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Item 1A. Risk Factors

2023-02-22 compared with 2022-02-18 · 119 added, 98 removed, 366 unchanged (37% of the section changed)

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You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Form 10-K, in considering our business and prospects.

Many of the following risks and uncertainties have been, and may continue to be, exacerbated by the Covid-19 pandemic and any worsening of the global business and economic environment as a result.

The risks and uncertainties described below are not the only ones facing Amkor.

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Summary of Risk Factors

An investment in our common stock involves various risks, and you are urged to carefully consider all of the matters discussed in Part I, Item 1A of this Form 10-K under the caption “Risk Factors” (in addition to those discussed under this “Summary of Risk Factors” section) in considering our business and prospects.

“Summary of Risk Factors” section) in considering our business and prospects.

The following is a list of some of these risks:

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• health conditions or pandemics, such as the Covid-19 pandemic, impacting labor availability and operating capacity, capital availability, the supply chain and consumer demand for our customers’ products and services;

• laws, rules, regulations and policies imposed by U.S.

or other governments, such as tariffs, customs, duties, export controls, sanctions and other restrictive trade barriers and national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor and environmental, health and safety laws;

• our substantial indebtedness;

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• challenges with integrating diverse operations;

• any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for tax holidays, or any requirements to establish or adjust valuation allowances on deferred tax assets;

• laws, rules, regulations and policies imposed by U.S.

or other governments, such as tariffs, customs, duties, other restrictive trade barriers and national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor and environmental, health and safety laws;

• any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or any requirements to establish or adjust valuation allowances on deferred tax assets;

• natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions.

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Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such as worldwide gross domestic product and consumer spending.

We believe that the general semiconductor market is currently going through a cyclical correction.

The semiconductor industry has experienced significant and sometimes sudden and prolonged downturns in the past.

If the industry or

markets in which we compete experience slower, or even negative growth, our business and results of operations may be materially and adversely affected.

If the industry or markets in which we compete experience slower, or even negative growth, our business and results of operations may be materially and adversely affected.

Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for outsourced packaging and test services, any downturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as telecommunications, automotive, consumer electronics, or computing, could have a material adverse effect on our business and operating results.

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In addition, declines in global economic and financial conditions have harmed our business in the past, and future global downturns could materially and adversely affect our business.

The Covid-19 pandemic and the effects of governmental initiatives to control the pandemic have adversely affected, and may continue to adversely affect, the economies and financial markets of many countries.

Although the magnitude of any potential future impact of the Covid-19 pandemic on our business and operations remains uncertain, the continued spread, new variants or potential re-emergence of the Covid-19 pandemic or the occurrence of other epidemics or pandemics, and the imposition of related public health measures and travel and business restrictions may materially and adversely impact our business, financial condition, operating results and cash flows.

In addition, we have experienced, and will continue to experience disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to meet customer commitments.

It is difficult to predict the timing, strength or duration of any economic slowdown caused by the Covid-19 pandemic, or which end markets will experience a slowdown, or subsequent economic recovery, which, in turn, makes it more challenging for us to forecast our operating results, make business decisions and identify risks that may materially affect our business, sources and uses of cash, financial condition and results of operations.

New variants or the potential re-emergence of the Covid-19 pandemic or the occurrence of other epidemics or pandemics, and the imposition of related public health measures and travel and business restrictions, may materially and adversely impact our business, financial condition, operating results and cash flows.

In addition, we have experienced, and may experience in the future, disruptions to our business operations resulting from quarantines, self-isolations or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to meet customer commitments.

In March 2022, as part of a broad effort to mitigate a rising number of Covid-19 cases in Shanghai, the Chinese government mandated a temporary lockdown of our Shanghai factory.

The Shanghai facility reopened during the second quarter and returned to normal operating levels in late June 2022.

Other national, regional, and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants, or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.

We also remain subject to industry-wide supply constraints and inflationary price pressures, which have resulted in long lead times, rising prices and supply chain disruptions.

It is difficult to predict the timing, strength or duration of any economic disruption caused by the Covid-19 pandemic or which end markets will experience a slowdown or subsequent economic recovery which, in turn, makes it more challenging for us to forecast our operating results, make business decisions and identify risks that may materially affect our business, sources and uses of cash, financial condition and results of operations.

Additionally, if industry conditions deteriorate, we could suffer significant losses, as we have in the past, that could materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.

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We obtain the materials and equipment required for the packaging and test services performed by our factories from various vendors.

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

A disruption to the operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business, and the Covid-19 pandemic has created extended lead times for some materials and equipment.

To the extent the impact of the Covid-19 pandemic continues or worsens, we anticipate having greater difficulty obtaining, or waiting longer to obtain, certain equipment, supplies and other materials necessary for performance of our services or necessary to increase the services we provide to customers.

We source most of our materials, including critical materials such as leadframes, laminate substrates

and gold wire, from a limited group of suppliers.

A disruption to the operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business, and the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence have created extended lead times for some materials and equipment.

To the extent the impact of such disruptive events continues or worsens, we anticipate having greater difficulty obtaining, or waiting longer to obtain, certain equipment, supplies and other materials necessary for performance of our services or necessary to increase the services we provide to customers.

Furthermore, fire, severe weather, earthquakes, flooding and tsunamis in the past have impacted the supply of specialty chemicals, substrates, silicon wafers, equipment and other supplies to the electronics industry.

In addition, we purchase the majority of our materials on a purchase order basis.

Our business may be harmed if we cannot obtain materials and other supplies from our vendors in a timely manner, in sufficient quantities, at acceptable quality or at competitive prices or are unable to increase price sufficiently to recover inflationary price increases in materials or supplies.

Our business may be harmed if we cannot obtain materials and other supplies from our vendors in a timely manner, in sufficient quantities, at acceptable quality or at competitive prices or are unable to increase our prices sufficiently to recover inflationary price increases in materials or supplies.

Some of our customers are also dependent on a limited number of suppliers for certain materials and silicon wafers.

Shortages or disruptions in our customers’ supply channels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Shortages or disruptions in our customers’ supply channels, including any disruptions arising out of the conflict in Ukraine, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

SEC rules and related industry initiatives require diligence and disclosure regarding the use of certain minerals originating from the conflict zones of the Democratic Republic of Congo and adjoining countries.

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These requirements and customer initiatives could affect the pricing, sourcing and availability of materials used in the manufacture of semiconductor devices, and we cannot assure you that we will be able to obtain conflict-free materials or other materials covered by customer initiatives in sufficient quantities and at competitive prices or that we will be able to verify the origin of all of the materials we procure.

If we are unable to meet these requirements and customer initiatives, some

customers may move their business to other suppliers, and our reputation and business could be materially and adversely affected.

If we are unable to meet these requirements and customer initiatives, some customers may move their business to other suppliers, and our reputation and business could be materially and adversely affected.

We purchase new packaging and test equipment to maintain and expand our operations.

From time to time, increased demand for new equipment may cause lead times to extend beyond those normally required by equipment vendors.

For example, in the past, increased demand for equipment caused some equipment suppliers to only partially satisfy our equipment orders in the normal time frame or to increase prices during market upturns for the semiconductor industry.

From time to time, increased demand for new equipment may cause lead times to extend beyond those normally required by equipment vendors, and the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence have created extended lead times for some equipment.

In periods of increased demand and reduced availability, equipment suppliers may delay orders or only partially satisfy our equipment orders in the normal time frame.

The unavailability of equipment or failures to deliver equipment on a timely basis could delay or impair our ability to meet customer orders.

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Many factors could have a material adverse effect on our net sales, gross profit, operating results and cash flows or lead to significant variability of quarterly or annual operating results.

Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the utilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures and our ability to control our costs including labor, material, overhead and financing costs.

Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the utilization of our capacity, semiconductor

package mix, the average selling price of our services, our ability to manage our capital expenditures and our ability to control our costs including labor, material, overhead and financing costs.

Our net sales, gross margin, gross profit, operating income, net income and cash flows have historically fluctuated significantly from quarter to quarter as a result of many of the following factors, over which we have little or no control and which we expect to continue to impact our business:

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• changes in cost, quality, availability and delivery times of raw materials, components, equipment and labor;

• inflation, including wage inflation, and fluctuations in commodity prices, including gold, copper and other precious metals;

• our ability to achieve our major growth objectives, including transitioning second-wave customers to advanced packages and increasing our share of the automotive and industrial end market;

• changes in our capacity and capacity utilization rates;

• fluctuations in interest rates and currency exchange rates, including the current rising interest rate environment;

• changes in average selling prices which can occur quickly due to the absence of long-term agreements on price;

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• the absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of orders relative to our production capacity;

• inflation, including wage inflation, and fluctuations in commodity prices, including gold, copper and other precious metals;

• the timing of expenditures in anticipation of future orders;

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• costs associated with legal claims, indemnification obligations, judgments and settlements;

• political instability, conflicts and government shutdowns, civil disturbances or international events;

• political instability, conflicts (such as the ongoing conflict in Ukraine) and government shutdowns, civil disturbances and international events;

• environmental or natural disasters such as earthquakes, typhoons and volcanic eruptions;

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• our ability to attract and retain qualified personnel to support our global operations;

• fluctuations in interest rates and currency exchange rates, including the potential impact of the phase-out of the London Interbank Offered Rate (“LIBOR”) on our variable rate debt;

• our ability to penetrate new end markets or expand our business in existing end markets;

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• restructuring charges, asset write-offs and impairments.

In addition to the above factors, restrictive trade barriers adopted by U.S.

and foreign governments applicable to the semiconductor supply chain, including the export rules and regulations adopted by the U.S.

government in October 2022 regarding the sale of certain semiconductor chip and chipmaking equipment products to customers in China, could impact our business and the businesses of our customers.

These factors may have a material and adverse effect on our business, liquidity, results of operations, financial condition and cash flows or lead to significant volatility in our quarterly or annual operating results.

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We depend on our factories and operations in various foreign jurisdictions and many of our customers’ and vendors’ operations are also located outside of the U.S.

We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan.

Additionally, we recently announced that we plan to expand our operations into Vietnam.

Substantially all of our property, plant and equipment is located outside of the United States.

Moreover, many of our customers and the vendors in our supply chain are located outside the U.S.

We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan and are preparing to offer packaging and test services from a new factory under construction in Vietnam.

Substantially all of our property, plant and equipment is located outside of the United States, and many of our customers and the vendors in our supply chain are also located outside the U.S.

The following are some of the risks we face in doing business internationally:

• health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19;

• changes in consumer demand resulting from current or expected inflation or other variations in local economies;

• laws, rules, regulations and policies imposed by U.S.

or foreign governments in areas such as data privacy, cybersecurity, antitrust and competition, tax, currency and banking, labor, and environmental;

• restrictive trade barriers considered or adopted by U.S.

and foreign governments applicable to the semiconductor supply chain, including laws, rules, regulations and policies in areas such as national security, licensing requirements for exports, tariffs, customs and duties;

companies that sell certain semiconductor and chipmaking equipment products to customers in China;

• laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including customer- or government-supported efforts to promote the development and growth of local competitors;

• health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19, and governmental responses thereto;

• changes in consumer demand resulting from current or expected inflation or other variations in local economies;

• laws, rules, regulations and policies imposed by U.S.

or foreign governments in areas such as data privacy, cybersecurity, antitrust and competition, tax, currency and banking, labor, environmental, and health and safety;

• the payment of dividends and other payments by non-U.S.

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dollar to Japanese yen exchange rate for our operations in Japan;

• political and social conditions, and the potential for civil unrest, terrorism or other hostilities, including military conflicts;

• political and social conditions, and the potential for civil unrest, terrorism or other hostilities (such as the ongoing conflict in Ukraine);

• disruptions or delays in shipments caused by customs brokers or government agencies;

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Foreign Corrupt Practices Act and other anti-corruption laws and regulations.

We have significant facilities and other investments in Korea, and there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region.

Furthermore, there has been a history of conflict and tension within and among other countries in the region.

In addition, the Covid-19 pandemic has impacted, and may continue to impact, our operations and the operations of our customers and suppliers as a result of illness, quarantines, facility closures and travel and logistics restrictions in connection with the outbreak.

For example, quarantine orders and orders restricting movement have affected, and may in the future affect, our operations in the Philippines and Malaysia.

Other national, regional and local governments have implemented, and may continue to implement, similar restrictions to mitigate the spread of Covid-19, the emergence of new variants or the potential re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.

On October 7, 2022, the U.S.

Bureau of Industry and Security announced new export control regulations applicable to U.S.

semiconductor technology sold in China.

The new regulations place limitations on the ability of companies to export certain advanced computing semiconductor chips, as well as chipmaking equipment, by requiring companies to obtain licenses to export such products and equipment into China.

Certain of the Company’s competitors may be exempt from the new regulations by virtue of being non-U.S.

manufacturers.

To the extent required, Amkor would pursue export licenses and authorizations, but there can be no assurances that Amkor would obtain such licenses or authorizations on a timely or cost-effective basis or at all, or that our customers will not reroute business that would have otherwise been given to Amkor to one or more of our competitors as a result of the new restrictions, particularly if our competitors have, or are not required to have, required licenses or authorizations that we have not obtained.

It is also possible that government agencies in China or in other countries may adopt retaliatory export control rules in response to the new U.S.

regulations, which could further impact our business, liquidity, results of operations, financial condition and cash flows.

The Covid-19 pandemic has impacted, and may impact in the future, our operations and the operations of our customers and suppliers as a result of illness, quarantines, facility closures and travel and logistics restrictions in connection with the outbreak.

For example, quarantine orders and orders restricting movement have adversely affected, and may in the future adversely affect, our operations in China, the Philippines and Malaysia.

Additionally, other national, regional, and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.

Such restrictions may also affect end-user demand in each geography where our customers sell their products and services, which may materially and adversely affect demand for our services, our operating results and financial condition.

We also remain subject to industry-wide supply constraints and inflationary price pressures, which have resulted in long lead times, rising prices and supply chain disruptions.

In addition, we have significant facilities and other investments in Korea, and there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region.

Furthermore, there has been a history of conflict and tension within and among other countries in the region.

We compete against established competitors in the packaging and test business as well as internal capabilities of IDMs and face competition from new competitors, including foundries.

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We face substantial competition from established and emerging packaging and test service providers primarily located in Asia, including companies with significantly greater processing capacity, financial resources, local presence, research and development operations, marketing, technology and other capabilities.

In addition, we may compete with electronic manufacturing service providers or contract electronics manufacturers that also provide advanced integrated device solutions.

In addition, we may compete with electronics manufacturing service providers or contract electronics manufacturers that also provide advanced integrated device solutions.

We also may face increased competition from domestic companies located in China, where there are government-supported efforts to promote and subsidize the development and growth of the local semiconductor industry.

We may be at a disadvantage in attempting to compete with entities associated with such government-supported initiatives based on their lower cost of capital, access to government resources and incentives, preferential sourcing practices, stronger local relationships or otherwise.

Our competitors may also have established relationships, or enter into new strategic relationships, with one or

more of the large semiconductor companies that are our current or potential customers, or key suppliers to these customers.

Our competitors may also have established relationships, or enter into new strategic relationships, with one or more of the large semiconductor companies that are our current or potential customers or key suppliers to these customers.

Consolidation among our competitors could also strengthen their competitive position.

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Our IDM and foundry customers continually evaluate the need for outsourced services against their own in-house packaging and test services.

As a result, at any time and for a variety of reasons, IDMs and foundries may decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.

As a result, at any time and for a variety of reasons, IDMs and foundries may

decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.

To the extent we limit capacity commitments for certain customers, these customers may increase their level of in-house packaging and test capabilities, which could make it more difficult for us to regain their business when we have available capacity.

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These foundries, which are substantially larger than us and have greater financial resources than we do, have expanded their operations to include packaging and test services and may continue to expand these capabilities in the future.

If a key customer decides to purchase wafers from a semiconductor foundry that provides packaging and test services, our business could be reduced if the customer also engages that foundry for related packaging and test services.

If a key customer decides to purchase wafers from a semiconductor foundry that provides packaging and test services, our business could be adversely affected if the customer also engages that foundry for related packaging and test services.

We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors, that our customers will not rely on internal sources or foundries for packaging and test services or that our business, liquidity, results of operations, financial condition or cash flows will not be materially and adversely affected by such increased competition.

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and economic, political and other global conditions.

During 2022, we began construction for the first phase of a new manufacturing facility in Bac Ninh, Vietnam, which will have approximately 1.9 million square feet of space.

We expect to complete the first phase and begin high-volume manufacturing in the fourth quarter of 2023.

There can be no assurance, however, that the construction will be completed, or that high-volume manufacturing will begin, on that schedule or that the actual scope, costs or benefits of the project will be consistent with our current expectations.

Due to our high percentage of fixed costs, we may be unable to maintain satisfactory gross margins if we are unable to achieve relatively high-capacity utilization rates.

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Our production yields on new packages, particularly those packages which are based on new technologies, typically are significantly lower than our production yields on our more established packages.

Our failure to qualify new processes, maintain quality standards or acceptable production yields, if significant and prolonged, could result in loss of customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto.

Our failure to qualify new processes, maintain quality standards or acceptable production yields, if significant and prolonged, could result in the loss of customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto.

Any of these problems could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.

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There can be no assurance that patents will issue from pending or future applications or that, if patents are issued, the rights granted under the patents will provide us with meaningful protection or any commercial advantage.

Any patents we do obtain will eventually expire, may be challenged, invalidated or circumvented and may not provide us meaningful protection or other commercial advantage.

Any patents we do obtain will eventually expire and may be challenged, invalidated or circumvented.

As a result, such patents may not offer us meaningful protection or provide the commercial advantage for which they were designed.

Some of our technologies are not covered by any patent or patent application.

The confidentiality agreements on which we rely to protect these technologies may be breached and may not be adequate to protect our proprietary technologies.

The confidentiality agreements on which we rely to protect these technologies may be breached or may not be adequate to protect our proprietary technologies.

There can be no assurance that other countries in which we market our services will protect our intellectual property rights to the same extent as the U.S.

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• acquire licenses to such technology, which may not be available on commercially reasonable terms or at all.

through litigation, which could result in substantial cost and diversion of our resources and may not be successful.

We may need to enforce our patents or other intellectual property rights, including our rights under patent and intellectual property licenses with third parties, or defend ourselves against claimed infringement of the rights of others through litigation, which could result in substantial cost and diversion of our resources and may not be successful.

Furthermore, if we fail to obtain necessary licenses, our business could suffer, and we could be exposed to claims for damages and injunctions from third parties, as well as claims from our customers for indemnification.

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The potential impact from the legal proceedings referred to in this Form 10-K on our results of operations, financial condition and cash flows could change in the future.

We may face warranty claims, product return and liability risks, the risk of economic damage claims and the risk of negative publicity if our packages fail .

Our packages are incorporated into a number of end products, and our business may be exposed to warranty claims, product return and liability risks, the risk of economic damage claims and the risk of negative publicity if our packages fail.

We may face warranty claims, product return and liability risks, economic damage claims and negative publicity if our packages fail .

Our packages are incorporated into a number of end products.

If our packages fail, our business may be exposed to warranty claims, product return and liability risks, economic damage claims and negative publicity.

We receive warranty claims from our customers from time to time in the ordinary course of our business.

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Covenants in the indentures and agreements governing our current and future indebtedness could restrict our operating flexibility.

The indentures and agreements governing our existing debt, and debt we may incur in the future, contain, or may contain, affirmative and negative covenants that materially limit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain investments and other payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and encumber and dispose of assets.

The indentures and agreements governing our existing debt contain, and debt we incur in the future may contain, affirmative and negative covenants that materially limit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain investments and other payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and encumber and dispose of assets.

In addition, certain of our debt agreements contain, and our future debt agreements may contain, financial covenants and ratios.

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Since October 2020, we have paid a regular quarterly cash dividend on our outstanding common stock.

However, the payment, amount and timing of future cash dividends are subject to the final determination each quarter by our Board of Directors or a committee thereof that there are sufficient funds available to lawfully pay a dividend, that the dividend is compliant with the applicable restrictions in our debt agreements, and that the payment of the dividend remains in our best interests.

However, the payment, amount and timing of future cash dividends are subject to the final determination each quarter by our Board of Directors or a committee thereof that there are sufficient funds available to lawfully pay a dividend, that the dividend is compliant with the applicable restrictions in our debt agreements and that the payment of the dividend remains in our and our stockholders’ best interests.

The determination will be based on our results of operations, financial condition, cash requirements, debt restrictions and other factors.

Given these considerations, we may increase or decrease the amount of the dividend at any time and may also decide to vary the timing of or suspend the payment of dividends in the future.

Any decrease or suspension could cause our stock price to decline.

Any decrease or suspension of dividend payments could cause our stock price to decline.

We have significant severance plan obligations associated with our manufacturing operations in Korea which could reduce our cash flow and negatively impact our financial condition.

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In the event of a significant layoff or other reduction in our labor force in Korea, our subsidiary in Korea would be required to make lump-sum severance payments under the plan, which could have a material adverse effect on our liquidity, financial condition and cash flows.

We have made, and may in the future make, offers to some or all of the covered employees the option to convert from the severance plan to the defined contribution plan.

Some employees have accepted previous offers, and future offers to make similar conversions could impact the timing of future payments, reducing our cash flow and affecting our financial condition.

We have made, and may in the future make, offers to some or all of the covered employees the option to convert from the severance plan to a defined contribution plan.

Some employees have accepted previous offers, and future offers to make similar conversions could impact the timing of future payments, reducing our cash flow and materially and adversely affecting our financial condition.

Kim and members of his family can effectively determine or substantially influence the outcome of all matters requiring stockholder approval.

As of December 31, 2021, Mr.

Kim, the Executive Chairman of our Board of Directors, Ms.

As of December 31, 2022, James J.

Kim, the Executive Chairman of our Board of Directors, Susan Y.

Kim, the Executive Vice Chairman of our Board of Directors, and members of the Kim family and affiliates owned approximately 142.0 million shares, or approximately 58%, of our outstanding common stock.

The Kim family also has options to acquire approximately 0.6 million shares.

If the options are exercised, the Kim family’s total ownership would be an aggregate of approximately 142.5 million shares of our outstanding common stock or approximately 58% of our outstanding common stock.

If the options are exercised, the Kim family’s total ownership would be an aggregate of approximately 142.6 million shares, or approximately 58% of our outstanding common stock.

In June 2013, the Kim family exchanged convertible notes issued by Amkor in 2009 for approximately 49.6 million shares of common stock (the “Convert Shares”).

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General Risk Factors

The Covid-19 pandemic has impacted, and may continue to impact, the supply chain and consumer demand for our customers’ products and services, and the continued impact on the supply chain and consumer demand may ultimately have a material and adverse effect on our business, results of operations, and financial condition.

Our business has been and may continue to be adversely impacted by the effects of the Covid-19 pandemic.

The impacts have varied, and likely will continue to vary, by location, by industry and by end market.

We, our suppliers and our customers have been and may continue to be disrupted by worker illness and absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure and border closures or other travel or health-related restrictions.

There is considerable uncertainty regarding such restrictions and potential future governmental restrictions.

transport, port closures, and increased border controls, could limit our capacity to meet customer demand and have a material adverse effect on our business, results of operations and financial condition.

Such restrictions and efforts to contain the spread of Covid-19 have caused and may continue to cause disruptions to our supply chain in connection with the sourcing of equipment, supplies and other materials.

The resumption of normal business operations after any such restrictions are lifted may be delayed or constrained by lingering effects of the Covid-19 pandemic on our suppliers or customers or both.

The spread of Covid-19 has caused us to modify our business practices (including corporate hygiene protocols at factories, restricting employee travel and employee work locations and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine to be in the best interests of our employees, customers and suppliers.

There is no certainty that such measures will be sufficient to mitigate the current or future impacts of the Covid-19 pandemic, and our ability to perform critical functions could be harmed.

While certain governments have started to relax Covid-19-related restrictions and many countries are offering Covid-19 vaccines to their residents, vaccination rates remain low in many areas and there remains uncertainty around the impact of new variants or resurgences of Covid-19, when remaining restrictions will be lifted, if additional restrictions may be initiated, the timing of distribution and administration of the vaccines globally and when or if normal economic activity and business operations will resume.

At this time, we are unable to predict the future impacts that the Covid-19 pandemic will have on our business, financial condition or results of operations due to various uncertainties, including the duration of the outbreak and the actions that may be taken by governmental authorities and other businesses in response to the Covid-19 pandemic.

The Covid-19 pandemic has impacted, and may impact in the future, the supply chain and consumer demand for our customers’ products and services, and such impact on the supply chain and consumer demand may ultimately have a material and adverse effect on our business, results of operations and financial condition.

The impacts of the Covid-19 pandemic have varied, and may continue to vary, by location, by industry and by end market.

We, our suppliers and our customers have been disrupted by worker illness and absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping infrastructure and border closures or other travel or health-related restrictions.

Restrictions on our workforce or access to our manufacturing facilities, or similar limitations for our suppliers, or restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls, could limit our capacity to meet customer demand and have a material adverse effect on our business, results of operations and financial condition.

Such restrictions and efforts to contain the spread of Covid-19 have caused, and may cause in the future, disruptions to our

supply chain in connection with the sourcing of equipment, supplies and other materials.

The resumption of normal business operations after any such restrictions are lifted may be delayed or constrained by lingering effects of the Covid-19 pandemic on our suppliers or customers or both, and additional restrictions may be implemented in response to the emergence of new variants or re-emergence of Covid-19.

Additionally, other national, regional and local governments have implemented, and may implement in the future, restrictions to mitigate the spread of Covid-19, the emergence of new variants, or the re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate (such as the government-mandated lockdown of our Shanghai factory during the second quarter of 2022), and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.

We also remain subject to industry-wide supply constraints and inflationary price pressures, which have resulted in long lead times, rising prices and supply chain disruptions.

The spread of Covid-19 has caused us to modify our business practices (including corporate hygiene protocols at factories, restricting employee travel and employee work locations and cancelling physical participation in meetings, events and conferences) and, while the long-term impact of the Covid-19 pandemic remains uncertain, we have retained those enhanced measures as part of our commitment to protect the health and safety of our employees.

We may also take further actions in the future as may be required by government authorities or that we determine to be in the best interests of our employees, customers and suppliers.

There is no certainty that such measures will be sufficient to mitigate the future impact of the Covid-19 pandemic, and our ability to perform critical functions could be harmed.

At this time, we are unable to predict the nature or duration of future actions that may be taken by governmental authorities and other businesses in response to the Covid-19 pandemic (including any emergence of new variants).

Our substantial indebtedness could have a material adverse effect on our financial condition and prevent us from fulfilling our obligations.

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The health of the worldwide banking system and capital markets also affects our liquidity.

If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S., foreign or international banking system and capital markets, they may refuse or be unable to fund borrowings under their credit commitments to us.

Volatility in the banking system and capital markets, as well as any increase in interest rates or adverse economic, political, public health or other global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities or refinance our debt.

If financial institutions that have extended credit commitments to us are adversely affected by the conditions of the U.S., foreign or international banking system and capital markets (including as a result of rising interest rates, economic downturns or other developments), they may refuse or be unable to fund borrowings under their credit commitments to us.

Federal Reserve raised interest rates several times during 2022 and has signaled further rate increases in the near term.

Volatility in the banking system and capital markets, as well as any further increase in interest rates or adverse economic, political, public health or other global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities or refinance our debt.

The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations.

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In addition, we have significant customer concentration within our end markets.

The loss of a significant customer, a business combination among our customers, a reduction in orders or a decrease in price from a significant customer or disruption in any of our significant commercial arrangements may result in a decline in our sales and profitability and could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.

performance, the customer’s qualification of additional competitors on products we package or test and a number of other factors.

The loss of a significant customer, a business combination among our customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our significant commercial arrangements may result in a decline in our sales and profitability and could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.

The demand for our services from each customer is directly dependent upon that customer’s financial health, level of business activity and purchasing decisions, the quality and price of our services, our cycle time and delivery performance, the customer’s qualification of additional competitors on products we package or test and a number of other factors.

Each of these factors could vary significantly from time to time resulting in the loss or reduction of customer orders, and we cannot be sure that our key customers or any other customers will continue to place orders with us in the future at the same levels as in past periods.

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Labor shortages could also result in higher wages that would increase our labor costs, which could reduce our profits.

Other than the agreement with our Chief Executive Officer, we do not have employment agreements with our key employees, including senior management, or other contracts that would prevent our key employees from working for our competitors in the event they cease working for us.

We cannot assure you that we will be successful in our efforts to retain or replace key employees or in hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth.

Although we have entered into agreements with our Chief Executive Officer and certain other executives that would prevent them from working for, or impose financial penalties for doing business with, our competitors in the event they cease working for us, we cannot assure you that we will be successful in our efforts to retain or replace key employees or in hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth.

Our inability to attract, retain, motivate and train qualified new personnel could have a material adverse effect on our business.

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We depend on our information technology systems for many aspects of our business.

Our systems may be susceptible to:

damage, disruptions or shutdowns due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardware failures, interruption or failures of third-party provider systems, computer viruses, attacks by computer hackers, ransomware attacks, telecommunication failures, user errors, malfeasance or catastrophic events.

Our systems may be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardware failures, interruption or failures of third-party provider systems, computer viruses, attacks by computer hackers, ransomware attacks, telecommunication failures, user errors,

malfeasance or catastrophic events.

Such events have occurred in the past and may occur in the future.

Cybersecurity

breaches could result in unauthorized disclosure of confidential information or disruptions to our operations.

While we have not experienced a material information security breach in the past, we cannot be sure that such a breach will not occur in the future.

Cybersecurity breaches could result in unauthorized disclosure of confidential information or disruptions to our operations.

While we have not experienced a material information security breach, we cannot be sure that such a breach will not occur in the future.

The IT systems in our factories are at varying levels of sophistication and maturity as the factories have different sets of products, processes and customer expectations.

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As a result of the risks discussed above, the anticipated benefits of these or other future acquisitions, consolidations and partnering arrangements may not be fully realized, if at all, and these activities could have a material adverse effect on our business, financial condition and results of operations.

We could suffer adverse tax and other financial consequences if there are changes in tax laws or taxing authorities do not agree with our interpretation of applicable tax laws, including whether we continue to qualify for tax holidays, or if we are required to establish or adjust valuation allowances on deferred tax assets.

We could suffer adverse tax and other financial consequences if there are changes in tax laws or taxing authorities do not agree with our interpretation of applicable tax laws, including whether we continue to qualify for conditional reduced tax rates, or if we are required to establish or adjust valuation allowances on deferred tax assets.

We earn a substantial portion of our income in foreign countries, and our operations are subject to tax in multiple jurisdictions with complicated and varied tax regimes.

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Changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic Cooperation and Development (“OECD”).

The OECD, which represents a coalition of member countries, recommended changes to long-standing tax principles related to transfer pricing and has developed new proposals including establishing a global minimum corporate income tax (tested on a jurisdictional basis).

The OECD, which represents a coalition of member countries, recommended changes to long-standing tax principles related to transfer pricing and has developed model rules including establishing a global minimum corporate income tax tested on a jurisdictional basis (the “Pillar Two Model Rules”).

Some countries have already started to implement laws based on the Pillar Two Model Rules.

Changes in U.S.

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Our tax liabilities are based, in part, on our corporate structure, interpretations of various U.S.

and foreign tax laws, including withholding tax, compliance with tax holiday requirements, application of changes in tax law to our operations and other relevant laws of applicable taxing jurisdictions.

and foreign tax laws, including withholding tax, compliance with conditional reduced tax rate requirements, application of changes in tax law to our operations and other relevant laws of applicable taxing jurisdictions.

From time to time, taxing authorities may conduct examinations of our income tax returns and other regulatory filings.

We cannot assure you that the taxing authorities will agree with our interpretations, including whether we continue to qualify for tax holidays.

We cannot assure you that the taxing authorities will agree with our interpretations, including whether we continue to qualify for conditional reduced tax rates.

If they do not agree, we may seek to enter into settlements with the taxing authorities.

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If we do not prevail or if we enter into settlements with taxing authorities, we may have to make significant payments or otherwise record charges (or reduce tax assets) that materially and adversely affect our results of operations, financial condition and cash flows.

Additionally, certain of our subsidiaries operate under tax holidays, which will expire in whole or in part at various dates in the future.

As those tax holidays expire, we expect that our tax expense will increase as income from those jurisdictions becomes subject to higher statutory income tax rates, thereby reducing our liquidity and cash flow.

Additionally, certain of our subsidiaries operate under conditional reduced tax rates, which will expire in whole or in part at various dates in the future.

As those conditional reduced tax rates expire, we expect that our tax expense will increase as income from those jurisdictions becomes subject to higher statutory income tax rates, thereby reducing our liquidity and cash flow.

We monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance.

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For example, at our foreign facilities we produce liquid waste when semiconductor wafers are diced into chips with the aid of diamond saws, then cooled with running water.

In addition, semiconductor packages have historically utilized metallic alloys containing lead (Pb) within the interconnect terminals typically referred to as leads, pins or balls, and the European Union’s Restriction of Hazardous Substances in Electrical and Electronic Equipment directive and similar laws in other jurisdictions, including China, impose strict restrictions on the placement into the market of electrical and electronic equipment containing lead and

certain other hazardous substances.

We may become liable under these and other environmental, health and safety laws and regulations, including for the cost of compliance and cleanup of any disposal or release of hazardous materials arising out of our former or current operations, or otherwise as a result of the emission of greenhouse gasses or other chemicals, the existence of hazardous materials on our properties or the existence of hazardous substances in the products for which we perform our services.

In addition, semiconductor packages have historically utilized metallic alloys containing lead within the interconnect terminals typically referred to as leads, pins or balls, and the European Union’s Restriction of Hazardous

Substances in Electrical and Electronic Equipment directive and similar laws in other jurisdictions, including China, impose strict restrictions on the placement into the market of electrical and electronic equipment containing lead and certain other hazardous substances.

We may become liable under these and other environmental, health and safety laws and regulations, including for the cost of compliance and cleanup of any disposal or release of hazardous materials arising out of our former or current operations, or otherwise as a result of the emission of GHGs or other chemicals, the existence of hazardous materials on our properties or the existence of hazardous substances in the products for which we perform our services.

We could also be held liable for damages, including fines, penalties and the cost of investigations and remedial actions, we could be subject to revocation of permits, which may materially and adversely affect our ability to maintain or expand our operations.

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This increased focus on sustainability and the environmental impact of semiconductor operations and products has caused industry groups and customers to impose additional requirements on us and our suppliers, sometimes exceeding regulatory standards.

These industry and customer requirements include increased tracking and reporting of greenhouse gas emissions, reductions in waste and wastewater from operations, additional reporting on the materials and components used in the products for which we perform our services, and the use of renewable energy sources in our factory operations.

These industry and customer requirements include increased tracking and reporting of GHG emissions, reductions in waste and wastewater from operations, additional reporting on the materials and components used in the products for which we perform our services, and the use of renewable energy sources in our factory operations.

To comply with these additional requirements, we may need to procure additional equipment or make factory or process changes and our operating costs may increase.

Our business and financial condition could be adversely affected by natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions.

We have significant packaging and test and other operations in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan, and we have announced our intention to expand our operations to Vietnam.

Our business and financial condition has been adversely affected, and could be adversely affected in the future, by natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions.

We have significant packaging and test services and other operations in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan, and we have a new factory under construction in Vietnam.

Such operations are or could be subject to:

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political events or instability;

acts of war, armed conflict, terrorist incidents and other hostilities in regions where we have facilities;

acts of war or armed conflict (such as the ongoing conflict in Ukraine);

terrorist incidents and other hostilities in regions where we have facilities;

and industrial accidents and other events, that could disrupt or even shutdown our operations.

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We maintain insurance policies for various types of property, casualty and other risks, but we do not carry insurance for all the above referred risks.

With regard to the insurance we do maintain, we cannot assure you that it would be sufficient to cover all of our potential losses.

With regard to the insurance we do maintain, we cannot assure you that it would be

sufficient to cover all of our potential losses.

As a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected by natural disasters and other calamities.

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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 1A. Risk Factors