What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-21 · 100 added, 78 removed, 224 unchanged (44% of the section changed)

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This section includes comparisons of certain 2025 financial information to the same information for 2024.

For discussion of 2023 results in comparison with 2022 results refer to “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on February 16, 2024.

Amkor is the world’s largest US headquartered OSAT (outsourced semiconductor assembly and test) service provider.

For discussion of 2024 results in comparison with 2023 results refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on February 21, 2025.

Amkor is the world’s largest U.S.

headquartered outsourced semiconductor assembly and test provider.

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

Our primary financial objective is profitable sales growth.

To achieve this goal, we are focused on leveraging our leadership position in services for advanced technologies, providing our customers with a geographically diverse manufacturing footprint, growing within the industry secular growth markets of HPC, automotive, IoT and mobile communications, selectively growing our scale and scope through strategic investments and optimizing utilization of existing assets.

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

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

To achieve this goal, we are focused on leveraging our technology leadership and innovation, providing our customers with a geographically diverse manufacturing footprint, partnering with lead customers in the key markets of HPC and AI, automotive, IoT and mobile communications, selectively growing our scale and scope through strategic investments and optimizing utilization of existing assets.

Amkor is a global leader in advanced semiconductor packaging and test technologies.

Our technology leadership encompasses areas such as HDFO, 2.5D integration, advanced flip chip, fine pitch bumping, wafer-level processing and advanced SiP solutions which support the industry’s drive toward smaller form factors, higher integration, improved performance and lower power consumption.

We provide turnkey solutions that include package design, wafer bump, wafer probe, wafer back-grind, packaging, burn-in, system level and final test and drop shipment services.

Our extensive line of packaging and test services covers analog, digital, logic, mixed signal, memory, sensors and radio frequency devices.

This breadth of services allows customers to streamline their supply chains, limit the number of suppliers and focus their resources on semiconductor design and wafer fabrication.

Our commitment to technology leadership is reinforced by ongoing investment in research and development, and we intend to continue to leverage our investments in advanced technology to meet the demand for these services in key markets.

Amkor’s broad and strategically located manufacturing footprint is a key differentiator, enabling us to deliver flexible, resilient and cost-effective solutions to customers worldwide.

With facilities located in key manufacturing regions in Asia and Europe, we provide customers with multiple options to mitigate risk, diversify supply chains and support regionalization initiatives.

headquartered OSAT, we are expanding our manufacturing footprint with the construction of a new facility in Arizona.

Construction began in the second half of 2025, and we believe that this investment will strengthen our ability to serve customers seeking to regionalize their supply chains and will enhance our participation in U.S.

semiconductor initiatives.

In addition, we continue to scale production in our Vietnam facility, which opened in 2024, further increasing our capacity and operational flexibility in Asia.

Our scale and geographic diversity allow us to qualify production at multiple sites, optimize asset utilization and absorb large orders with quick turnaround times.

Amkor has built long-standing relationships with most of the world’s leading semiconductor companies over the last five decades.

Our operational excellence, high quality, reliability and predictability have been key to attracting and retaining customers.

Our collaborative approach enables us to work closely with customers and suppliers to co-develop proprietary process technologies, accelerate time-to-market, improve quality and lower costs.

We work closely with lead customers to deliver advanced packaging solutions tailored to evolving industry needs.

High performance computing supporting artificial intelligence and increasing demand for improved networking speed and storage within data centers, cloud computing, PCs and laptops are driving demand for more semiconductors and advanced packaging in the computing end market.

Increasing semiconductor content in automobiles is driving increased demand for advanced packaging to enable the proliferation of safety features such as ADAS and radar and digital cockpit features such as infotainment displays and telematics.

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

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

Within our communications end market, we have a strong position across multiple device functionalities within premium and high tier smartphones.

We are collaborating with industry leaders as smartphones transition to include artificial intelligence and drive semiconductor growth through integration of a broad range of applications, enhanced features and higher performance requirements to support increased data processing.

Our broad geographic footprint, including our manufacturing presence in multiple countries across Asia, in Portugal and our headquarters in the United States, is a key differentiator and positions us well to support evolving global supply chains, including initiatives to regionalize supply chains.

We began delivering advanced packages from the Vietnam Facility in the third quarter of 2024.

In addition, we are progressing plans to build an advanced packaging and test facility in Arizona and were awarded up to $407 million in direct funding by Commerce pursuant to the CHIPS Act to support the facility, conditioned on, among other things, the achievement of certain construction and production milestones.

We acquired the land for the Arizona Facility in 2024 and expect to begin construction in the second half of 2025.

We believe our broad geographic footprint provides customers with multiple options to mitigate risk and diversify their supply chains.

Another key factor in our success is the optimization of asset utilization.

We build and utilize manufacturing lines which support multiple customers, and we increase factory utilization through sophisticated planning processes and intensive efficiency improvement activities.

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

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

Increasing semiconductor content in automobiles is driving demand for advanced packaging to enable safety features such as ADAS, in-car computing, radar and digital cockpit features such as infotainment displays and telematics.

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

Hearables, watches and augmented and virtual reality devices integrate multiple functions, such as processors, sensors and connectivity devices, into small form factors, which requires innovation in advanced packaging.

We have a strong position across multiple device functionalities within premium and high-tier smartphones.

We are collaborating with industry leaders as smartphones transition to include artificial intelligence and drive semiconductor growth through the adoption of new wireless standards, integration of a broad range of applications, enhanced features and higher performance requirements to support increased data processing.

The trend to greater functionality drives miniaturization and innovation enabled by advanced packaging.

As a supplier in the semiconductor industry, our business is cyclical and impacted by broad economic factors.

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Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures, which are generally made in advance of expected revenues and without firm customer commitments.

We fund our operations, including capital expenditures and debt service requirements, with cash flows from operations, existing cash and cash equivalents, short-term investments, borrowings under available credit facilities and proceeds from any additional financing.

Maintaining an appropriate level of liquidity is important to our business and depends on, among other considerations, the performance of our business, our capital expenditure levels, our ability to repay debt out of our operating cash flows or proceeds from debt or equity financings and our investment strategy.

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 and/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.

As of December 31, 2025, we had cash and cash equivalents and short-term investments of $1,378.3 million and $613.0 million, respectively.

Our net sales, gross profit, operating income, cash flows, liquidity and capital resources have historically fluctuated significantly from quarter to quarter due to many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item 1A of this Form 10-K.

Our results of operations and cash flows have historically fluctuated significantly from quarter to quarter due to many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item 1A of this Form 10-K.

We continue to monitor the recent changes in global trade policy, including tariffs and related trade actions announced by the U.S.

and other countries.

The degree to which such tariffs and other related actions impact our business, financial condition and results of operations will depend on future developments, which are uncertain.

We will continue to make prudent investments, and we will closely manage capacity expansion and control costs in response to any changes in market conditions.

2025 Financial Summary

Our net sales decreased $185.4 million or 2.9% to $6,317.7 million in 2024 from $6,503.1 million in 2023.

The decrease was primarily due to lower sales in our automotive and industrial and communications end markets, partially offset by growth in the computing and consumer end markets.

Gross margin increased to 14.8% in 2024 compared to 14.5% in 2023.

The increase was primarily due to the extension of the estimated useful life of our test equipment from five years to seven years and net favorable foreign currency exchange rate movements, offset by the decrease in net sales and resulting lower factory utilization.

Operating income margin decreased to 6.9% in 2024 from 7.2% in 2023.

The decrease in our operating income margin was primarily due to increased employee compensation costs and costs incurred during start-up at the Vietnam Facility, partially offset by the increase in our gross margin discussed above and a reduction in bad debt expense.

Our net sales increased $390.3 million or 6.2% to $6,708.0 million in 2025 from $6,317.7 million in 2024.

The increase was primarily due to higher sales across all end markets.

Gross margin decreased to 14.0% in 2025 compared to 14.8% in 2024.

The decrease was primarily due to increased overhead and employee compensation costs, partially offset by higher factory utilization driven by the increase in net sales and a gain recognized on the sale of certain machinery and equipment.

Gross margin for 2025 was also constrained by the ramp up of production at the Vietnam Facility, which is in the early stages of high-volume manufacturing.

Operating income margin increased to 7.0% in 2025 from 6.9% in 2024.

The increase in our operating income margin was primarily due to the net amount recognized for a cash receipt subject to bankruptcy proceedings related to our Nanium acquisition in May 2017 (“Nanium Insolvency Receipt”) and the incremental costs incurred in 2024 during start-up at the Vietnam Facility, partially offset by the decrease in our gross margin discussed above.

In 2025, our capital expenditures totaled $904.6 million, or 13.5% of net sales, compared to $743.8 million, or 11.8% of net sales in 2024.

Our spending was primarily focused on investments in advanced packaging and test equipment.

Our spending was primarily focused on investments in advanced packaging and test equipment and the Arizona Facility.

Net cash provided by operating activities was $1,095.6 million for the year ended December 31, 2025, compared to $1,088.9 million for the year ended December 31, 2024.

This decrease was primarily due to changes in working capital and lower operating profits.

This increase was primarily due to changes in contract liabilities due to customer advance payments and higher operating profits, offset by changes in working capital.

In November 2025, our Board of Directors approved a quarterly dividend of $0.08352 per share, a 1% increase from the rate set in November 2024.

The Board of Directors also approved a special cash dividend of $0.40546 per share.

In 2025, we paid total cash dividends of $81.9 million.

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Net sales $ 6,707,981 $ 6,317,692 $ 6,503,065 $ 390,289 6.2 % $ (185,373) (2.9) %

The $185.4 million decrease in net sales in 2024 compared to 2023 was primarily due to lower sales in our automotive and industrial and communications end markets, partially offset by growth in the computing and consumer end markets.

The automotive and industrial end market decreased 16% in 2024 compared to 2023 primarily driven by elevated customer inventories and weaker demand.

The communications end market decreased 7% in 2024 compared to 2023 primarily due to lower supported content mix in premium tier smartphones.

The computing and consumer end markets grew 16% and 10%, respectively, in 2024 compared to 2023 primarily driven by strong demand for ARM-based PCs, AI devices and IoT wearables.

The $390.3 million increase in net sales in 2025 compared to 2024 was primarily due to higher sales across all end markets.

The computing end market increased 16% in 2025 compared to 2024 primarily driven by strength in AI related PC devices and networking infrastructure.

The automotive and industrial end market increased 8% in 2025 compared to 2024 primarily due to strong advanced content growth for ADAS applications.

The consumer and communications end markets grew 9% and 1%, respectively, in 2025 compared to 2024, primarily driven by strong demand for IoT wearables and premium tier smartphones.

Gross Profit and Gross Margin

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As we continue to increase production of these higher material cost products, there could be an impact on our profitability, depending on overall utilization.

While gross profit decreased for 2024 compared to 2023, gross margin increased primarily due to the extension of the estimated useful life of our test equipment from five years to seven years and net favorable foreign currency exchange rate movements, offset by the decrease in net sales and resulting lower factory utilization.

Gross margin decreased for 2025 compared to 2024, primarily due to increased overhead and employee compensation costs, partially offset by higher factory utilization driven by the increase in net sales and a gain recognized on the sale of certain machinery and equipment.

Gross profit and gross margin for 2025 were also constrained by the ramp up of production at the Vietnam Facility, which is in the early stages of high-volume manufacturing.

For additional

information regarding the sale of certain machinery and equipment, please refer to Note 8 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Selling, General and Administrative

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$ 304,471 $ 331,806 $ 295,393 $ (27,335) (8.2) % $ 36,413 12.3 %

Selling, general and administrative expenses increased in 2024 compared to 2023.

The increase was primarily due to increased employee compensation costs and costs incurred during start-up at the Vietnam Facility, partially offset by a reduction in bad debt expense.

In 2024, the costs incurred during start-up at the Vietnam Facility increased approximately $16 million compared to 2023.

Selling, general and administrative expenses decreased in 2025 compared to 2024.

The decrease was primarily due to the net amount recognized from the Nanium Insolvency Receipt in 2025 and the incremental costs incurred in 2024 during start-up at the Vietnam Facility, partially offset by increased employee compensation costs, the recovery of bad debt expense in 2024 and higher professional fees and software maintenance costs.

The net amount recognized from the Nanium Insolvency Receipt was $32.4 million.

The incremental costs incurred during start-up at the Vietnam Facility were approximately $16 million in 2024.

For additional information regarding the Nanium Insolvency Receipt, please refer to Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Research and Development

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Once production begins, the costs relating to production become part of the cost of sales, including ongoing depreciation for the equipment previously held for research and development activities.

Research and development expenses decreased in 2024 compared to 2023 primarily due to the utilization mix of assets shared with manufacturing and projects moving into production, partially offset by new development projects in packaging technologies.

Research and development expenses increased in 2025 compared to 2024 primarily due to development projects in new advanced and mainstream packaging technologies, partially offset by projects moving into production.

Other Income and Expense

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Total other expense, net $ 22,766 $ 7,439 $ 26,446 $ 15,327 >100% $ (19,007) (71.9) %

Interest expense increased in 2024 compared to 2023, primarily due to a decrease in capitalized interest for the Vietnam Facility and an increase in our finance lease obligation balance.

Interest income increased in 2024 compared to 2023, primarily due to increases in our cash and cash equivalent and available-for-sale debt investment balances and higher interest rates.

The changes in foreign currency (gain) loss, net for the 2024 compared to the 2023 were primarily due to the lower net costs associated with foreign exchange forward contracts.

Interest expense increased in 2025 compared to 2024, primarily due to an increase in our average outstanding debt related to the new issuances in 2025, which were used in part to redeem outstanding amounts under existing debt.

For additional information regarding our debt activities, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Interest income decreased in 2025 compared to 2024, primarily due to lower interest rates, partially offset by increases in our cash and cash equivalent and available-for-sale debt investment balances.

Income Tax Expense

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The effective tax rate is below the U.S.

statutory rate of 21% primarily due to lower tax rates applicable to our operations in some foreign jurisdictions where we earn income.

The effective tax rate in 2022 includes a $17.8 million tax benefit from the recognition of deferred tax assets we expect to utilize in future years.

During 2024, 2023 and 2022, our subsidiaries in Korea and Singapore operated under various conditional reduced tax rates.

Beginning in 2024, our subsidiary in Vietnam also operated under a conditional reduced tax rate.

statutory rate of 21% primarily due to lower tax rates applicable to our operations in some foreign jurisdictions where we earn income and discrete tax benefits recognized in 2025.

During 2025, 2024 and 2023, our subsidiaries in Korea, Singapore and Vietnam operated under various conditional reduced tax rates.

As these conditional reduced tax rates expire, income earned in these jurisdictions will be subject to higher statutory income tax rates, which may cause our effective tax rate to increase.

In addition, the conditional reduced tax rates granted to certain operations are expected to be adversely impacted by the enactment of the Pillar Two Model Rules effective in 2025.

We believe the short-term impact will result in an increase to the overall effective tax rate of approximately 2 to 3 percentage points, before any discrete tax items, depending on the amount and relative mix of earnings in each location, among other factors.

See Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information about our income tax expense.

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We have the ability to access cash held offshore by our foreign subsidiaries primarily through the repayment of intercompany debt obligations.

If we were to distribute this offshore cash to the United States as dividends

from our foreign subsidiaries, the dividends generally would not be subject to U.S.

If we were to distribute this offshore cash to the United States as dividends from our foreign subsidiaries, the dividends generally would not be subject to U.S.

federal income tax, but the distributions may be subject to foreign withholding and state income taxes.

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These factoring arrangements can be reduced or eliminated at any time due to market conditions and changes in the creditworthiness of customers.

For the year ended December 31, 2024 and 2023, we sold accounts receivable totaling $158.6 million and $253.9 million, net of discounts and fees of $0.4 million and $1.3 million, respectively.

For the year ended December 31, 2025 and 2024, we sold receivables totaling $154.4 million and $158.6 million, net of discounts and fees of $0.5 million and $0.4 million, respectively.

We operate in a capital-intensive industry.

Servicing our current and future customers may require that we incur significant operating expenses and make significant investments in equipment and facilities, which are generally made in advance of the related revenues and without firm customer commitments.

In December 2024, we signed a Direct Funding Agreement with the U.S.

Department of Commerce for the award of up to $407 million in government incentives pursuant to the CHIPS Act, and no funds have been received to date.

The award requires us to achieve construction and production milestones over the next several years.

In addition, we receive a 25% investment tax credit on qualified investments in U.S.

In December 2024, we signed a Direct Funding Agreement with the Commerce Department for the award of up to $407 million in government incentives pursuant to the CHIPS Act, and no funds have been received to date.

The award agreement contains representations, warranties and covenants that relate to compliance with requirements, including construction milestones, and also includes certain events of default and related rights and remedies, including clawbacks.

In addition, we are eligible to receive an investment tax credit on qualified investments in U.S.

semiconductor manufacturing under the CHIPS Act.

In July 2025, the enactment of OBBBA increased the investment tax credit rate from 25% to 35% for qualified property placed in service after 2025.

For additional information, please refer to Note 1 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

The maximum borrowing capacity under our $600.0 million senior secured revolving credit facility (“2022 Singapore Revolver”) is limited to a base amount equal to the lesser of:

(1) $600.0 million;

or (2) $250.0 million plus a variable amount equal to 37.5% of our consolidated accounts receivable balance.

As of December 31, 2024, we had availability of $600.0 million.

In May 2025, we entered into a $1.0 billion senior secured revolving credit facility (the “2025 Revolving Credit Facility”) that replaced an existing revolving credit facility.

The 2025 Revolving Credit Facility includes an uncommitted optional accordion of up to $200.0 million, which may be incurred in the form of revolving commitment increases or term loans.

In June 2025, we amended the 2025 Revolving Credit Facility agreement and created a new tranche of term loans (the “Term A Loans”), which are secured and guaranteed on a pari passu basis to the revolver loans under the existing agreement.

The Term A Loans have an aggregate principal amount of $500.0 million.

In July 2025, a portion of the proceeds were used to redeem $125.0 million of our 6.625% Senior Notes due September 2027 (“2027 Notes”) and repay the remaining $98.0 million of term loans at Amkor Assembly & Test (Shanghai) Co., Ltd.

(“AATS Loans”).

The 2025 Revolving Credit Facility and Term A Loans will mature in May 2030.

As of December 31, 2025, we had availability of $1.0 billion under the 2025 Revolving Credit Facility.

As of December 31, 2025, our foreign subsidiaries also had $58.6 million available to be borrowed under term loan credit facilities.

For additional information regarding the 2022 Singapore Revolver, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

For additional information regarding the 2025 Revolving Credit Facility, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

In September 2025, we issued $500.0 million of 5.875% Senior Notes due October 2033 (the “2033 Notes”).

The proceeds were used for the redemption of the outstanding $400.0 million aggregate principal amount of our 2027 Notes and general corporate purposes.

For additional information regarding the 2033 Notes, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

As of December 31, 2025, we had debt of $1,445.2 million, with $162.4 million payable within 12 months.

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For additional information regarding our debt arrangements, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Certain of our debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities.

These restrictions are determined in part by our covenant compliance and on calculations based upon cumulative net income and do not currently have a material impact on our ability to make dividend payments or stock repurchases.

Certain of our debt agreements contain affirmative and negative covenants including, among others, covenants to maintain a minimum interest coverage ratio and a maximum consolidated leverage ratio, which restrict our ability to pay dividends and could restrict our operations.

These restrictions do not currently have a material impact on our ability to make dividend payments or stock repurchases.

The debt of Amkor Technology, Inc.

is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries.

From time to time, Amkor Technology, Inc., Amkor Technology Taiwan Ltd.

(“ATT”), Amkor Advanced Technology Taiwan, Inc.

(“AATT”) and Amkor Technology Singapore Holding Pte.

(“ATSH”) guarantee certain debt of our subsidiaries.

From time to time, Amkor Technology, Inc., Amkor Technology Singapore Holding Pte.

(“ATSH”) and Guardian Assets, Inc.

(“Guardian”) guarantee certain debt of our subsidiaries.

In order to reduce our debt and future cash interest payments, we may from time to time repurchase or redeem our outstanding senior notes for cash or exchange shares of our common stock for our outstanding senior notes.

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We lease certain machinery and equipment, office space and manufacturing facilities.

As of December 31, 2024, our total remaining operating lease obligations and finance lease obligations were $98.5 million and $204.4 million,

respectively, with $30.9 million and $65.7 million payable within 12 months, respectively.

As of December 31, 2025, our total remaining operating lease obligations and finance lease obligations were $82.9 million and $170.8 million, respectively, with $26.3 million and $51.8 million payable within 12 months, respectively.

The lease obligations represent our future minimum lease payments including interest payments.

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As of December 31, 2025, the purchase obligations were $1,152.4 million, with $1,084.8 million payable within 12 months.

We enter into customer advance payment agreements from time to time, some of which require standby letters of credit.

As of December 31, 2025, we expect to receive approximately $300 million of advance payments over a two-year period, all of which will require standby letters of credit upon receipt.

For additional information regarding our customer advance payments, please refer to Note 1 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.

Capital Returns

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This return may be in the form of dividends and stock repurchases, subject to a variety of factors, including strategic investments, other capital allocation priorities and Board of Directors’ approval.

In 2024, we paid total cash dividends of $178.6 million, and we currently anticipate that we will continue to pay quarterly cash dividends in the future.

In 2025, we paid total quarterly cash dividends of $81.9 million, and we currently anticipate that we will continue to pay quarterly cash dividends in the future.

However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend upon our results of operations, financial condition, cash requirements, debt restrictions and other factors.

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We make significant capital expenditures in order to service the demand of our customers.

In 2024, our capital expenditures totaled $743.8 million or approximately 11.8% of net sales, which are primarily focused on investments in advanced packaging and test equipment.

We expect that our 2025 capital expenditures will be approximately $850 million, approximately 5% to 10% of which we expect to spend on the construction of the Arizona Facility.

Ultimately, the amount of our 2025 capital expenditures will depend on several factors including, among others, the timing and implementation of any capital projects under review, including the commencement of construction for the Arizona Facility, the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity to service anticipated customer demand, equipment lead times and the availability of cash flows from operations or financing.

In 2025, our capital expenditures totaled $904.6 million or approximately 13.5% of net sales, which are primarily focused on investments in advanced packaging and test equipment and the Arizona Facility.

We expect that our 2026 capital expenditures will be approximately $2.5 billion to $3.0 billion.

The increase from 2025 is primarily due to the construction of the Arizona Facility.

Ultimately, the amount of our 2026 capital expenditures will depend on several factors including, among others, the timing and implementation of any capital projects under review, including the progress of construction of the Arizona Facility, the performance of our business, economic and market conditions, the cash needs and investment opportunities for the business, the need for additional capacity to service anticipated customer demand, equipment lead times and the availability of cash flows from operations or financing.

The primary sources of funds for our capital expenditures are cash flows from operations, current cash and cash equivalents, short-term investments, borrowings under available credit facilities and proceeds from any additional debt or equity financings.

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Operating activities:

Our cash flow provided by operating activities for the year ended December 31, 2024 decreased by $181.2 million compared to the year ended December 31, 2023, primarily due to changes in working capital and lower operating profits.

Our cash flow provided by operating activities for the year ended December 31, 2025 increased by $6.7 million compared to the year ended December 31, 2024, primarily due to changes in contract liabilities due to customer advance payments and higher operating profits, offset by changes in working capital.

Investing activities:

Our cash flow used in investing activities for the year ended December 31, 2024 decreased by $151.6 million compared to the year ended December 31, 2023, primarily due to lower net payments for short-term investment activity.

Our cash flow used in investing activities for the year ended December 31, 2025 increased by $84.7 million compared to the year ended December 31, 2024, primarily due to higher payments for property, plant and equipment and higher net payments for short-term investments, partially offset by higher proceeds from the sale of property, plant and equipment and lower net payments for foreign exchange forward contracts.

Payments for property, plant and equipment can fluctuate based on the timing of purchase, receipt and acceptance of equipment.

Financing activities:

The net cash used in financing activities for the year ended December 31, 2024 and 2023 was primarily due to the payments of our dividends, payments of finance lease obligations and net debt repayments.

The changes in financing activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 were primarily due to net debt borrowings in 2025 and the payment of a special cash dividend in 2024, partially offset by increased payments of finance lease obligations.

We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources.

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However, resolution of these matters involves uncertainties, and there can be no assurance that the outcomes will be favorable.

In addition, changes in the mix of income from our foreign subsidiaries, expiration of conditional reduced tax rates or changes in tax laws or regulations could result in increased tax expense and effective tax rates in the future.

In addition, changes in the mix of

income from our foreign subsidiaries, expiration of conditional reduced tax rates or changes in tax laws or regulations could result in increased tax expense and effective tax rates in the future.

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

In evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent operations.

With the exception of a certain foreign jurisdiction and select U.S.

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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 7. Management’s Discussion and Analysis