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Amkor Technology (AMKR) is expected to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended December 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be releas ...

Core Viewpoint - The article discusses the significant investment and strategic shifts in the semiconductor packaging industry, particularly focusing on advanced packaging technologies driven by the AI wave and the structural changes in the storage industry [1][2]. Group 1: Investment and Market Trends - SK Hynix announced a 19 trillion KRW (approximately 12.9 billion USD) investment to build an advanced chip packaging factory in Cheongju, South Korea, reflecting the structural changes in the storage industry due to AI [1]. - The global advanced chip packaging market is projected to grow from 50.38 billion USD in 2025 to 79.85 billion USD by 2032, with a compound annual growth rate (CAGR) of 6.8% [2]. - By early 2026, leading packaging and testing companies are expected to ramp up advanced packaging capacity, indicating a competitive landscape focused on advanced packaging capabilities [2]. Group 2: TSMC's Dominance - TSMC is recognized as the leader in advanced packaging, holding over 60% market share in semiconductor manufacturing and establishing significant competitive barriers in advanced packaging technologies [2][3]. - TSMC has developed three branches of CoWoS technology: CoWoS-S for medium-sized chips, CoWoS-R for greater design flexibility, and CoWoS-L for large AI chips [3]. - TSMC's SoIC technology, based on CoWoS and wafer-on-wafer stacking, offers higher interconnect density and improved performance compared to traditional 2.5D packaging [3]. Group 3: Capacity Expansion and Technological Advancements - TSMC's CoWoS capacity is projected to increase 6-8 times from 2023 to 2026, with a CAGR exceeding 60% [5]. - TSMC's new advanced packaging facilities, including the flagship AP6 plant in Zhunan, are designed for full automation and are expected to handle significant orders from major clients like NVIDIA and AMD [5][6]. - TSMC is also expanding its advanced packaging capabilities in the U.S. with plans for two new facilities in Arizona, focusing on SoIC and CoPoS technologies [6]. Group 4: Competitors' Strategies - ASE, as the largest packaging and testing foundry, is benefiting from the advanced packaging trend, with over 60% of its ATM business expected to come from advanced packaging by 2025 [9]. - ASE is developing its own 2.5D packaging platform, FOCoS, and is expanding its production capacity across multiple sites, including a new K28 plant aimed at meeting the demand for AI and GPU chips [10][11]. - Amkor is enhancing its market position through partnerships, such as its collaboration with Intel on EMIB technology, and expanding its facilities in the U.S. to meet advanced packaging demands [15][16]. Group 5: Mainland China's Participation - Mainland Chinese companies are actively investing in advanced packaging technologies and capacity, with firms like Yongxi Electronics and Changjiang Electronics focusing on high-density packaging and automotive electronics [20][22]. - Yongxi Electronics is establishing a new production base in Malaysia to enhance its overseas strategy, while Changjiang Electronics is expanding its automotive electronics packaging capabilities [21][22]. - Tongfu Microelectronics is also increasing its advanced packaging capacity, particularly in automotive and high-performance computing sectors, to meet growing market demands [23][24]. Group 6: Future Outlook - The article concludes that while TSMC's dominance in advanced packaging is unlikely to be challenged in the short term, other specialized packaging firms are seeking to differentiate themselves through flexible capacity and innovative technologies [25][27]. - The collective expansion of packaging firms represents a significant industry bet on the demand for AI-driven computing power, with the potential for winners to emerge as the market stabilizes and technology paths clarify [27].

Group 1: Samsung's Strategy in Wafer Production - Samsung plans to close its 8-inch wafer fab S7 to focus on more profitable 12-inch fabs, reflecting a global trend in the semiconductor industry [1][2] - The closure will reduce Samsung's monthly production capacity of 8-inch wafers from 250,000 to below 200,000, with S7 contributing 50,000 wafers [1] - The current utilization rate of Samsung's 8-inch fabs is approximately 70%, as the company shifts focus to 12-inch fabs for key products like CMOS image sensors [1][2] Group 2: Market Dynamics and Competitors - TrendForce predicts a 2.4% decline in global 8-inch wafer fab capacity this year, with TSMC also reducing its capacity [2] - Despite the supply decrease, demand remains strong, particularly for power management ICs used in AI servers, keeping the average utilization rate of global 8-inch fabs between 85% and 90% [2] - DB Hitek may benefit from Samsung's capacity reduction, as it currently operates at full capacity and specializes in small-batch production of various chips [2][3] Group 3: Amkor Technology's Challenges and Opportunities - Amkor Technology plans to close its Hakodate factory in Japan due to weak demand, leading to a significant drop in its stock price [4][5] - The closure is expected to be completed by the end of 2027, with production shifting to existing facilities in Kyushu [4] - Despite recent stock price increases, Amkor faces challenges with declining revenue growth, projected to drop from 15.5% in 2022 to -8.3% in 2023 [9] Group 4: Future Projections for Amkor - Analysts predict Amkor's revenue will rebound to $6.65 billion in 2025, driven by AI demand, with a potential increase in orders from Nvidia [9][10] - The company is investing $7 billion in a new facility in Arizona, supported by $407 million in incentives from the U.S. government, to enhance its advanced packaging capabilities [7][10] - Expected revenue for 2026 is projected at $7.27 billion, with a significant increase in earnings per share anticipated due to investments in advanced packaging [10]

Core Viewpoint - Amkor Technology is facing challenges due to weak demand, leading to the decision to close its Hakodate factory in Japan by December 2027, with production capacity being consolidated to existing facilities in Kyushu [1][2]. Group 1: Company Overview - Amkor Technology, established in 1968 and headquartered in Tempe, Arizona, is a leading provider of semiconductor packaging and testing services, offering solutions such as wafer bumping, packaging design, and advanced packaging technologies [2]. - The company recently saw its stock price surge over 10%, reaching a 25-year high, driven by analysts raising the target price and optimistic projections regarding its position in the CoWoS (Chip-on-Wafer-on-Substrate) market [2][3]. Group 2: Market Dynamics - The semiconductor industry is a significant driver for Amkor, accounting for 34.57% of its sales, with the company positioning itself as an advanced packaging supplier and collaborating with industry leaders like Nvidia, which controls about 60% of the CoWoS demand [3]. - Amkor is expected to build a monthly capacity of approximately 50,000 wafers for CoWoS over the next five years, which could substantially contribute to its revenue if fully utilized [3]. Group 3: Future Outlook - Amkor is investing $7 billion in a new facility in Peoria, Arizona, to prepare for advanced packaging technologies, supported by $407 million in incentives from the U.S. CHIPS and Science Act, with plans for production to begin in mid-2028 [4]. - The company anticipates a rebound in revenue growth, projecting total revenue of $6.65 billion in fiscal year 2025, a year-on-year increase of 5.31%, driven by the growth of artificial intelligence [5]. - For 2026, revenue is expected to reach $7.27 billion, reflecting a year-on-year growth of 9.29%, bolstered by potential orders from Nvidia [6].

Core Viewpoint - Amkor Technology Inc. (NASDAQ: AMKR) is rated as a Buy, primarily due to its significant customer base in the semiconductor industry, which accounts for 34.57% [1] Company Analysis - The partnership with Nvidia is highlighted as a key factor contributing to Amkor's positive outlook [1] - The company is positioned within the technology sector, focusing on innovation and sustainability [1] Investment Strategy - The investment approach is based on "First Principles," which involves deconstructing complex problems to identify overlooked investment opportunities [1] - The analyst has a strong background in investment, private equity, and venture capital, indicating a robust capability to deliver strong returns [1]

Group 1 - UBS downgraded Amkor Technology (AMKR.US) from "Buy" to "Neutral" while raising the target price from $38 to $55, citing that the recent stock price increase reflects strong expectations for computing capability growth but must weigh costs and risks [1] - Since the low point in April 2025, Amkor's stock price has risen by 250%, but UBS believes the stock price reflects faster growth expectations in computing capability, recovery in smartphone SiP, cyclical mainstream market recovery, and the potential of long-term projects in Arizona [1] - UBS expects strong growth in computing demand for 2026-2027, raising the 2025 sales growth forecast from 5% to 6%, while maintaining growth expectations of 14% and 12% for 2026 and 2027, respectively, which is above market expectations of 9% for both years [2] Group 2 - The growth of mature businesses is moderate, with high growth in computing business balanced by low-profit SiP in consumer electronics, smartphones, and automotive/industrial sectors [3] - UBS anticipates a mild recovery in automotive/industrial business with expected growth of 10% and 5% for 2026 and 2027, respectively, due to normalized inventory post-COVID and Amkor's advantages in ADAS/information entertainment [3] - Investment cycles are extended, and high valuations limit upside potential, with Amkor's $7 billion Arizona wafer fab expected to start production in 2028 and profitability in 2029, leading to negative free cash flow of $1 billion from Q4 2025 to 2028 [4]

Market Overview - U.S. stock markets ended positively with the Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 gaining 1.18%, 1.08%, and 0.93% respectively despite mid-week volatility [1] - Market direction was influenced by U.S. policy developments regarding Venezuela, enthusiasm for AI-linked technology stocks, and mixed economic data [1] Economic Indicators - The manufacturing Purchasing Managers' Index (PMI) fell to 47.9 in December 2025, the lowest since October 2024, indicating contraction [2] - Conversely, the Services PMI unexpectedly rose to 54.4 in December from 52.6 in the previous month, indicating expansion [2] - Nonfarm Payrolls increased by 50,000 jobs in December, below expectations, while the unemployment rate slightly declined to 4.4% from 4.5% in November [2] - Average Hourly Earnings increased by 3.8% year-over-year, up from 3.6% in November [2] Stock Performance - Indivior PLC shares rose 21.7% since being upgraded to Zacks Rank 1 (Strong Buy) on October 31, outperforming the S&P 500's 2% increase [4] - FormFactor, Inc. shares increased by 15.9% since its upgrade to Zacks Rank 2 (Buy) on October 31, also outperforming the S&P 500 [5] - An equal-weight portfolio of Zacks Rank 1 stocks outperformed the equal-weight S&P 500 index by 7 percentage points, returning +17.81% compared to +10.85% for the index [5] Focus List and Model Portfolios - The Zacks Focus List portfolio returned +22.1% in 2025, outperforming the S&P 500 index's +17.9% gain [12] - The Focus List has consistently outperformed the S&P 500 over various time frames, including a +22.1% return in the last year compared to +17.9% for the index [14] - The Earnings Certain Admiral Portfolio (ECAP) returned -1.67% in 2025, underperforming the S&P 500's +17.9% gain [15] - The Earnings Certain Dividend Portfolio (ECDP) returned -0.6% in 2025, also underperforming compared to the S&P 500 [19] Notable Stock Recommendations - FIGS, Inc. shares surged 56.8% since being upgraded to Outperform on November 7, significantly outperforming the S&P 500's 3.5% increase [8] - Five Below, Inc. shares increased by 21.7% since its upgrade on October 29, again outperforming the S&P 500 [8] - Mettler-Toledo International Inc. and Accenture plc saw returns of 16.6% and 16.5% respectively over the past 12 weeks [14]

Core Insights - Amkor Technology (AMKR) is evolving beyond its traditional role as an outsourced semiconductor assembly and test (OSAT) provider, indicating a shift in its operational focus and capabilities [1] Company Overview - Amkor Technology is headquartered in Arizona and is primarily known for its OSAT services, which typically operate at the end of the silicon value chain [1] Industry Context - The role of OSATs is becoming increasingly complex, suggesting that companies like Amkor may be expanding their services and capabilities beyond conventional boundaries [1]

Summary of Key Points from Conference Call Records Industry Overview: Semiconductors Core Insights - **Sustained WFE Growth**: The semiconductor industry is expected to see an 11% year-over-year (YoY) growth in wafer fabrication equipment (WFE) by 2026, driven by transitions in leading-edge logic and DRAM due to AI datacenter expansions [1][6][10]. - **Memory Market Dynamics**: The NAND supply/demand balance has tightened significantly, with price increases anticipated through 2026, supported by strong SSD demand from hyperscalers and enterprises [1][6]. - **Investor Expectations**: Elevated investor expectations following strong third-quarter results mean that upcoming earnings and guidance must meet high standards [1][7]. Company-Specific Insights Applied Materials (AMAT) - **Rating**: Buy - **Outlook**: Expected upside in guidance due to improved memory spending outlook, with a focus on DRAM and foundry/logic segments [2][6]. - **Financial Estimates**: Anticipated 1% revenue upside for the quarter and 4% quarter-over-quarter (QoQ) revenue improvement, with non-GAAP EPS estimates 8% above consensus for CY26 [8][10]. Entegris (ENTG) - **Rating**: Sell - **Concerns**: Cautious outlook due to margin headwinds and limited growth from fab construction-related CapEx, which constitutes about 25% of revenue [3][58]. - **Financial Estimates**: Expected 2% revenue downside for the quarter, with guidance for flattish revenue QoQ [60]. Lam Research (LRCX) - **Rating**: Buy - **Focus Areas**: Investors are expected to concentrate on DRAM spending and NAND upgrades, with modest revenue upside anticipated for the quarter [16][18]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 1% above consensus for CY26 [17]. KLA (KLAC) - **Rating**: Neutral - **Investor Focus**: Management's view on process control intensity and growth expectations for 2026 WFE will be critical [24][26]. - **Financial Estimates**: Anticipated over 1% revenue upside for the quarter, with guidance for flat revenue QoQ [25]. MKS Instruments (MKSI) - **Rating**: Sell - **Outlook**: Focus on 2026 WFE expectations and chemistry momentum, with a balanced investor positioning [32][34]. - **Financial Estimates**: Expected 1% revenue upside for the quarter, with guidance for slight revenue growth QoQ [33]. Teradyne (TER) - **Rating**: Buy - **Key Focus**: Sustainability of semi-test growth and Merchant GPU qualification progress [40][43]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 13% above consensus for CY26 [42]. Qnity (Q) - **Rating**: Buy - **Investor Focus**: Wafer start recovery and operational execution will be key areas of interest [49][52]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with guidance for flattish revenue QoQ [51]. SanDisk (SNDK) - **Rating**: Buy - **Focus Areas**: Sustainability of NAND pricing growth and enterprise SSD qualification momentum [66][68]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 9% below consensus for CY26 [67]. Seagate (STX) - **Rating**: Buy - **Investor Focus**: Sustainability of HDD pricing growth and HAMR production ramp [73][75]. - **Financial Estimates**: Expected 1% revenue upside for the quarter, with guidance for flattish revenue QoQ [74]. Additional Considerations - **CapEx Monitoring**: Investors are advised to closely monitor CapEx revisions from leading foundry and memory players, as well as signs of wafer start recovery, which could create upside for select suppliers [1][19]. - **China Exposure**: Continued focus on China exposure and its implications for revenue growth in 2026 remains a critical point for investors [9][26]. This summary encapsulates the key insights and financial expectations from the semiconductor industry and specific companies, highlighting potential investment opportunities and risks.