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Item 1A. Risk Factors

2024-02-16 compared with 2023-02-22 · 249 added, 229 removed, 256 unchanged (65% of the section changed)

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The following is a list of some of these risks:

Company-Specific Risk Factors

• dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and financial conditions;

Risks Related to Our Business, Operations and Industry

• competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including foundries;

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

• fluctuations in operating results and cash flows;

• dependence on international factories and operations, and risks relating to our customers’ and vendors’ international operations;

• competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including foundries;

• dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and financial conditions;

• our substantial investments in equipment and facilities to support the demand of our customers;

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• fluctuations in our manufacturing yields;

• a downturn or lower sales to customers in the automotive industry;

• dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive;

• difficulty funding our liquidity needs;

• challenges with integrating diverse operations.

Risks Related to Our International Sales and Operation s

• dependence on international factories and operations, and risks relating to trade restrictions and regional conflict;

• significant severance plan obligations associated with our manufacturing operations in Korea.

Risks Related to Cybersecurity, Data Privacy and Intellectual Property

• our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others, and implement new technologies;

• warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business;

• our continuing development and implementation of changes to, and maintenance and security of, our information technology systems.

Risks Related to Our Indebtedness

• restrictive covenants in the indentures and agreements governing our current and future indebtedness;

• the possibility that we may decrease or suspend our quarterly dividend;

• significant severance plan obligations associated with our manufacturing operations in Korea;

• the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.

General Risk Factors

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

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

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

• our substantial indebtedness;

• fluctuations in interest rates and changes in credit risk.

• difficulty funding our liquidity needs;

• dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive;

Risks Related to Our Common Stock

• the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval;

• the possibility that we may decrease or suspend our quarterly dividend.

Risks Related to Human Capital and Management

• difficulty attracting, retaining or replacing qualified personnel.

Risks Related to Regulatory, Legal and Tax Challenges

• warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to our business;

• maintaining an effective system of internal controls;

• our continuing development and implementation of changes to, and maintenance and security of, our information technology systems;

• challenges with integrating diverse operations;

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

• environmental, health and safety liabilities and expenditures.

General Risk Factors

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

Company-Specific Risk Factors

Risks Related to Our Business, Operations and Industry

Our packaging and test services are used in volatile industries, and industry downturns, and declines in global economic and financial conditions could harm our performance.

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

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

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

During downturns, we have experienced, among other things, reduced demand, excess capacity and reduced sales.

For example, the Covid-19 pandemic disrupted demand in the automotive and industrial end market in 2020, and during 2019, there was weakness in the general market and an inventory correction in the smartphone market.

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

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

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

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

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

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

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

Other national, regional, and local governments have implemented, and may implement in the future, public health measures in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and adversely impact our operations and the operations of our customers and suppliers.

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

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

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

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

Additionally, if industry conditions

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

Our business may suffer if the cost, quality or supply of materials or equipment changes adversely.

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

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

and gold wire, from a limited group of suppliers.

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

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

A disruption to the operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business.

For example, the Covid-19 pandemic and resulting supply chain disruptions and economic turbulence created extended lead times for some materials and equipment.

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

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

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

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

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

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

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

From time to time, increased demand for new equipment or supply chain disruptions and economic turbulence may cause lead times to extend beyond those normally required by equipment vendors.

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

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Generally, we acquire our equipment on a purchase order basis and do not enter into long-term equipment agreements.

As a result, we could experience adverse changes in pricing, currency risk and potential shortages in equipment in a strong market, any of which could have a material adverse effect on our results of operations.

As a result, depending on market conditions, we could experience adverse changes in pricing, currency risk and potential shortages in equipment, any of which could have a material adverse effect on our results of operations.

We are a large buyer of gold and other commodity materials, including substrates and copper.

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

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

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

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

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

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

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

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

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

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• restructuring charges, asset write-offs and impairments.

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

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

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

On October 7, 2022 and October 17, 2023, the U.S.

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

semiconductor technology (collectively, the “BIS Regulations”).

The above factors, in addition to the BIS Regulations and other similarly restrictive trade barriers adopted by U.S.

and foreign governments applicable to the semiconductor supply chain, could impact our business and the businesses of our customers.

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

In addition, these factors may materially and adversely affect our credit ratings, which could make it more difficult and expensive for us to raise capital and could materially and adversely affect the price of our securities.

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

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

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

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

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

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

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

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

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

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

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

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

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

subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions;

• fluctuations in currency exchange rates, particularly the U.S.

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

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

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

• difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions;

• difficulty in enforcing contractual rights and protecting our intellectual property rights;

• potentially adverse tax consequences resulting from tax laws in the U.S.

and in other jurisdictions;

• local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the U.S.

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

On October 7, 2022, the U.S.

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

semiconductor technology sold in China.

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

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

manufacturers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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and economic, political and other global conditions.

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

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

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

In October 2023, we completed the initial phase of construction for our Vietnam Facility.

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

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

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Transitions between different packaging technologies can also impact our capacity utilization if we do not efficiently redeploy our equipment for other packaging and test opportunities.

We cannot assure you that we will be

able to achieve consistently high-capacity utilization, and if we fail to do so, our gross margins may be negatively impacted.

We cannot assure you that we will be able to achieve consistently high-capacity utilization, and if we fail to do so, our gross margins may be negatively impacted.

In addition, our fixed operating costs have increased as a result of capital expenditures for capacity expansion.

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Our quarterly net sales from packaging and test services are substantially dependent upon our customers’ demand in that quarter.

Generally, our customers do not commit to purchase any significant amount of packaging or test services or to provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount.

Generally, our customers do not commit to purchase any significant amount of packaging or test services or provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount.

In addition, we sometimes experience double booking by customers, and our customers often reduce, cancel or delay their purchases of packaging and test services for a variety of reasons, including industry-wide, customer-specific and Amkor-specific reasons.

This makes it difficult for us to forecast our capacity utilization and net sales in future periods.

Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of future sales, we may not be able to adjust costs in a timely manner to compensate for any sales shortfall.

Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of future sales, we may not be

able to adjust costs in a timely manner to compensate for any sales shortfall.

If we are unable to adjust costs in a timely manner, our margins, operating results, financial condition and cash flows could be materially and adversely affected.

Additionally, while we generally purchase materials based on Amkor’s commitments to customer forecasts, and our customers are generally responsible for any unused materials we purchase based on such commitments, due to the Covid-19 pandemic and the resulting supply chain constraints and extended lead times, we have been placing an increasing number of our orders for materials in advance of customer forecasts.

If we are unable to timely fulfill our customers’ orders, or if we are required to bear the cost of a substantial amount of unused materials, our margins, operating results, financial condition and cash flows could be materially and adversely affected.

Historically, there has been downward pressure on the prices of our packaging and test services.

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Semiconductor packaging and test services are complex processes that require significant technological and process expertise, and in line with industry practice, customers usually require us to pass a lengthy and rigorous qualification process that may take several months.

Once qualified and in production, defective packages primarily result from:

Once qualified and in production, defective packages primarily result from one or more of the following:

• contaminants in the manufacturing environment;

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

A significant portion of our revenue is derived from customers in the automotive industry.

A downturn or lower sales to customers in the automotive industry could materially affect our business and results of operations.

A significant portion of our sales are to customers within the automotive industry.

The automotive industry is cyclical, and, as a result, our customers in the automotive end-market are sensitive to changes in general economic conditions, inflationary pressure, disruptive innovation and end-market preferences, which can adversely affect sales of our products and, correspondingly, our results of operations.

The automotive industry is also subject to long design-in time frames, long product life cycles and a high degree of regulatory and safety requirements, necessitating suppliers to the industry to comply with stringent qualification processes, very low defect rates and high reliability standards, all of which result in significant operational challenges, risk to our results of operations, and increased costs of our investments in serving customers in the automotive end-market.

Additionally, the quantity and price of our products sold to customers in the

automotive end-market could decline despite continued growth in such end-market.

Lower sales to customers in the automotive end-market may have a material adverse effect on our business and results of operations.

The loss of certain customers or reduced orders or pricing from existing customers may have a material adverse effect on our operations and financial results.

We have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period due in part to the concentration of market share in the semiconductor industry.

Our ten largest customers accounted for, in the aggregate, 69% of our net sales for the year ended December 31, 2023.

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

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

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

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

For example, as seen in the automotive end market in 2020, the Covid-19 pandemic and restrictions imposed by governmental authorities to mitigate the spread of Covid-19 in our customers’ end markets may decrease demand for our customers’ products and services, thereby adversely impacting their demand for our services.

In addition, from time to time, we may acquire or build new facilities or migrate existing business among our facilities.

In connection with these facility changes or new facility constructions, our customers require us to qualify the new facilities even though we have already qualified to perform the services at our other facilities.

We cannot assure that we will successfully qualify facility changes, that we will complete construction of new facilities in a timely manner or that our customers will not qualify our competitors and move the business for such services.

We may have difficulty funding liquidity needs.

We assess our liquidity based on our current expectations regarding sales and operating expenses, capital spending, dividend payments, stock repurchases, debt service requirements and other funding needs.

We fund our operations, including capital expenditures and other investments and servicing principal and interest obligations with respect to our debt, from cash flows from our operations, existing cash and cash equivalents, borrowings under available debt facilities, or proceeds from any additional debt or equity financing.

Our liquidity is affected by, among other factors, volatility in the global economy and credit markets, the performance of our business, our capital expenditures and other investment levels, other uses of our cash, including any payments of dividends and purchases of stock under any stock repurchase program, any acquisitions or investments in joint ventures and any decisions we might make to either repay debt and other long-term obligations out of our operating cash flows or refinance debt at or prior to maturity with the proceeds of debt or equity financings.

Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures and other investments, and the amount of our capital expenditures for 2024 and thereafter may vary materially and will depend on several factors.

These factors include, among others, the amount, timing and implementation of our capital projects, the performance of our business, economic and market conditions, advances in technology, the cash needs and investment opportunities for the business, the need for additional capacity and facilities and the availability of cash flows from operations or financing.

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

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

Federal Reserve has raised interest rates several times during 2022 and 2023.

Volatility in the banking system and capital markets, as well as any further increase in interest rates or adverse economic, political, public health or other

global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities or refinance our debt.

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

Such fluctuations could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.

In addition, there is a risk that we could fail to generate the necessary net income or operating cash flows to meet the funding needs of our business due to a variety of factors, including the other factors discussed in this “Risk Factors” section.

If we fail to generate the necessary cash flows or we are unable to access the capital markets when needed, our liquidity could be materially and adversely impacted.

We face challenges as we integrate diverse operations.

We have experienced, and expect to continue to experience, change in the scope and complexity of our operations resulting primarily from existing and future facility and operational consolidations, facility and operational expansions, strategic acquisitions, joint ventures and other partnering arrangements.

Some of the risks from these activities include those associated with the following:

• increasing the scope, geographic diversity and complexity of our operations;

• conforming an acquired company’s standards, practices, systems and controls with our operations;

• increasing complexity from combining recent acquisitions of an acquired business;

• unexpected losses of key employees or customers of an acquired business;

• difficulties in the assimilation of acquired operations, technologies or products;

• diversion of management and other resources from other parts of our operations and adverse effects on existing business relationships with customers.

In connection with these activities, we may:

• incur costs associated with personnel reductions and voluntary retirement programs;

• record restructuring charges to cover costs associated with facility consolidations and related cost reduction initiatives;

• use a significant portion of our available cash;

• incur substantial debt;

• issue equity securities, which may dilute the ownership of current stockholders;

• incur or assume known or unknown contingent liabilities;

• incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.

For example, the businesses we have acquired had, at the time of acquisition, multiple systems for managing their own production, sales, inventory and other operations.

Migrating these businesses to our systems typically is a slow, expensive process requiring us to divert significant resources from other parts of our operations.

We may continue to face these challenges in the future.

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

Risks Related to Our International Sales and Operation s

Our factories and operations, and those of our customers and vendors, are located in various foreign jurisdictions, which exposes us to risks arising from international trade restrictions and regional conflict.

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

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

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

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

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

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

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

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

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

subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions;

• fluctuations in currency exchange rates, particularly the U.S.

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

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

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

• difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions;

• difficulty in enforcing contractual rights and protecting our intellectual property rights;

• potentially adverse tax consequences resulting from tax laws in the United States and in other jurisdictions;

• local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from engaging in by the U.S.

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

Many of these factors and risks are present and may be heightened within our business operations in China.

For example, changes in U.S.-China relations, the political environment or international trade policies could result in further revisions to laws or regulations or their interpretation and enforcement, increased taxation, trade sanctions, the imposition of import or export duties and tariffs, restrictions on imports or exports, currency revaluations or retaliatory actions, which have had and may continue to have an adverse effect on our business plans and operating results.

Additionally, the BIS Regulations place limitations on the ability of companies to export certain advanced computing semiconductor chips, as well as chipmaking equipment, by requiring companies to obtain licenses to export such products and equipment into China or other designated countries.

These expanded export restrictions limit our ability to sell to certain Chinese companies and to third parties that do business with those companies.

Certain of the Company’s

competitors may be exempt from the BIS Regulations by virtue of being non-U.S.

manufacturers.

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

It is also possible that government agencies in China or in other countries may adopt retaliatory export control rules in response to the BIS Regulations, which could further impact our business, liquidity, results of operations, financial condition and cash flows.

These restrictions have created, and these and similar restrictions may continue to create, uncertainty and caution with our current or prospective customers and may cause them to amass large inventories of our products, replace our products with products from another supplier that is not subject to the export restrictions or focus on building indigenous semiconductor capacity to reduce reliance on U.S.

Furthermore, if these export restrictions cause our current or potential customers to view U.S.

companies as unreliable, we could suffer reputational damage or lose business to foreign competitors who are not subject to such export restrictions, and our business could be materially harmed.

We are continuing to evaluate the impact of these restrictions on our business, but these actions may have direct and indirect material adverse impacts on our revenues and results of operations in China and elsewhere.

In addition, our success in the Chinese markets may be adversely affected by China’s evolving policies, laws and regulations, including those relating to antitrust, cybersecurity, data protection and data privacy, the environment, indigenous innovation and the promotion of a domestic semiconductor industry and intellectual property rights and enforcement and protection of those rights.

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

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

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

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

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

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

Our subsidiary in Korea maintains an unfunded severance plan, under which we have an accrued liability of $47.8 million as of December 31, 2023.

The plan covers certain employees that were employed prior to August 1, 2015.

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

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

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

Risks Related to Cybersecurity, Data Privacy and Intellectual Property

Our business will suffer if we are not able to develop new proprietary technology, protect our proprietary technology and operate without infringing the proprietary rights of others.

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As a result, we expect to develop, acquire and implement new manufacturing processes and packaging technologies and tools in order to respond to competitive industry conditions and customer requirements.

Technological advances may lead to rapid and significant price erosion and may make our existing packages less competitive or our existing inventories obsolete.

Technological advances may lead to rapid and significant price erosion and may make our existing packages less competitive or our existing inventories

If we cannot achieve advances in packaging design or obtain access to advanced packaging designs developed by others, our business could suffer.

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

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

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

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

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

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

Our packages are incorporated into a number of end products.

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

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

If we were to experience an unusually high incidence of warranty claims, we could incur significant costs and our business could be materially and adversely affected.

In addition, we are exposed to the product and economic liability risks and the risk of negative publicity affecting our customers.

Our sales may decline if any of our customers are sued on a product liability claim.

We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public perceptions in general regarding our customers’ products.

Further, if our packages are delivered with defects, we could incur additional development, repair or replacement costs or suffer other economic losses, and our credibility and the market’s acceptance of our packages could be harmed.

We face risks in connection with the continuing development and implementation of changes to, and maintenance and security of, our information technology systems.

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

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

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

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

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

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

Some of our key software has been developed by our own programmers, and this software may not be easily integrated with other software and systems.

From time to time,

we make additions or changes to our information technology systems.

For example, we continue to further integrate our Japan operations’ information technology systems into our existing systems and processes.

We face risks in connection with current and future projects to install or integrate new information technology systems or upgrade our existing systems.

These risks include:

• delays in the design and implementation of the system;

• costs may exceed our plans and expectations;

• disruptions resulting from the implementation, integration or cybersecurity breach of the systems may impact our ability to process transactions and delay shipments to customers, impact our results of operations or financial condition or harm our control environment.

Our business could be materially and adversely affected if our information technology systems are disrupted or if we are unable to successfully install new systems or improve, upgrade, integrate or expand upon our existing systems.

We maintain insurance policies for various types of information security risks, including network security and privacy liability for third party claims, and business interruption and system failure reimbursement coverage, but we do not carry insurance for all the above referred risks.

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

As a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected by a disruption, failure or breach of our information technology systems.

Risks Related to Our Indebtedness

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

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Our ability to comply with the provisions of the indentures, credit facilities and other agreements governing our outstanding debt and indebtedness we may incur in the future can be affected by events beyond our control, and a default under any debt instrument, if not cured or waived, could have a material adverse effect on us.

We may decrease or suspend our quarterly dividend, and any decrease in or suspension of the dividend could cause our stock price to decline.

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

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

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

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

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

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

Our subsidiary in Korea maintains an unfunded severance plan, under which we have an accrued liability of $56.2 million as of December 31, 2022.

The plan covers certain employees that were employed prior to August 1, 2015.

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

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

As of December 31, 2022, James J.

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

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

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

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

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

The Convert Shares are subject to a voting agreement.

The voting agreement requires the Kim family to vote these shares in a “neutral manner” on all matters submitted to our stockholders for a vote, so that such Convert Shares are voted in the same proportion as all of the other outstanding securities (excluding the other shares owned by the Kim family) that are actually voted on a proposal submitted to Amkor’s stockholders for approval.

The Kim family is not required to vote in a “neutral manner” any Convert Shares that, when aggregated with all other voting shares held by the Kim family, represent 41.6% or less of the total then-outstanding voting shares of our common stock.

The voting agreement for the Convert Shares terminates upon the earliest of (i) such time as the Kim family no longer beneficially owns any of the Convert Shares, (ii) consummation of a change of control (as defined in the voting agreement) or (iii) the mutual agreement of the Kim family and Amkor.

Kim and his family and affiliates, acting together, have the ability to effectively determine or substantially influence matters submitted for approval by our stockholders by voting their shares or otherwise acting by written consent, including the election of our Board of Directors.

There is also the potential, through the election of members of our Board of Directors, that the Kim family could substantially influence matters decided upon by our Board of Directors.

This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation involving us, or discouraging a potential acquirer from making a tender offer for our shares, and could also negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.

Concentration of ownership also reduces the public float of our common stock.

There may be less liquidity and higher price volatility for the stock of companies with a smaller public float compared to companies with broader public ownership.

Also, the sale or the prospect of the sale of a substantial portion of the Kim family shares may cause the market price of our stock to decline significantly.

General Risk Factors

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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If such investments suffer market price declines, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the decline is judged to be an impairment, including an allowance for credit loss.

We may have difficulty funding liquidity needs.

Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures and other investments, and the amount of our capital expenditures for 2023 and thereafter may vary materially and will depend on several factors.

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

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

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

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

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

Such fluctuations could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.

If we fail to generate the necessary cash flows or we are unable to access the capital markets when needed, our liquidity could be materially and adversely impacted.

The loss of certain customers or reduced orders or pricing from existing customers may have a material adverse effect on our operations and financial results.

Our ten largest customers accounted for, in the aggregate, 65% of our net sales for the year ended December 31, 2022.

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

In addition, from time to time, we may acquire or build new facilities or migrate existing business among our facilities.

Risks Related to Our Common Stock

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

As of December 31, 2023, James J.

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

Kim, the Executive Vice Chairman of our Board of Directors, and members of the Kim family and affiliates owned approximately 132.0 million shares, or approximately 54%, of our outstanding common stock.

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

If the options are exercised, the Kim family’s total ownership would be an aggregate of approximately 132.6 million shares, or approximately 54% of our outstanding common stock.

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

As of December 31, 2023, the Kim family owns 39.6 million Convert Shares.

The Convert Shares owned by the Kim family are subject to a voting agreement.

There is also the potential, through the election of members of our Board of Directors, that the Kim family could substantially influence matters decided upon by our Board of Directors.

could also negatively affect our stock’s market price or decrease any premium over market price that an acquirer might otherwise pay.

Concentration of ownership also reduces the public float of our common stock.

There may be less liquidity and higher price volatility for the stock of companies with a smaller public float compared to companies with broader public ownership.

Also, the sale or the prospect of the sale of a substantial portion of the Kim family shares may cause the market price of our stock to decline significantly.

We may decrease or suspend our quarterly dividend, and any decrease in or suspension of the dividend could cause our stock price to decline.

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

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

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

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

Risks Related to Human Capital and Management

We face risks trying to attract, retain or replace qualified employees to support our operations.

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

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

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

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