Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the Amcor Technology Third Quarter 2021 Earnings Conference Call. My name is Hillary, 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. Ms. Ju, please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for AMCOR's third quarter 2021 earnings conference call. Joining me today are Phil Rutten, 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. We delivered outstanding financial results in the third quarter with record revenue of $1.68 billion and record profitability. Strong execution, high factory utilization, and controlled spending resulted in record quarterly EPS of 74 cents. When combined with the strong first half results, we generated $1.74 of EPS in the first three quarters. doubling last year performance in the same period. Revenue was up 24 percent year-on-year, and 20 percent sequential growth comes on top of an excellent second quarter. Continued momentum drove record performance in all end markets, most notably in communications and consumer, where we saw sequential revenue increases of 28 percent and 22 percent, respectively. Our communication business grew 24 percent year-on-year, representing 43 percent of total quarterly revenue. The main driver for growth here is the strength in the smartphone market, particularly in 5G, with current industry forecasts of nearly 500 million 5G-enabled smartphones to be built this year. We expect 5G to remain an important growth driver, and we continue to invest in technology and manufacturing scale to support our customers in these growing markets. In the automotive and industrial market, we achieved another quarterly revenue record, with sequential growth of 9% and year-on-year growth of 42%. The growth underlines a strong recovery in this market, although supply chain constraints, especially in wavefront substrate supply, dampen further growth. The strong recovery of our automotive business is mainly due to significant ramps of new products in this domain. particularly supporting the rapid proliferation of ADAS functionality and the accelerated electrification of car models. EMCO is well positioned to support these innovations with a solid technology portfolio and an established automotive qualified manufacturing base. In ADAS, we are ramping the assembly of the latest generation processors using our advanced flip chip technology and the portfolio of radar and optical sensors using wafer-level fan-out technology. For electrical vehicles, we are enabling the assembly of high-power silicon carbide devices in our Japan factories, utilizing unique wire-bound and lead-frame technology. Although we foresee some short-term and mid-term constraints in the automotive supply chain, we believe the long-term growth drivers in this market remain in place. resulting in the continued expansion of semiconductor content of cars. Market forecasts show growth rates in the automotive market that exceed the average semiconductor industry growth. Strength in the consumer market resulted in a better-than-expected sequential increase of 22 percent. We continue to diversify our product and customer portfolio in IoT wearables. and we ramped several new products in the third quarter. We expect this market to be an important driver of growth, and our overall product and customer pipeline for advanced SIP solutions in this sector remains strong. Revenue in the computing market set another quarterly record, with sequential growth of 9% and year-on-year growth of 28%. Further upside was tempered by constraints in material supply, especially high-end substrate materials. During the quarter, we experienced solid performance in all computing applications and a further strengthening of our project pipeline. We continue to invest in technology and manufacturing scale to capitalize on opportunities in emerging segments, like AI and high-performance computing. Finally, our test business grew 19% year-on-year in the third quarter, to a record $225 million as we broaden the scope of our test services for 5G communications and system level testing. Our manufacturing organization did an excellent job managing the steep production ramp in the third quarter, most notably for advanced packaging in our factories in Korea. During the quarter, we added capacity and ran several new products while working through obstacles in the supply chain caused by COVID restrictions and supply constraints for material and equipment. We worked closely with our suppliers and customers and managed to keep the impact limited, although we experienced some revenue impact for our SIP business due to short supply of critical ICs. We expect the constraints in material and equipment supply to continue into next year. To mitigate risk, we have expanded agreements with several of our suppliers as well as most of our top customers to warrant a better supply assurance in future periods. In the U.S., we continue to monitor investment policies to incentivize domestic semiconductor manufacturing, and we are exploring a possible factory location to align with the U.S. investments of other major semiconductor companies. Our capex target for the year remains at $775 million, with major investments for wafer-level and flip-chip technology, SIP, and test capacity, as well as facility expansions. Now let me turn to our fourth quarter outlook. We are expecting the fourth quarter to be another solid quarter with revenue of $1.64 billion at the midpoint of our guidance. This represents a year-on-year increase of 20% for both the quarter and the full year. For 2021, we expect double-digit percentage growth in all end markets, and we remain confident in our strong market position and the overall demand environment. Megan will now provide more detailed financial information.