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Item 1. Business

2022-02-18 compared with 2021-02-19 · 181 added, 194 removed, 209 unchanged (64% of the section changed)

Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services.

Amkor pioneered the outsourcing of semiconductor packaging and test services through a predecessor corporation in 1968, and over the years we have built a leading position by:

Amkor was a pioneer in the outsourcing of semiconductor packaging and test services, and over the years we have built a leading position by:

• Designing and developing innovative packaging and test technologies;

• Offering a broad portfolio of cost-effective solutions and services;

• Focusing on strategic end markets that offer solid growth potential;

• Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies;

• Collaborating with customers, original equipment manufacturers (“OEMs”) and equipment and material suppliers;

• Developing a competitive cost structure with disciplined capital investment;

• Collaborating with customers, foundries, original equipment manufacturers (“OEMs”) and equipment and material suppliers;

• Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution;

• Providing a geographically diverse operating base, with research and development, engineering support and production capabilities at various facilities in China, Japan, Korea, Malaysia, the Philippines, Portugal and Taiwan.

• Providing a geographically diverse operating base;

• Focusing on strategic end markets that offer solid growth potential;

• Developing a competitive cost structure through disciplined capital investment.

Our packaging and test services are designed to meet application and chip specific requirements including:

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However, the availability of technologically advanced outsourced manufacturing services has encouraged IDMs to outsource a portion of their manufacturing.

Fabless semiconductor companies do not have factories and focus exclusively on the semiconductor design process and outsource virtually every step of the manufacturing process.

Fabless semiconductor companies utilize contract foundries to manufacture their semiconductors in wafer form and companies such as Amkor for their packaging and test needs.

By offering a broad package portfolio, Amkor allows IDMs to outsource packaging and test services and focus their investments on core competencies such as silicon fabrication.

Fabless semiconductor companies do not have factories.

They focus exclusively on semiconductor design and outsource virtually every step of the manufacturing process, utilizing contract foundries to manufacture their semiconductors in wafer form and companies such as Amkor for their packaging and test needs.

Some companies will engage a contract foundry to manage the complete semiconductor manufacturing process, and in turn, the contract foundry will outsource some of its packaging and test needs.

AVAILABLE INFORMATION

Amkor files annual, quarterly and current reports, proxy statements and other information with the U.S.

Securities and Exchange Commission (the “SEC”).

The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Amkor) file electronically with the SEC.

The SEC’s website is http://www.sec.gov .

Amkor’s website is http://www.amkor.com.

Amkor makes available, free of charge, through its website:

our annual reports on Form 10-K;

quarterly reports on Form 10-Q;

current reports on Form 8-K;

Forms 3, 4 and 5 filed on behalf of directors and executive officers and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

We also make available, free of charge, through our website, our

Corporate Governance Guidelines, the charters of the Audit Committee, Nominating and Governance Committee and Compensation Committee of our Board of Directors, our Code of Business Conduct, our Code of Ethics for Directors and other information and materials.

The information on Amkor’s website is not incorporated by reference into this report.

INDUSTRY BACKGROUND

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These trends include:

• An increasing demand for mobile and connected devices, including the worldwide adoption of “smart” phones, tablets and other Internet-of-Things (IoT) devices that can access the internet and provide multimedia capabilities.

• An increase in mobility and connectivity capabilities and growing digital content driving demand for new broadband wired and wireless networking equipment.

• The proliferation of semiconductor devices into well-established end products such as automotive systems due to increased use of electronics for safety, navigation, fuel efficiency, emission reduction and entertainment systems.

• An overall increase in the semiconductor content within electronic products to provide greater functionality and higher levels of performance.

• The emergence of specialized chips designed to collect, analyze and store the digital content driven by the growth of cloud computing.

These chips, sometimes referred to as “chiplets,” include data accelerators, artificial intelligence and machine learning devices.

The semiconductor industry is adopting a chiplet based approach to reduce the overall cost, improve the individual yields and deliver required performance.

In this type of packaging, diverse dies of different geometries are positioned close to each other within the same package.

• The growth of advanced System-in-Package (“SiP”) modules where multiple semiconductor and other electronic components with different functionalities are combined into a single package.

The increasing demand for miniaturization and higher functionality at competitive cost is driving the adoption of advanced SiP in new products.

Advanced SiPs are the primary vehicle for package-level integration, which allow customers to combine integrated circuits (“ICs”) from different silicon nodes and different foundries.

• An increasing demand for mobile and connected devices, including the worldwide adoption of “smart” phones, tablets and other Internet-of-Things (“IoT”) devices that can access the internet and provide multimedia capabilities.

• The expansion of 5G infrastructure and enabled devices.

• The proliferation of semiconductor devices into well-established end products such as automotive systems for automation and driver assist, electrification and infotainment systems.

• An increase in mobility and connectivity capabilities driving demand for new broadband wired and wireless networking equipment.

• Digitalization driving expansion of data generation and storage.

• The adoption of Heterogeneous Integration (diverse dies positioned close to each other within the same package) to reduce cost, improve yields and deliver required performance in datacenter computing, artificial intelligence and similar end uses.

• The growth of advanced system-in-package (“SiP”) modules (combining multiple semiconductor and other electronic components in a single package) to meet the demand for miniaturization and higher functionality at competitive cost.

• The increase in digital format in our environment, from sensors for automobiles (e.g., pressure, radar, LiDAR and image recognition), mobile devices (e.g., 3D motion, temperature, acceleration and imaging), and IoT (e.g., in-home sensing from temperature to weather and wearables).

As a supplier in the semiconductor industry, our business is cyclical by nature and impacted by broad economic factors, such as worldwide gross domestic product and consumer spending.

Historical trends indicate there has been a strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles.

With the exception of 2020, where the Covid-19 pandemic caused worldwide gross domestic product levels to decline during a period of strong growth in the semiconductor industry, there has generally been a strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles.

Outsourcing Trends in Semiconductor Manufacturing

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Packaging and test service providers have developed expertise in advanced technologies.

The increasing demands for miniaturization, greater functionality, lower power consumption and improved thermal and electrical performance are driving the continuous development of semiconductor packaging and test technologies that are more sophisticated, complex and customized.

This trend has led many semiconductor companies and OEMs to view packaging and test as enabling technologies requiring the kind of leading-edge expertise for technological innovation found in the leading outsourced assembly and test companies.

This trend has led many semiconductor companies and OEMs to view packaging and test as enabling technologies requiring the technological innovation expertise found in the leading outsourced assembly and test companies.

At the same time, these companies are often looking to reduce the internal manufacturing and research and development costs in packaging and test solutions.

As a result, many of these companies are increasingly relying on packaging and test service providers as key sources for new package designs and advanced interconnect technologies.

Packaging and test service providers offer a cost-effective solution in a highly cyclical, capital intensive industry.

Packaging and test service providers offer a cost-effective solution in a cyclical, capital intensive industry.

The semiconductor industry is cyclical by nature and impacted by broad economic factors, such as changes in worldwide gross domestic product and consumer spending.

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As a result of this cyclicality and the large investments required, manufacturing facilities must operate at consistently high levels of utilization to be cost-effective.

Shorter product life cycles, coupled with the need to update or replace packaging and test equipment to accommodate new package types, make it more difficult for integrated semiconductor companies to maintain cost-effective utilization of their packaging and test assets throughout semiconductor industry cycles.

Shorter product life cycles, coupled with the need to update or replace packaging and test equipment to accommodate new package types, make it more difficult for IDMs to maintain cost-effective utilization of their packaging and test assets throughout semiconductor industry cycles.

Packaging and test service providers, on the other hand, can typically use their assets to support a broad range of customers and multiple end markets, potentially generating more efficient use of their production assets and a more cost-effective solution.

Packaging and test service providers can facilitate a more efficient supply chain and help shorten time-to-market for new products.

We believe that semiconductor companies, together with their customers, are seeking to shorten the time-to-market for their new products and that having an effective supply chain is a critical factor in facilitating timely and successful product introductions.

Packaging and test service providers have the resources and expertise to timely develop their capabilities and implement new packaging technology in volume.

For this reason, semiconductor companies and OEMs are leveraging the capabilities of packaging and test service providers to deliver their new products to market more quickly.

We believe that semiconductor companies, together with their customers, are seeking to shorten the time-to-market for new products and that having an effective supply chain is a critical factor in facilitating timely and successful product

introductions.

Packaging and test service providers have the resources and expertise to timely develop and implement new packaging technology in high volume.

For this reason, semiconductor companies and OEMs are leveraging the capabilities of packaging and test service providers to bring new products to market more quickly.

High quality packaging and test service providers enable semiconductor manufacturers to focus their resources on semiconductor design and wafer fabrication.

As semiconductor process technology migrates to larger wafers and smaller feature sizes, the cost of building a state-of-the-art wafer fabrication factory has risen significantly and can now be several billions of dollars.

As semiconductor process technology migrates to larger wafers and smaller feature sizes, the cost of building a state-of-the-art wafer fabrication factory has risen significantly.

The high cost of investing in next generation silicon technology and equipment is causing many semiconductor companies to adopt or maintain a “fabless” or “fab-lite” strategy to reduce or eliminate their investment in wafer fabrication and associated packaging and test operations.

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STRATEGY AND COMPETITIVE STRENGTHS

Our financial goals are sales growth and improved profitability, and we are focusing on the following strategies to achieve these goals:

Leverage Our Investment in Services for Advanced Technologies

We are an industry leader in developing and commercializing cost-effective advanced packaging and test technologies.

We believe these advanced technology solutions provide increased value to our customers.

An important factor for success in the advanced packaging and test area is to generate reasonably quick returns on investments made in support of customers seeking leading-edge technologies.

In recent years we have made significant investments in state-of-the-art facilities and equipment to provide services for the industry’s most complex devices.

With approximately 650 employees engaged in research and development and manufacturing process engineering for new semiconductor packaging and test technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip, wafer-level processing and advanced SiPs.

During 2020, we had success capitalizing on our advanced technology to achieve design wins and new product introductions in areas such as:

chips fabricated at 5, 7, 10, 14 and 16 nanometer geometries;

advanced SiP products including radio frequency (“RF”), front end modules and micro-electro-mechanical systems (“MEMS”) devices;

optical sensors and cavity MEMS;

advanced Flip Chip with Through Silicon Via (“TSV”) technology;

wafer-level Chip Scale Packaging (“CSP”);

and wafer-level fan-out packages.

Amkor is a leader in advanced packaging technology in the outsourced assembly and test domain.

Growth in the semiconductor industry is being driven primarily by advanced packaging within four key megatrends of 5G, IoT, high-performance computing (“HPC”) and automotive.

We believe Amkor is well positioned in each of these end markets.

• Within our communications end market, we have a strong position across multiple device functionalities.

We are collaborating with industry leaders and emerging participants as smartphones transition to 5G and drive semiconductor growth by the continuing adoption of new wireless standards and the integration of a broad range of applications.

The trend to more functionality drives miniaturization and cost reduction enabled by advanced packaging.

• The IoT wearables within our consumer end market are evolving in multiple applications, such as watches, health trackers, hearables, biometrics and smart glasses.

Integration of multiple functions in small form factors, processors, sensors and connectivity devices depends on innovation in advanced packaging.

• Increased data traffic requiring higher networking speed and storage, as well as computing power increases in HPC, datacenters, cloud computing, AI, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market.

• Increasing semiconductor content in automobiles is driving greater needs for advanced packaging to enable the proliferation of safety features such as advanced driver assistance systems (“ADAS”) and radar and digital cockpit features such as infotainment displays.

The increasing battery voltage, higher voltage power converters and inverter automotive components also need innovative power packaging solutions.

Our financial goal is profitable sales growth.

We believe that Amkor’s strength in advanced packaging, combined with the following strategies, will achieve that goal and create long-term shareholder value.

Leverage Our Leadership in Services for Advanced Technologies

We are an industry leader in developing and commercializing cost-effective advanced packaging and test technologies, and we believe that our advanced technology solutions provide increased value to our customers.

With approximately 550 employees, as of December 31, 2021, engaged in research and development and manufacturing process engineering for new semiconductor packaging and test technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip, wafer-level processing, advanced SiPs and power modules.

We work closely with our customers to develop cost-effective leading-edge packages for the next generation of devices.

These include integrated technologies such as advanced SiP, wafer-level fan-out, Silicon Wafer Integrated Fan-out

Technology (“SWIFT”), High Density Fan-Out (“HDFO”) and redistribution layer (“RDL”) solutions which enable very thin, very small products combining application processors, memory, baseband and other peripheral integrated circuits (“ICs”).

They also include packages utilizing TSV interconnects and silicon interposers which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package.

These include integrated technologies such as advanced SiP, wafer-level fan-out (“WLFO”), Silicon Wafer Integrated Fan-out Technology (“SWIFT”), High Density Fan-Out (“HDFO”) and redistribution layer (“RDL”) solutions which enable very thin, very small products that combine application processors, memory, baseband and other peripheral integrated circuits (“ICs”).

Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon interposers, which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package.

In addition, we co-develop with customers high power modules involving gallium

nitride (“GaN”) and silicon carbide (“SiC”) based devices.

Our approach is to work with lead customers to develop processes that will enable volume manufacturing with high yields and reliability.

We believe that advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smaller device geometries, higher levels of integration and performance and lower power consumption.

We believe that demand for advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smaller device geometries, higher levels of integration and performance and lower power consumption.

We intend to continue to leverage our investment in advanced technology to meet the demand for these services in high growth markets.

Improve Utilization of Existing Assets and Broaden Our Customer Base

Another key to our success is to improve the utilization of our existing assets.

Optimize Utilization of Existing Assets and Broaden Our Customer Base

Another key to our success is to optimize the utilization of our existing assets.

The transition by leading edge customers to newer packaging and test equipment platforms typically frees up capacity in existing, previously installed equipment.

As part of our strategy, we are focused on developing a second wave of customers to more effectively utilize these assets over a longer period of time.

We are building and utilizing manufacturing lines which support multiple customers and increasing factory utilization through more sophisticated planning processes and more intensive efficiency improvement activities.

Balanced Growth

Revenue growth is a significant objective for Amkor.

We strive to grow in a balanced way and avoid over-reliance on any single market or customer.

Our goal is to achieve more consistent financial performance through all phases of the business cycle.

Our balanced growth strategy consists of the following two components:

• First, we are increasing our revenue in markets beyond communications, including consumer, computing and automotive and industrial end markets.

As computing power increases in additional applications, these additional markets are requiring more advanced packaging technology.

Revenue from these markets tends to be more stable, with less pronounced seasonality tied to the launch of flagship phones.

• Second, we continue to focus on share gains in the iOS and high-end Android ecosystems, leveraging our expertise in advanced SiP, MEMS and other advanced packages to expand our content in next generation 5G phones.

As part of our strategy, we are focused on developing a second wave of customers to utilize these assets more effectively over a longer period of time.

We are building and utilizing manufacturing lines which support multiple customers and increase factory utilization through more sophisticated planning processes and more intensive efficiency improvement activities.

Selectively Grow Our Scale and Scope through Strategic Investments

From time to time, we see attractive opportunities to grow our customer base and expand markets through strategic investments.

For example, in 2017 we completed the acquisition of Nanium, S.A.

(“Nanium”), a provider of wafer-level fan-out semiconductor packaging solutions.

We believe that this acquisition has strengthened our position in the market for wafer-level packaging.

For example, in 2021, we announced our plans to build a new state-of-the-art manufacturing facility in Bac Ninh, Vietnam.

Investing in Bac Ninh expands our manufacturing footprint in support of customer needs for an additional cost-competitive supply chain solution for advanced SiP and other packaging solutions.

Construction is expected to begin in 2022.

We believe that selective growth through joint ventures, acquisitions and other strategic investments can help diversify our revenue streams, improve our profits and maintain our technological leadership.

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We believe we are well-positioned in the outsourced packaging and test services market.

The following competitive strengths allow us to build upon our industry position and to remain one of the preferred providers of semiconductor packaging and test services.

Leading Technology Innovator

The following competitive strengths support our strategy to build upon our industry position and remain a preferred provider of semiconductor packaging and test services.

Advanced Packaging Technology Leadership

We are a leader in developing and deploying advanced semiconductor packaging and test solutions.

We have designed and developed several state-of-the-art package formats and technologies, including our Package-on-Package (“PoP”) platform with Through Mold Via (“TMV”) technology, molded embedded packages, FusionQuad, flip chip ball grid array, multi-chip modules with a silicon interposer placed between the module chips and substrate, copper pillar bumping and fine pitch copper pillar flip chip packaging technologies.

In addition, we believe that as semiconductor

technology continues to achieve smaller device geometries with higher levels of integration, speed and performance, packages will increasingly require wafer-level CSP, wafer-level fan-out, SWIFT and flip chip interconnect solutions and advanced SiP products.

We have designed and developed several state-of-the-art package formats and technologies, including our Dual Side Molded Ball Grid Array (“DSMBGA”) SiP platform and multi-chip modules that incorporate silicon interposers between the module chips and substrate.

In addition, we believe that as semiconductor technology continues to achieve smaller device geometries with higher levels of integration, speed and performance, packages will increasingly require wafer-level Chip Scale Packaging (“CSP”), WLFO, SWIFT and Flip Chip interconnect solutions, advanced SiP products, and medium and higher power density packages and modules.

We continue to invest in developing the key processes and packaging and test technologies required for our customers to deliver advanced integrated and modular solutions to market.

We are a leader in wafer thinning, micro-bumping, die stacking, hybrid packaging and TSV-based flip chip innovation.

We are also a developer of environmentally friendly IC packaging, which involves the elimination of lead and certain other materials.

Broad Offering of Semiconductor Package Design, Packaging and Test Services

Creating successful interconnect solutions for advanced semiconductor devices often poses unique thermal, electrical and mechanical design challenges, and we employ a large number of engineers to solve these challenges.

This wide variety of packaging offerings is necessary to meet the diverse needs of our customers for the optimal combination of performance, size and cost.

Utilizing Amkor for its innovative packaging, test and design services enables our customers to focus their resources on semiconductor design and wafer fabrication.

We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal, memory, sensors and RF-semiconductor devices.

We believe that the breadth of our design, packaging and test services is important to customers seeking to limit the number of their suppliers.

Long-Standing Relationships and Collaboration with Prominent Semiconductor Companies

Our customers include most of the world’s largest semiconductor companies, and over the last five decades we have developed long-standing relationships with many of these companies.

We believe that our production excellence has been a key factor in our success in attracting and retaining customers.

We work with our customers and our suppliers to develop proprietary process technologies to enhance our existing capabilities, reduce time-to-market, increase quality and lower costs.

We believe that our production excellence, including high quality, reliability and predictability, has been a key factor in our success in attracting and retaining customers.

We work with our customers and our suppliers to develop proprietary process technologies to enhance our existing capabilities, reduce time-to-market, improve quality and lower costs.

We believe that our focus on research and product development will enable us to enter new markets early, capture market share and promote the adoption of our new package designs as industry standards.

We collaborate with customers and leading OEMs to develop comprehensive packaging solutions that make it easier for next-generation semiconductors to be designed into next-generation end products.

By collaborating with leading semiconductor companies and OEM electronic companies, we gain access to technology roadmaps that allow us to focus resources on developing new packages that satisfy their future requirements.

Broad Offering of Semiconductor Package Design, Packaging and Test Services

This wide variety of packaging offerings is necessary to meet the diverse needs of our customers for the optimal combination of performance, size and cost attributes.

Our solutions enable our customers to focus on semiconductor design and wafer fabrication while utilizing Amkor as their turnkey design, packaging and test services provider and, in many cases, their packaging technology innovator.

We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal and RF semiconductor devices.

We believe that the breadth of our design, packaging and test services is important to customers seeking to limit the number of their suppliers.

By collaborating with leading semiconductor companies, foundries and OEM electronic companies, we are able to focus resources on developing new packages that will meet the requirements of new products.

The traditional delineation between front end semiconductor manufacturing and packaging is starting to converge.

Foundries, and in some cases IDMs, are integrating some packaging activities closer to front end wafer processes.

We work closely with foundry partners to complement these offerings by offering similar wafer-based technologies as well as downstream processing.

Geographically Diversified Operating Base

We have a broad and geographically diversified operating footprint strategically located in seven countries in many of the world’s important electronics manufacturing regions.

We have a broad and geographically diverse operating footprint strategically located in seven countries in many of the world’s important electronics manufacturing regions.

We believe that our scale and scope allow us to provide a flexible supply chain and cost-effective solutions to our customers by:

• Offering capacity to absorb large orders and accommodate quick turn-around times;

• Obtaining favorable pricing on materials and equipment, where possible, by using our purchasing power and leading industry position;

• Obtaining favorable pricing and supply agreements on materials and equipment by using our purchasing power and leading industry position;

• Qualifying production of customer devices at multiple manufacturing sites to mitigate the risks of supply disruptions;

• Providing capabilities and solutions for customer-specific requirements.

Competitive Cost Structure and Disciplined Capital Investment

There is a continuous push throughout the entire semiconductor supply chain for lower cost solutions.

We work to maintain a competitive cost structure and make disciplined capital investment decisions so that we can provide cost-competitive solutions to our customers and achieve sustainable profitability and cash flow.

Some of our cost control efforts have been directed at:

(1) improving the utilization of our existing assets;

(2) developing new manufacturing

methods to reduce processing costs;

(3) utilizing flexible manufacturing lines that can accommodate a variety of products and customers;

(4) increasing test densities to drive higher throughput;

(5) implementing more cost-effective materials;

(6) utilizing our scale to drive worldwide purchasing leverage;

and (7) increasing labor productivity.

We operate in a cyclical industry.

During an industry downturn we seek to reduce our costs and drive greater factory and administrative efficiencies.

Cost control efforts can include reducing labor costs by temporarily lowering compensation, reducing employee and contractor headcount, shortening work weeks and obtaining labor-related foreign government subsidies where available.

PACKAGING AND TEST SERVICES

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We offer a broad range of advanced and mainstream packaging and test services to our customers.

We refer to our flip chip, wafer-level processing and related test services as “Advanced Products”, and our wirebond packaging and related test services as “Mainstream Products”.

The following table sets forth, for the periods indicated, the amount of advanced and mainstream packaging and test net sales and the percentage of such net sales:

We refer to our flip chip, wafer-level processing and related test services as “Advanced Products”, and our wirebond packaging, power device packaging and related test services as “Mainstream Products”.

The following table sets forth, for the periods indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for each service

In 2021, we began reporting memory net sales under Advanced Products.

Previously, memory net sales were reported in Mainstream Products.

Prior year amounts were reclassified to conform to current year presentation.

For the Year Ended December 31,

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Advanced Products

Our Advanced Products include flip chip chip scale packages, wafer-level packages and flip chip ball grid array packages.

Our Advanced Products include flip chip chip scale packages, wafer-level packages and flip chip ball grid array (“FCBGA”) packages.

These package families use flip chip interconnect technology so that the die can be connected to a substrate package carrier or, in the case of wafer-level chip scale packages, directly to a printed circuit board.

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FC CSP packages are small form factor packages where the substrate size is not much larger than the die itself.

FC CSP can be a single die or multi die format.

The size advantage provided by CSP technologies has made FC CSP an attractive choice for a wide variety of applications that require very small form factors such as smartphones, tablets and other mobile consumer electronic devices.

Flip chip stacked chip scale packages (“FC SCSP”) stack a second die on top of the original flip-chip die.

The top die is typically a memory device, and wirebond interconnects are used to attach it to the substrate.

The top die is typically a memory device, and wirebond interconnects are used to attach the top die to the substrate.

FC SCSP is frequently used to stack memory on top of digital baseband and applications processors for use in mobile devices.

We continue to drive thinner package solutions for our PoP technology through the development of ultra-thin substrates and enhancing our pre-stacking and thin die handling capabilities.

We continue to drive thinner package solutions for our Package on Package (“PoP”) technology through the development of ultra-thin substrates and enhancing our pre-stacking and thin die handling capabilities.

We developed fine pitch copper pillar flip chip interconnect technology, which creates interconnections at finer pitches using a plating process to reduce the number of substrate layers to facilitate very thin packages.

This innovative solution is also an enabling technology for package stacking with TSVs.

Flip Chip Ball Grid Array (“FC BGA”) Products :

FC BGA packages are large form factor substrate-based packages which are used where processing power and speed are needed and small form factors are not required.

Our FC BGA packages are assembled around state-of-the-art substrates.

Utilizing multiple high density routing layers, laser drilled vias, and ultra-fine line and space metallization, FC BGA substrates have the highest routing density available.

The variety of FC BGA package options allows package selection to be tailored to the specific thermal needs of the end

We offer FC BGA packaging in a variety of product formats to fit a wide range of end application requirements, including networking, storage, computing and consumer applications.

FCBGA Products :

FCBGA packages are large form factor substrate-based packages which are used where processing power and speed are a higher priority than a small form factor.

Our FCBGA packages are assembled using state-of-the-art substrates.

Utilizing multiple high density routing layers, laser drilled vias, and ultra-fine line and space metallization, FCBGA substrates have the highest routing density available.

The variety of FCBGA package options, from large single die to multi-chip packages with memory, allows package selection to be tailored to the specific thermal needs of the end product.

We offer FCBGA packaging in a variety of product formats to fit a wide range of end application requirements, including networking, storage, computing and consumer applications.

Memory Products:

Memory packages consist of either standalone packaging and testing or a combination of NAND Flash, DRAM, or a memory controller IC using a variety of packaging technologies, including FC, SCSP, SiP, PoP and other state-of-the-art packaging technologies.

These products are used as system memory or platform data storage in all of our end markets.

Wafer-level Package Products :

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wafer-level CSP;

wafer-level fan-out;

Wafer-level CSP and WLFO are complementary technologies.

Customers can choose between the two package types as their die sizes shrink or grow.

• Wafer-level CSP packages (also known as fan-in wafer-level packages) do not utilize a package carrier.

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Wafer-level CSP offers one of the lowest total system costs, enabling higher semiconductor content while leveraging the smallest form factor and one of the highest performing, most reliable semiconductor package platforms on the market today.

We have seen consistent content gains in our wafer-level CSP business, driven largely by mobile communications.

Applications for wafer-level CSP include power management, transceivers, sensors, wireless charging, codecs and specialty silicon for new or unique functionality.

• Wafer-level fan-out packages (also known as low-density fan-out packages) are utilized for ICs where the die surface area is too small to accommodate all of the bond pads.

Applications for wafer-level CSP include power management, transceivers, sensors, wireless charging, codecs, radar and specialty silicon for new or unique functionality.

• WLFO packages (also known as low-density fan-out packages) are utilized for ICs where the die surface area is too small to accommodate all of the bond pads.

The fan-out package enlarges the bondable surface area by building a border around the die using low-cost molding compound.

Wafer-level CSP and wafer-level fan-out are complementary technologies.

Customers can choose between the two package types as their die sizes shrink or grow.

With the acquisition of Nanium, we became a leader in low-density fan-out technology.

• Silicon Wafer Integrated Fan-out Technology (“SWIFT”, also known as high-density fan-out) replaces a laminate substrate with a thinner structure.

SWIFT solutions enable very thin, very small products combining application processors, memory, baseband and other peripheral ICs.

Applications for WLFO packages include power management, transceivers, radar and specialty silicon.

• SWIFT, also known as high-density fan-out, can either replace the laminate substrate with a thinner structure or reduce the complexity of the substrate by housing the dense interconnects in the SWIFT structure, allowing for a less expensive substrate that provides a high level of performance with a balanced cost structure.

SWIFT solutions enable high performance at a compact form factor that combines tiled processors, memory, I/O die and other peripheral ICs.

Mainstream Products

Our Mainstream Products include leadframe packages, substrate-based wirebond packages and MEMS packages.

Our Mainstream Products include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems (“MEMS”) packages.

These package families use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier.

Leadframe Packages:

Leadframe packages use wirebond or flip chip technology to interconnect a die to a leadframe package carrier.

Leadframe packages are used in many electronic devices and remain the most practical and cost-effective solution for many low to medium pin count applications.

Leadframe packages use wirebond or flip chip technology to connect a die to a leadframe package carrier.

Leadframe packages are used in many electronic devices and remain the most practical and cost-effective solution for many low to medium pin count analog and mixed signal applications.

Traditional leadframe packages support a wide variety of device types and applications.

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One of our more successful leadframe package offerings is the Micro LeadFrame family of quad flat no lead packages.

These packages offer cost effective, miniaturized solutions for multiple analog power and signal chain applications.

Power discrete devices use a leadframe as the package carrier and primarily use wirebond interconnect technology.

However, power applications that require improved thermal and electrical performance will use packaging with copper clip interconnect technology.

However, power applications that require improved thermal and electrical performance will use packaging with copper clip interconnect technology that creates multi die power modules.

Substrate-based Wirebond Packages :

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Stacked CSP is ideal for memory and mixed signal applications.

Wirebond ball grid array packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and passive component integration.

Wirebond ball grid array packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and passive component integration together with thermal management solutions.

They are applicable for a wide range of semiconductors requiring a smaller package size than conventional PBGAs or leadframe packages.

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The increasing demand for miniaturization and higher functionality at competitive cost is driving the adoption of advanced SiP in new products.

Advanced SiP modules are used for many applications such as RF and front end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, NAND memory and solid state drives.

Advanced SiP modules are used for many applications such as radio frequency (“RF”) and front end modules, basebands, connectivity, fingerprint sensors, display and touch screen drivers, sensors and MEMS, NAND memory and solid state drives.

Advanced SiP modules are found in many products including smartphones and tablets, automobiles, IoT wearables, high-performance gaming systems, computers and network systems.

In 2020, 2019 and 2018, we had net sales of approximately $1,885 million, $1,075 million and $990 million, respectively, from our advanced SiP modules which are included in either Advanced Products or Mainstream Products depending upon the interconnect technology used in the module.

In 2021, 2020 and 2019, we had net sales of approximately $2,280 million, $1,885 million and $1,075 million, respectively, from our advanced SiP modules, which are mostly included in Advanced Products, depending upon the interconnect technology used in the module.

Test Services

Our Test Services complement our wafer and packaging services across our Advanced and Mainstream Products.

Our test services offer customers the cycle time and cost advantages of co-located turn-key services.

Our test services are used as both an interim step or as the final testing step to ensure screening and rejection of defects, performance grading and overall outgoing quality and reliability.

Interim testing eliminates the manufacturing costs of assembling the defective chips.

Below is a description of our test services:

Wafer Level Test:

Wafer level test is a manufacturing step performed while a wafer is still in its full form and before being singulated for further package processing.

Package Level Test:

Package level test is performed on a product or products that have been assembled in a package.

System Level Test:

As advanced packaging proliferates and the integration of more individual components into a SiP grows, system level testing becomes more important.

System level test identifies defective SiP products that may not otherwise be screened by traditional wafer level, package level or burn-in testing.

Burn-In Test:

Burn-in test is a process in which components of a system are exercised, monitored and measured in extreme operational conditions such as high temperature, voltage and frequency over time.

The purpose of the environmental and operational stress conditions of burn-in testing is to accelerate and screen early life failures and estimate and monitor long term wear out performance.

Test Development Services:

Prior to mass production, an integrated manufacturing ready test solution must be developed and deployed.

Amkor’s test development services offer both co-development and full development of complete test software and hardware solutions to our customers.

These services also enable early engagement with our customers in the product design phases for maximum compatibility with manufacturing.

Our test development teams are experienced in a full suite of test engineering disciplines for Memory, Power, RF, Mixed Signal, Analog and digital test solution development.

The following table lists the end markets that use our products and sets forth, for the periods indicated, the percentage of net sales in each end market:

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End Market Distribution Data (an approximation including representative devices and applications based on a sampling of our largest customers):

Communications (handheld devices, smart phones, tablets) 41 % 38 % 44 %

Consumer (connected home, set-top boxes, televisions, visual imaging, wearables) 24 % 18 % 12 %

Automotive, industrial and other (driver assist, infotainment, performance, safety) 20 % 27 % 26 %

Communications (smart phones, tablets) 41 % 41 % 38 %

Consumer (AR & gaming, connected home, home electronics, wearables) 22 % 24 % 18 %

Automotive and Industrial (ADAS, electrification, infotainment, safety) 21 % 20 % 27 %

Computing (datacenter, infrastructure, PC/laptops, storage) 16 % 15 % 17 %

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We believe that technology development is one of the keys to success in the semiconductor packaging and test industry.

By concentrating our research and development on our

customers’ needs for innovative packages, increased performance and lower cost, we gain opportunities to enter markets early, capture market share and promote our new package offerings as industry standards.

One of our top priorities is developing highly integrated modules for the next generation of mobile devices, which reduce material and processing costs and minimize form factor.

This development effort is particularly important for customers requiring miniaturization of high performance functionality in the mobile phone and consumer markets.

By concentrating our research and development on our customers’ needs for innovative packages, increased performance and lower cost, we gain opportunities to enter markets early, successfully compete for new products and promote our new package offerings as industry leading technology.

One of our top priorities is developing highly integrated modules such as DSMBGA packages to reduce material and processing costs and minimize form factor for wearables and 5G mobile devices.

Another important focus area is the development of wafer-level packages for larger chips.

These wafer-level chip-scale packages and wafer-level fan-out (low density) packages are increasingly the preferred package type for many chips used in mobile devices.

They provide a very low-profile product at a competitive cost.

We are also developing new applications for the automotive market using existing and new package technologies as higher performance compute and sensor content are used to support new automotive features including ADAS, infotainment and electric vehicles.

Another focus for development is in the area of integrated multi-die solutions, including higher density MCMs and wafer-level fan-out solutions which enable package level integration of different types and levels of silicon technologies.

This is accomplished by combining application processors and other chiplets into one packaged module.

Through the use of die partitioning and heterogeneous die integration, these modules provide higher functionality at lower total product cost.

Our research and development employees are based in Korea, the United States, Portugal and throughout other parts of Asia.

In 2020, we had approximately 650 employees engaged in research and development activities.

These wafer-level chip-scale packages and WLFO packages are increasingly the preferred package type for many applications in IoT and mobile devices, including power management integrated circuits (“PMICs”), display drivers and antenna-in-package products.

Another focus for development is integrated multi-die solutions, including multichip modules and high-density WLFO solutions, which enable package level integration of different types and levels of silicon technologies for high performance computing, networking and data center applications.

This is accomplished by combining processors and other chiplets into one packaged module.

Through die partitioning and heterogeneous die integration, these modules provide higher functionality at lower total product cost.

Our research and development employees are based in Korea, the United States, Portugal and throughout other locations in Asia.

At December 31, 2021, we had approximately 550 employees engaged in research and development activities.

In 2021, 2020 and 2019, we incurred $166.0 million, $140.7 million and $137.6 million, respectively, of research and development expense.

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Together, these direct and extended support teams deliver an array of services to our customers.

Our sales have generally been higher in the second half of the year than in the first half due to the effect of consumer buying patterns in the U.S., Europe and Asia and the timing of flagship mobile device launches.

Our sales have generally been higher in the second half of the year than in the first half due to consumer buying patterns in the U.S., Europe and Asia and the timing of flagship mobile device launches.

In addition, semiconductor companies generally reduce their production during the holidays at the end of December, which generally results in a decrease in packaging and test services during the first quarter.

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Our ten largest customers accounted for 63% of our net sales in 2021.

Direct sales to Apple Inc., our largest customer, increased during 2020 and accounted for 14.5% of our net revenue for the year ended December 31, 2020.

Direct sales to Apple Inc., our largest customer, accounted for 13.7% of our net revenue for the year ended December 31, 2021.

MATERIALS AND EQUIPMENT

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Our packaging operations depend upon obtaining adequate supplies of materials on a timely basis.

The principal materials used in our packaging process are leadframes, laminate substrates, gold and copper wire, mold compound, epoxy, tubes and trays.

The principal materials used in our packaging process are laminate substrates, ICs, capacitors, leadframes and gold wire.

The silicon wafer is generally consigned from the customer.

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Test materials constitute a very small portion of our total test cost.

materials based on customer forecasts, and our customers are generally responsible for any unused materials which we purchased based on such forecasts.

Generally, we purchase materials based on Amkor’s commitments to customer forecasts, and our customers are generally responsible for any unused materials we purchase based on such commitments.

Due to the Covid-19 pandemic and the resulting supply chain constraints and extended lead times, however, we have been placing an increasing number of our orders for materials in advance of customer forecasts.

We believe these materials will be utilized by future orders and will allow us to fulfill orders on a timely basis.

We obtain the materials required for packaging services from various suppliers.

We source most of our materials, including critical materials such as leadframes, laminate substrates and gold wire, from a limited group of suppliers.

We work closely with our primary material suppliers in an effort to ensure consistent quality, availability and timely delivery.

We work closely with our primary material suppliers to ensure consistent quality, availability and timely delivery.

We also negotiate worldwide pricing agreements with our major suppliers to take advantage of the scale of our operations.

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In addition, we maintain a variety of other packaging equipment, including mold, singulation, die attach, ball attach and wafer backgrind, along with numerous other types of manufacturing equipment.

A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packages through the use of relatively low cost tooling, although equipment used in advanced packaging can be more difficult to redeploy than equipment used in traditional wirebond packaging.

A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packages, with equipment used in traditional wirebond packaging being easier to redeploy than the equipment used in advanced packaging.

We also purchase wafer bumping equipment to facilitate our flip chip and wafer level packaging services.

Wafer bump equipment includes sputter and spin coaters, electroplating equipment, reflow ovens and other types of equipment.

Wafer bumping equipment includes sputter and spin coaters, electroplating equipment, reflow ovens and other types of equipment.

This equipment tends to have longer lead times for delivery and installation than other packaging equipment and is sold in relatively larger increments of capacity.

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Handlers are used to transfer individual or small groups of packaged ICs to a tester.

Test equipment is generally a more capital intensive portion of the process and tends to have longer delivery lead times than most types of packaging equipment.

We focus our capital expenditures on standardized tester platforms in order to maximize test equipment utilization where possible.

Test equipment is generally a more capital-intensive activity than packaging, and test equipment tends to have longer delivery lead times than most types of packaging equipment.

We focus our capital expenditures on standardized tester platforms to maximize test equipment utilization where possible.

For tester platforms that are less standardized, we generally lease test equipment for the expected life cycle of the project.

In some cases, our customers will consign test equipment to us.

In those cases, we operate the equipment on their behalf but do not own it.

GOVERNMENTAL REGULATIONS

As a public company with global operations, we are subject to various federal, state, local, and foreign laws, and our products and services are governed by a number of rules and regulations.

These regulations, which differ among jurisdictions, include those related to financial and other disclosures, accounting standards, environmental, corporate governance, intellectual property, tax, trade, antitrust, employment, immigration and travel regulations, privacy, and anti-corruption.

These regulations, which differ among jurisdictions, include financial and other external reporting disclosure rules, accounting standards, and environmental, corporate governance, intellectual property, tax, trade, antitrust, employment, immigration and travel, privacy and anti-corruption laws.

Costs and accruals incurred to comply with these governmental regulations are presently not material to our capital expenditures, results of operations and competitive position.

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For example, water used for rinsing or cooling wafers being sawed or used in the etching or solder deposition process produces wastewater.

Scraps from metal lead-frame or substrate or excessive molding resin produces solid waste.

Scrap from metal lead-frame or substrate processing or excessive molding resin produces solid waste.

Emissions from solvents used for coating produce flue gases.

In addition to byproducts, semiconductor packages have historically contained lead (“Pb”), a naturally occurring element that can be toxic.

The use of Pb in our packages has decreased over time due to the use of Pb-free alternatives.

In addition to byproducts, semiconductor packages have historically contained lead, a naturally occurring element that can be toxic.

The use of lead in our packages has decreased over time due to the use of lead-free alternatives.

The use and storage of chemicals and materials are subject to various laws and regulations governing waste disposal, water discharge, emissions into the atmosphere and employee health and safety.

We are engaged in continuing efforts to comply with these environmental laws and regulations, including the establishment of environmental management systems, safety training for employees and installation of pollution control equipment at our factories.

In the future we may be subject to changes to existing environmental regulations or new green initiatives required by our customers, investors or other stakeholders.

In the future, we may be subject to changes to existing environmental regulations or new green initiatives required by our customers, investors, governments or other stakeholders.

We do not believe that capital expenditures or other costs attributable to compliance with environmental laws and regulations or green initiatives will have a material adverse effect on our business, liquidity, results of operations, financial condition or cash flows.

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• Measurement and independent verification of greenhouse gases (“GHG”) generated by our factories worldwide.

Once collected, our GHG data is submitted to, and disclosed publicly by, the CDP, formerly known as the Carbon Disclosure Project.

Once collected, our GHG data is submitted to, and disclosed publicly by, CDP, formerly known as the Carbon Disclosure Project.

CDP is a leading organization that assesses the impact of climate change and promotes a sustainable economy.

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RBA members agree to follow a uniform Code of Conduct that includes standards of environmental responsibility, and our factories have been subject to independent audits to assess compliance with these standards.

• Capital investment and process optimization activities to reduce GHGs include installation of solar photovoltaic panels, replacement of or improvements to chiller unit systems and use of lighting based on Light Emitting Diode (“LED”) technology.

• Capital investment and process optimization activities to reduce GHGs include installation of solar photovoltaic panels, replacement of, or improvements to, chiller unit systems and use of light-emitting diode (“LED”) technology.

The outsourced semiconductor packaging and test market is very competitive.

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and JCET Group Co., Ltd.

Such companies also have developed relationships with most of the world’s largest semiconductor companies, including current or potential customers of Amkor.

In addition, we compete with electronic manufacturing service providers or contract electronics manufacturers, including Universal Scientific Industrial (Shanghai) Co., Ltd., that also provide advanced integrated device solutions.

Such companies also have

developed relationships with most of the world’s largest semiconductor companies, including current or potential customers of Amkor.

We also compete with the internal semiconductor packaging and test capabilities of many of our customers.

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We also compete with contract foundries, such as Taiwan Semiconductor Manufacturing Company Limited and Samsung Electronics Co., Ltd., which offer full turnkey services from silicon wafer fabrication through packaging and final test.

In addition, we compete with companies that offer only test services and not packaging.

The principal elements of competition in the semiconductor packaging and test services market include:

• technical competence;

• breadth of packaging and test services offered, including turnkey services;

• new package and test design, technology innovation and implementation;

• cycle times;

• customer service;

• available capacity;

• ability to invest in capacity, geographic location and scale of manufacturing.

In addition, we compete with companies that offer test-only services.

The principal elements of competition in the outsourced semiconductor packaging and test services market include price, available capacity, flexibility, quality, customer service and support, new product introduction experience, cycle time, reputation and reliability, customer satisfaction, technological expertise and innovation, breadth of packaging and test services offered, including turnkey services, and the ability to invest in capacity, geographic location and scale of manufacturing.

We believe that we compete favorably with respect to each of these elements.

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and abroad, and their durations vary depending on the jurisdiction in which each patent is filed.

Although our patents are an important element of our intellectual property strategy as a whole, we are not materially dependent on any one patent or any one technology.

Although our patents are an important element of our intellectual property strategy, we are not materially dependent on any one patent or any one technology.

We expect to continue to file patent applications when appropriate to protect our proprietary technologies, but we cannot assure you that we will receive patents from pending or future applications.

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Amkor believes that its future success is highly dependent upon our continued ability to attract, retain and motivate qualified employees.

As part of our effort to attract and motivate employees, Amkor is committed to providing comprehensive benefit options that are intended to allow our employees and their families to live healthier and more secure lives.

Additionally, Amkor has implemented various retention programs at factory locations to incentivize and retain high-performing employees.

As part of our effort to attract and motivate employees, Amkor is committed to providing competitive and comprehensive benefits that are designed to enable our employees and their families to live healthier and more secure lives.

Additionally, Amkor has implemented various retention programs to incentivize and retain high-performing employees.

Factory locations also maintain training and development programs that enable the continued learning and growth of our employees, and senior management regularly meets to share and implement best practices among our various facilities.

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Health and Safety

The health and safety of our employees is very important to us and, accordingly, we endeavor to provide comprehensive health benefits to all of our full-time employees.

The health and safety of our employees is very important to us and, accordingly, we endeavor to provide comprehensive health benefits to our full-time employees.

Our focus on health and safety is further evident in our response to the Covid-19 pandemic around the globe.

Because our business involves the manufacturing and testing of physical products, many of our employees are unable to work from home.

In an effort to keep our employees safe and to maintain operations during the Covid-19 pandemic, we implemented a number of new health and safety-related measures during 2020.

Actions taken at Amkor’s facilities during the pandemic include:

• Establishing a response team with executive sponsors;

• Adopting a “no factory visit” policy;

• Implementing a work from home environment in all U.S.

locations, and certain international locations;

• Implementing extraordinary travel restrictions across the Company, including 14-day waiting periods for entry to Amkor factories after international travel;

• Communicating with employees about health and safety measures and educating employees about the outbreak;

• Arranging for alternative housing for employees in China who traveled;

• Screening everyone at campus entrances for fever and signs of illness;

• Increasing hygiene measures at dormitories, canteens and shuttles;

• Requiring masks to be worn and the use of disinfectants for hand washing;

• Implementing protocols to address actual and suspected Covid-19 cases and potential exposure;

• Restricting domestic and international non-essential travel for all employees.

In an effort to keep our employees safe and to maintain operations during the Covid-19 pandemic, we implemented increased health and safety-related measures across our global footprint.

AVAILABLE INFORMATION

Amkor files annual, quarterly and current reports, proxy statements and other information with the U.S.

Securities and Exchange Commission (the “SEC”).

The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Amkor) file electronically with the SEC.

The SEC’s website is www.sec.gov .

Amkor’s website is www.amkor.com.

Amkor makes available, free of charge, through its website:

our annual reports on Form 10-K;

quarterly reports on Form 10-Q;

current reports on Form 8-K;

Forms 3, 4 and 5 filed on behalf of directors and executive officers;

and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

We also make available, free of charge, through our website, our Corporate Governance Guidelines, the charters of the Audit Committee, Nominating and Governance Committee and Compensation Committee of our Board of Directors, our Code of Business Conduct, our Code of Ethics for Directors and other information and materials.

The information on Amkor’s website is not incorporated by reference into this Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business