Amkor Technology, Inc.

Good day, ladies and gentlemen, and welcome to the AMCOR Technology Third 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 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 2023 earnings conference call. Joining me today are Gil Rutin, 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 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'll turn the call over to Gil.

Thank you, Jennifer. Good afternoon, everyone, and thank you for joining the call today. mCore delivered solid results in the third quarter, with both revenue and profitability at the high end of guidance. Revenue of $1.82 billion was up 25% sequentially, driven by the growth in advanced packaging, supporting the launch of premium-tier smartphones. Year-to-date, revenue of $4.8 billion was down 8% versus prior year, reflecting strong outperformance compared to an estimated semiconductor industry decline of over 15% in that same period. Although we observe improvements in certain areas like smartphones and PCs, overall macroeconomic conditions continue to dampen end market demand and inventory levels remain elevated in some markets. Looking forward, we remain confident that the secular growth drivers for the industry remain in place and that MCOR is well positioned to outperform the industry with our strategic focus on advanced packaging and our broad geographic footprint. Now let me review the dynamics in each of our end markets. Revenue within our communication end market has remained strong throughout this industry cycle, despite overall smartphone units projected to decline for the second year in a row. Third quarter revenue set a new record. crossing the $1 billion mark with a sequential growth of 69% and a year-on-year growth of 3%. mCore holds a leading position throughout premium-tier smartphones, building our technology expertise and our proven track record as a trusted partner for co-developing innovative solutions and delivering operational excellence. Our advanced packaging technology supports a wide range of applications and functionality throughout the phone. With our advanced SIP technology for heterogeneous integration, we enable continuous innovation in form factor, functionality, and performance. Devices supporting 5G connectivity, RF, camera applications, touch and display controllers, memory and sensors utilize advanced SIP technology. which drove the communication revenue to new record levels. EMCOR's broad technology portfolio, scale, and focus on operational excellence are key drivers for further growing our footprint in premium-tier smartphones. Overall revenue from the automotive and industrial end market was flat sequentially, as well as year-to-date. But year-to-date revenue for advanced packaging in this market is up 15% versus the same period last year. Although we have observed some near-term variability in certain applications with ongoing inventory control measures by certain customers, we expect that the trend of increasing semiconductor content per car will continue. Advanced driver assistance systems generate growth in multiple applications, from cameras and high-performance processors to sensors like radar and lidar. Growth in the EV segment is leading innovation in electrification, especially with the introduction of wideband gap materials like silicon carbide and gallium nitride. These materials enable improvements in power efficiency and charging infrastructure. As the leading automotive OSET, we are strategically expanding our capacity and technology base for automotive solutions notably in our factories in Europe, Japan, and Korea, in support of regional supply chains for critical automotive semiconductors. In these regions, we have built a pipeline for future growth by partnering with lead customers for new applications utilizing advanced technology portfolio. Mixed near-term dynamics impacted our revenue in the computing end market, resulting in a sequential decline of 14%. Strong demand for leading-edge advanced packaging technology supporting high-performance computing devices for AI and other data center applications was offset by product lifecycle changeovers and excess inventory corrections in more mature computing segments. EMCR is leading the OSAT supply chain with the deployment of 2.5D technologies. integrating high bandwidth memory and ASIC on interposers, combined with modular touch on substrates. To support the strong demand now and in the future, we are optimizing line utilization and expect capacity to double by the end of the year. And with our planned investments coming online by Q2 next year, we will have more than tripled our capacity compared to the second quarter of this year. Emcor is well positioned to capitalize on opportunities in the computing market with our broad advanced packaging portfolio and established relationship with lead customers and foundries. Revenue within the consumer end market remains stable sequentially. The headwinds impacting this market continue to dampen demand. Reduced consumer spending, access inventory, and product lifecycle changeovers in the IoT wearable market are still holding back a full recovery. Beyond this cycle, we expect the IoT wearable market will diversify and grow, and we are expanding capacity and investing in our advanced SAP technology to drive manufacturing scale and innovation. We are engaged with multiple customers across a diverse set of products ranging from audio devices, smartwatches, and the emerging AR VR experience. Within our new Vietnam location, we are qualifying new advanced SAP consumer products that we expect to ramp to high volume in the second half of 2024. In the third quarter, our manufacturing organization demonstrated operational excellence and supply reliability to support a significant advanced packaging ramp within premium-tier smartphones. Geopolitical dynamics continue to impact the semiconductor supply chain. With our broad geographic footprint across multiple countries in Asia and in Europe, Emcor is uniquely positioned to support our customers with reliable and cost-effective manufacturing. We are actively working with our customers on programs that will support diversifying and de-risking their supply chains. In the U.S., we are progressing our discussions to establish an advanced packaging and test facility. We have submitted our pre-application for chips funding and are actively working with customers and partners on long-term commitments to secure a U.S. manufacturing supply chain. On October 11th, we held a grand opening ceremony for our Vietnam manufacturing sites. The Bac Ninh campus further diversifies and strengthens our broad geographic footprint, and qualifications of new programs is progressing for advanced SIP and memory technology. Vietnam is an attractive location for our customers. We believe that the evolving local semiconductor ecosystem coupled with MCOR's advanced packaging scale and expertise, will deliver a cost-effective and reliable manufacturing location. Now let me turn to the fourth quarter outlook. With the ongoing uncertainties in the market, we are observing several customers taking a prudent position on inventory to close out the year. With this backdrop, we are expecting the fourth quarter to be softer and seasonal. with revenue of $1.675 billion at the midpoint of guidance. Although it is taking longer than anticipated to recover from this industry cycle, we believe that the secular growth drivers for the semiconductor industry remain in place. And with our leading technology portfolio, scale, and global footprint, Emcor is poised to accelerate as the market recovers. With that, I will now turn the call over to Megan to provide more detailed financial information.