Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the Amcor Technology Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is Alex, 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 fourth quarter and full year 2021 earnings conference call. Joining me today are Gil 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-K. And now, I would like to turn the call over to Hiel.

Thanks, Jennifer. Good afternoon, everyone, and thank you for joining the call today. MCOR delivered outstanding results in the fourth quarter, achieving record revenue and profitability. Revenue of $1.72 billion and EPS of 88 cents are all-time records and were above the high end of guidance. Continued momentum drove excellent performance in all end markets. 2021 was an exceptional year for mCore. We achieved our highest ever revenue of over $6.1 billion, adding nearly $1.1 billion to our previous record in 2020. We set new records in all end markets, with each growing robust double digits versus last year. High factory utilization and disciplined cost control resulted in excellent profitability, generating an all-time high EPS of $2.62, up more than 85% from last year. Our solid position in key growth markets, together with our proven execution, positions MCOR well to deliver strong financial performance in 2022 and beyond. Demonstrating confidence in our business outlook, we increased our quarterly dividend by 25% in November. Throughout the year, we successfully navigated the challenges brought on by the ongoing pandemic, and the MCOR team demonstrated resilience and focus to achieve major milestones. We deepened the cooperation with lead customers and foundry partners to introduce innovative advanced packaging technology. Revenue for advanced products represents over 70% of our business. Significant growth was driven by new product introductions, primarily in advanced SAP Wave 11 flip-chip technology supporting 5G communication, high-performance computing, automotive, and IoT applications. Our mainstream business also showed a solid year-on-year increase through continued recovery in the automotive and industrial markets. Now let me review the current dynamics in our end markets. Our communications business grew 22% for the full year, driven by strength in the smartphone market, particularly the transition to 5G smartphones. For the latest smartphone models in both the Android and the iOS ecosystems, we introduced a broad range of new technologies, most notably technology enabling RF and sensor integration utilizing our advanced SAP platform and next-generation 5G processors utilizing our UltraTIN package-on-package solution. With Emco's leadership position across 5G smartphones, we expect this market to remain an important growth driver and we plan to continue investing in technology and manufacturing scale to support our customers. Strong recovery in the automotive and industrial market drove 28% growth for the year. Continued supply constraints, especially in wafer and substrate supply, dampened even further growth. The strong performance of our automotive business is supported by a solid recovery in our mainstream automotive portfolio. notably growth in high-power silicon carbide devices for the expanding EV market. We also experienced strength in advanced products with significant ramps of new ADAS and infotainment processors relying on large body size flip chip technology in our advanced packaging factories in Korea. Although we foresee some short and mid-term constraints in the automotive supply chain, we believe the long-term growth drivers in this market remain in place. with the expected continued expansion of semiconductor content per car. Our consumer business increased 12% for a year, supported by diversification of our product and customer portfolio in IoT wearables and strength in the traditional consumer products. In the consumer wearable market, we utilize our advanced SAP assembly and test platform that offers a turnkey solution to integrate over 80% of the electronic components into a single system and package. We expect this market to further expand and our overall product and customer pipeline for advanced SAP solutions for consumer products remains strong. Revenue in the computing market continued a robust growth trajectory with full year growth of 28%. We experienced solid performance in all computing applications and a further strengthening of our product pipeline. Like the automotive market, some further upside was tempered by constraints in material supply, especially high-end substrate materials. Going forward, we believe the computing market is an important driver for growth. Increasing data traffic across networks and data centers is accelerating the need for high-performance computing, utilizing the latest silicon nodes and enabled by advanced packaging technology. With our proven technology portfolio and established partnerships with lead customers and foundries, we believe mCore is well positioned to capitalize on opportunities in this growing market. And we plan to continue our investments in technology and manufacturing scale for computing applications. Finally, our test business grew 17% compared to 2020. We are broadening the scope of our test services in areas like 5G communications, computing and system level testing to enhance turnkey support to our customers. Our global manufacturing organization remains focused on operational excellence to serve our customers while maintaining industry leading quality standards and high factory utilization. Working through supply chain constraints for material and components required extraordinary flexibility to meet customer demands by optimizing factory planning and managing new product introductions. We expect the supply constraints to continue throughout 2022 until new capacity for substrates and critical silicon nodes comes online. In November, we announced our plans to expand our global factory footprint by building a state-of-the-art factory in Bac Ninh, Vietnam. The first phase of this factory will focus on advanced SIP technology. This is a strategic long-term investment in geographical diversification and factory capacity expansion. Utilization across our advanced packaging locations is high, and we expect the strong market demand for these technologies to continue. Our Viadam factory project is on schedule to start pilot production in the second half of 2023. This will provide key capacity to support future growth. In the US, we continue to monitor investment policies to incentivize domestic semiconductor manufacturing. Our capex for 2021 was $780 million. We made significant investments in advanced technologies like wafer-level packaging, flip chip technology, advanced SIP and test, as well as in facility expansion. For 2022, we expect to increase CapEx to around $950 million in order to capture new opportunities for a strong demand for our advanced package technologies. Our 2022 CapEx guidance of $950 million includes around $100 million for the construction of our new Vietnam factory. Now let me turn to our first quarter 2022 revenue outlook. We are expecting another solid quarter with revenue of $1.55 billion at the midpoint of our guidance. This represents a year-on-year increase of 17%. The full year 2022 is shaping up as another growth year for mCore. Our key growth drivers remain in place. 5G deployment, high-performance computing, IoT wearables, and automotive electronics are all expected to drive strong demand for our services. With Amcor's differentiated technology portfolio, global manufacturing scale, and broad customer base, we believe we can outperform the semiconductor market in 2022. Megan will now provide more detailed financial information.