Q1 2025 Amkor Technology Inc Earnings Call

Good day, ladies and gentlemen, and welcome to the EMCORE Technology first quarter 2025 earnings Conference call. My name is Diego and I will be your conference facilitator today.

Operator: Good day, ladies and gentlemen, and welcome to the Amkor Technology first quarter 2025 earnings conference call. My name is Diego and I will be your conference facilitator. At this time, all participants are in a listen-only mode.

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

Operator: After the speaker's remarks, we will conduct a question and answer session. As a reminder, this conference is being recorded.

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. Thank you. Please go ahead.

Speaker Change: I would now like to turn the call over to Jennifer <unk> head of Investor Relations Ms. Zhu. Please go ahead.

Jennifer Jue: Thank you, Operator.

Speaker Change: Thank you operator, good afternoon, everyone and thank you for joining us for <unk> first quarter 2025 earnings conference call joining.

Jennifer Jue: Good afternoon, everyone, and thank you for joining us for Amkor's first quarter 2025 earnings conference call. Joining me today are Giel 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-GAAP financial measures, and you can find the reconciliation to the U.S. GAAP equivalent on our website.

Speaker Change: Joining me today are humeral, Chen, our Chief Executive Officer, and Megan Faust, our Chief Financial Officer.

Speaker Change: 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 Change: 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 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.

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

Speaker Change: Of course actual results could differ.

Speaker Change: 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 Jue: Please note that the financial results discussed today are preliminary, and final data will be included in our Form 10-Q.

Speaker Change: 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.

Giel Rutten: And now, I'll turn the call over to Heal. Thank you, Jennifer. Good afternoon, everyone, and thank you for joining the call today. Amkor delivered revenue of $1.32 billion in the first quarter at the upper end of our guidance. Communications revenue exceeded our expectations, while other end marks performed as anticipated. EPS was $0.09, impacted by higher R&D costs, including accelerated development in RDL technology for additional programs scheduled to RAM this year. We are closely monitoring the tariffs and trade regulations. On tariffs, our global manufacturing operations are largely unaffected at this time because the majority of our facilities operate in free trade zones, and we only ship a small amount of semiconductors into the U.S.

Heal: Thank you Jennifer.

Speaker Change: Good afternoon, everyone and thank you for joining the call today.

Speaker Change: And could deliver revenue of $1.32 billion in the first quarter at the upper end of our guidance.

Speaker Change: Communications revenue exceeded our expectations, while other end marks performed as anticipated.

Speaker Change: EPS was <unk> impacted by higher R&D costs, including accelerated development in the al technologies for additional programs scheduled to ramp this year.

Speaker Change: Yeah.

Speaker Change: We are closely monitoring the tariffs and trade regulations.

Speaker Change: On tariffs our global manufacturing operations are largely unaffected at this time, because the majority of our facilities operate in free trade zones, and we only ship a small amount of semiconductors into the U S.

Speaker Change: The main on chefs and T sweep revolved around potential disruptions to our customer supply chains and potential demand swings for consumer driven end products.

Giel Rutten: The main uncertainties revolve around potential disruptions to our customers' supply chains and potential demand swings for consumer-driven end products. Our diversified global footprint and longstanding partnerships allow us to help customers work through this complexity. On trade, we continue to monitor evolving U.S. export controls, including expanding technology restrictions. As an approved OSET by the U.S. Department of Commerce, we are an ideal partner for our customers. The Amkor team is handling these market dynamics with agility and is focused on executing our long-term strategy.

Speaker Change: Our diversified global footprint and longstanding partnerships allow us to help customers through this complexity.

Speaker Change: On trades, we continue to monitor evolving U S export controls, including expanding technology restrictions.

Speaker Change: As an approved all set by the U S Department of Commerce, we're an ideal partner for our customers.

Speaker Change: The Aimco team is handling these market dynamics with agility and is focused on executing our long term strategy.

Speaker Change: Our strategic framework is based on three pillars, strengthening our technology leadership, expanding our geographic footprint and partnering with lead customers in growth markets.

Giel Rutten: Our strategic framework is based on three pillars. Strengthening our technology leadership, expanding our geographic footprint, and partnering with lead customers in growth markets. This strategy helps us to leverage our competitive advantages that differentiate Amkor as a Tier 1 OSET. As a technology leader in advanced packaging and test, we are a trusted partner for the largest semiconductor companies to enable their product roadmaps. Our leadership and engineering expertise allow us to address manufacturing complexities through co-development with customers utilizing our broad technology portfolio. High-performance computing and AI are driving technology innovations and the need for advanced packaging. In addition to our engagements in 2NRD and RDL technology, we are collaborating with our data center and networking customers on co-packaged optics and photonic solutions.

Speaker Change: Strategy helps us to leverage our competitive advantages that differentiate amcor asset tier one osage.

Speaker Change: As a technology leader in advanced packaging and test we are a trusted partner for the largest semiconductor companies to enable their product roadmaps.

Our leadership and engineering expertise allow us to address manufacturing complexities to co development with customers utilizing our broad technology portfolio.

Speaker Change: High performance computing, and AI are driving technology innovations and the need for advanced packaging.

Speaker Change: In addition to our engagements in two and after you know the al technologies, we are collaborating with our data center and networking customers on co packaged optics and photonics solutions.

Giel Rutten: Amkor is engaged in photonics in pluggable devices and in next-generation advanced co-packaged optics devices with heterogeneous integration of optical engine chiplet dyes in a module format, improving power, bandwidth, signal, and spaces efficiency. The growing complexity of devices requires a comprehensive testing strategy. This quarter we confirmed plans for a turnkey test solutions expansion on our K5 campus in Incheon, Korea, where also our main R&D center is located. We expect the first phase of the expansion to be operational in the existing K5 facility by the end of 2025. The next phase, including a new building, is expected to be operational in the first half of 2027.

Speaker Change: Courtesan caged in Photonics implausible devices and next generation advanced co packaged optics devices that Heathrow genius integration of optical engine chip to dice and a module formats.

Speaker Change: Proving power bandwidth signal and spacious efficiency.

Speaker Change: The growing complexity of devices requires a comprehensive testing spent to cheap.

Speaker Change: This quarter reconfirmed plants for a turnkey test solutions expansion on our K five campus in Incheon Korea, but also our main R&D center dislocated.

Speaker Change: We expect the first phase of the expansion to be operational in the existing K five facility by the end of 2025.

Speaker Change: The next phase, including a new building is expected to be operational in the first half of 'twenty 'twenty seven.

Giel Rutten: Our second pillar aims to expand our geographic footprint to align with customer and industry supply chains. To support accelerated demand for advanced packaging services in the U.S., we are evaluating options to increase scale and expand our technology offerings. We continue to broaden our partnerships with lead customers and silicon foundries, and we are on track to begin construction of our Arizona facility in the second half of 2025. Beyond these significant projects, we continuously evaluate our footprint to ensure we are optimally scaled with the right technologies in the right locations.

Speaker Change: Our second pillar aims to expand our geographic footprint to align with customer and industry supply change.

Speaker Change: To support accelerated demand for advanced packaging services in the U S. We are evaluating options to increase scale and expand our technology offerings.

Speaker Change: We continue to broaden our partnerships with lead customers in silicon foundries and we are on track to begin construction of our Arizona facility in the second half of 2025.

Speaker Change: Beyond these significant projects, we continuously evaluate our footprint to ensure we are optimally scaled with the right technologies and the right locations.

Giel Rutten: In our third pillar, we are strengthening collaboration with leading semiconductor companies to facilitate early engagements in product development and to co-develop innovative advanced packaging solutions to enable fast time to market for lead applications in the industry. In communications, we primarily serve the premium tier smartphone market for both the iOS and the Android ecosystems. With AI applications shifting to edge devices, we expect innovation within smartphones will accelerate in premium tier first, notably in apps processors and connectivity applications, both requiring advanced packaging. Within the computing end market, we support customers across the data center and PC landscape with advanced packaging and test for multiple devices in AI and high performance computing applications.

Speaker Change: And our third pillar, we are strengthening collaboration with leading semiconductor companies to facilitate early engagements in product development and to co develop innovative advanced packaging solutions to enable fast time to market for lead applications in the industry.

Speaker Change: In communications, we primarily serve the premium tier smartphone market for both the iOS and the Android ecosystems.

But AI applications shifting to etch devices, we expect innovation within smartphones will accelerate and premium tier first notably in apps processors and connectivity applications, both requiring advanced packaging.

Speaker Change: Within the computing end market, we support customers across the data center and PC landscape with advanced packaging and test for multiple devices in AI and high performance computing applications.

Giel Rutten: The accelerated transition to a new AI GPU product family and the expanded trade restrictions tempered our outlook for this year. Demand for prior generation devices will continue for the year, but volumes are difficult to predict due to impact of export controls. Overall, we have a robust project pipeline in our computing end market, including our new 2NRFD switching customer that continues to ramp volume, and our first AI CPU programs ramping on RDL interposing technology, which gives us further confidence in our long-term outlook. While the automotive and industrial end markets are still recovering from weak end market demand and elevated inventory levels, the demand for advanced packaging solutions continues to be robust.

Speaker Change: The accelerated transition to a new AI GPU product family and the expanded trade restrictions tempered our outlook for this year.

Speaker Change: Demand for prior generation devices will continue for the year, but volumes are difficult to predict due to impact of export controls.

Speaker Change: Overall, we have a robust project pipeline in our computing end markets, including our new tune off the switching customers that continues to ramp volume in our first AI CPU programs ramping on the al Interposing technologies, which gives us further confidence in our long term outlook.

Speaker Change: Oh, the automotive and industrial end markets are still recovering from weekend market demand and elevated inventory levels. The demand for advanced packaging solutions continues to be robust.

Giel Rutten: The main driver is proliferation of ADAS and infotainment functionality across the car ranges. Amkor is a leading automotive OZ provider with a strong track record in automotive manufacturing and advanced packaging technology, where we have a solid pipeline with multiple customers for new radar and LiDAR applications, ADAS, and CMOS image sensor programs. In the consumer market, long-term drivers include the growing demand for wearables and connected devices. Our advanced SIP expertise positions us well for consumer growth and between our established Korea facility and new Vietnam facility, we have alternative locations to offer customers this technology.

Speaker Change: The main driver is proliferation of Adas and infotainment functionality across the car ranges.

Speaker Change: EMCORE is a leading automotive also provide us with a strong track record in automotive manufacturing and advanced packaging technologies, where we have a solid pipeline with multiple customers for new radar and lidar applications eight S and Cmos image sensor programs.

In the consumer markets long term drivers include the growing demand for Wearables and connected devices.

Speaker Change: Our advance as IP expertise positions us well for consumer growth and between our established Korea facility and New Vietnam facility, you have alternative locations to offer customers of this technology.

Speaker Change: In summary, we are.

Giel Rutten: In summary, we remain confident in our strategy to achieve long-term profitable growth. We are actively supporting customers to resolve supply chain challenges in the current dynamic environment, and we are focused on executing our strategy.

Speaker Change: <unk> confident in our strategy to achieve long term profitable growth.

We are actively supporting customers to resolve supply chain challenges in the current dynamic environment and.

Speaker Change: We are focused on executing our strategy.

Megan Faust: With that, I will now turn the call over to Megan to provide more details on our first quarter performance and near-term outlook. Thank you, Giel, and good afternoon, everyone. As Giel mentioned, we are navigating a dynamic environment. The team is focused on adapting to change and managing elements within our control while continuing to execute on our long-term strategy. Amkor delivered first quarter revenue of $1.32 billion, reflecting a 3% year-on-year decline. Revenue in our communications end market decreased 19% year-on-year, primarily driven by lower revenue within the iOS ecosystem. A new SIP socket we are co-developing for the next generation of smartphones is on track to begin production by the end of June.

Speaker Change: With that I will now turn the call over to Megan to provide more details on our first quarter performance and near term outlook.

Megan: Thank you Hugh and good afternoon, everyone.

Megan: As you mentioned, we are navigating a dynamic environment.

Megan: Team is focused on adapting to change and managing elements within our control while continuing to execute on our long term strategy.

Megan: Amcor delivered first quarter revenue of $1.32 billion, reflecting a 3% year on year decline.

Megan: Revenue in our communications end market.

Megan: Kris 19% year on year, primarily driven by lower revenue within the iOS ecosystem.

Megan: A new S. I P. Socket, we are co developing the next generation of smartphones is on track to begin production by the end of June.

Megan Faust: For the second quarter, communications revenue is expected to increase sequentially, reflecting efforts to optimize line utilization. Revenue in our computing end market increased 21% year-on-year, driven by multiple engagements across data center, networking, and PC customers, as well as accommodating dynamic build patterns for AI GPUs using 2.5D technology. Computing is expected to grow sequentially in the second quarter, driven by strong demand for new PC devices. Revenue in the automotive and industrial end market declined 6% year-on-year, but remained stable sequentially across both advanced and mainstream products. Our project pipeline with our largest customers in ADAS, infotainment, and other advanced applications is robust, and we have begun ramping solutions that we expect to drive growth for this end market in Q2.

Megan: For the second quarter Communications revenue is expected to increase sequentially.

Megan: <unk> efforts to optimize line utilization.

Revenue in our computing end market increased 21% year on year, driven by multiple engagements across data center networking and PC customers as well as accommodating dynamic build patterns for AI Gpus, using two and a half D technology.

Megan: Computing is expected to grow sequentially in the second quarter, driven by strong demand for new PC devices.

Megan: Revenue in the automotive and industrial end market declined 6% year on year.

Megan: <unk> stable sequentially across both advanced and mainstream products.

Megan: Our project pipeline with our largest customers and Adas infotainment and other advanced applications is robust and we have begun ramping solutions that we expect to drive growth for this end market in Q2.

Megan Faust: Revenue in our consumer end market increased 23% year-on-year, driven by a continuation of the HEARable program utilizing advanced SIP technology that launched in the second half of last year. For Q2, we expect the consumer market to be relatively flat sequentially. First quarter gross profit was $158 million, and gross margin was 11.9%. Gross margin was lower sequentially and year-over-year due to the impact from lower volumes, with resulting factor utilization in the low 50s. Operating expenses came in higher than expected at $126 million, primarily due to the increase in R&D, which Giel mentioned is associated with development of new technology, including RDL, that is expected to ramp later this year.

Megan: Revenue in our consumer end market increased 23% year on year, driven by a continuation of the hero program utilizing advanced S. I P technology that launched in the second half of last year.

Megan: For Q2, we expect the consumer market to be relatively flat sequentially.

Megan: First quarter gross profit was $158 million and gross margin was 11, 9%.

Megan: Gross margin was lower sequentially and year over year due to the impact from lower volumes with resulting factory utilization in the low fifties.

Speaker Change: Operating expenses came in higher than expected at $126 million, primarily due to the increase in R&D, which you mentioned is associated with development of new technology, including RTL that is expected to ramp later this year.

Megan Faust: Operating income was $32 million or 2.4% of sales. Cost containment measures are in place globally, and we have continued to be profitable throughout this semiconductor cycle. Net income was $21 million and EPS was $0.09. First quarter EBITDA was $197 million, and EBITDA margin was 14.9%. Amkor has exhibited strict financial discipline and maintains a strong balance sheet. We ended the quarter with $1.56 billion of cash and short-term investments and total liquidity of $2.2 billion. Our total debt as of the end of the quarter is $1.15 billion, and our debt-to-EBITDA ratio is 1.1 times. The strong and flexible balance sheet we have built enables us to enhance shareholder returns by investing in organic growth, including technology development with lead customers, exploring strategic investments to optimize our global footprint, and returning cash to shareholders within our capital allocation framework.

Speaker Change: Operating income was $32 million or two 4% of sales.

Speaker Change: Cost containment measures are in place globally, and we have continued to be profitable throughout the semiconductor cycle.

Speaker Change: Net income was $21 million and EPS was nine cents.

Speaker Change: First quarter, EBITDA was $197 million and EBITDA margin was 14, 9%.

Speaker Change: Amcor has exhibited strict financial discipline and maintains a strong balance sheet.

Speaker Change: We ended the quarter with $1.56 billion of cash and short term investments and total liquidity of $2.2 billion.

Speaker Change: Our total debt as of the ended the quarter is $1.15 billion and our debt to EBITDA ratio is one one times.

Speaker Change: A strong and flexible balance sheet, we adult enables us to enhance shareholder returns.

Speaker Change: Investing in organic growth, including technology development with lead customers exploring strategic investments to optimize our global footprint and returning cash to shareholders within our capital allocation framework.

Megan Faust: We are confident that this multifaceted and balanced approach will allow us to create long-term shareholder value.

Speaker Change: We are confident that this multifaceted and balanced approach will allow us to create long term shareholder value.

Megan Faust: Moving on to our second quarter outlook. We expect revenue between $1.375 and $1.475 billion, representing growth of 8% sequentially at the midpoint. We are closely monitoring the impact of tariffs and other trade regulations, which may affect demand. Gross margin is expected to be between 11.5 and 13.5%, reflecting a modest improvement in utilization across our factories. We expect operating expenses of around $125 million for the quarter and a full year effective tax rate of around 20 percent. As a result, second quarter net income is expected to be between $17 and $57 million, resulting in EPS between 7 and 23 cents.

Moving onto our second quarter outlook.

Speaker Change: We expect revenue between 1.3, 75, and one point for seven and $5 billion representing growth of 8% sequentially at the midpoint.

Speaker Change: We are closely monitoring the impact of tariffs and other trade regulations, which may affect demand.

Speaker Change: Gross margin is expected to be between 11, five and 13, 5%, reflecting a modest improvement in utilization across our factories.

Speaker Change: We expect operating expenses of around $125 million for the quarter and a full year effective tax rate of around 20%.

Speaker Change: As a result second quarter net income is expected to be between 17 and $57 million, resulting in EPS between seven and 23 cents.

Megan Faust: Our CAPEX forecast for 2025 remains unchanged at $850 million, of which 5-10% is estimated for our new Advanced Packaging Facility in Arizona. Our investments are focused on expanding capacity and capability for leading-edge technology, including the next-generation RDL and bridge technology, advanced SIP, and test solutions. We will continue to monitor the environment and prudently evaluate our investment. Although tariff and trade regulations are constantly evolving, Amkor's operations remain largely unaffected.

Speaker Change: Our capex forecast for 2025 remains unchanged at $850 million of which 5% to 10% is estimated for our new advanced packaging facility in Arizona.

Our investments are focused on expanding capacity and capability for our leading edge technology, including the next generation RTL and branch technology Advanced S E T and test solutions.

Speaker Change: We will continue to monitor the environment and prudently evaluate our investments.

Speaker Change: Although tariff and trade regulations are constantly evolving and course operations remain largely unaffected.

Megan Faust: Our shipments to the U.S. are immaterial, and nearly all of our operations are in some form a free trade zone, which provide duty relief for the direct supply of equipment, materials, and components. We believe our diversified geographic footprint remains a competitive advantage and we will continue to closely monitor developments in this area. In this dynamic environment, we remain poised and ready to support our customers. Our team continues to execute our strategic plan. We are investing in differentiated technology to maintain our position as a leader in the OSOT space. We are optimizing and expanding our geographic footprint.

Speaker Change: Our shipments to the U S are immaterial and nearly all of our operations are in some form of free trade zone, which provide duty relief for the direct supply of equipment materials and components.

Speaker Change: We believe our diversified geographic footprint remains a competitive advantage and we will continue to closely monitor developments in this area.

Speaker Change: In this dynamic environment, we remain poised and ready to support our customers.

Speaker Change: Our team continues to execute our strategic plan.

Speaker Change: We are investing in differentiated technology to maintain our position as a leader in the OS that space.

Speaker Change: We are optimizing and expanding our geographic footprint.

Megan Faust: And we are closely partnering with leading semiconductor companies that are addressing market megatrends.

Speaker Change: And we are closely partnering with leading semiconductor companies that are addressing market mega trends.

Giel Rutten: With that, we will now open the call-up for your questions. Operator? Thank you.

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

Later.

Speaker Change: Thank you.

Operator: and at this time we'll conduct your Q&A session. Who would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 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 start key. Once again, to ask a question, press star 1. We'll pause for a moment while we pull for questions.

Speaker Change: And at this time, we'll conduct your Q&A 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 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 your handset before pressing the star.

Speaker Change: <unk> once again to ask a question press Star one we'll pause for a moment, while we poll for questions.

Speaker Change: And our first question comes from Charles shy with Needham. Please state your question.

Charles Shye: And our first question comes from Charles Shye with Needham. Please state your question. Hi, thanks for taking my question.

Charles Shy: Hi, Thanks for taking my question.

Giel Rutten: Maybe I missed a little bit the first part of the prepared remarks, but I wonder if you guys can provide some color on why the Q1 you've done a little bit better than expected, but Q2, I'm especially interested in your thoughts on Q2 because the amount of sequential growth for Q2, if I look at the midpoint of the guidance range, it's one of the stronger Q2 in recent history and Wonder, do you see any potential impact from any pull-ins due to concerns on the tariffs for any of the two quarters, Q1 or Q2? Thank you.

Charles Shy: Maybe I missed a little bit.

Charles Shy: The first part of the prepared remarks, but.

Charles Shy: I wonder.

Charles Shy: If you could you guys can provide some color on why the Q why you've done a little bit better than expected Q2, especially interesting you'll stop in Q2.

Charles Shy: The amount of a sequential growth.

Charles Shy: For Q2, if I look at the midpoint.

Charles Shy: Our guidance range.

Charles Shy: One of the stronger Q2 in your recent history and.

Charles Shy: Wonder if do you see any potential impact from any pull ins due to concerns on the tariffs.

Charles Shy: For any of the two quarters throughout Q2. Thank you.

Giel Rutten: Hello, Charles. This is Giel. Let me start answering your question. First of all, Q1, you know, in Q1, we had strength in our communication business, and the other businesses were performing in line with expectations. Now, for Q2, we see growth versus Q1, again, in communication, and on top of that, we see strength in the computing domain, and that goes across applications from data center into the PC domain, but also in networking. So, that's a strength in Q2. Do we believe that the Q2 strength is related to market pull-ins? That's not what we observe, Charles. I think we see, you know, we're working with customers to optimize the utilization of our lines, but that's more on our own, let's say, management structure that we normally have, but it's not really a pull-in from our customers.

Charles Shy: Hello charge. This is if you let me start answering your question.

Charles Shy: First of all.

Charles Shy: Q1.

Charles Shy: You know and in Q1, we had strength in our communication business and the other businesses.

Charles Shy: Performing in line with expectations.

Charles Shy: For Q2, we see growth versus Q1 again in communication and on top of that we see strength in the computing domain and that goes across applications from data center into the P. C domain, but also in networking. So that's the strength in in Q2.

Speaker Change: And do we believe that the Q2 <unk>.

Speaker Change: Strength is related to market pull ins and that's not what we observed for Charles I think we see.

Speaker Change: You know, we are working with customers to optimize the utilization of our lines.

Speaker Change: But that's more on our own let's say management structure that we normally have but its not really a pull in from our customers. So we don't see that in that neither of us neither of the market we serve.

Giel Rutten: So, we don't see that in neither of the markets that we serve.

Speaker Change: Okay.

Charles Shye: Got it, thanks.

Speaker Change: Got it thanks.

Giel Rutten: The second question, you guys are maintaining that $850 million capex. Given the recent tariff news, any thoughts on the continued expansion in Vietnam? And any thoughts that you may or may not continue the current investment in that specific country that probably can be hit by the tariffs? Yeah, let me give you some color on our CAPEX plans, and Megan can give more details later on, Charles. Currently, we don't foresee that we significantly change our CAPEX plan, although we remain flexible as much as possible if we observe unexpected events later in the year, where we then can push out certain investments.

Speaker Change: The second question you guys are maintaining that 850 million capex.

Speaker Change: Given the recent tariff news any thoughts.

Speaker Change:

Speaker Change: Continued expansion in Vietnam and.

Speaker Change: Yeah.

Speaker Change: Any any thoughts that you.

Speaker Change: You may or may not continue.

Speaker Change: The current investment.

Speaker Change: The country.

Speaker Change: Perfect.

Speaker Change: By the tariffs.

Okay.

Speaker Change: Hum.

Speaker Change: Yeah, Let me give some view.

Speaker Change: Color on our Capex plans.

<unk> can give a more detail later on the Charles currently we don't foresee that we are significantly.

Speaker Change: Change all of our Capex plan, although we remain.

Speaker Change: Flexible as much as possible.

Speaker Change: If we observe unexpected events later in the year, but have you done can push out certain investments now 70% of our investments in capacity and capabilities.

Megan Faust: Now, 70% of our investments are in capacity and capabilities of which, and then 25% is facilities and construction expansion, of which 5% to 10% is for our Arizona and Portugal facilities. Now if we take the 70% on capacity and capabilities, it's mostly to support our high-performance computing market that goes across different applications from PC into networking, across 2NRFD technology, as well as RDL technology. You know, we still see a strong pipeline there, but that may be impacted by a tariff structure that may change in the course of this year. And by, you know, by watching that closely and working with our customers, we foresee that we have opportunities to, let's say, delay certain shipments of equipment, although we believe that long-term and mid-term, this will continue to be a strong market, and most of our investments are for fungible equipment, and on top of that, we invest in expansion of our test capability and capacity.

Speaker Change: Of which and then 25% of facilities and construction expansion of which 5% to 10% is for our Arizona and in Portugal facility.

Speaker Change: So if we take the 70% on capacity and capabilities is mostly to support our high performance computing market that goes across different applications from P. C into networking across two and a half day technology as well as our VL technologies.

Speaker Change: We still see a strong pipeline there, but that may be impacted by tariff structure that may change in the course of this year and by you know by by watching that closely and working with our customers. We foresee that we have opportunities to.

Speaker Change: To let's say delay certain shipments of equipment, although we believe that long term and mid term, but this will continues to be a strong markets and most of our investments off or fungible fungible equipment and on top of that we invest in expansion of our tests.

Speaker Change: <unk> capability and capacity.

Speaker Change: Okay.

Megan Faust: Megan, anything to add from your side? Charles, I think as we look at our current view, you know, our first half, I would say, shaped up slightly better than what we expected with our Q1 coming in at the high end of guide and then a strong compared to our seasonal expectations for Q2. So, as Gil mentioned, we're not seeing any significant changes from our customers' perspectives, so we are holding our CapEx expectations, although we will continue to monitor that. Thank you.

Speaker Change: And Megan anything to add from your side.

Charles I think as we look at our current view you know our first half I would say shaped up slightly better than what we expected with our Q1 coming in at the high end of guide and then a strong compared to our seasonal and expectations for Q2, and so as Hugh mentioned we're in.

Speaker Change: Not seeing any significant changes from our customers' perspective, so we are holding our capex expectations. Although we will continue to monitor that.

Speaker Change: Thank you.

Ben Reitzes: And our next question comes from Ben Reitzes with Mellius Research. Yeah, hi. Good afternoon. I hope you can hear me okay.

Speaker Change: And our next question comes from Ben Reitzes with Malleus Research. Please state your question.

Speaker Change: Yeah, Hi.

Speaker Change: Good afternoon Hope you can hear me, Okay I wanted to ask about the communications segment beyond the two Q.

Ben Reitzes: I wanted to ask about the communications segment beyond the 2Q. Should this be better than seasonal for the second half, given, you know, the win of the new socket? And I was wondering, you know, what that would mean for margins? And then also, in the answer to your question, if you've thought about tariffs and how that may impact the seasonality in the second half as well in the comm sector. Thanks.

Speaker Change: Should this be better than seasonal for.

Speaker Change: For the second half given you know the the win of the new socket and.

Speaker Change: I was wondering you know what that would mean for margins and then also in the answer to your question if you've thought about tariffs and how that may impact the seasonality in the second half as well in the comm sector. Thanks.

Giel Rutten: Well, it's difficult to to give details on the second half here, Ben, because You know, what we can say on the second half is that the fundamentals going into the second half are unchanged. I mean, if we take critical programs, specifically in the communication segments, that's still in line with what we expected before. The new program with our lead customer is, you know, we have line of sight, and we will start initial ramp in the second quarter, towards the end of the second quarter. So we expect that to happen. Our projections and our program and project pipeline in the communication segment is also expected.

Speaker Change: Well, it's difficult to to give details on the second half he had been because.

Speaker Change: You know what we can say on the second half is that the fundamentals going into the second half are unchanged I mean, if we take critical programs specifically in the communication segments.

Speaker Change: That's still in line with what we expected before the new program with our lead customer is so you know we have line of sight and we will start initial ramp in the second quarter towards the end of the second quarter. So we expect that to happen.

Speaker Change: Our projections and our program our project pipeline in the communication segment is also expected. So you know we believe that our market position that is strong both on the <unk> side as well as on the Android side.

Giel Rutten: So, you know, we believe that our market position there is strong, both on the iOS side as well as on the Android side. However, given the trade restrictions and the uncertainties there, you know, the macro indicators like the consumer demand profile and impact of, let's say, tariffs may impact the total volumes and may influence bill plans of customers. So that creates significant uncertainties. For ourselves, we clearly focus on the elements that we can influence and we're very confident that our position in the communication market is as we predicted earlier. Ben, just to comment on your question with respect to gross margins, you know, as we move into the second half, we would expect those gross margins to expand as we increase utilization.

Speaker Change: However.

Speaker Change: Given the the trade restrictions and the old certainties, there you know the macro indicators like the consumer demand profile and impact off.

Speaker Change: Let's say tariffs may impact the total volumes and may influenza build plans of customers. So that creates significant uncertainties now for ourself, we clearly focus on the elements that we can influence and we're very confident that our position in the communication market.

Speaker Change: As we predicted earlier.

Speaker Change: Ben just some comment on here your question with respect to gross margin.

Speaker Change: As we move into the second half we would expect those gross margins to expand as we increase utilization.

Megan Faust: So that would be expected given our financial model. But as Giel mentioned, we'll be watching demand carefully in order to flex costs where possible to manage profitability.

Speaker Change: So that that would be expected given our financial model.

Speaker Change: But as Joe mentioned, we'll be watching demand carefully in order to flex costs, where possible to manage profitability.

Speaker Change: Okay, great if I could just slip in one more I wanted to just clarify on the auto industrial guidance.

Ben Reitzes: Okay, great.

Ben Reitzes: So if I could just slip in one more, I wanted to just clarify, you know, on the auto industrial guidance, you know, given that the margin impact that you have in that in that vertical, what are you thinking there? Can you just reiterate what you said about the 2Q and in the second half? And does that have the same uncertainty with regard to tariffs as the other spaces? Or is that space really picking up?

Speaker Change: Given that the margin impact that you have in that in that vertical what are you thinking there you can you just reiterate what you said about the two Q and in the second half and does that have the same uncertainty with regard to tariffs as the other spaces or as that space really picking up.

Giel Rutten: Well, we believe that the automotive market and the performance in that market hit the trough and we are very careful in anticipating further growth. We definitely see strength on the advanced packaging in automotive that is driven by in-car infotainment, ADAS applications, and that comes also with peripheral devices like image sensors and other sensor devices. So we see strength there. On the more mainstream side of the automotive market, if we talk to our customers, the lead customers there are confident that they hit the trough, although we don't see too much of a growth signal there going into the next quarter.

Speaker Change: Well, we believe that the you know the automotive.

Speaker Change: Market's underperformance in that market.

Speaker Change: Hit the trough.

Speaker Change: We're very careful.

Speaker Change: And anticipating further growth.

Speaker Change: We definitely see strength on the advanced packaging and automotive that is driven by in car infotainment Adas applications and that comes also with peripheral devices like <unk> image sensors.

Speaker Change: And other sensor devices. So we see we see strength there on the more on the more mainstream side of the automotive market.

Speaker Change: If we talk to our customers.

Speaker Change: <unk> customers that are confidence that they it's the trough although.

Speaker Change: Although we don't see too much of a growth signal they are going into the next quota. So overall.

Giel Rutten: So overall, We believe that the second quarter is giving, let's say, a single-digit, mid-single-digit growth quarter-on-quarter, but still we're careful in predicting a strong second half of this year in October. Thanks a lot.

Speaker Change: We believe that the second quarter is is giving lets say.

Speaker Change: Single digit mid single digit growth both of those quarters.

Speaker Change: But still with you know with careful in predicting a strong second half of this year in automotive.

Speaker Change: Thanks, a lot appreciate the answers from both of you.

Ben Reitzes: Appreciate the answers from both.

Speaker Change: Yeah.

Speaker Change: Your next question comes from Randy Abrams with UBS. Please state your question.

Randy Abrams: Your next question comes from Randy Abrams with UBS Police. Yes, hi, thank you. I want to test that first question on the Arizona expansion. I have two parts to it. I think first, how you're thinking about your opportunity now with TSMC announcing their two sites in the U.S. If you could talk where you see your opportunity versus their expansion. And the other side, it sounds like even given that you're expanding or potentially considering a faster plan, so if you could talk the potential to either pull in or raise the scale of Arizona, if indeed you see a bigger opportunity there.

Randy Abrams: Yes, hi, Thank you I wanted to ask the first question on the Arizona expansion I'd like two parts to it I think first how you're thinking about your opportunity now with TSMC.

Speaker Change: Announcing their two sites in U S. If you could talk.

Speaker Change: Where do you see your opportunity there.

Speaker Change: Their expansion in the other side it sounds like even given that youre, expanding or potentially considering a faster plan. So if you could talk the potential either pull in or raise the scale of Arizona. If indeed, you see a bigger opportunity there.

Giel Rutten: Yeah. Good point. Let me share our view there. Now, the announcements made by TSMC for enhancing and increasing their investments in the US, we believe that's an opportunity for Amkor. You know, the increased scale of their operation, also the enhancement of next-generation technology that would come into the U.S. will mean that the volumes will increase. And we are currently, you know, believe that in our strategy to be complementary to TSMC, that that will increase the opportunity for Amkor. We're currently evaluating the technology portfolio for our Arizona facility, because that will be impacted, moving maybe more to an on-substrate technology, but that's still to be seen.

Speaker Change: Yeah.

Speaker Change: Good point, let's let me, let me share our few data no D announcements made by Ts and CS for enhancing and increasing debt investments in the U S. We believe that that's an opportunity for amcor.

Speaker Change: You know the increased scale of their operation also.

Speaker Change: Enhancement of next generation technology that could come into the U S. A will mean that the volumes will increase.

Speaker Change: And we have currencies you know believe that in our strategy to be complementary to tease them see that that will increase the opportunity for amcor.

Speaker Change: We're currently evaluating the technology portfolio for our.

Speaker Change: So on a facility because that will be impacted.

Speaker Change: Moving maybe more to and on substrates are technologies.

Speaker Change: But that's still to be seen.

Giel Rutten: So we're looking at two ways currently. One is to accelerate, and secondly, to scale up faster than we originally anticipated in line with increasing demand. And that's how we currently evaluate the opportunities in the U.S.

Speaker Change: So we're looking at to cite two ways are currently one is to accelerate and secondly to scale up faster than we originally anticipated in line with increasing demands.

Speaker Change: And that's how we currently evaluate the opportunities in the U S.

Giel Rutten: Randy. Okay. Yeah, and a quick follow-up and then I'll ask a second question. The faster than anticipated, if you could give the timeline how you see the scale up, like in terms of going into volume for that facility, and then the second question on a couple of the advanced technology. I'm curious how you're seeing the potential come in. I think you mentioned the RDL interposer accelerating some of the R&D. So how you see in terms of design activity or opportunities once you go into production for that. And then the second you mentioned a bit more on the co-packaged optics, when you see timing and how you see participating versus TSMC, which has some vertical integration there.

Speaker Change: Randy.

Speaker Change: Okay, and a quick follow up and then I'll ask a second question.

Speaker Change: Faster than anticipated if you could give the timeline, how how you see the <unk>.

Speaker Change: Scale up like in terms of going into volume for that facility.

Speaker Change: Okay.

Speaker Change: And then the second question.

Speaker Change: A couple of the advanced technology curious, how you're seeing the potential come in I think you mentioned the RTL interposed accelerating some of the R&D. So how are you seeing in terms of design activity or opportunities.

Speaker Change: Can you go into production for that and then secondly, you mentioned a bit more on the co packaged optics when.

Speaker Change: When you see.

Speaker Change: Timing and how you see.

Speaker Change: Participating burst TSMC, which has had some vertical integration there.

Giel Rutten: Okay. Well, let me start with the first part of your question related to the timeline, Randy. We were currently still on schedule to start our manufacturing location in Arizona, the building in the second half of this year. We're looking for ways to accelerate this. And I think options are there to have a seven by 24 building schedule. You have to keep in mind that building a packaging facility for us, our last facility that we built in Vietnam, it took us 18 months from ground breaking to equipment move in. We expect that to be a little bit longer in Arizona, but we're looking for ways and means with our contractors to accelerate that.

Speaker Change: Okay.

Randy Abrams: Well, let me start with the first part of your question related to the timeline or Randy.

Randy Abrams: I mean, we're currently still on schedule to start.

Randy Abrams: Our manufacturing.

Randy Abrams: Location in Arizona the building in the second half of this year, we're looking for ways to accelerate this and I think options are there who have a seven by 24 building schedule you have to keep in mind that building a packaging facility for us or lost to.

Randy Abrams: Let's see that rebuild in Vietnam. It took US 18 months from groundbreaking to equipment move in we expect that to be shed a little bit longer in Arizona, looking but we're looking for ways and means with our contractors to work to accelerate that.

Giel Rutten: Now also with respect to the scale and the technology portfolio. Now, originally, when we started to evaluate an opportunity, and that was also publicly announced with the, our, you know, with TSMC and our lead customer, we're very much tuned towards starting with communication technology. Currently, with, you know, with the compute market growing, as it does, we are evaluating the best technology portfolio there. We believe that it's a combination of communication together with compute technology, and compute would be a combination of a few elements. It would be an RDL or two and RFD technology portfolio combined with an on-substrate portfolio.

Randy Abrams: Now also with respect to the scale and the technology portfolio.

Randy Abrams: Now originally when we started to evaluate an opportunity and that was also publicly announced which.

Randy Abrams: Our you know with with TSMC and our lead customer.

Randy Abrams: Much June towards starting with communication technology currently issue, which.

Randy Abrams: Which you know with the.

Randy Abrams: Huge markets growing as a dos.

Randy Abrams: We are evaluating the best technology portfolio there.

Randy Abrams: We believe that it's a combination of communication together with its compute technologies and compute would be a combination of a few elements it would be.

Randy Abrams: And are the alloy to an off dish technology portfolio combined with an ops on substrate portfolio.

Randy Abrams: You know good working with TSMC to be as seamless as possible for customers. That's transferred their technology depth product portfolio out of Asia into the U S. But we currently anticipate that that will.

Giel Rutten: You know, we're working with TSMC to be as seamless as possible for customers that transfer their technology, their product portfolio out of Asia into the U.S., but we currently anticipate that that will be a portfolio of technology that we will support. Now, on the timing exactly of, you know, I cannot talk about on behalf of TSMC. So there's still many details to be discussed. And we are in constant, constant communication to. the details sorted out. Now, on the co-packaged optics, we currently work with the lead customer, which is a leading data center company on the first products that go into the market.

Randy Abrams: It will be a portfolio of technology that we will support.

Randy Abrams: Now on the timing exactly off.

Randy Abrams: You know I cannot talk about it on behalf of TSMC. So there are still many details to be discussed and we are in content constant communication tool.

Speaker Change: Get the details.

Randy Abrams: Sorted out now on the co packaged optics.

Randy Abrams: We currently work with share with the lead customer, which is a leading data center companies.

Randy Abrams: The first products that go into the market we are actually in production now.

Giel Rutten: We're actually in production now. You know, there are multiple new generations coming up and that will diversify. We see, let's say, the co-packaged optics technology to diversify both within the data centers as well as within the networking. We expect multiple devices to ramp over the next couple of years. Thank you.

Randy Abrams: You know there are multiple new generations coming up and that will diversify.

Randy Abrams: <unk>, let's say the co packaged optics.

Randy Abrams: Technology to diversify both within the data centers as well as fit into networking, we expect multiple devices to ramp over the next couple of years.

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

Craig Ellis: And your next question comes from Craig Ellis with B. Reilly Securities. Yeah, thanks for taking the question. In fact, I'll start with a couple of clarifications. If you could clarify, in the communication segment, you mentioned it was stronger than you expected in the first quarter. Can you just characterize the linearity of that strength? Was it all quarter-long, early quarter, late quarter? And then, Giel, on the RDL-based opportunity you just talked about, can you clarify, is that something that, as you work on it this year, generates revenue this year, or is that revenue-generative next year? And can you comment if that would be first or second half?

Craig Ellis: Yeah. Thanks for taking the question and in fact I'll start with a couple of clarifications. If you could clarify in the communications segment. You mentioned it was stronger than you expected in the first quarter can you just characterize the linearity of that strength was it all <unk>.

Her long early quarter linked quarter, and then hill on the RTL based opportunity you just talked about can you clarify is that something that as you work on it. This year generates revenue this year or is that revenue generative next year and can you comment if that would be first or second half.

Giel Rutten: Very good, Craig. With respect to your first part of the question, how the communication segment developed and how the improved revenue developed over the quarter, I don't have the data here, but I would expect that it would be rather linear. We started the quarter pretty strong and it developed in line with normal expectations throughout the quarter, but a bit stronger than expected. We have a weekly review of how our revenue is expected, but from the beginning of the quarter, we saw, I would say, a fairly solid communication business build up. With respect to the RDL technology, currently we have one device in production for a CPU data center device.

Speaker Change: Very goods are correct with respect to your first part of the question how the communication segment developed and how the improved revenue developed over the quarter I don't have the data here, but I would expect that it would be.

Rather than linear.

Speaker Change: I wanted to call out are pretty strong and it develops in line with normal expectations throughout the quarter quite a bit stronger than expected <unk>.

Speaker Change: <unk> a weekly review of how our revenue expected book now from the beginning of the quarter we saw.

Speaker Change: I felt I would say a fairly solid communication business buildup.

Speaker Change: With respect to the RVO.

Speaker Change: Technology currently we have one device and production.

Speaker Change: For CPU.

Speaker Change: Data center device there are multiple other devices currently in qualification.

Giel Rutten: There are multiple other devices currently in qualification, and we definitely think that that's a next-generation technology that will take off. So the investments will result revenue in this year. You have to keep in mind that the investments that we're making for high-performance computing is fungible across applications. So the capacity that we put in place for 2.5D, for RDL, for large-body size flip chip ETA, even for co-packaged optics, the equipment in instances are fungible across the whole domain, even for standard bumping. So we are able to reach a high utilization. So most of the investments will start generating when they come in.

Speaker Change: I mean, we definitely think that that's a you know a next generation technology that will that will take a take off.

Speaker Change: So you know the investments village results revenue in this year.

Speaker Change: You know you have to keep in mind that the investments that we're making.

Speaker Change: For high performance computing is fungible across applications. So the capacity that we've put in place for two and a half dish for RTL four large body size flip chip VGA.

Speaker Change: Or even four co packaged optics.

Speaker Change: The equipment in instances fungible across the whole domain, even forced tend to send the bumping. So we're able to to reach a high utilization.

Speaker Change: So most of the investments will start generating rent.

Speaker Change: When they come in and of course, we need to qualify the equipment, but we will start generating revenue.

Craig Ellis: And of course, we need to qualify the equipment, but we'll start generating revenue towards the end of the year or early next year. That's very helpful. Thank you.

Speaker Change: Towards the end of the year or early next year.

Speaker Change: That's very helpful. Thank you and then the follow up is really a higher level question.

Megan Faust: And then the follow-up is really a higher level question for you or Megan, and it goes back to some commentary from last quarter's conference call. I think in characterizing the year, the company was of the view that revenues could be flat to modestly up year on year with strong half-on-half seasonality, potentially in the 40-60 range, half-on-half. Is that still the right way to think about the year, or how should we think about the year's potential and the way linearity could break down? I hand it over to Megan. Hi, Craig. Yeah, so as I just mentioned, our first half has shaped up better than we had originally expected.

Speaker Change: For you or Megan and and it goes back to some commentary.

Speaker Change: From last quarters conference call I think in characterizing the year. The company was of the view that revenues could be flat to modestly up year on year with.

Speaker Change: With strong half on half seasonality potentially in a $40 60 range half on half is that still the right way to think about the year or how should we think about the year as potential on the wave linearity could breakdown.

Speaker Change: I hand, it over to Megan.

Megan: Hi, Greg Yeah.

Speaker Change: Yes, so as I just mentioned our first shot first half has shaped up better than we had originally expected so that alone would moderate some of that first half second half.

Megan Faust: So that alone would moderate some of that first half, second half magnitude that we had talked about last quarter. With respect to our position on the second half, we're not providing second half or full year guide, given the dynamics and the environment. That being said, the fundamentals of what's driving our second half growth are still intact. And so those are really centered around communications with that new socket and the seasonal launch expected. A lot of the new compute programs that HEAL has mentioned, strength in automotive, as well as the continuation in consumer for that wearable product.

Megan: Magnitude that we had talked about last quarter.

Megan: With respect to our position on the second half, we're not providing you know second half our full year guide given the dynamics in the environment that being said the fundamentals of what's driving our second half growth are still intact and so those are really centered around.

Megan: Communications with that new socket.

Heal: And the seasonal launch expected and a lot of the new compute programs that heal has mentioned strength in automotive as well as the continuation in consumer for that wearable product.

Megan Faust: So with that, we're just gonna leave it at that point, given the dynamics. Thank you.

Megan: So with that.

Megan: Just going to leave it leave it at that point given the dynamics.

Speaker Change: Thank you and our next question comes from Peter Peng with J P. Morgan. Please state your question.

Peter Peng: And our next question comes from Peter Peng with J.P. Morgan. Please state your question. Hi, thanks for taking my question. I want to double click on your computing and specifically your 2.5D segment. It sounds like you guys are just given some of the export controls at your marquee customers. You're downtaking that. But you're also ramping with a, you know, networking switch customer this quarter. So given the puts and takes, should we expect that this segment could be flyers for the year? Or just given that, you know, that marketing customer is quite big, that this could be declining this year?

Peter Peng: Hi, guys. Thanks for taking my question.

Speaker Change: I want to double click on your.

Peter Peng: Computing and specifically your $2 five <unk>.

Speaker Change: Segment. It sounds like you guys are just given some of the export controls and your marquee customers you're down ticking that box.

Peter Peng: He also ramping and it was eight.

Peter Peng: Networking switch customer this quarter, so now given the puts and takes.

Peter Peng: Should we expect that this segment.

Peter Peng: Could be flattish for the year or just given the that marquee customer is quite big that this could be declining this year.

Giel Rutten: Yeah, Peter, let me start by sketching the color in the compute segment. Now, as you mentioned, we are indeed ramping up with a second customer in 2.5D, and we are continuing with 2.5D for our prime customer, although at lower volumes due to the current situation on export controls. Next to that, we're ramping up multiple other devices for both customers, both on the GPU domain as well as the CPU domain, and we expect that to be in production for the second half of this year, you know, given the uncertainties of the overall environment. You know, next to that, we have multiple devices in qualification that will have strength in the second half of the year.

Peter Peng: Yeah Peter.

Peter Peng: Let me start by by scratching the color and the compute segment.

Peter Peng: No as you mentioned, we are indeed ramping up with where the second court cost summit in two and a half D and we are continuing with two and a half DS four hour.

Peter Peng: Prime customer, although at lower volumes due to the share the current situation on export controls.

Next to that we're ramping up multiple other devices for both customers.

Peter Peng: Bolt on the GPU domain as well as the CPU domain.

Peter Peng: And we expect that to.

Peter Peng: To be in production for the second half of this year.

Given the uncertainties of the overall environment.

Peter Peng: You know next to them that's for sure yes.

Peter Peng: Multiple devices in.

Peter Peng: Qualification that bill will have strength in the second half of the year and that goes beyond the wafer based technology.

Giel Rutten: And that goes beyond the wafer-based technologies. You know, there are certain devices in the data center that go for large-body-size FlipGBGA. All of that contributes to strength in the computing domain. So we're optimistic for the second half of this year, for the full year, given the disclaimer that, you know, in the current macro environment, things may change rapidly. Got it.

Peter Peng: Certain devices in the share in the data center that go for large body size flip chip VGA all of that contribute to strength in the computing domain. So we have we're optimistic for the second half of this year for the full year.

Given the disclaimer that you know in the current macro environment things may change rapidly.

Peter Peng: Got it.

Giel Rutten: And maybe just kind of follow up to that question. Maybe as we kind of look into 2026, I know you guys were working on the Connect S technology with the COAS-L. Any update on there and whether you're able to support that market customer for next year? And then maybe more broadly, if you can talk about your design wind pipeline for your 2.5D segment? So, let's first try to look at the... The first part of the question on the bridge technology. Now, currently, we have two customers in qualification to be ramping by, you know, 2026. So in the course of next year, you know, the volumes are hard to predict.

Peter Peng: And maybe just kind of follow up to that question, maybe as we kind of look into two.

Peter Peng: 2026.

Peter Peng: I know you guys were working on the connect as technology was the cost L. Any update on there and whether you are able to support that marquee customer.

Peter Peng: For next year, and then maybe more broadly if you can talk about your design win pipeline for your two segments.

Peter Peng: Well, let's let's first to try to.

Peter Peng: Two.

Peter Peng: We'll look at dish.

Peter Peng: <unk>.

Peter Peng: The first part of the question on the bridge technologies.

Peter Peng: So currently we have two customers and qualification.

Peter Peng: To be sure to be ramping Bosch you know 2026, so in the course of next year.

Peter Peng: You know the volumes are hard to predict.

Giel Rutten: But we expect that to complement our 2NRFD and RDL-based portfolio. So we still expect growth, and that's also how we invest. We also see diversification in the compute segment, where multiple devices, as well as, you know, in the data center, you know, moving from GPU, and on top of that we see CPUs programs in data centers. We also see networking devices being refreshed and renewed in data centers. So the portfolio is broadening beyond, I would say, the single device, GPU device that you're referring to.

Peter Peng: But we expect that.

Speaker Change: To complement our two went off D and are the L based our portfolio.

Speaker Change: So we still expect growth and that's also why we invest we also see diversification in the compute segment, where multiple devices as well as you know in the data center.

Speaker Change: Moving from GPU and on top of that D. C. Cpus programs in data centers, you also see networking devices being refreshed and renewed in data center. So the portfolio is broadening.

Speaker Change: Beyond.

Speaker Change: I would say the single device GPU device that could occur.

Steve Barger: Thank you.

Speaker Change: Thank you.

Steve Barger: And our next question comes from Steve Barger with KeyBank Capital Markets. Thanks.

Speaker Change: And our next question comes from Steve Barger with Keybanc capital markets. Please state your question.

Speaker Change: Thanks.

Steve Barger: As you move into the Socket Recovery Ramp, does the content and pricing there mean you'll outgrow the prior program, and do you have visibility into share gains or content gains beyond the socket issue that we should be thinking about, or is whatever happens in the back half just more about unit volume? Let's start from the latter part of your question. You know, our overall business in communication is very dependent on unit volume. Unit volume depends on bill plans for individual customers both in iOS as well as in the Android ecosystem, and these, you know, bill plans may be impacted by current trade restrictions, export controls, et cetera.

Speaker Change: As you move into the socket recovery ramp does the content and pricing, they're menial outgrow the prior program.

Speaker Change: And do you have visibility into share gains are content gains beyond the socket issue that we should be thinking about or is whatever happens in the back half just more about unit volume.

Speaker Change: Mhm.

Speaker Change: That's.

Speaker Change: Start from the latter part of your question you know our overall business in communication is very dependent on unit volume.

Speaker Change: Unit volume depends on build plans for individual customers both in <unk> as well as in the Android ecosystem and these you know build plants may be impacted by current trade restrictions export controls et cetera, so that as a disclaimer.

Giel Rutten: So, that is a disclaimer.

Giel Rutten: Now, to go back to your earlier part of your question. you know, how is the socket that we're currently ramping in the latter part in the next generation of iOS devices? How does that compare to previous devices when it comes to technology complexity and pricing? You know, if we compare it on revenue potential for the second half of the year and we compare it with previous devices, then it's in the same order of magnitude. So the devices are different, but the total revenue potential is in the same order of magnitude if the volumes are the same.

Speaker Change: Now to go back to your earlier part of your question.

Speaker Change: How is the sockets that are currently ramping in the latter part in the next generation <unk> devices, Oh, that's does it compare to previous devices when it comes to technology complexity and pricing.

Speaker Change: You know if we compare it.

Speaker Change: The revenue potential for the second half of the year and we compare it with previous devices and it's in the same order of magnitude so the devices.

Speaker Change: Are different but the total revenue potential is in the same order of magnitude.

Speaker Change: If the volumes are the same.

Speaker Change: And that's that's steel certain issues that we have been in the middle part of your question is what is our.

Giel Rutten: And that's the uncertainty that we have.

Speaker Change: Over a few hours.

Speaker Change: Visibility of our let's say.

Giel Rutten: Then let's say position in the individual phones. Do we have a clear visibility of our socket position beyond the sockets that we regain? And there we have a very open communication with our lead customer and customers, both in iOS as well as in in the Android ecosystem. And we know pretty exactly which positions that we're in. Slightly uncertainty is that in some of the positions and slots, there are multiple suppliers. So then it's a bit on market share division. But overall, we know exactly what our footprint is. And, you know, we do a very detailed planning on volume expectation, you know, for the ramp of a new phone generation.

Speaker Change: Position and the individual.

Speaker Change: Phones do we have a clear visibility of our solid position beyond the sockets that we regain and there we have a very open communication with our lead customer and customers both in our U S. S wellness isn't there.

Speaker Change:

Speaker Change: In the Android ecosystem, and we know pretty exactly.

Speaker Change: Which which positions that's where in slightly or certainty is that in some of the positions and slots.

Speaker Change: Got it off.

Speaker Change: No multiple suppliers. So then it's a bit on market share the vision, but overall, we know exactly what our footprint is and you.

Speaker Change: You know, we do a very detailed planning on full year expectation.

Speaker Change: You know for the ramble for new phone generation.

Steve Barger: Understood that's that's good detail. Thank you.

Speaker Change: Understood that's good detail. Thank you.

Giel Rutten: And I know you can't make firm statements about trade issues at this point. But if you do have customers asked to move a program to mitigate tariffs, and it goes into an area with higher labor costs, or if you incur costs, because you have to move things around, is that all complete pass through? Or how will that customer conversation go? Well, this goes on a case-by-case basis. We cannot say that we have a general approach. I mean, we are all in a... I hope it's a once-in-a-lifetime experience, but this is definitely a first for many of us.

Speaker Change: I know you can't make firm statements about trade issues at this point, but if you do have customers estimate of a program to mitigate tariffs and it goes into an area with higher labor costs or if you incur costs because you have to move things around is that all complete pass through or how will that customer conversation go.

Well this goes on a case by case case basis.

Speaker Change: Cannot say that we have a general approach I mean, we're all in in.

Speaker Change: I would hope putting a once in a lifetime experience, but this is definitely a first for for many of us.

Giel Rutten: And we do that on a case-by-case basis. I mean, generally, we work with customers for many, many years. I think on our lead customers, you know, generally, all more than 10 years, we have a conversation and there is a certain rationale that if we incur more cost that, you know, we look at the rationale and we come to an agreement. I feel that in the current way that Amkor approaches this, you know, we work with a high level of agility and we see our customers work in the same way, looking for practical and pragmatic solutions in case that bottlenecks occur in the supply chain.

Speaker Change: And we do that on a case by case basis, I mean, generally we work with customers for many many years, so I think on our lead customers.

Speaker Change: You know generally all more than 10 years, we have a conversation and that has a certain rationale that if we incur more costs that are you know we look at the rationale and we come to an agreement and I feel that in the current.

Speaker Change: Way that amcor approaches. This you know we work with a high level of agility and we see our customers work in the same way looking for practical and pragmatic solutions in case, that's bottlenecks occurred in the supply chain.

Giel Rutten: Understood, thank you.

Speaker Change: Understood. Thank you.

Tom Diffely: Thanks, and our next question comes from Tom Diffely with DA Davidson.

Speaker Change: Thanks, and our next question comes from Tom Diffley with D. A Davidson. Please state your question.

Tom Diffely: Please state your name. Yes, good afternoon. Thank you for taking my questions. I'm curious, maybe to follow up on the communication side. Do you expect the AI going to the edge to drive unit growth this year in the handsets? And perhaps if not, is there enough technology changes to allow you to grow in a further depressed market? That's not an easy question to answer, Tom, with respect to AI entering the smartphone segment. You know, we believe it will enter the smartphone segment through the premium tier of the market. You know, that's that's basically good for Amcor because that's where we are concentrated when it when it comes to our market position.

Speaker Change: Yes. Good afternoon. Thank you for taking my questions a hill curious maybe as a follow up on the communications side do you expect the going to the edge to drive unit growth. This year in the handsets and perhaps if not is there enough technology changes to allow you to grow.

Speaker Change: For the depressed market.

Speaker Change: Okay.

Speaker Change:

Speaker Change: That's not an easy question to answer Tom.

Speaker Change: The spec to a I N thing the smartphone segment.

Speaker Change: We believe it will enter the smartphone segment through the premium tier of the market.

Speaker Change: You know that's that's basically good for M. CT because that's where we are concentrated dependent when it comes to our market position.

Giel Rutten: Will it drive upside this year already? You know, it's difficult for me to forecast that part of the market. Will it come at a given point in time? I currently see that there is definitely a belief in the market that AI will proliferate towards edge devices, whether it's smartphones or whether it's PCs. I think there are some first applications coming on the market. It will drive innovation in the smartphones, whether it's innovation in the connectivity part, whether it's innovation in the compute or co-processor part in the phones or in the modems. I think many of these devices will go through an innovation cycle.

Speaker Change: Will it drive upside to this year already.

Speaker Change: You know it's difficult for me to forecast that part of the market.

Speaker Change: Will it come at a given point in time have built.

Speaker Change: I currently see deaths that is definitely believe in the market that the AI will proliferate towards edge devices, whether it's smartphones or whether that species I think there are some first applications coming on the market.

Speaker Change: It will drive innovation into smartphones, whether it's our innovation and the connectivity part whether it's innovation in the compute or a co processor path into phones.

Or in the modems I think many of these devices will go through an innovation cycle.

Speaker Change:

Giel Rutten: You know, when will it come? When will it start driving upside? It's difficult to say. You know, this year is a very difficult year, anyhow, for the market to predict volume.

Speaker Change: When will it come when metal sought driving upsides, it's difficult to say.

Speaker Change: This year is a very difficult year.

Speaker Change: Anyhow for the market to predict volumes.

Tom Diffely: Okay, that's fair.

Speaker Change: Okay, No that's fair.

Megan Faust: Megan, I had a question on the margins for the reported quarter. When you compare fiscal first quarter 25 to fiscal first quarter 24, you know, on lower revenue, you had about the same COGS. And I'm curious, you know, you obviously talked about overhead absorption being an issue, but to get the same level of COGS, was there a difference in the mix? Or was there weaker pricing? Or how would you describe what drove that? So, Tom, I just want to clarify, you're looking at Q125 compared to Q124? Correct, yes. So really, the main difference between those two periods is moving our Vietnam factory to production.

Speaker Change: Megan I had a question on the the margins for the reported quarter when you compare.

Speaker Change: Fiscal first quarter 'twenty five fiscal first quarter 'twenty four.

Speaker Change: You'll have lower revenue you had about the same Cogs and <unk>.

Speaker Change: Curious.

Speaker Change: So you've talked about.

Speaker Change: Overhead absorption issue, but to get the same level of Cogs was there a difference in the mix or was there a weaker pricing or how would you describe what drove that.

So Tom I, just wanted to clarify here looking at Q1, 'twenty five compared to Q1 'twenty four.

Speaker Change: Correct, yes.

Speaker Change: So really the main difference between those two periods isn't moving our Vietnam factory to production and so those costs are having.

Megan Faust: And so those costs are having a impact on the margin in twenty five that was not there in twenty four. For Q1, that was around one hundred basis points. Okay, yeah, perfect.

Speaker Change: Having any impact on the margin in 'twenty five that was not there in 'twenty four.

Speaker Change: For Q1 that was around 100 basis points.

Speaker Change: Okay.

Operator: All right. Well, thank you. Thank you.

Speaker Change: Okay.

Speaker Change: Alright, well thank you.

Hill: 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.

Giel Rutten: At this time, I'm showing no further questions.

Giel Rutten: I would like to turn the call back over to Giel for closing remarks. Thank you.

Speaker Change: Thank you.

Now let me recap the key messages. First quarter results met our expectations with revenue of 1.32 billion dollars and EPS of 9 cents. Second quarter revenue is expected to grow 8% at the midpoint of guidance of $1.425 billion. We stay agile to support our customers in this dynamic environment and we stay focused on executing our long-term strategy by strengthening our technology leadership, expanding our geographic footprint and partnering with lead customers in growth markets.

Hill: Now, let me recap the key messages.

Hill: First quarter results met our expectations with revenue of $1, three $2 billion and EPS of nine.

Hill: Second quarter revenue is expected to grow 8% at the midpoint of guidance of $1 $4 billion to $5 billion.

Hill: We stay agile to support our customers in this dynamic environment and we stay focused on executing our long term strategy by strengthening our technology leadership, expanding our geographic footprint and partnering with lead customers in growth markets.

Thank you for joining the call. Ladies and gentlemen, this concludes today's conference call. You may

Hill: Thank you for joining the call today.

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