example, but the second half of the year, we clearly see a.

Tom: Hey, you know a significant opportunities for further ramp up Megan already.

Tom: Gave them you know, we have two and a half the capacity coming online with a full pipeline of products also das you know we have a new customer for the share on wafers.

Heal Rutan: You know, we have 2.5D capacity coming online with a full pipeline of products. Also, there, we have a new customer for the on-wafer, let's say, portfolio. We have a meaningful ramp for new IoT wearable programs in the second half, and we definitely expect that Android, memory, PC, and automotive will be back on stream in the second half of this year. So to quantify that and to give a full year outlook, I mean, in general, we are confident with our product portfolio and with our customer engagements that we should, let's say, grow with or above the market. Okay, that's helpful. And then you look at what's driving the weakness in the first quarter between iOS and the automotive inventory. Did anything change over the last month or two? Has anything gotten worse, or is this kind of the view you've had for a little bit here coming into the new year?

Tom: Let's strip portfolio.

Tom: Meaningful ramp for new Iot renewable programs in the second half and we definitely expect that androids memory P. C and automotive will be back on stream in the second half of this year, so to quantify that and to give our full year outlook I mean in general we have confidence.

Tom: Our product portfolio with our customer engagements that we should see a let's say grow with or above the market.

Speaker Change: Okay. That's helpful.

Speaker Change: And then when you look at the what's driving the weakness in the first quarter between iOS and the automotive inventory.

Speaker Change: Did anything change over the last month or two.

Speaker Change: <unk> gotten worse or is this kind of the view you've had for a little bit here coming into the new year.

Speaker Change: I mean at the end of the year in General I think that's the end of the first ramp up indeed, our U S system you generally see.

Heal Rutan: I mean, at the end of the year in general, I think that's the end of the first ramp up in the iOS system. You generally see that stock is taken on, you know, the performance. So, you know, there are always some corrections.

That's stokers taken on you know the performance. So you know there are always some correction. So do the corrections may be a little bit higher than normal seasonality, but I already indicated earlier that it's not.

Heal Rutan: So the corrections may be a little bit higher than normal seasonality, but I already indicated earlier that it's not, you know, in the same order of magnitude as in the first quarter of 2023. So nothing extraordinary from our perspective. And just to give some color, Tom, on the automotive industry specifically, what we experienced. In Q4, I would say the order of magnitude is what we're seeing kind of going into Q1. So we haven't seen anything, I would say, recently that suggested it's deeper.

Speaker Change: You know in the same order of magnitude as in the first quarter of 2023, so nothing extraordinary.

Speaker Change: From our perspective.

Speaker Change: Okay.

Speaker Change: Color Tom on automotive specifically, what we experienced in Q4, I would say order of magnitude as what we're seeing kind of going into Q1. So we haven't seen anything I would say.

Tom: Recently that suggested its deeper we saw this coming in Q4, yeah. Okay. Okay, and then maybe make it maybe to follow it up could you maybe provide a few more specifics on what drove the cost savings the cost management you referred to earlier.

Megan Faust: We saw this coming in Q4. Could you provide a few more specifics on what drove the cost savings, the cost management you referred to earlier? Sure. So as far as our approach to cost management, especially in times of temporary declines that we're experiencing now, it's very much ensuring that we don't structurally change such that we're not able to support significant ramps, whether that's seasonal ramps or coming out of the cycle where we want to be ready to capture that future growth. So the types of programs centered around our labor costs are very intentional as far as monitoring overtime and ensuring that in certain locations, where appropriate, we can extend furloughs to manage that cost.

Speaker Change: Sure so as far as our approach to cost management, especially in times of temporary.

Speaker Change: Declines that we're experiencing now it's very much on ensuring that we don't structurally changed such that we're not able to support <unk>.

Speaker Change: Significant ramps, whether that's seasonal ramps or coming out of the cycle, where we wanted to be ready to capture it.

That future growth. So the types of programs centered around our labor cost are very intentional as far as monitoring overtime and ensuring it you know in certain locations where appropriate we can extend furloughs.

To manage that cost on.

Megan Faust: On the other manufacturing costs, there's strict work happening in areas such as energy usage, as well as monitoring repairs, maintenance, and supplies so that we're being very prudent without sacrificing quality. Okay, thanks. Maybe this last question, are you guys getting the atmospheric river coming your way? Thanks for joining us. We hope you have a great day. And we'll see you next time. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. We don't have any windows here, so we can't look outside, but thanks for the warning.

Speaker Change: On the other manufacturing costs, there's strict.

Speaker Change: Work happening in areas, such as energy usage as well as monitoring repairs maintenance and supplies such that we're being very prudent.

Speaker Change: Sacrificing quality.

Speaker Change: Okay. Thanks, and maybe just last question are you guys getting the atmospheric river coming your way.

Speaker Change: Or is.

Speaker Change: Does that work.

Speaker Change: We're holding where we don't have any windows here. So we can't look outside but thanks for the warning okay.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Craig Ellis with B Riley Securities. Please state your question.

Operator: Thank you. This is Craig Ellis with B. Reilly. Yes. Thank you very much for taking the follow-up question. I just wanted to try to connect some dots and clarify a few comments that I heard.

Yes. Thank you very much for taking the follow up question I just wanted to try to connect some dots and clarify a few comments that I heard so repeatedly there were comments on expecting strength later this year as two and a half the capacity opens up and I'm interpreting that as more server GPU.

Heal Rutan: So, repeatedly, there were comments on expecting strength later this year as 2.5G capacity opens up, and I'm interpreting that as more server GPU-related. And then, Gail, I think you mentioned that part of the expectation for the back half of the year is more of a recovery in PCs, and so I really wanted to dig into the PC comment. Is that PC comment something that you see as being driven more cyclically, which is what we've seen in much of the market, or is it really something related to more AI-optimized PCs that have been discussed for the last couple of quarters by folks like Gail and others that might have different packaging types that would stretch capabilities and needs into the 2.5G realm? Any clarification there would be helpful. Well, we expect the second half, let's say, recovery on the PC side, mostly as it impacts Amkor, mostly for the ARM-based PCs and then peripheral devices for the x86-based PCs. There's a memory component to that also.

Speaker Change: A related and then Gail I think you mentioned that part of the.

Expectation for the back half of the year.

Speaker Change: As more of a recovery in Pcs and so I really wanted to dig into the P. C comment is that P. C comment something that you see as being driven more cyclically, which is what we've seen in much of the market or is.

Speaker Change: Is it really something related to more AI optimize Pcs that have been discussed for the last couple of quarters by folks like Dell and others that might have different packaging types that would stretch.

Speaker Change: Capabilities and needs into the two and a half D. Brown any clarification there would be appreciated.

Brown: Well, we expect the second half, let's say recovery on the PC side, mostly as it as it impacts are amcor, mostly for the on base to Pcs and then peripheral devices for the X 86 based Pcs.

Brown: It is a memory component to that also so we see multiple components, that's b package assemblies.

Heal Rutan: So we see multiple components that we package, assembly, package, and test that go into PCs. But I would say the most prominent delta would be in the ARM-based PC. Got it. Makes sense.

Brown: The package and test that go into Pcs, but I would say the most prominent delta would be in the on base to Pcs.

Speaker Change: Got it makes sense. Thank you.

Heal Rutan: Thank you. Thank you. Joe Moore, Great, thank you. In terms of the HPC AI part of the business, I know there was some news recently that there might be a third supplier of the advanced packaging there. Can you just talk about, you know, whether that has any impact on you? And, and just, you know, is there a market share assumption that's kind of underlying your expectations there?

Speaker Change: Thank you and our next question comes from Joe Moore with Morgan Stanley. Please state your question.

Joe Moore: Great. Thank you.

Joe Moore: In terms of the HTC AI part of the business I know there was some news recently that there might be a third supplier of the events packaging. There can you just talk about whether that has any impact on you and just is there a market share assumption that's kind of underlying your expectations there.

Heal Rutan: Now, with respect to the market, I think the capacity and the demand are still in an imbalance, so there's more demand than capacity in the market, with multiple parties bringing capacity online. I don't know exactly which news source you refer to, but what I can say is that our customer portfolio for 2.5D packaging is increasing. We have two more customers, let's say, ramping up by the end of this year. By the second quarter of this year, we also started what is called our on-substrate business with a new customer, and that adds significantly to our revenue in the second half of the year. So there are multiple elements that contribute to a ramp-up in the second half.

Speaker Change: Hi, Joe.

Speaker Change: Respect to Eh.

Speaker Change: The market I think the capacity and the demand are still in an unbalanced. So there's more demand than capacity in the market.

Speaker Change: Multiple parties are bringing capacity online.

Speaker Change: I don't know exactly which a new source you you referred to.

Speaker Change: But what I can say is that our customer portfolio for two and off the packaging is increasing we have two more customers, let's say ramping up by the end of this year by the second quarter of this year. We also start or what is called our arms on substrate business with.

Speaker Change: A new customer and that's that's also significantly to our revenue in the second half of the year. So that's multiple elements that sit that contributes to a to a ramp in the second half it's a dynamic environment.

Heal Rutan: It's a dynamic environment, but there's a consensus that demand and supply will be out of balance for a longer period of time. Great, thank you very much. At this time, I'm not showing any further questions. I would like to turn the call back over to HEAL for closing. Okay, well, let me recap the key messages here.

Speaker Change: But there is a consensus that demand and supply will be out of balance for a longer period of time.

Speaker Change: Great. Thank you very much.

Speaker Change: Yeah.

Speaker Change: Thank you at this time I'm showing no further questions I would like to turn the call back over to hill for closing remarks.

Speaker Change: Yeah.

Hill: Okay, well, let me recap the key messages here after a strong third quarter of.

Heal Rutan: After a strong third quarter, Amkor delivered solid fourth-quarter performance with revenue of $1.75 billion, above the high end of guidance. For full year 2023, amid a cyclical downturn, Amkor outperformed the semiconductor industry. For the full year of 2024, we foresee the first half of the year to be muted but anticipate a strong second half with growth higher than typical seasonality, driven by expanding AI engagements, a new consumer wearable program, and further rebalancing of inventory within Android, automotive, memory, and PCs. Amkor has continued to elevate its leadership position by executing on its three strategic pillars, advancing its technology leadership, expanding our broad Thank you for joining the call. Ladies and gentlemen, this concludes today's conference call; you may now go.

Hill: <unk> delivered solid fourth quarter performance with revenue of $1 $75 billion above the high end of guidance.

Hill: For full year 2023, amid a cyclical downturn EMCORE outperformed the semiconductor industry.

Hill: For the full year of 2024 do you foresee the first half of the year to be muted, but anticipate a strong second half with growth higher than typical seasonality.

By expanding AI engagements.

Hill: New consumer available program and further rebalancing of inventories within Android automotive memory Mpc's.

Hill: Amcor has continued to pay all of it.

Hill: Elevate its leadership position by executing on its three strategic pillars.

Hill: Advancing our technology leadership.

Hill: Expanding our broad geographic footprint and strengthening engagements with lead customers in growth market.

Speaker Change: Thank you for joining the call today.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect.