What changed in this filing

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Item 1. Business

2024-02-16 compared with 2023-02-22 · 51 added, 51 removed, 344 unchanged (23% of the section changed)

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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;

• Designing and developing innovative packaging and test technologies focused on advanced packaging solutions in high growth markets, including artificial intelligence;

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

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

• Providing a geographically diverse operating base;

• Providing a geographically diverse operating base with manufacturing facilities in multiple countries across Asia and in Europe;

• Developing a competitive cost structure through disciplined capital investment.

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These trends include:

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

• Adoption of artificial intelligence applications within data centers and edge devices such as smartphones, autonomous vehicles and consumer and industrial devices.

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

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

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

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

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

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

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

We cannot predict the timing, strength or duration of any correction, economic slowdown, recession or subsequent economic recovery.

Outsourcing Trends in Semiconductor Manufacturing

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

As a result, these

companies are increasing their reliance on outsourced providers of semiconductor manufacturing services, including high quality packaging and test solutions.

As a result, these companies are increasing their reliance on outsourced providers of semiconductor manufacturing services, including high quality packaging and test solutions.

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

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

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

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

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

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

Increasing battery voltage, higher voltage power converters and automotive inverter components also require innovative power packaging solutions.

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

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

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

Increasing battery voltage, higher voltage power converters, onboard chargers, automotive inverter components and microcontrollers also require innovative power packaging solutions.

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

• The IoT wearables within our consumer end market are evolving in multiple applications, such as hearables, watches, health trackers and augmented reality and virtual reality devices.

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

Our primary financial objective is profitable sales growth.

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We are an industry leader in developing and commercializing advanced packaging and test technologies, which we believe provide substantial value to our customers.

With approximately 700 employees, as of December 31, 2022, engaged in research and development for new semiconductor packaging and test technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip, wafer-level processing, advanced SiPs and power modules.

With approximately 950 employees, as of December 31, 2023, engaged in research and development for new semiconductor packaging and test technologies, we are a technology leader in areas such as 2.5D, advanced flip chip, fine pitch bumping, wafer-level processing, advanced SiPs and power modules.

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

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

Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon

interposers, which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package.

In addition, we co-develop with customers high power modules involving gallium nitride (“GaN”) and silicon carbide (“SiC”) based devices.

Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon interposers, which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package, such as 2.5D.

In addition, we co-develop with customers high power modules incorporating gallium nitride (“GaN”) and silicon carbide (“SiC”) based devices.

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

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

Optimize Utilization of Existing Assets and Broaden Our Customer Base

Optimize Utilization of Existing Assets

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

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From time to time, we identify attractive opportunities to strengthen our leadership position and market share through expansion of our operations, joint ventures, acquisitions and other strategic investments.

For example, we are making preparations to deliver advanced SiP modules and other packaging solutions from a new factory in Bac Ninh, Vietnam.

We believe that the Bac Ninh site, which is expected to begin production in the fourth quarter of 2023, will provide customers with a cost-competitive high-volume manufacturing location that offers supply chain diversification.

For example, in 2023, we completed construction of the Vietnam Facility, where we will manufacture advanced SiP modules and other packaging solutions.

We believe that the Vietnam facility will provide customers with a cost-competitive high-volume manufacturing location that offers supply chain diversification.

In addition, our broad geographic footprint, including our manufacturing presence in Portugal and our headquarters in the United States, are key differentiators for us and position us to participate in initiatives to regionalize supply chains.

We are making preparations to participate in developing the U.S.

semiconductor supply chain and are planning to build an advanced packaging and test facility in Arizona.

We believe that selective growth through these strategic actions can further strengthen customer relationships, help to maintain and enhance our technological leadership, diversify our revenue streams and improve our profits.

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

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

We have designed and developed several state-of-the-art package formats and technologies such as Double-Sided, Molded Ball Grid Array

(“DSMBGA”) SiP and 2.5D.

2.5D technology utilizes high density silicon interposers to enable the integration of high-performance chips, such as high bandwidth memory and graphics processors, into a single package.

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

We continue to invest in developing the key processes and packages, along with test solutions, required for our customers to deliver advanced integrated and modular solutions to their markets.

We are also a developer of environmentally friendly IC packaging, which involves reducing the use of lead and other harmful materials and efficient use of energy and water.

We are committed to advancing our key processes and packages, as well as developing innovative test solutions, required for our customers to deliver advanced integrated and modular solutions to their respective markets.

We are also committed to environmental responsibility by creating more sustainable IC packaging.

This involves minimizing the use of harmful materials like lead and optimizing energy and water usage.

Broad Offering of Semiconductor Package Design, Packaging and Test Services

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

This wide variety

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

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

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

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Geographically Diversified Manufacturing Base

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

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

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

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

indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for each service offering.

We refer to our flip chip, wafer-level processing and related test services as “Advanced Products” and to our wirebond packaging, power device packaging and related test services as “Mainstream Products.” The following table sets forth, for the periods indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for each service offering.

For the Year Ended December 31,

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

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

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

Mainstream Products

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

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

Our Mainstream Products use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier and include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems (“MEMS”) packages.

Leadframe Packages:

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

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

However, power applications that require improved thermal and electrical performance will use packaging with copper clip interconnect technology that creates multi die power modules with wafers from silicon carbide and other wide band gap materials.

Substrate-based Wirebond Packages :

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Automotive, industrial and other (ADAS, electrification, infotainment, safety) 21 % 20 % 21 %

Consumer (AR & gaming, connected home, home electronics, wearables) 20 % 22 % 24 %

Computing (data center, infrastructure, PC/laptop, storage) 16 % 16 % 16 %

Consumer (AR & gaming, connected home, home electronics, wearables) 13 % 20 % 22 %

Total net sales 100 % 100 % 100 %

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Our development of Panel Level Fan Out (“PLFO”) technology will permit higher economies of scale for fan-out package devices manufactured on a panel versus wafer basis.

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

In addition, we are developing high power management modules involving SiC-based devices.

We are also developing new applications for the automotive market using existing and new package technologies as higher performance computing, energy efficiency, power distribution and sensor content are used to support new automotive features including ADAS, infotainment, optical sensors and electric vehicles.

In addition, we are developing high power modules involving SiC-based devices.

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

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

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

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

At December 31, 2023, we had approximately 950 employees engaged in research and development activities.

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SALES AND MARKETING

Our sales offices are located throughout Asia, Europe and North America.

Our sales offices are located throughout Asia, Europe and the United States.

Our support personnel manage and promote our packaging and test services and provide key customer and technical support.

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Direct sales to Apple Inc.

and Qualcomm Technologies, Inc.

accounted for 20.6% and 10.1% of our net sales, respectively, for the year ended December 31, 2022.

accounted for 27.7% of our net sales for the year ended December 31, 2023.

MATERIALS AND EQUIPMENT

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

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

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

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

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

Such companies also have

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

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

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

Our IDM customers continually evaluate the attractiveness of outsourced services against their own in-house packaging and test services and at times may decide to shift some or all of their outsourced packaging and test services to internally sourced capacity.

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

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

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

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In addition, any patents we obtain could be challenged, invalidated or circumvented and may not provide meaningful protection or other commercial advantage to us.

Nonetheless, our patents afford an important means of protection for our technologies.

Nonetheless, we believe that our patents afford an important means of protection for our technologies.

Further, to distinguish our products from our competitors’ products, we have obtained certain trademarks and service marks and may promote our particular brands through advertising and other marketing techniques.

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HUMAN CAPITAL RESOURCES

As of December 31, 2022, Amkor employed 31,300 regular full-time employees, of whom approximately 97%, 2% and 1% resided in the Asia-Pacific region, Europe and North America, respectively.

Our global workforce spans 12 countries, reflecting various cultures, backgrounds, ages, genders and ethnicities.

Of our global employee base, 93% are employed in manufacturing roles.

Our employees in France, Germany, the Philippines, Singapore, Taiwan, Vietnam and the U.S.

are not represented by any union.

Certain employees at our factories in China, Japan, Korea, Malaysia and Portugal are members of a union, and we operate subject to collective bargaining agreements that we have entered into with these unions.

We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories.

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

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We look to promote our management-level employees from within Amkor, and we believe that we have been successful in this effort.

Factory locations also

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

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

Amkor also uses human capital initiatives to support our broad geographic footprint.

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We believe that our efforts to motivate, retain and support the growth of qualified employees is reflected in the long average tenure of our key employees.

As of December 31, 2023, Amkor employed 28,700 employees, of whom approximately 96%, 3% and 1% resided in the Asia-Pacific region, Europe and the United States, respectively.

Our global workforce spans 12 countries, reflecting various cultures, backgrounds, ages, genders and ethnicities.

Of our global employee base, 91% are employed in manufacturing roles.

Our employees in France, Germany, the Philippines, Singapore, Taiwan, Vietnam and the United States are not represented by any union.

We believe that our relations with our employees are good, and we have not experienced a work stoppage in any of our factories.

Health and Safety

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

What changed 10-K

Item 1. Business