Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the AMCOR first quarter 2022 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. Ms. Ju? Please go ahead.

Thank you, operator. Good afternoon, everyone, and thank you for joining us for AMCOR's first quarter 2022 earnings conference call. Joining me today are Hjul 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 U.S. 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, 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. MCOR delivered solid results in the first quarter, with both revenue and profitability at the high end of guidance. Revenue of $1.6 billion and EPS of 69 cents are first quarter records, reflecting year-on-year increases of 20% and 40% respectively. Continued strong demand for our advanced packaging solutions, particularly in the communication end market, drove better-than-expected results. Now let me review the current dynamics in our end markets. Our communications business grew 22% year-on-year, driven by demand for advanced SAP and flagship technology for the latest 5G processors and peripheral devices in new smartphone models. Some weakness in the China market was offset by strength in the high-end smartphones, as well as the spring launch of new models. With EMCOR's leadership position across multiple semiconductor devices and 5G phones, we expect the ongoing proliferation of 5G to remain an important growth driver. Solar performance in the automotive and industrial markets drove 15% growth compared to first quarter 2021. In the automotive supply chain, we observe an increased attention to risk management. Both semiconductor suppliers as well as tier one companies are exploring multiple sourcing arrangements as well as options to establish regional supply chains. With MCOS Manufacturing Alliance in the main automotive geographies, we are well positioned to support our customers in implementing these changes. In Korea, we have a strong automotive manufacturing hub for advanced packaging. In Japan, we offer a well-established manufacturing base supporting a broad range of automotive solutions, including emerging silicon carbide power products for EV. And in Europe, we are expanding our technology portfolio in our Portugal factory, where we have started production of automotive sensors using wafer-level fan-out and MEMS technology. In all locations, we are working with lead automotive customers on their next-generation products, and we have multiple new product introductions ramping this year. With our global manufacturing footprint and broad technology offering, we expect ongoing strength in this market. ADAS, electrification, and infotainment and telematics will drive continued expansion of semiconductor content per car. As the leading automotive OSET, Emcor has a strong track record of partnering with customers who demand automotive-grade quality and supplier reliability. Automotive-qualified manufacturing lines are a critical differentiator, and we are proud to have received recognition from top automotive companies for our commitment to quality and supplier reliability. Our consumer business increased 11% year-on-year, supported by strength in traditional consumer product and a broad portfolio of IoT wearables. Our advanced SAP assembly and test platform offers a turnkey solution for the IoT wearable market, and our high-volume, cost-effective flip chip technology offers excellent value to customers for traditional consumer applications. We expect the consumer market to further expand, and our overall product and customer pipeline remains strong. IoT wearables continues to be an important driver for growth, although we expect that this emerging product category is more prone to quarterly variability due to supply chain constraints and varying product life cycles. Continued strong momentum in the computing market drove year-on-year growth of 36%. the 10th consecutive quarter of sequential growth. We achieved robust growth in all compute applications. In data centers, introduction of AI, as well as the trend of increased data traffic, is driving investments in high-performance computing, utilizing the latest silicon nodes with advanced packaging technology. We see similar technology requirements in the wired and wireless infrastructure market, notably in support of 5G infrastructure. Although the PC market is softening, we observe a trend to ARM-based PC architectures. In this emerging PC segment, mCore is able to support our customers with a proven multi-chip modular solution. With our broad advanced packaging portfolio and established partnerships with lead customers and foundries, we believe we are well positioned to capitalize on opportunities in these growing computing applications. and we continue investing in advanced technology and manufacturing scale for this market. Finally, our test business grew 14% compared to first quarter 2021. We have established a broad test expertise by supporting both industry leaders as well as emerging companies in new application areas. Through early engagement in customers' product life cycles, we are able to define test strategies and intelligent equipment selection to provide differentiated test solutions. We are broadening the scope of our test services in areas like 5G communications, computing, and system-level testing to enhance this turnkey support to our customers. Our manufacturing organization continues to demonstrate mCore's commitment to quality and supply reliability to our customers. The ongoing semiconductor supply challenges require diligence and flexibility from our global organization to meet customer requirements while maintaining industry-leading quality standards and high factory utilization. In late March, the Chinese government mandated a COVID-19 lockdown of our Shanghai factory. Demonstrating the utmost in flexibility, our manufacturing team is closely cooperating with local authorities and customers to minimize the impact and resume regular operations. We anticipate that our Shanghai factory will return to normal production during the second half of the quarter. Our guidance reflects this, and as we work through this dynamic situation, we are doing what we can to support our people and keep them safe. We are leveraging our global factory network to support our customers and we work with authorities to enable a controlled restart of production. In addition to managing these supply chain challenges, the Emcor team continues to expand our global manufacturing footprint to ensure we can capture future growth opportunities and meet expanding customer requirements. Besides supporting a changing automotive supply chain, we are also expanding our footprint to offer customers a broader geographical diversification. In November 2021, we announced our plans to expand our global factory footprint by building a state-of-the-art factory in Bac Ninh, Vietnam. The project is on schedule to start pilot production in the second half of 2023. When completed, our Bac Ninh manufacturing campus will offer our customers an attractive, large-scale, cost-effective manufacturing location with a diversified technology portfolio. Now let me turn to our second quarter revenue outlook. We have included an estimated revenue impact for the Shanghai lockdown of around $120 million in our guidance, assuming that the situation continues to improve. Including this impact, we are expecting second quarter revenue of $1.52 billion at the midpoint of our guidance. This would represent a year-on-year increase of 8%. Megan will now provide more detailed financial information.