Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the Amcor Technology second quarter 2023 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 Zhu, head of investor relations. Ms. Zhu, please go ahead.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for AMCOR's second quarter 2023 earnings conference call. Joining me today are Hiel 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 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.

Thank you, Jennifer. Good afternoon, everyone, and thank you for joining the call today. mCore delivered second quarter performance in line with our expectations with revenue of $1.46 billion and EPS of 26 cents. Demand for advanced packaging increased in the second quarter, notably demand for consumer wearable products and for high performance computing devices. For the first half of 2023, revenue of $2.9 billion was down 6% versus the first half of 2022. better than the semiconductor industry estimated decline of over 20% in that same period. Overall, business continues to be dampened by challenging macroeconomic conditions, high inventory, and weak end market demands. With our technology leadership and broad geographic footprint, Emcor is outperforming the industry and is well positioned to capitalize on industry megatrends that we expect to propel growth beyond the current cycles. Now let me review the dynamics in each of our end markets. Revenue from our communications end market decreased 11% sequentially and increased 7% year-on-year. Inventory consumption is taking longer than anticipated due to weaker end market demand, especially in the Android supply chain. Smartphone units declined around 10% in 2022, and are expected to decline a further 5% this year. We have a leadership position in advanced packaging throughout premium-tier smartphones, and we expect semiconductor content to continue to increase to support new features and functionality. This, combined with our continued investment in technology, in close cooperation with key customers, positions us well to outperform the market and to accelerate when the industry exits the current cycle. In the first half of 2023, revenue from the automotive and industrial end market increased 5% compared to the first half of 2022, with advanced packaging revenue up 30%. In the second quarter, revenue from conventional automotive and industrial applications softened due to inventory control by certain customers. In the quarter, ADAS and electrification applications remained resilient at record quarterly revenue levels. Despite near-term variability, semiconductor content per car is expected to continue to increase, driven by the proliferation of ADAS, electrification, infotainment, and telematics. Emcor is the leading automotive OSET and has multiple decades of experience meeting the stringent requirements of the automotive industry. Our qualified manufacturing lines in multiple geographies, such as Korea, Japan, and Portugal, and our broad technology portfolio ranging from advanced packaging, wire bond, and power are important differentiators to our customers. Revenue from the computing end market represents 20% of total revenue and increased 15% sequentially and 5% year-on-year. Increasing demand for leading-edge advanced packaging supporting high-performance computing devices for AI applications led to this sequential growth. As a technology leader, mCore is enabling the OSAT supply chain with the deployment of 2.5D heterogeneous integration technology, integrating high bandwidth memory and ASIC on interposers, combined with modular touch on substrates. In the computing market, we support leading customers in all areas of data centers and networks, ranging from CPUs, GPUs, memory, and AI accelerators to routers and switches. We continue to invest in the high-performance computing market, both in capacity and technology, to support customers with innovative solutions for next-generation devices. Revenue from the consumer end market increased 33% sequentially, but decreased 27% year-on-year. Advanced SIP for wearable devices increased from a trough in the first quarter as we observed first signs of inventory reductions. Consumer IoT devices require miniaturization at high levels of integration into small form factors. These IoT devices are increasingly incorporating wireless connectivity sensors and devices for data protection, combined with ultra-low power requirements. Achieving the form factor and power profile requires advanced system and package solutions. Although we observe multiple near-term headwinds impacting the consumer market, including product lifecycle changeovers, reduced consumer demand, and excess inventories, We expect that beyond the current industry cycle, our system and package expertise positions as well for growth. In the first half of 2023, our manufacturing organization continued to demonstrate operational excellence across our factories, focusing on quality and supply reliability while diligently managing cost at lower capacity utilizations. Geopolitical dynamics continue to impact the semiconductor supply chain. Emcor is uniquely positioned to support our customers with reliable and cost-effective manufacturing across the geographically diversified manufacturing footprint. Investments in our new Vietnam factory continue as planned, with the goal to be production-ready late this year. We have established silicon carbide capabilities in Japan, and are expanding these capabilities to multiple other factories, including Portugal. We are also expanding our wafer processing advanced flip chip and test technology in Portugal in close cooperation with foundry partners to support a seamless European semiconductor supply chain. In Korea, we are expanding capacity for 2.5D technology in support of customers ramping devices for AI applications. In the US, we continue to be actively engaged in discussions with customers, partners, and economic development agencies to establish a U.S. manufacturing facility. Now let me turn to our third quarter outlook. We expect performance to improve from the first half, with revenue of $1.775 billion at the midpoint of guidance. This represents sequential growth of 22% driven by advanced packaging in support of the full launch of premium tier smartphones. With that, I will now turn the call over to Megan to provide more detailed financial information.