Amkor Technology(AMKR) - 2023 Q2 - Quarterly Report

Financial Performance - Amkor's net sales decreased by $46.9 million, or 3.1%, to $1,457.9 million for the three months ended June 30, 2023, compared to $1,504.9 million for the same period in 2022[99]. - Gross margin for the three months ended June 30, 2023 decreased to 12.8%, down from 16.6% in the same period of 2022, primarily due to higher material costs and lower factory utilization[99]. - Operating income margin decreased by 430 basis points to 5.2% for the three months ended June 30, 2023, from 9.5% for the same period in 2022[100]. - The consumer end market sales decreased by 27% and 35% for the three and six months ended June 30, 2023, respectively, while communications market sales grew by 7% and 4% during the same periods[104]. - Operating cash flow for the six months ended June 30, 2023, was $422.6 million, a decrease of $39.7 million compared to $462.3 million for the same period in 2022[133]. - Free cash flow for the six months ended June 30, 2023, was $146.0 million, an increase of $23.1 million from $122.8 million in the same period of 2022[136]. Capital Expenditures and Investments - Capital expenditures totaled $282.3 million for the six months ended June 30, 2023, compared to $340.2 million for the same period in 2022, focusing on advanced packaging and the Vietnam Facility[100]. - Capital expenditures for the six months ended June 30, 2023, totaled $282.3 million, with expectations for 2023 capital expenditures to be approximately $750 million[129][130]. - Cash used in investing activities decreased by $107.8 million to $(418.9) million for the six months ended June 30, 2023, primarily due to reduced payments for property, plant, and equipment[134]. Debt and Interest - As of June 30, 2023, the company had debt of $1,131.5 million, with $156.0 million due within 12 months[122]. - Interest expense for the six months ended June 30, 2023, increased to $30.5 million, up 6.2% from $28.7 million in the same period of 2022[110]. - Total debt maturities amount to $1.14 billion, with an average interest rate of 4.3%[144]. - Fixed rate debt totals $992.5 million, with an average interest rate of 1.3% for the remaining 2023[144]. - Variable rate debt amounts to $145.0 million, with an average interest rate of 5.7%[144]. Cash and Liquidity - As of June 30, 2023, Amkor had cash and cash equivalents of $804.8 million and short-term investments of $399.2 million[97]. - As of June 30, 2023, the company had cash and cash equivalents and short-term investments totaling $1,204.1 million, with $1,057.7 million held offshore[118]. - The company anticipates continuing to pay quarterly cash dividends, having paid $36.9 million in total cash dividends during the six months ended June 30, 2023[127]. - Approximately $91.6 million remains available for stock repurchases under the Stock Repurchase Program as of June 30, 2023[128]. Economic Outlook and Market Conditions - The company anticipates challenging macroeconomic conditions in the second half of 2023 and plans to manage capacity expansion and control costs accordingly[98]. - Amkor's business is cyclical and currently experiencing a correction, influenced by broader economic factors and supply chain disruptions[94]. Foreign Exchange and Risk Management - Approximately 90% of net sales for the six months ended June 30, 2023, were denominated in U.S. dollars, with the remaining sales primarily in Japanese yen[140]. - A 10% appreciation of foreign currencies against the U.S. dollar would have resulted in a $15 million decrease in income before taxes for the six months ended June 30, 2023[139]. - The company reported a foreign exchange loss of $15.2 million for the six months ended June 30, 2023, compared to a loss of $24.0 million for the same period in 2022[141]. - The company employs natural hedging techniques and forward contracts to manage foreign currency risk[138]. Research and Development - Research and development expenses increased by 21.9% to $45.7 million for the three months ended June 30, 2023, compared to $37.5 million in 2022, due to additional costs for advanced packaging technology projects[108]. Other Expenses - Total other expense, net, decreased by 62.3% to $2.5 million for the three months ended June 30, 2023, from $6.6 million in the same period of 2022[110]. - Income tax expense for the three months ended June 30, 2023, was $9.4 million, down from $10.8 million in the same period of 2022, reflecting a decrease of $1.4 million[112].