Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the Amcor Technology Second Quarter 2021 Earnings Conference Call. My name is Diego, and I will be your conference facilitator today. At this time, all participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. As a reminder, this conference is being recorded. I would now like to turn the call over to Jennifer Ju, Head of Investor Relations. Thank you, Ms. Ju. Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for AMCOR's second quarter 2021 earnings conference call. Joining me today are Phil Routon, our chief executive officer, and Megan Faust, our chief financial officer. Our earnings press release was filed with the SEC this afternoon and is available on the investor relations page of our website, along with the presentation slides that accompany today's call. During this presentation, we will use non-GAAP financial measures, and you can find the reconciliation to the US GAAP equivalent on our website. We will make forward-looking statements about our expectations for AMCOR's future performance based on the environment as we currently see it. Of course, actual results could differ. Please refer to our press release and other SEC filings for information on risk factors, uncertainties, and exceptions that could cause actual results to differ materially from these expectations. Please note that the financial results discussed today are preliminary, and final data will be included in our Form 10-Q. And now, I would like to turn the call over to Gil.

Thanks, Jennifer. Good afternoon, everyone, and thank you for joining the call today. Today, I will review our second quarter performance and will provide the outlook for the third quarter. I will also make a few comments on dynamics in the markets and technologies that Emcor is well positioned for future growth. We delivered solid financial results in the second quarter with an all-time quarterly revenue record of $1.41 billion above the high end of guidance and an increase of 20% year-on-year and 6% sequentially. Following a strong first quarter, continued momentum resulted in better than expected performance in all end markets. most notably communications and consumer, where we saw a sequential increase of 6% and 9% respectively. High factory utilization for our advanced technology portfolio and continued improvement in our mainstream business resulted in a record second quarter EPS of 51 cents. The 6% sequential growth in communications exceeded our expectations after a strong first quarter in this segment. Year-on-year, our communications business grew 28%, representing 40% of total quarterly revenue. For the full year of 2021, we expect continued growth in this business, driven by the strength in the smartphone market, particularly in 5G, with current industry forecasts of over 500 million 5G-enabled smartphones to be built this year. Emcor has a leading position in the 5G RF domain, And over recent years, we have established a proven technology portfolio to address the advanced requirements needed to enable 5G. With our DSMBGA advanced SIP platform, we have established a preferred advanced packaging solution for this demanding application. EMCOR's industry-leading design rules, dual-sided molding technology, conformal shielding together with inline RF testing deliver best-in-class integration levels in a high-volume, high-yield manufacturing process. We continue to develop technology and manufacturing scale to support our customers in this growing market segment. In the automotive and industrial markets, we achieved another quarterly revenue record. Year-on-year growth of 33% underlines the recovery in this end market. Some supply chain constraints, especially in the wafer and substrate supply, dampened even further growth. We continue to see strength in the mainstream part of our automotive portfolio and have received several customer endorsements, especially for the quality and delivery performance in our Philippines factories. In the advanced product part of our portfolio, we rent several new products in the automotive sensor domain. For radar sensors, we utilize wafer-level fan-out technology in our portico factories. Customers are rapidly adopting this technology due to the strict requirements of radar sensors. In addition to the growing sensor market, we also ram several new products targeting the automotive high-power domain, accelerated by the growth of the EV market. For the second half of the year, we anticipate the automotive supply chain will gradually improve, resulting in further growth. Beyond the second half, We believe the growth drivers in this market remain in place, and we expect that semiconductor content per car will further increase due to accelerated proliferation of driver assistance electronics and the electrification of more car models. Strength in the consumer market resulted in a better than expected sequential increase of 9%. We continue to diversify our product and customer portfolio in IoT wearables, around several new products in the quarter. We expect this market will be an important driver of growth, and our overall product and customer pipeline for advanced SAP solutions in this domain remains strong. In addition to the wearable market, we also experienced strength in traditional consumer products like gaming, display, and video devices, and we expect continued growth going forward. Revenue in the computing market set another quarterly record, with sequential growth of 6% and a year-on-year growth of 21%. We experienced solid performance in all computing applications and a further strengthening of our project pipeline. We are investing in technology and manufacturing scale to capitalize on opportunities across the computing domain, from personal computing to infrastructure and data centers. We see more opportunities in this market in emerging segments like AI and high-performance computing and in the changes brought by the ongoing de-verticalization in this market. Finally, our test business grew 12% year-on-year in the second quarter as we broaden the scope of our test services for 5G communications and system-level testing and expand our test attach rates. To prepare for the volume ramp in the second half of 2021, our manufacturing organization has expanded clean room space and capacity, most notably for advanced packaging in our factories in Korea. Also, we are encouraged by progress in the US on investment policies to incentivize domestic semiconductor manufacturing. The EMCOR team is exploring a possible factory location to align with the investments in the US supply chain of other major semiconductor companies. During the quarter, we increased our capex target for the year to around $775 million, partially in anticipation of some initial investments in a new factory location. Other major investments in 2021 are planned for wafer-level and flip-chip technology, SIP and test capacity, as well as facility expansions and specific investments to support our Industry 4.0 program. Now let me turn to our third quarter outlook. We expect significant growth with revenue of $1.7 billion at the midpoint of guidance. This would represent a sequential increase of 21% and a year-on-year increase of 26%. The ongoing short-term constraints in the supply chain of materials and equipment are expected to continue into the second half of 2021, and we are working closely with our suppliers and customers to help mitigate these risks. For full year 2021, we expect growth in all end markets, particularly communications, and we are well positioned to support the continued recovery in automotive. We remain confident in our strong market position and the overall demand environment and expect to outgrow the semiconductor market in 2021. Megan will now provide more detailed financial information.