AMKOR TECHNOLOGY, INC. 10-K

Item 8. Financial Statements and Supplementary Data We present the information required by Item 8 of Form 10-K here in the following order: Page Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 49 Consolidated Statements of Income — Years ended December 31, 202 2 , 202 1 and 202 0 52 Consolidated Statements of Comprehensive Income — Years ended December 31, 202 2 , 202 1 and 2020 53 Consolidated Balance Sheets — December 31, 202 2 and 20 21 54 Consolidated Statements of Stockholders’ Equity — Years ended December 31, 202 2 , 202 1 and 20 20 55 Consolidated Statements of Cash Flows — Years December 31, 202 2 , 202 1 and 20 20 56 Notes to Consolidated Financial Statements 58 Schedule II — Valuation and Qualifying Accounts — Years ended December 31, 202 2 , 202 1 and 20 20 90 48 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Amkor Technology, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Amkor Technology, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and financial statement schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2022 appearing under Item 8 (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 49 Table of Contents Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for Income Taxes As described in Notes 1 and 4 to the consolidated financial statements, the Company recorded income tax expense of $89.9 million for the year ended December 31, 2022, and net deferred tax assets of $78.2 million and unrecognized tax benefits of $33.3 million as of December 31, 2022. Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis as well as for net operating loss and tax credit carryforwards. Management monitors on an ongoing basis its ability to utilize deferred tax assets and whether there is a need for a related valuation allowance. In evaluating the ability to recover deferred tax assets in the jurisdictions from which they arise, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations. The Company operates in and files income tax returns in various U.S. and foreign jurisdictions, which are subject to examination by tax authorities. Years open to examination contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits. The principal considerations for our determination that performing procedures relating to accounting for income taxes is a critical audit matter are the significant judgment by management in determining the income tax provision and other tax positions. This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and in evaluating audit evidence relating to income taxes. The audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained. 50 Table of Contents Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to accounting for income taxes, including the controls addressing the completeness and accuracy of the data utilized. These procedures also included, among others (i) testing the income tax provision calculation and underlying data, including the effective tax rate reconciliation, significant return to provision adjustments, and permanent and temporary differences, (ii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, (iii) evaluating the identification of reserves for unrecognized tax benefits and the reasonableness of the “more likely than not” determination considering the jurisdictions, court decisions, legislative actions, statute of limitations, and developments in tax examinations, and (iv) using professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s judgment and estimates, including application of foreign and domestic tax laws and regulations. /s/ PricewaterhouseCoopers LLP Phoenix, Arizona February 22, 2023 We have served as the Company’s auditor since 2000. 51 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF INCOME For the Year Ended December 31, 2022 2021 2020 (In thousands, except per share data) Net sales $ 7,091,585 $ 6,138,329 $ 5,050,589 Cost of sales 5,761,598 4,912,775 4,149,775 Gross profit 1,329,987 1,225,554 900,814 Selling, general and administrative 283,372 296,084 302,842 Research and development 149,429 166,037 140,727 Total operating expenses 432,801 462,121 443,569 Operating income 897,186 763,433 457,245 Interest expense 58,563 51,508 64,168 Other (income) expense, net ( 18,309 ) ( 3,141 ) 6,395 Total other expense, net 40,254 48,367 70,563 Income before taxes 856,932 715,066 386,682 Income tax expense 89,890 69,459 46,183 Net income 767,042 645,607 340,499 Net income attributable to noncontrolling interests ( 1,219 ) ( 2,612 ) ( 2,361 ) Net income attributable to Amkor $ 765,823 $ 642,995 $ 338,138 Net income attributable to Amkor per common share: Basic $ 3.13 $ 2.64 $ 1.40 Diluted $ 3.11 $ 2.62 $ 1.40 Shares used in computing per common share amounts: Basic 244,676 243,878 241,509 Diluted 246,205 245,704 242,248 The accompanying notes are an integral part of these statements. 52 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Year Ended December 31, 2022 2021 2020 (In thousands) Net income $ 767,042 $ 645,607 $ 340,499 Other comprehensive income (loss), net of tax: Adjustments to net unrealized gains (losses) on available-for-sale debt investments ( 1,225 ) ( 369 ) 21 Adjustments to unrealized components of defined benefit pension plans 8,604 9,834 602 Foreign currency translation ( 10,658 ) ( 16,757 ) 7,532 Total other comprehensive income (loss) ( 3,279 ) ( 7,292 ) 8,155 Comprehensive income 763,763 638,315 348,654 Comprehensive income attributable to noncontrolling interests ( 1,219 ) ( 2,612 ) ( 2,361 ) Comprehensive income attributable to Amkor $ 762,544 $ 635,703 $ 346,293 The accompanying notes are an integral part of these statements. 53 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED BALANCE SHEETS December 31, 2022 2021 (In thousands, except per share data) ASSETS Current assets: Cash and cash equivalents $ 959,072 $ 826,744 Restricted cash — 962 Short-term investments (amortized cost of $ 283,641 and $ 251,959 , respectively) 281,964 251,530 Accounts receivable, net of allowances of $ 365 and $ 440 , respectively 1,365,504 1,258,767 Inventories 629,576 484,959 Other current assets 65,123 33,601 Total current assets 3,301,239 2,856,563 Property, plant and equipment, net 3,135,614 2,871,058 Operating lease right of use assets 171,163 159,742 Goodwill 21,517 24,516 Restricted cash 3,334 3,815 Other assets 188,890 122,860 Total assets $ 6,821,757 $ 6,038,554 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt $ 143,813 $ 153,008 Trade accounts payable 899,164 828,727 Capital expenditures payable 146,602 210,875 Short-term operating lease liability 70,991 64,233 Accrued expenses 401,841 422,892 Total current liabilities 1,662,411 1,679,735 Long-term debt 1,088,521 984,988 Pension and severance obligations 93,540 120,472 Long-term operating lease liabilities 75,745 83,937 Other non-current liabilities 201,839 196,876 Total liabilities 3,122,056 3,066,008 Commitments and contingencies (Note 17) Stockholders’ equity: Preferred stock, $ 0.001 par value, 10,000 shares authorized, designated Series A, none issued — — Common stock, $ 0.001 par value, 500,000 shares authorized, 291,249 and 290,466 shares issued, and 245,091 and 244,315 shares outstanding, respectively 291 290 Additional paid-in capital 1,996,344 1,977,134 Retained earnings 1,874,644 1,163,939 Accumulated other comprehensive income (loss) 16,699 19,978 Treasury stock, at cost, 46,158 and 46,151 shares, respectively ( 219,226 ) ( 219,065 ) Total Amkor stockholders’ equity 3,668,752 2,942,276 Noncontrolling interests in subsidiaries 30,949 30,270 Total equity 3,699,701 2,972,546 Total liabilities and equity $ 6,821,757 $ 6,038,554 The accompanying notes are an integral part of these statements. 54 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Additional Paid- In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Amkor Stockholders’ Equity Noncontrolling Interest in Subsidiaries Total Equity Common Stock Treasury Stock Shares Par Value Shares Cost (In thousands) Balance at December 31, 2019 286,877 $ 287 $ 1,927,739 $ 234,077 $ 19,115 ( 46,072 ) $ ( 217,479 ) $ 1,963,739 $ 26,500 $ 1,990,239 Net income — — — 338,138 — — — 338,138 2,361 340,499 Other comprehensive income (loss) — — — — 8,155 — — 8,155 — 8,155 Treasury stock acquired through surrender of shares for tax withholding — — — — — ( 22 ) ( 261 ) ( 261 ) — ( 261 ) Issuance of stock through share-based compensation plans 2,046 2 17,609 — — — — 17,611 — 17,611 Share-based compensation — — 8,030 — — — — 8,030 — 8,030 Cash dividends declared ($ 0.04 per common share) — — — ( 9,713 ) — — — ( 9,713 ) — ( 9,713 ) Subsidiary dividends to noncontrolling interests — — — — — — — — ( 601 ) ( 601 ) Balance at December 31, 2020 288,923 $ 289 $ 1,953,378 $ 562,502 $ 27,270 ( 46,094 ) $ ( 217,740 ) $ 2,325,699 $ 28,260 $ 2,353,959 Net income — — — 642,995 — — — 642,995 2,612 645,607 Other comprehensive income (loss) — — — — ( 7,292 ) — — ( 7,292 ) — ( 7,292 ) Treasury stock acquired through surrender of shares for tax withholding — — — — — ( 57 ) ( 1,325 ) ( 1,325 ) — ( 1,325 ) Issuance of stock through share-based compensation plans 1,543 1 12,786 — — — — 12,787 — 12,787 Share-based compensation — — 10,970 — — — — 10,970 — 10,970 Cash dividends declared ($ 0.17 per common share) — — — ( 41,558 ) — — — ( 41,558 ) — ( 41,558 ) Subsidiary dividends to noncontrolling interests — — — — — — — — ( 602 ) ( 602 ) Balance at December 31, 2021 290,466 $ 290 $ 1,977,134 $ 1,163,939 $ 19,978 ( 46,151 ) $ ( 219,065 ) $ 2,942,276 $ 30,270 $ 2,972,546 Net income — — — 765,823 — — — 765,823 1,219 767,042 Other comprehensive income (loss) — — — — ( 3,279 ) — — ( 3,279 ) — ( 3,279 ) Treasury stock acquired through surrender of shares for tax withholding — — — — — ( 7 ) ( 161 ) ( 161 ) — ( 161 ) Issuance of stock through share-based compensation plans 783 1 5,648 — — — — 5,649 — 5,649 Share-based compensation — — 13,562 — — — — 13,562 — 13,562 Cash dividends declared ($ 0.225 per common share) — — — ( 55,118 ) — — — ( 55,118 ) — ( 55,118 ) Subsidiary dividends to noncontrolling interests — — — — — — — — ( 540 ) ( 540 ) Balance at December 31, 2022 291,249 $ 291 $ 1,996,344 $ 1,874,644 $ 16,699 ( 46,158 ) $ ( 219,226 ) $ 3,668,752 $ 30,949 $ 3,699,701 The accompanying notes are an integral part of these statements. 55 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2022 2021 2020 (In thousands) Cash flows from operating activities: Net income $ 767,042 $ 645,607 $ 340,499 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 612,702 563,582 510,396 Amortization of deferred debt issuance costs and premiums 3,247 2,508 1,979 Deferred income taxes ( 11,623 ) 10,676 3,143 Loss on debt retirement 464 — 3,042 Gain on disposal of fixed assets, net ( 2,807 ) ( 1,446 ) ( 2,821 ) Share-based compensation 13,562 10,970 8,030 Other, net ( 2,421 ) 13,752 ( 779 ) Changes in assets and liabilities: Accounts receivable ( 103,990 ) ( 298,854 ) ( 106,693 ) Inventories ( 148,137 ) ( 190,555 ) ( 75,499 ) Other current assets ( 23,802 ) 5,335 ( 12,348 ) Other assets ( 34,835 ) 14,746 ( 22,614 ) Trade accounts payable 86,574 215,646 48,786 Accrued expenses ( 40,637 ) 108,283 69,151 Pension and severance obligations ( 10,547 ) ( 30,013 ) ( 21,535 ) Net operating lease ROU asset ( 14,483 ) ( 14,781 ) 871 Operating lease liabilities 1,574 16,293 2,537 Other non-current liabilities 6,873 49,546 23,888 Net cash provided by operating activities 1,098,756 1,121,295 770,033 Cash flows from investing activities: Payments for property, plant and equipment ( 908,294 ) ( 779,779 ) ( 553,021 ) Proceeds from sale of property, plant and equipment 3,148 3,157 3,819 Proceeds from insurance recovery for property, plant and equipment — 104 — Proceeds from foreign exchange forward contracts 33,578 16,608 49,226 Payments for foreign exchange forward contracts ( 104,703 ) ( 69,835 ) ( 14,031 ) Payments for short-term investments ( 438,803 ) ( 414,208 ) ( 535,368 ) Proceeds from sale of short-term investments 33,972 87,273 247,081 Proceeds from maturities of short-term investments 370,924 204,679 159,015 Other investing activities 3,009 8,122 4,574 Net cash used in investing activities ( 1,007,169 ) ( 943,879 ) ( 638,705 ) Cash flows from financing activities: Proceeds from revolving credit facilities 80,000 — 312,000 Payments of revolving credit facilities ( 80,000 ) — ( 332,000 ) Proceeds from short-term debt 29,711 15,514 86,769 Payments of short-term debt ( 27,187 ) ( 19,927 ) ( 87,353 ) Proceeds from issuance of long-term debt 366,386 353,587 331,033 Payments of long-term debt ( 214,290 ) ( 316,635 ) ( 648,514 ) Payments for debt issuance costs ( 7,297 ) ( 1,294 ) ( 1,644 ) Payments of finance lease obligations ( 40,673 ) ( 20,373 ) ( 9,851 ) Proceeds from issuance of stock through share-based compensation plans 5,635 12,787 17,611 Payment of dividends ( 55,116 ) ( 51,213 ) — Other financing activities ( 1,572 ) ( 2,548 ) ( 1,770 ) Net cash provided by (used in) financing activities 55,597 ( 30,102 ) ( 333,719 ) Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash ( 16,299 ) ( 17,990 ) 6,056 Net increase (decrease) in cash, cash equivalents and restricted cash 130,885 129,324 ( 196,335 ) Cash, cash equivalents and restricted cash, beginning of period 831,521 702,197 898,532 Cash, cash equivalents and restricted cash, end of period $ 962,406 $ 831,521 $ 702,197 The accompanying notes are an integral part of these statements. 56 Table of Contents AMKOR TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2022 2021 2020 (In thousands) Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 54,355 $ 46,932 $ 61,295 Income taxes 97,333 24,011 43,404 Non-cash investing and financing activities: Property, plant and equipment included in capital expenditures payable 142,160 211,421 181,376 Right of use assets acquired through operating lease liabilities 64,849 63,314 41,672 Right of use assets acquired through finance lease liabilities 58,166 73,894 10,517 Dividends declared and unpaid 25 58 9,713 The accompanying notes are an integral part of these statements. 57 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements 1. Description of Business and Summary of Significant Accounting Policies Description of Business Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. 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; • Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution; • Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies; • Collaborating with customers, foundries, OEMs and equipment and material suppliers; • Focusing on strategic end markets that offer solid growth potential; • Providing a geographically diverse operating base; and • Developing a competitive cost structure through disciplined capital investment. Basis of Presentation Our Consolidated Financial Statements include the accounts of Amkor Technology, Inc. and its subsidiaries. Our Consolidated Financial Statements reflect the elimination of all significant inter-company accounts and transactions. Our investments in variable interest entities in which we are the primary beneficiary are consolidated. We reflect the remaining portion of variable interest entities and foreign subsidiaries that are not wholly owned as noncontrolling interests. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, income taxes, inventory and long-lived assets. These estimates are based on management’s best knowledge of current events, historical experience, actions that we may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results could differ materially from these estimates and assumptions, including the impact of Covid-19 and any deterioration in the global business and economic environment. Consolidation of Variable Interest Entities We have variable interests in certain Philippine realty corporations in which we have a 40 % ownership. We lease land and buildings in the Philippines from these entities and we are the primary beneficiary of these arrangements. As of December 31, 2022, the combined book value of the assets and liabilities associated with these Philippine realty corporations included in our Consolidated Balance Sheet was $ 17.2 million and $ 0.1 million, respectively. The impact of consolidating these variable interest entities on our Consolidated Statements of Income was not significant, and other than our lease payments, we have not provided any significant assistance or other financial support to these variable interest entities for the years ended December 31, 2022, 2021 or 2020. The creditors of the Philippine realty corporations have no recourse to our general credit. 58 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Foreign Currency Translation The U.S. dollar is the functional currency of our subsidiaries other than our Japan operations. The foreign currency asset and liability amounts at these subsidiaries are remeasured into U.S. dollars at end-of-period exchange rates, except for nonmonetary items which are remeasured at historical rates. Foreign currency income and expenses are remeasured at daily exchange rates, except for expenses related to balance sheet amounts which are remeasured at historical exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in other (income) expense, net in the period in which they occur. The Japanese yen is the functional currency of our Japan operations. The asset and liability amounts of our Japan operations are translated into U.S. dollars at end-of-period exchange rates. Income and expenses are translated into U.S. dollars at the daily exchange rate. The resulting translation adjustments are reported as a component of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet. Assets and liabilities denominated in a currency other than the functional currency are remeasured into the functional currency prior to translation into U.S. dollars, and the resulting transaction exchange gains or losses are included in other (income) expense, net in the period in which they occur. Risks and Concentrations The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. Our financial results are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the timely implementation of new package and test technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and reliance on materials and equipment suppliers. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns at various times. 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. A significant portion of our revenues is concentrated with a small group of customers (Note 18). Direct sales to our two largest customers accounted for 20.6 % and 10.1 % of our net sales for the year ended December 31, 2022. The loss of a significant customer, a business combination among customers, a reduction in orders or decrease in price from a significant customer or disruption in any of our significant strategic partnerships or other commercial arrangements could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. Financial instruments, for which we are subject to credit risk, consist principally of accounts receivable and cash, cash equivalents and short-term investments. With respect to accounts receivable, we mitigate our credit risk by selling primarily to well-established companies, performing ongoing credit evaluations and making frequent contact with customers. In addition, we may utilize non-recourse factoring to mitigate credit risk when considered appropriate. We have historically mitigated our credit risk with respect to cash and cash equivalents through diversification of our holdings into various high quality money market funds and bank deposit accounts. Our short-term investments are principally investments in debt securities with maximum duration of twenty-four months and range from AAA- to BBB-rated financial instruments. Our short-term investments are primarily in direct obligations of the U.S. Government or its agencies, corporate bonds, asset backed securities, commercial paper, municipal bonds, and other foreign government obligations and funds. At December 31, 2022, our cash and cash equivalents were primarily maintained in various U.S. and foreign bank operating and time deposit accounts and invested in U.S. money market funds and commercial paper. Contingencies and Litigation We may be subject to certain legal proceedings, lawsuits and other claims, as discussed in Note 17. We accrue for a loss contingency, including legal proceedings, lawsuits, pending claims and other legal matters, when we conclude that the likelihood of a loss is probable and the amount of the loss can be reasonably estimated. When the reasonable estimate of the loss is within a range of amounts, and no amount in the range constitutes a better estimate than any other amount, we 59 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but the loss we incur may be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if we believe they are material and there is at least a reasonable possibility that a loss has been incurred. Attorney fees related to legal matters are expensed as incurred. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents are primarily maintained in various U.S. and foreign bank operating and time deposit accounts and invested in U.S. money market funds and commercial paper. Restricted Cash Restricted cash, current, consists of short-term cash equivalents used to collateralize our daily banking services. Restricted cash, non-current, mainly consists of collateral to fulfill foreign trade compliance requirements. Investments Generally, we classify our short-term investments in fixed income securities as available-for-sale debt investments. All of our available-for-sale debt investments as of December 31, 2022 are available to fund current operations and are recorded at fair value (Note 6). Unrealized gains and losses on our available-for-sale debt investments are included as a separate component of accumulated other comprehensive income (loss), net of tax. Realized gains and losses on our available-for-sale debt investments and declines in value judged to be an impairment are included in other (income) expense, net. The cost of short-term investments matured or sold is based on the average cost method. We evaluate on an ongoing basis the market conditions, trends of earnings, financial condition, credit ratings, any underlying collateral and other key measures for our short-term investments in determining if and when a decline in value below the adjusted cost of our available-for-sale debt investments is an impairment. An impairment is considered if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the security before recovery of the entire amortized cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security. If impairment is considered on condition (i) or (ii) above, the entire difference between the amortized cost and the fair value of the debt security is recognized in earnings. If impairment is considered based on condition (iii), the amount representing credit losses will be recognized in earnings and as an allowance for credit losses. The amount relating to all other factors will be recognized in other comprehensive income. Inventories Inventories consist of raw materials and purchased components and are stated at the lower of cost and net realizable value. Cost is principally determined by standard cost or the weighted moving average method, both of which approximate actual cost. We review and set our standard costs as needed, but at a minimum on a quarterly basis. We reduce the carrying value of our inventories for the cost of inventory we estimate is excess and obsolete based on the age of our inventories. When a determination is made that the inventory will not be utilized in production or is not saleable, it is written-off. Other Current Assets Other current assets consist principally of prepaid assets. 60 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assets which are as follows: Buildings and improvements 10 to 40 years Machinery and equipment 2 to 7 years Software and computer equipment 3 to 5 years Furniture, fixtures and other equipment 4 to 10 years Cost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings. Expenditures for maintenance and repairs are charged to expense as incurred. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of are carried at the lower of cost or fair value less the costs of disposal. Leases We lease certain machinery and equipment, office space, and manufacturing facilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) with the non-lease components (e.g., common-area maintenance costs) for all asset classes. We use our incremental borrowing rate based on the information available at the lease commencement date to determine the lease liability. Our leases have remaining lease terms ranging from less than one year to 83 years. For purposes of calculating our lease liabilities, our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise those options. Certain leases also include options to purchase the leased property. Goodwill Goodwill is recorded when the cost of an acquisition exceeds the fair value of the net tangible and identifiable intangible assets acquired. We review goodwill for impairment annually during the fourth quarter of each year and whenever events or changes in circumstances indicate that an impairment may exist. Impairment losses are recorded when the carrying amount of the reporting unit exceeds its fair value. The balance of goodwill in our Consolidated Balance Sheets reflects adjustments for foreign currency translation. Other Assets Other assets consist principally of deferred tax assets, refundable security deposits and advanced payments to vendors. Derivatives We use foreign exchange forward contracts, generally settled monthly, to manage a portion of our exposure to foreign exchange risk. The derivatives are recorded at the fair value either in other current assets or accrued expenses, with the associated gains and losses charged to other (income) expense, net in the period in which they occur. We do not apply hedge accounting to the derivatives. See Note 15 for further discussion about the derivatives. 61 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Fair Value Measurements We apply fair value accounting for assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or nonrecurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. See Note 16 for further discussion of fair value measurements. Revenue Recognition We recognize revenue, net of sales, use, value-added and other similar taxes, as a performance obligation is satisfied in an amount reflecting the consideration to which we expect to be entitled. We apply a five-step approach in determining the amount and timing of revenue to be recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied. Substantially all of our revenue is recognized as services are rendered. Our packaging and test services are our performance obligations to our customers. Our packaging services include wafer bump, probe and assembly. We provide packaging and test services to our customers either individually or as part of a combined offering. In a combined offering, we account for the individual services separately if they are determined to be distinct. We determine a service to be distinct if it is separately identifiable from other services in the combined offering and if a customer can benefit from the unique service on its own or with other resources that are readily available to the customer. The consideration, including variable consideration, is allocated between the distinct services in a combined offering based upon the stand-alone selling prices of the individual services. Our services involve a high degree of specialization which are unique based on the design and purpose of the customer’s wafers. Accordingly, our negotiated pricing reflects the customized nature of our services and represents a customer-specific stand-alone selling price. We recognize revenue as services are rendered, which generally occurs over the course of two to three weeks. Services are generally billed at completion of each individual packaging or test service or in some instances at the completion of all services in a combined offering. We recognize revenue over time as services are rendered because our services create or enhance the customer’s wafer. We utilize an input method (cost incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. During the period of providing our services, we generally do not control or take ownership of customers’ wafers, nor do we include the cost of the wafer in our cost calculations. We believe that a cost-based input method is the most appropriate manner to measure how we satisfy our performance obligations to customers because the effort and costs incurred to package and/or test customer wafers are not linear over the duration of these services. Shipping and handling costs are accounted for as a cost to fulfill our performance obligations to customers. Accordingly, we record customer payments of shipping and handling costs as a component of net sales, and the costs incurred for shipping and handling are then charged to cost of sales. Unbilled receivables are revenues that have been recognized for performance obligations that have been satisfied, or partially satisfied, in advance of billing the customer. Revenue may be recognized in advance of billing as our contracts provide us with an unconditional right to consideration for work that is performed. Total unbilled receivables as of December 31, 2022 and 2021 were $ 301.7 million and $ 224.7 million, respectively. These amounts are included in accounts receivable, net of allowances in our Consolidated Balance Sheets. At times, the company receives cash payments from customers in advance of the company’s performance. In such cases, we record deferred revenue until the performance obligation is satisfied, which represents a contract liability and is included in accrued expenses and other non-current liabilities in the consolidated balance sheets. These contract liabilities are classified as either current or long-term based on the timing of when the company expects to recognize 62 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) revenue. Contract liabilities were $ 170.6 million and $ 187.2 million as of December 31, 2022 and December 31, 2021, respectively. As of December 31, 2022 and December 31, 2021, the short-term portion of the liability was $ 81.5 million and $ 117.7 million, respectively. The remainder of the December 31, 2022 contract liability balance is expected to be recognized in revenue over the next 1 - 5 years. Revenue recognized during the year that was included in the contract liability balance at the beginning of the period was $ 101.2 million, $ 29.0 million, and $ 14.1 million, for 2022, 2021 and 2020, respectively. Research and Development Costs Research and development expenses include costs attributable to the conduct of research and development programs primarily related to the development of new package designs or technologies and improving the efficiency and capabilities of our existing production processes. Such costs include labor, materials, supplies, depreciation and maintenance of research equipment, services provided by outside contractors and the allocable portions of facility costs such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. Costs associated with research and development are expensed as incurred. Income Taxes Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis as well as for net operating loss carryforwards (“NOLs”) and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related tax benefits will not be realized. 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. In evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations. With exception of a certain foreign jurisdiction and select U.S. and foreign carryforwards, we consider it more likely than not that we will have sufficient taxable income to allow us to realize these deferred tax assets. However, in the event taxable income falls short of current expectations, we may need to establish a valuation allowance against such deferred tax assets. We recognize in our Consolidated Financial Statements the impact of an income tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 4 for further discussion regarding unrecognized income tax benefits. 2. Share-Based Compensation Plans For the years ended December 31, 2022, 2021 and 2020, we recognized share-based compensation of $ 13.6 million, $ 11.0 million and $ 8.0 million, respectively, primarily in selling, general and administrative expenses. The amount of compensation expense to be recognized is adjusted for an estimated forfeiture rate which is based on historical data. The corresponding deferred income tax benefits are $ 1.7 million, $ 1.4 million and $ 1.3 million for 2022, 2021 and 2020, respectively. Equity Incentive Plans Second Amended and Restated 2007 Equity Incentive Plan. The Second Amended and Restated 2007 Equity Incentive Plan (as amended, the “2007 Plan”) provided for the grant of the following types of incentive awards: (i) stock options; (ii) restricted stock; (iii) restricted stock units; (iv) stock appreciation rights; (v) performance units and performance 63 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) shares; and (vi) other stock or cash awards. Those eligible for awards included employees, directors and consultants who provide services to Amkor and its subsidiaries. There were originally 17.0 million shares of our common stock reserved for issuance under the 2007 Plan. No awards have been or will be granted under the 2007 Plan after the effective date of the 2021 Plan (as defined below), but all outstanding awards under the 2007 Plan will continue in full force and effect, subject to their original terms. 2021 Equity Incentive Plan. On May 18, 2021, at our 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”), our stockholders approved the Amkor Technology, Inc. 2021 Equity Incentive Plan (as amended, the “2021 Plan”) to replace the 2007 Plan. The 2021 Plan provides for the grant of the following types of incentive awards: (i) stock options; (ii) restricted stock; (iii) restricted stock units; (iv) stock appreciation rights; (v) performance units and performance shares; and (vi) other stock or cash awards. Those eligible for awards include employees, directors and consultants who provide services to Amkor and its subsidiaries. The number of shares authorized and available for issuance under the 2021 Plan is 23,100,000 shares, reduced for certain awards granted under the 2007 Plan after December 31, 2020, but before May 18, 2021. There were originally 22.8 million shares of our common stock reserved for issuance under the 2021 Plan, and at December 31, 2022, there were 21.9 million shares available for grant under the 2021 Plan. Stock options Stock options are generally granted with an exercise price equal to the market price of the stock at the date of grant. Substantially all of the options granted are exercisable pursuant to a one to four year vesting schedule, and the term of the options granted is no longer than ten years . Upon option exercise, we may issue new shares of common or treasury stock. In order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. Expected volatilities are based on historical performance of our stock. We also use historical data to estimate the timing and amount of option exercises and forfeitures within the valuation model. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the annualized declared quarterly dividend rate divided by our closing stock price at the date of the grant. The following table summarizes our stock option activity for the year ended December 31, 2022: Number of Shares (In thousands) Weighted-Average Exercise Price per Share Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (In thousands) Outstanding at December 31, 2021 3,026 $ 10.34 Granted — — Exercised ( 587 ) 9.60 Forfeited or expired ( 63 ) 9.48 Outstanding at December 31, 2022 2,376 $ 10.54 5.86 years $ 31,929 Fully vested at December 31, 2022 and expected to vest thereafter 2,365 $ 10.53 5.85 years $ 31,800 Exercisable at December 31, 2022 2,064 $ 10.31 5.66 years $ 28,219 64 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The following assumptions were used to calculate the weighted-average fair values of the options granted: For the Year Ended December 31, 2021 2020 Expected life (in years) 6.7 5.6 Risk-free interest rate 1.3 % 0.3 % Volatility 54 % 52 % Dividend yield 0.8 % 0.3 % Weighted-average grant date fair value per option granted $ 9.54 $ 5.79 Total unrecognized compensation expense from stock options was $ 1.2 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of approximately 0.9 years beginning January 1, 2023. The total intrinsic value of options exercised during fiscal years 2022, 2021, and 2020 was $ 8.0 million, $ 17.7 million, and $ 8.2 million, respectively. Restricted shares Restricted shares granted to our non-employee directors vest on the earlier of the one year anniversary of the grant date or the date of the annual meeting of stockholders immediately following the grant date, subject to the recipient’s continued service as a director of Amkor on the applicable vesting date. Generally, other restricted shares vest ratably over three years , with 8.33 % of the shares vesting in equal quarterly installments such that 100 % of the shares will become vested on the third anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting date. In addition, provided that the restricted shares have not been forfeited earlier, under the terms and conditions of the applicable award agreements for certain grants, the restricted shares will vest upon the recipient’s death or disability, or upon a change in control of Amkor. The value of the restricted shares is determined based on the fair market value of the underlying shares on the date of the grant and is recognized ratably over the vesting period. The following table summarizes our restricted share activity for the year ended December 31, 2022: Number of Shares (In thousands) Weighted- average Grant Date Fair Value (Per Share) Non-vested at December 31, 2021 283 $ 15.79 Awards granted — — Awards vested ( 174 ) 16.03 Awards forfeited — — Non-vested at December 31, 2022 109 $ 15.38 Total unrecognized compensation expense from restricted shares was $ 1.3 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of approximately 0.6 years beginning January 1, 2023. Restricted stock units From time to time, and pursuant to the 2021 Plan, we grant time-vested restricted stock units (“RSUs”) to our non-employee directors and certain employees and performance-vested restricted stock units (“PSUs”) to certain employees. RSUs generally vest in four equal installments over a four-year period such that 100% of the RSUs will become vested on the fourth anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting dates. In addition, provided that the RSUs have not been forfeited earlier, they will generally vest upon the recipient’s retirement, death or disability, or upon a change in control of Amkor, in accordance with the terms and conditions of the applicable award agreement. The value of the RSUs is determined based on the fair market value of the underlying shares on the date of the grant, reduced by the present value of dividends or dividend equivalent rights expected to be paid on our common stock prior to vesting, and is recognized ratably over the vesting period. 65 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) PSUs generally vest in one installment after a two-year period such that any earned PSUs will become vested within 90 days of the second anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting date. Generally for PSUs, the number of shares of our common stock to be received at vesting will range from 0 % to 200 % of the target grant amount based on Cumulative Basic EPS (as defined in the applicable award agreement) over a two-year performance measurement period. In addition, provided the PSUs have not been forfeited earlier, the PSUs will generally vest upon the recipient’s retirement, death or disability, or upon a change of control of Amkor, in accordance with the terms and conditions of the applicable award agreement. The value of the PSUs is initially determined based on the fair market value of the underlying shares on the date of the grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting, and is recognized over the vesting period. The following table summarizes our RSU and PSU activity for the year ended December 31, 2022: Number of Shares (In thousands) Weighted- average Grant Date Fair Value (Per Share) Non-vested at December 31, 2021 286 $ 22.48 Awards granted 531 22.29 Awards vested ( 22 ) 22.23 Awards forfeited ( 57 ) 22.63 Non-vested at December 31, 2022 738 $ 22.34 Total unrecognized compensation expense from RSUs and PSUs was $ 6.4 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of approximately 1.6 years beginning January 1, 2023. 3. Other Income and Expense Other income and expense consists of the following: For the Year Ended December 31, 2022 2021 2020 (In thousands) Interest income $ ( 12,762 ) $ ( 1,065 ) $ ( 5,449 ) Foreign currency (gain) loss, net ( 1,572 ) 723 9,608 Loss on debt retirement 464 — 3,042 Other ( 4,439 ) ( 2,799 ) ( 806 ) Total other (income) expense, net $ ( 18,309 ) $ ( 3,141 ) $ 6,395 4. Income Taxes Geographic sources of income (loss) before taxes are as follows: For the Year Ended December 31, 2022 2021 2020 (In thousands) United States $ 81,488 $ 81,994 $ 38,719 Foreign 775,444 633,072 347,963 Income before taxes $ 856,932 $ 715,066 $ 386,682 66 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The components of the provision (benefit) for income taxes are as follows: For the Year Ended December 31, 2022 2021 2020 (In thousands) Current: Federal $ 40,063 $ 9,649 $ 4,608 State 150 198 134 Foreign 61,300 48,936 38,298 101,513 58,783 43,040 Deferred: Federal ( 10,156 ) 20,478 ( 7,877 ) State 1,458 361 ( 535 ) Foreign ( 2,925 ) ( 10,163 ) 11,555 ( 11,623 ) 10,676 3,143 Income tax expense $ 89,890 $ 69,459 $ 46,183 The reconciliation between the U.S. federal statutory income tax rate of 21% and our effective tax rate is as follows: For the Year Ended December 31, 2022 2021 (1) 2020 (1) U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Foreign income taxed at different rates ( 12.0 ) ( 9.5 ) ( 7.2 ) Foreign exchange (loss) gain 2.2 ( 2.3 ) 1.7 Change in valuation allowance ( 2.4 ) 0.1 ( 4.0 ) Income tax credits generated ( 6.1 ) ( 5.1 ) ( 5.6 ) Foreign earnings and profits 9.0 5.7 6.2 Foreign derived intangible income ( 0.9 ) ( 1.1 ) ( 1.6 ) Settlements and changes in uncertain tax positions ( 0.2 ) 0.8 1.8 Other ( 0.1 ) 0.1 ( 0.4 ) Income tax expense 10.5 % 9.7 % 11.9 % (1) Prior year amounts were reclassified and presented to conform with current year presentation. In 2022, we reversed $ 17.8 million of valuation allowance recorded against U.S. foreign tax credit carryforwards previously projected to expire unused due to the limitations to utilize the credits under current tax law. In 2020, we reversed $ 12.4 million of valuation allowance recorded against our interest expense carryforward previously projected to expire unused due to the limitation to deduct interest expense under current tax law. Realization of these carryforwards is dependent on generating sufficient taxable income to overcome the foreign tax credit and interest limitation provisions, respectively. Although utilization of these carryforwards is not assured, in light of our current earnings and recent estimates of future taxable income, management believes sufficient positive evidence exists to conclude that the respective valuation allowances are no longer needed, resulting in the reversal of these valuation allowances. As a result of certain capital investments, export commitments and employment levels, income from operations in Korea, the Philippines and Singapore was subject to reduced income tax rates and, in some cases, was exempt from income taxes. The most significant tax rate impact is in Singapore where we have been granted a conditional reduced tax rate that expires at the end of 2023, excluding potential renewal subject to certain conditions and commitments. We recognized $ 84.5 million, $ 56.7 million and $ 27.6 million in tax benefits as a result of the conditional reduced tax rates 67 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) in 2022, 2021 and 2020, respectively. The benefit of the conditional reduced tax rates on diluted earnings per share was approximately $ 0.34 , $ 0.23 and $ 0.11 for 2022, 2021 and 2020, respectively. The following is a summary of the components of our deferred tax assets and liabilities: December 31, 2022 2021 (In thousands) Deferred tax assets: NOLs $ 49,846 $ 36,326 Income tax credits 92,368 93,257 Property, plant and equipment 15,328 20,181 Deferred interest expense — 3,397 Accrued liabilities 39,929 49,554 Receivable 29,178 30,996 Unrealized foreign exchange loss 8,018 11,409 Revenue Recognition 1,564 — Operating lease liabilities 26,955 27,446 Other 14,665 13,407 Total deferred tax assets 277,851 285,973 Valuation allowance ( 101,869 ) ( 122,357 ) Total deferred tax assets net of valuation allowance 175,982 163,616 Deferred tax liabilities: Property, plant and equipment 50,215 40,334 Deferred gain 7,839 10,873 Unrealized foreign exchange gain 5,242 3,212 Unbilled receivables 822 5,218 Operating lease right of use assets 26,241 26,120 Other 7,433 5,241 Total deferred tax liabilities 97,792 90,998 Net deferred tax assets $ 78,190 $ 72,618 Recognized as: Other assets $ 86,616 $ 83,596 Other non-current liabilities ( 8,426 ) ( 10,978 ) Total $ 78,190 $ 72,618 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. In evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations. 68 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Valuation allowance against deferred tax assets consist of the following: December 31, 2022 2021 (In thousands) Valuation allowance: U.S. $ 40,610 $ 61,074 Foreign 61,259 61,283 Total valuation allowance $ 101,869 $ 122,357 Our NOLs are as follows: December 31, 2022 2021 Expiration (In thousands) U.S. Federal NOLs $ 13,003 $ 21,388 2023-2024 U.S. State NOLs 38,384 55,694 2023-2036 Foreign NOLs 240,740 155,323 2024-2036 At December 31, 2022 and 2021, a portion of our remaining U.S. federal NOL was reserved with a valuation allowance due to ownership change limitations from a prior year acquisition as well as certain state NOLs expected to expire unused. Also, we have a valuation allowance against a foreign NOL that we do not expect to have sufficient taxable income to realize as of December 31, 2022 and 2021. Our tax credit carryforwards are as follows: December 31, 2022 2021 Expiration (In thousands) U.S. Foreign Tax Credits $ 54,130 $ 57,247 2026-2032 U.S. Other Tax Credits 110 138 2026 Foreign Tax Credits 38,128 35,872 2023-2032 At December 31, 2022 and 2021, a portion of our U.S. and foreign tax credit carryforwards were reserved with a valuation allowance for the amount expected to expire unused. Distributions of cash to the U.S. as dividends generally will not be subject to U.S. federal income tax. We have not provided foreign withholding taxes or state income taxes on the undistributed earnings of our foreign subsidiaries, over which we have sufficient influence to control the distribution of such earnings and have determined that substantially all such earnings have been reinvested indefinitely. These earnings could become subject to foreign withholding tax if they are remitted as dividends. For the year ended December 31, 2022, we estimate that repatriation of these foreign earnings would generate withholding taxes and state income taxes of approximately $ 131.3 million. We operate in and file income tax returns in various U.S. and foreign jurisdictions which are subject to examination by tax authorities. We have tax returns that are open to examination in various jurisdictions for tax years 2012-2022. The open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits. There can be no assurance that the outcome of examinations will be favorable. Our unrecognized tax benefits are subject to change as examinations of specific tax years are completed in the respective jurisdictions. In certain circumstances where we elect to appeal the results of an 69 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) examination, we may be required to make tax assessment payments to proceed with the administrative appeal process. Current examinations include 2015-2020 Malaysia income tax returns and 2021 Philippine income tax return. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: For the Year Ended December 31, 2022 2021 2020 (In thousands) Balance at January 1 $ 37,293 $ 32,598 $ 26,242 Additions based on tax positions related to the current year 1,519 9,562 10,427 Additions for tax positions of prior years 1,909 1,740 1,173 Reductions for tax positions of prior years ( 5,755 ) ( 66 ) ( 280 ) Reductions related to settlements with tax authorities ( 988 ) ( 1,266 ) — Reductions from lapse of statutes of limitations ( 725 ) ( 5,275 ) ( 4,964 ) Balance at December 31 $ 33,253 $ 37,293 $ 32,598 The net decrease in our unrecognized tax benefits was $ 4.0 million from December 31, 2021 to December 31, 2022. The decrease was primarily related to income attribution, settlements and the lapse of statutes of limitations. At December 31, 2022, all of our gross unrecognized tax benefits would reduce our effective tax rate, if recognized. It is reasonably possible that unrecognized tax benefits related to income attribution will decrease in the next 12 months by up to $ 1.9 million due to the lapse of statutes of limitations in foreign jurisdictions. The liability related to our unrecognized tax benefits, before interest and penalties, is $ 24.7 million as of December 31, 2022 and is reported as a component of other non-current liabilities. The unrecognized tax benefits presented in the table above also include positions that have reduced deferred tax assets by $ 8.6 million. The balance of accrued and unpaid interest and penalties is $ 4.9 million and $ 5.5 million as of December 31, 2022 and 2021, respectively, and is included as a component of other non-current liabilities in connection with our unrecognized tax benefits. 5. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amkor common stockholders by the weighted-average number of common shares outstanding during the period. The weighted-average number of common shares outstanding is reduced for treasury stock. Diluted EPS is computed based on the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock options, PSUs, RSUs and unvested restricted shares. 70 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The following table summarizes the computations of basic and diluted EPS: For the Year Ended December 31, 2022 2021 2020 (In thousands, except per share data) Net income attributable to Amkor common stockholders $ 765,823 $ 642,995 $ 338,138 Weighted-average number of common shares outstanding — basic 244,676 243,878 241,509 Effect of dilutive securities: Share-based awards 1,529 1,826 739 Weighted-average number of common shares outstanding — diluted 246,205 245,704 242,248 Net income attributable to Amkor per common share: Basic $ 3.13 $ 2.64 $ 1.40 Diluted $ 3.11 $ 2.62 $ 1.40 The following table summarizes the potential shares of common stock that were excluded from diluted EPS, because the effect of including these potential shares was anti-dilutive: For the Year Ended December 31, 2022 2021 2020 (In thousands) Share-based awards 180 112 2,412 71 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) 6. Investments The following table summarizes our cash equivalents and available-for-sale debt investments: December 31, 2022 Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Total Fair Value Level 1 Level 2 (In thousands) Cash equivalents Asset-backed securities $ 25 $ — $ — $ 25 $ — $ 25 Commercial paper 69,101 — — 69,101 — 69,101 Money market funds 97,650 — — 97,650 97,650 — Municipal bonds 1,001 — — 1,001 — 1,001 U.S. government bonds 10,767 1 — 10,768 10,768 — U.S. government agency bonds 16,982 3 — 16,985 — 16,985 Total cash equivalents (2) 195,526 4 — 195,530 108,418 87,112 Short-term investments Asset-backed securities 25,677 7 ( 134 ) 25,550 — 25,550 Certificate of deposits 17,362 — — 17,362 17,362 — Commercial paper 27,866 — — 27,866 — 27,866 Corporate bonds 198,868 7 ( 1,529 ) 197,346 — 197,346 Foreign government bonds 996 — ( 4 ) 992 — 992 Mortgage-backed securities 696 — ( 2 ) 694 — 694 Municipal bonds 364 — ( 2 ) 362 — 362 U.S. government agency bonds 735 — ( 1 ) 734 — 734 U.S. government bonds 6,704 1 ( 20 ) 6,685 6,685 — Total short-term investments 279,268 15 ( 1,692 ) 277,591 24,047 253,544 Total $ 474,794 $ 19 $ ( 1,692 ) $ 473,121 $ 132,465 $ 340,656 72 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) December 31, 2021 Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses (1) Total Fair Value Level 1 Level 2 (In thousands) Cash equivalents Commercial paper $ 5,499 $ — $ — $ 5,499 $ — $ 5,499 Corporate bonds 4,921 — ( 5 ) 4,916 — 4,916 Money market funds 269,251 — — 269,251 269,251 — Municipal bonds 500 — — 500 — 500 U.S. government bonds 4,000 — — 4,000 4,000 — Total cash equivalents (2) 284,171 — ( 5 ) 284,166 273,251 10,915 Short-term investments Asset-backed securities 12,915 1 ( 11 ) 12,905 — 12,905 Certificate of deposits 12,076 — — 12,076 12,076 — Commercial paper 30,691 — — 30,691 — 30,691 Corporate bonds 179,235 1 ( 410 ) 178,826 — 178,826 Foreign government bonds 458 — ( 1 ) 457 — 457 Municipal bonds 8,418 1 ( 2 ) 8,417 — 8,417 U.S. government bonds 2,966 — ( 8 ) 2,958 2,958 — Variable rate demand notes 500 — — 500 — 500 Total short-term investments 247,259 3 ( 432 ) 246,830 15,034 231,796 Total $ 531,430 $ 3 $ ( 437 ) $ 530,996 $ 288,285 $ 242,711 (1) All unrealized losses have been in a continuous loss position for less than 12 months. We do not intend to sell the investments in an unrealized loss position, and we do not believe it is more likely than not that we will be required to sell these investments before recovery of their amortized cost bases. (2) During the years ended December 31, 2022, 2021, and 2020 we sold cash equivalent investments for proceeds of $ 29.6 million, $ 12.8 million and $ 27.1 million, respectively, and realized no gain or loss on such sales. The following table summarizes the contractual maturities of our cash equivalents and available-for-sale debt investments as of December 31, 2022: Amortized Cost Fair Value Within 1 year $ 415,498 $ 414,313 After 1 year through 5 years 59,296 58,808 Total $ 474,794 $ 473,121 Actual maturities can differ from contractual maturities due to various factors including whether the issuers have the right to call or prepay obligations without call or prepayment penalties, and we view our available-for-sale debt investments as available for current operations. As of December 31, 2022, the amortized cost and fair market value of our held-to-maturity government bonds (Level 1) maturing within a year were $ 4.4 million and $ 4.3 million, respectively. As of December 31, 2021 the amortized cost and fair market value of our held-to-maturity government bonds (Level 1) maturing within a year were $ 4.7 million. 73 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) 7. Factoring of Accounts Receivable For certain accounts receivable, we use non-recourse factoring arrangements with third-party financial institutions to manage our working capital and cash flows. Under these arrangements, we sell receivables to a financial institution for cash at a discount to the face amount. As part of the factoring arrangements, we perform certain collection and administrative functions for the receivables sold. For the years ended December 31, 2022 and 2021, we sold accounts receivable totaling $ 386.5 million and $ 464.4 million, net of discounts and fees of $ 1.1 million and $ 1.2 million, respectively. 8. Property, Plant and Equipment Property, plant and equipment consist of the following: December 31, 2022 2021 (In thousands) Land $ 214,763 $ 218,140 Buildings and improvements 1,817,135 1,711,560 Machinery and equipment 6,757,652 6,277,684 Finance lease assets 165,122 105,294 Furniture, fixtures and other equipment 23,240 22,125 Software and computer equipment 240,610 232,251 Construction in progress 152,809 74,662 Total property, plant and equipment 9,371,331 8,641,716 Less accumulated depreciation and amortization ( 6,235,717 ) ( 5,770,658 ) Total property, plant and equipment, net $ 3,135,614 $ 2,871,058 The following table summarizes our depreciation expense: For the Year Ended December 31, 2022 2021 2020 (In thousands) Depreciation expense $ 612,105 $ 562,962 $ 509,770 During 2022, we began construction of a new manufacturing facility in Bac Ninh, Vietnam and incurred costs of $ 79.6 million, including capitalized interest of $ 0.7 million. 74 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) 9. Leases The components of lease expense were as follows: For the Year Ended December 31, 2022 2021 2020 (In thousands) Operating lease cost $ 81,410 $ 64,902 $ 52,882 Finance lease cost Amortization of leased assets 24,644 14,196 6,520 Interest on lease liabilities 3,891 2,768 987 Total finance lease cost 28,535 16,964 7,507 Short-term lease cost 5,749 6,264 7,188 Variable lease cost 6,592 7,409 5,307 Net lease cost $ 122,286 $ 95,539 $ 72,884 Other information related to leases was as follows: For the Year Ended December 31, 2022 2021 2020 Supplemental Cash Flows Information (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 81,044 $ 64,786 $ 53,323 Operating cash flows for finance leases 3,933 1,745 946 Financing cash flows for finance leases 40,673 20,373 9,851 Weighted Average Remaining Lease Term (years) Operating leases 4.2 3.2 3.9 Finance leases 2.3 3.1 3.1 Weighted Average Discount Rate Operating leases 4.4 % 3.6 % 4.0 % Finance leases 4.1 % 3.2 % 4.0 % 75 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Maturities of lease liabilities were as follows: December 31, 2022 Operating Leases Finance Leases (In thousands) 2023 $ 75,795 $ 60,090 2024 36,178 42,816 2025 16,613 9,266 2026 10,888 1,613 2027 7,452 1,519 Thereafter 14,458 2,302 Total future minimum lease payments 161,384 117,606 Less: Imputed interest ( 14,648 ) ( 6,192 ) Total $ 146,736 $ 111,414 As of December 31, 2022, we have entered into additional lease agreements that have not yet commenced of approximately $ 14 million. 10. Accrued Expenses Accrued expenses consist of the following: December 31, 2022 2021 (In thousands) Payroll and benefits $ 137,445 $ 150,883 Deferred revenue and customer advances 81,459 117,741 Short-term finance lease liability 56,570 30,919 Income taxes payable 50,685 38,957 Accrued interest 10,878 10,789 Accrued severance plan obligations (Note 12) 7,422 8,194 Other accrued expenses 57,382 65,409 Total accrued expenses $ 401,841 $ 422,892 76 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) 11. Debt Short-term borrowings and long-term debt consist of the following: December 31, 2022 2021 (In thousands) Debt of Amkor Technology, Inc.: Senior notes: 6.625 % Senior notes, due September 2027 $ 525,000 $ 525,000 Debt of subsidiaries: Amkor Technology Korea, Inc.: Term loan, applicable bank rate plus 1.77 %, due April 2023 — 47,064 Term loan, fixed rate at 1.85 %, due April 2024 (1) — — Term loan, applicable bank rate plus 1.98 %, due December 2028 — 50,000 Term loan, fixed rate at 2.12 %, due December 2028 (2) 200,000 50,000 Amkor Technology Japan, Inc.: Short-term term loans, variable rate (3) 4,042 3,789 Term loan, fixed rate at 0.86 %, due June 2022 — 4,345 Term loan, fixed rate at 0.60 %, due July 2022 — 1,303 Term loan, fixed rate at 1.30 %, due July 2023 29,744 79,075 Term loan, fixed rate at 1.35 %, due December 2024 86,943 148,592 Term loan, fixed rate at 1.20 %, due December 2025 49,878 75,773 Term loan, fixed rate at 1.23 %, due December 2026 79,927 113,834 Term loan, fixed rate at 1.59 %, due December 2027 (4) 119,738 — Amkor Assembly & Test (Shanghai) Co., Ltd.: Term loan, LIBOR plus 1.10 %, due March 2024 46,000 48,000 Term loans, LIBOR plus 0.80 %, due June 2025 (5) 39,000 — Term loans, LIBOR plus 0.75 %, due 2025 (6) 59,500 — Other: Credit facility, TAIFX plus the applicable bank rate, due December 2024 (Taiwan) (7) — — $ 600.0 million senior secured revolving credit facility, applicable bank rate plus 1.75 %, due March 2027 (Singapore) (8) — — 1,239,772 1,146,775 Less: Unamortized discount and deferred debt costs, net ( 7,438 ) ( 8,779 ) Less: Short-term borrowings and current portion of long-term debt ( 143,813 ) ( 153,008 ) Long-term debt $ 1,088,521 $ 984,988 (1) In April 2021, we entered into a ₩ 80 billion term loan agreement with the option to borrow and re-borrow the funds up to six times per year through April 2024. Principal is payable at maturity, and interest is payable monthly. As of December 31, 2022, ₩ 80.0 billion, or approximately $ 63 million, was available to be drawn. (2) In October 2021, we entered into a term loan agreement with availability of $ 200.0 million. Principal is payable in semiannual installments after a three-year grace period from the date of the first drawdown, which occurred 77 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) in December 2021. Interest is payable quarterly. During the year ended December 31, 2022, we borrowed $ 150.0 million. (3) We entered into various short-term term loans which mature semiannually. Principal and interest are payable in monthly installments. As of December 31, 2022, $ 6.8 million was available to be drawn. (4) In December 2022, we borrowed ¥ 15.7 billion (US$ 115.9 million) under a new term loan agreement due December 2027, guaranteed by Amkor Technology, Inc. and our subsidiary, ATSH. Principal is due in 20 equal, quarterly installments plus accrued interest, through maturity. (5) In June 2022, we borrowed $ 40.0 million under two $ 20.0 million term loans. For each term loan, principal is payable in semiannual installments of $ 0.5 million, with the remaining balance due at maturity. Interest is payable quarterly. (6) In August 2022 and September 2022, we borrowed $ 60.0 million under two $ 30.0 million term loans with each maturing in three years . For each term loan, principal is payable in semiannual installments of $ 0.5 million, with the remaining balance due at maturity. Interest is payable quarterly. (7) In December 2019, ATT entered into a $ 56.0 million borrowing arrangement (the “ATT Loan”). This arrangement included a $ 20.0 million term loan and a $ 36.0 million revolving credit facility. In March 2022, in connection with our entry into the 2022 Singapore Revolver, the ATT Loan was amended to reduce the availability of the revolving credit facility from $ 36.0 million to $ 15.0 million. As of December 31, 2022, $ 15.0 million was available for future borrowings under such credit facility. (8) In July 2018, ATSH entered into a $ 250.0 million senior secured revolving credit facility. In March 2022, this agreement was terminated and replaced with the 2022 Singapore Revolver. The 2022 Singapore Revolver is guaranteed by Amkor Technology, Inc., ATT and AATT. The maximum borrowing capacity under the 2022 Singapore Revolver is limited to a base amount equal to the lesser of: (1) $ 600.0 million; and (2) $ 250.0 million plus a variable amount equal to 37.5 % of our consolidated accounts receivable balance. As of December 31, 2022, $ 600.0 million was available for future borrowings under the 2022 Singapore Revolver. Certain of our foreign debt is collateralized by the land, buildings, equipment and accounts receivable in the respective locations. As of December 31, 2022 the collateralized debt balance was $ 681.0 million, of which $ 376.4 million of assets were pledged as collateral. Interest Rates Interest is payable semiannually on our senior notes and quarterly or monthly on our other fixed- and variable-rate debt. Refer to the table above for the interest rates on our fixed-rate debt and to the table below for the interest rates on our variable-rate debt. December 31, 2022 2021 Amkor Technology Korea, Inc.: Term loan, applicable bank rate plus 1.77 %, due April 2023 — 2.86 % Amkor Technology Japan, Inc: Short-term term loans, variable rate 0.29 % 0.29 % Amkor Assembly & Test (Shanghai) Co., Ltd.: Term loan, LIBOR plus 1.10 %, due March 2024 5.83 % 1.31 % Term loans, LIBOR plus 0.80 % due June 2025 5.55 % — Term loans, LIBOR plus 0.75 %, due 2025 5.48 % — 78 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Compliance with Debt Covenants The debt of Amkor Technology, Inc. is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries. From time to time, Amkor Technology, Inc., ATT, AATT and ATSH guarantee certain debt of our subsidiaries. The agreements governing our indebtedness contain affirmative and negative covenants which restrict our ability to pay dividends and could restrict our operations. These restrictions are determined in part by calculations based upon cumulative net income and do not currently have a material impact on our ability to make dividend payments or stock repurchases. We were in compliance with all debt covenants at December 31, 2022 and 2021. Maturities Total Debt (In thousands) Payments due for the year ending December 31, 2023 $ 143,813 2024 152,027 2025 201,055 2026 93,929 2027 598,948 Thereafter 50,000 Total debt $ 1,239,772 12. Pension and Severance Plans Korean Severance Plan Our subsidiary in Korea maintains an unfunded severance plan that covers certain employees that were employed prior to August 1, 2015. To the extent eligible employees are terminated, our subsidiary in Korea would be required to make lump-sum severance payments on behalf of these eligible employees for service provided prior to August 1, 2015. Factors used to determine severance benefits include employees’ length of service, seniority and rate of pay. The employees’ length of service and seniority are fixed as of July 31, 2015. The employees’ rate of pay is adjusted to the rate of pay at the time of termination. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. Our contributions to the National Pension Plan of the Republic of Korea are deducted from accrued severance benefit liabilities. On August 1, 2015, our subsidiary in Korea began sponsoring a defined benefit pension plan and a defined contribution plan. Existing employees at that time were given the option of choosing either a defined benefit pension plan or a defined contribution plan for their future benefits and new employees since that date are enrolled in a defined contribution plan. 79 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The changes to the balance of our accrued severance plan obligations are as follows: For the Year Ended December 31, 2022 2021 (In thousands) Balance at January 1 $ 73,345 $ 98,162 Provision of severance benefits 2,119 6,144 Severance payments ( 15,295 ) ( 22,775 ) Foreign currency (gain) loss ( 3,880 ) ( 8,186 ) Balance at December 31 56,289 73,345 Payments remaining with the National Pension Fund ( 124 ) ( 138 ) Total accrued severance plan obligations at December 31 56,165 73,207 Less current portion of accrued severance plan obligations (Note 10) 7,422 8,194 Non-current portion of accrued severance plan obligations $ 48,743 $ 65,013 Foreign Defined Benefit Pension Plans Our subsidiaries in Japan, Korea, Malaysia, the Philippines and Taiwan sponsor defined benefit plans (the “Plans”). Charges to expense are based upon actuarial analyses. The following table summarizes the changes to the Plans’ benefit obligations, fair value of the Plans’ assets and the funded status of the Plans at December 31, 2022 and 2021: For the Year Ended December 31, 2022 2021 (In thousands) Change in projected benefit obligation: Projected benefit obligation at January 1 $ 200,187 $ 222,509 Service cost 20,072 25,908 Interest cost 4,731 4,900 Benefits paid ( 8,573 ) ( 10,466 ) Actuarial (gain) loss ( 24,571 ) ( 7,169 ) Effects of curtailment 508 ( 954 ) Settlement ( 16,914 ) ( 18,042 ) Foreign exchange (gain) loss ( 15,680 ) ( 16,499 ) Projected benefit obligation at December 31 159,760 200,187 Change in plan assets: Fair value of plan assets at January 1 157,012 155,211 Actual gain (loss) on plan assets ( 6,528 ) 9,463 Employer contributions 12,946 32,354 Settlement ( 16,914 ) ( 18,042 ) Benefits paid ( 8,573 ) ( 10,466 ) Foreign exchange gain (loss) ( 10,605 ) ( 11,508 ) Fair value of plan assets at December 31 127,338 157,012 Funded status of the Plans at December 31 $ ( 32,422 ) $ ( 43,175 ) 80 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) December 31, 2022 2021 (In thousands) Amounts recognized in the Consolidated Balance Sheets consist of: Prepaid benefit cost (included in non-current assets) $ 12,308 $ 11,982 Accrued benefit liability (included in pension and severance obligations) ( 44,730 ) ( 55,157 ) Net amount recognized at year end $ ( 32,422 ) $ ( 43,175 ) The accumulated benefit obligation as of December 31, 2022 and 2021 was $ 125.6 million and $ 151.7 million, respectively. The following table summarizes, by component, the change in accumulated other comprehensive income (loss), net of tax related to our Plans: Prior Service Cost Actuarial Net Gain (Loss) Total (In thousands) Balance at December 31, 2020 $ 602 $ ( 4,820 ) $ ( 4,218 ) Amortization and settlement gain included in net periodic pension cost — ( 457 ) ( 457 ) Net gain (loss) arising during period — 10,291 10,291 Adjustments to unrealized components of defined benefit pension plan included in other comprehensive income (loss) — 9,834 9,834 Balance at December 31, 2021 $ 602 $ 5,014 $ 5,616 Amortization and settlement gain included in net periodic pension cost — ( 1,021 ) ( 1,021 ) Net gain (loss) arising during period — 9,625 9,625 Adjustments to unrealized components of defined benefit pension plan included in other comprehensive income (loss) — 8,604 8,604 Balance at December 31, 2022 $ 602 $ 13,618 $ 14,220 Information for pension plans with benefit obligations in excess of plan assets is as follows: December 31, 2022 2021 (In thousands) Plans with underfunded or non-funded projected benefit obligation: Aggregate projected benefit obligation $ 96,310 $ 128,312 Aggregate fair value of plan assets 51,581 73,159 Plans with underfunded or non-funded accumulated benefit obligation: Aggregate accumulated benefit obligation 61,764 72,009 Aggregate fair value of plan assets 20,740 24,365 81 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The following table summarizes total pension expense: For the Year Ended December 31, 2022 2021 2020 (In thousands) Components of net periodic pension cost and total pension expense: Service cost $ 20,072 $ 25,908 $ 29,848 Interest cost 4,731 4,900 4,980 Expected return on plan assets ( 5,605 ) ( 5,600 ) ( 5,506 ) Recognized actuarial (gain) loss 53 128 56 Net periodic pension cost 19,251 25,336 29,378 Curtailment (gain) loss — ( 954 ) — Settlement (gain) loss ( 1,374 ) ( 743 ) 62 Total pension expense $ 17,877 $ 23,639 $ 29,440 The components of net periodic pension cost other than the service cost component are included in other (income) expense, net in our Consolidated Statements of Income. The following table summarizes the weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligations: For the Year Ended December 31, 2022 2021 2020 Discount rate for determining net periodic pension cost 2.6 % 2.3 % 2.5 % Discount rate for determining benefit obligations at December 31 4.2 % 2.6 % 2.3 % Rate of compensation increase for determining net periodic pension cost 3.7 % 3.7 % 3.7 % Rate of compensation increase for determining benefit obligations at December 31 3.6 % 3.7 % 3.7 % Expected rate of return on plan assets for determining net periodic pension cost 3.8 % 3.7 % 3.8 % The measurement date for determining the Plans’ assets and benefit obligations is December 31, each year. Discount rates are generally derived from yield curves constructed from high-quality corporate or foreign government bonds, for which the timing and amount of cash outflows approximate the estimated payouts. The expected rate of return assumption is based on weighted-average expected returns for each asset class. Expected returns reflect a combination of historical performance analysis and the forward-looking views of the financial markets and include input from our actuaries. We have no control over the direction of our investments in our defined benefit plans in Taiwan as the local Labor Standards Law Fund mandates such contributions into a cash account balance at the Bank of Taiwan. Our defined benefit pension plan in Malaysia is a non-funded plan, and as such, no asset exists related to this plan. Our investment strategies for our defined benefit plans in Japan, Korea and the Philippines are based on long-term, sustained asset growth through low to medium risk investments. The current rate of return assumption targets are based on asset allocation strategies as follows: Allocation Debt Equity Other Japan defined benefit plan 64 % 34 % 2 % Korea defined benefit plan 30 % 20 % 50 % Philippine defined benefit plan 50 % 45 % 5 % 82 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) The fair value of our pension plan assets, by asset category utilizing the fair value hierarchy as discussed in Note 16, is as follows: December 31, 2022 December 31, 2021 Level 1 Level 2 Total Level 1 Level 2 Total (In thousands) (In thousands) Cash and cash equivalents $ 1,117 $ — $ 1,117 $ 17 $ — $ 17 Equity securities 13,339 — 13,339 21,450 — 21,450 Debt securities Government bonds 2,982 — 2,982 7,536 — 7,536 Corporate bonds 540 — 540 369 — 369 Treasury notes 11,561 — 11,561 8,559 — 8,559 Mutual and commingled funds Equity funds 23,931 7,157 31,088 33,619 8,270 41,889 Debt funds 11,651 13,409 25,060 12,774 15,159 27,933 Guaranteed investment contracts — 28,340 28,340 — 37,458 37,458 Taiwan retirement fund 12,845 — 12,845 13,173 — 13,173 Other, net ( 383 ) 849 466 ( 1,947 ) 575 ( 1,372 ) Total fair value of pension plan assets $ 77,583 $ 49,755 $ 127,338 $ 95,550 $ 61,462 $ 157,012 The Taiwan retirement fund category of our plan assets represents accounts that our subsidiaries in Taiwan have in a government labor retirement fund in the custody of the Bank of Taiwan. The accounts earn a minimum guaranteed rate of return and are invested in a mix of cash, domestic and foreign equity securities and domestic and foreign debt securities. We expect to make contributions of approximately $ 12 million during 2023. We closely monitor the funded status of the Plans with respect to legislative requirements. We intend to make at least the minimum contribution required by law each year. The estimated future benefit payments related to our foreign defined benefit plans are as follows: Payments (In thousands) 2023 $ 9,146 2024 12,138 2025 13,035 2026 14,174 2027 17,008 2028 to 2032 101,637 Defined Contribution Plans We sponsor defined contribution plans in Korea, Malaysia, Taiwan and the U.S. Total defined contribution expense was $ 24.2 million, $ 21.8 million and $ 16.5 million for 2022, 2021 and 2020, respectively. 83 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) 13. Dividends In October 2020, our Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. Each quarter since the adoption of this dividend policy, the Company has declared and paid a quarterly dividend. In November 2022, our Board of Directors approved a quarterly dividend of $ 0.075 per share, a 50 % increase from the rate set in November 2021. 14. Accumulated Other Comprehensive Income (Loss) The following table reflects the changes in accumulated other comprehensive income (loss), net of tax: Unrealized Gain (Losses) on Available-for-Sale Debt Investments (1) Defined Benefit Pension (2) Foreign Currency Translation Total (In thousands) Balance at December 31, 2020 $ 21 $ ( 4,218 ) $ 31,467 $ 27,270 Other comprehensive income (loss) before reclassifications ( 454 ) 10,291 ( 16,757 ) ( 6,920 ) Amounts reclassified from accumulated other comprehensive income (loss) 85 ( 457 ) — ( 372 ) Other comprehensive income (loss) ( 369 ) 9,834 ( 16,757 ) ( 7,292 ) Balance at December 31, 2021 $ ( 348 ) $ 5,616 $ 14,710 $ 19,978 Other comprehensive income (loss) before reclassifications ( 1,243 ) 9,625 ( 10,658 ) ( 2,276 ) Amounts reclassified from accumulated other comprehensive income (loss) 18 ( 1,021 ) — ( 1,003 ) Other comprehensive income (loss) ( 1,225 ) 8,604 ( 10,658 ) ( 3,279 ) Balance at December 31, 2022 $ ( 1,573 ) $ 14,220 $ 4,052 $ 16,699 (1) Amounts reclassified out of accumulated other comprehensive income (loss) are included as other (income) expense, net (Note 3). (2) Amounts reclassified out of accumulated other comprehensive income (loss) are included as a component of net periodic pension cost (Note 12) or other (income) expense, net (Note 3). 15. Derivatives We use foreign currency forward contracts to mitigate foreign currency risk of certain assets and monetary liabilities denominated in foreign currencies. We do not enter into such contracts for trading or speculative purposes. These derivative instruments are not designated as hedging instruments. 84 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) As of December 31, 2022 and 2021, our foreign exchange forward contracts consisted of the following: December 31, 2022 December 31, 2021 Notional Value Fair Value (Level 2) Balance Sheet Location Notional Value Fair Value (Level 2) Balance Sheet Location (In thousands) Japanese yen $ 330,179 $ 6,284 Other current assets $ 396,946 $ ( 901 ) Accrued expenses Korean won 65,927 333 Other current assets 125,321 ( 492 ) Accrued expenses Philippine peso 3,085 ( 6 ) Accrued expenses 4,001 7 Other current assets Taiwan dollar 28,763 ( 57 ) Accrued expenses — — N/A Total forward contracts $ 427,954 $ 6,554 $ 526,268 $ ( 1,386 ) For the years ended December 31, 2022 and 2021, the derivatives resulted in a net loss of $ 60.2 million and $ 58.8 million respectively, which were offset by the foreign currency gains associated with the underlying net assets or liabilities. For the year ended December 31, 2020, the derivatives resulted in a net gain of $ 35.9 million, which was offset by the foreign currency losses associated with the underlying net liabilities. 16. Fair Value Measurements The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers as follows: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data. For our Level 2 short-term investments, we consider factors such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data obtained from quoted market prices and independent pricing vendors to determine the fair value of these assets and liabilities. The fair values of cash, accounts receivable, trade accounts payable, capital expenditures payable, and certain other current assets and accrued expenses approximate carrying values because of their short-term nature. The carrying value of certain other non-current assets and liabilities approximates fair value. Our assets and liabilities recorded at fair value on a recurring basis include restricted cash money market funds and short-term investments, including investments classified as cash equivalents. Cash equivalent money market funds and restricted cash money market funds are invested in U.S. money market funds and various U.S. and foreign bank operating and time deposit accounts, which are due on demand or carry a maturity date of less than three months when purchased. No restrictions have been imposed on us regarding withdrawal of balances with respect to our cash equivalents as a result of liquidity or other credit market issues affecting the money market funds we invest in or the counterparty financial institutions holding our deposits. Our derivative financial instruments are valued using quoted market prices for similar assets. Counterparties to these derivative contracts are highly rated financial institutions. We also measure certain assets and liabilities, including property, plant and equipment and goodwill, at fair value on a nonrecurring basis. 85 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) We measure the fair value of our debt for disclosure purposes. The following table presents the fair value of our debt: December 31, 2022 December 31, 2021 Fair Value Carrying Value Fair Value Carrying Value (In thousands) Senior notes (Level 1) $ 523,016 $ 521,114 $ 555,655 $ 520,436 Revolving credit facilities and term loans (Level 2) 686,728 711,220 627,883 617,560 Total financial instruments $ 1,209,744 $ 1,232,334 $ 1,183,538 $ 1,137,996 The estimated fair value of our senior notes is based primarily on quoted market prices reported on or near the respective balance sheet dates. The estimated fair value of our revolving credit facilities and term loans is calculated using a discounted cash flow analysis, which utilizes market-based assumptions including forward interest rates adjusted for credit risk. 17. Commitments and Contingencies We generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications. We accrue costs for known warranty issues. Historically, our warranty costs have been immaterial. Legal Proceedings We are involved in claims and legal proceedings and may become involved in other legal matters arising in the ordinary course of our business. We evaluate these claims and legal matters on a case-by-case basis to make a determination as to the impact, if any, on our business, liquidity, results of operations, financial condition or cash flows. Although the outcome of these matters is uncertain, we believe that the ultimate outcome of these claims and proceedings, individually and in the aggregate, will not have a material adverse impact to us. Our evaluation of the potential impact of these claims and legal proceedings on our business, liquidity, results of operations, financial condition or cash flows could change in the future. 18. Business Segments, Customer Concentrations and Geographic Information We operate as a single operating segment as managed by our Chief Executive Officer, who is considered our chief operating decision maker (“CODM”). The CODM bears the ultimate responsibility for, and is actively engaged in, the allocation of resources and the evaluation of our operating and financial results. We have concluded that we have a single operating segment based on the following: • We are managed under a functionally-based organizational structure with the head of each function reporting directly to the CODM; • We assess performance, including incentive compensation, based on consolidated operating performance and financial results; • Our CODM allocates resources and makes other operating decisions based on specific customer business opportunities and • We have an integrated process for the design, development and manufacturing services we provide to all of our customers. We also have centralized sales and administrative functions. 86 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Net sales by product group consist of the following: For the Year Ended December 31, 2022 2021 2020 (In thousands) Advanced Products $ 5,367,589 $ 4,409,207 $ 3,604,365 Mainstream Products 1,723,996 1,729,122 1,446,224 Total net sales $ 7,091,585 $ 6,138,329 $ 5,050,589 (1) Advanced Products include flip chip, memory and wafer-level processing and related test services. (2) Mainstream Products include all other wirebond packaging and related test services. Net sales by end market consist of the following : For the Year Ended December 31, 2022 2021 2020 Communications (smartphones, tablets) 44 % 41 % 41 % Automotive, industrial and other (ADAS, electrification, infotainment, safety) 20 % 21 % 20 % Consumer (AR & gaming, connected home, home electronics, wearables) 20 % 22 % 24 % Computing (data center, infrastructure, PC/laptop, storage) 16 % 16 % 15 % Total net sales 100 % 100 % 100 % Net sales by region based on customer headquarters location consist of the following: For the Year Ended December 31, 2022 2021 2020 (In thousands) Europe, Middle East and Africa $ 1,084,853 $ 1,061,369 $ 848,301 Japan 1,132,121 1,253,717 1,152,641 Asia Pacific (excluding Japan) 1,017,246 999,591 672,563 Total foreign countries 3,234,220 3,314,677 2,673,505 United States 3,857,365 2,823,652 2,377,084 Total net sales $ 7,091,585 $ 6,138,329 $ 5,050,589 In 2022, two customers accounted for 20.6 % and 10.1 % of total net sales, respectively. In 2021 and 2020, one customer accounted for 13.7 % and 14.5 % of total net sales, respectively. 87 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) Property, plant and equipment, net, based on physical location, consist of the following: December 31, 2022 2021 (In thousands) China $ 476,945 $ 431,862 Japan 121,842 147,253 Korea 1,868,956 1,719,842 Malaysia 41,978 33,416 Philippines 195,805 189,478 Portugal 82,454 79,326 Taiwan 261,449 264,540 Vietnam 79,630 — Other foreign countries 583 694 Total foreign countries 3,129,642 2,866,411 United States 5,972 4,647 Total property, plant and equipment, net $ 3,135,614 $ 2,871,058 19. Restructuring and Other Exit Activities As part of our ongoing efforts to improve our manufacturing operations and manage costs, we regularly evaluate our staffing levels and facility requirements compared to business needs. The following table summarizes our exit activities associated with these efforts. “Charges” represents the initial charge related to the exit activity. “Cash Payments” consists of the utilization of “Charges.” “Non-cash Amounts” consists of asset impairment and translation adjustments. Japan Consolidation Activities During the year ended December 31, 2021, we recorded restructuring charges of $ 2.9 million associated with our Japan factory consolidation efforts. We recorded these charges to selling, general and administrative expenses within the Consolidated Statements of Income. We completed these restructuring actions in the second quarter of 2021. Facility Costs (1) Employee Separation Costs Other Exit Costs (2) Total (In thousands) Accrual at December 31, 2019 $ 2,196 $ 271 $ 174 $ 2,641 Charges 9,679 5,548 2,779 18,006 Cash Payments ( 7,536 ) ( 4,056 ) ( 2,731 ) ( 14,323 ) Non-cash Amounts 26 ( 4 ) ( 3 ) 19 Accrual at December 31, 2020 $ 4,365 $ 1,759 $ 219 $ 6,343 Charges 2,077 496 360 $ 2,933 Cash Payments ( 5,733 ) ( 2,253 ) ( 578 ) $ ( 8,564 ) Non-cash Amounts ( 709 ) ( 2 ) ( 1 ) ( 712 ) Accrual at December 31, 2021 $ — $ — $ — $ — Total cumulative charges incurred to date $ 16,255 $ 8,754 $ 3,884 $ 28,893 Estimated additional charges to be incurred — — — $ — (1) Facility costs primarily consist of equipment relocation costs directly resulting from the restructuring actions. 88 Table of Contents AMKOR TECHNOLOGY, INC. Notes to Consolidated Financial Statements — (Continued) (2) Other exit costs primarily consist of employee relocation and training costs directly resulting from the restructuring actions. 89 Table of Contents SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS Balance at Beginning of Period Additions (Credited) Charged to Expense Write-offs Balance at End of Period (In thousands) Deferred tax asset valuation allowance: Year ended at December 31, 2020 $ 136,934 ( 15,311 ) ( 313 ) $ 121,310 Year ended at December 31, 2021 $ 121,310 3,653 ( 2,606 ) $ 122,357 Year ended at December 31, 2022 $ 122,357 ( 17,762 ) ( 2,726 ) $ 101,869 90 Table of Contents Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None.