Amkor CEO Says Slower 25% Computing Growth Was Not About Supply — A 300-Step Line Takes Time To Fill
Computing revenue rose 25% from the prior quarter; the CFO guided communications down high single digits and consumer into the mid-teens.
Amkor Technology, which provides outsourced chip packaging and testing, grew computing revenue 25% sequentially in the third quarter, and CEO Kevin Engel said on the company's earnings call that supply limits were not the reason it fell short of the roughly 30% a Morgan Stanley analyst recalled from last quarter. He blamed the time it takes to load a production line with more than 300 steps.
A line that takes time to fill
Asked by the Morgan Stanley analyst whether supply constraints explained the gap, Engel said, "I wouldn't necessarily say supply side." The HDFO parts behind the flagship CPU program run "over 300 steps" in the process, he said, and it "took a little bit longer to really load the line to the level we wanted to."
CFO Megan Faust said fourth-quarter computing revenue should rise low double digits from the third quarter, which she said would mean growth of over 50% year on year. Engel said computing should grow more than 30% in 2026, with data center demand offsetting soft PC sales, and a similar or higher rate in 2027.
Phones and wearables drag
Communications revenue fell 8% sequentially in the third quarter. Faust said component shortages hitting premium smartphones and IoT wearables added a headwind, and she guided fourth-quarter communications down high single digits sequentially. Consumer, which rose 10% in the third quarter, is expected to fall more than seasonally, into the mid-teens percent.
Answering a Needham analyst, Engel said memory pricing and availability affected both phones and PCs. Android had a harder time adjusting than iOS, he said, likely because low-tier phones absorbed cost changes worse. In PCs, the shift from x86 to ARM is helping offset some of the pain.
Margins up, spending climbing
Third-quarter revenue was $1.99 billion, up 5% sequentially. Gross margin was 18.3%, up 400 basis points (four percentage points) from a year earlier, driven mainly by a richer mix of advanced packaging. Net income was $191 million, or 76 cents a share.
Fourth-quarter revenue is guided to $1.9 billion to $2 billion, with earnings of 65 to 75 cents a share. Faust said 2026 capital spending is narrowing to about $2.5 billion and will step up in 2027 for facilities in Arizona, Korea and Vietnam. Customer advance payments from a dozen customers since 2025 are expected to fund much of it.
Apple's launch timing
Asked about Apple's new launch cadence, Engel said it is too early to tell how it will play out for 2027, though he expects it to change the typical seasonality of communications.
Amkor will give specific 2027 capital spending guidance on its fourth-quarter call in February, Faust said.
Sources
- amkr-20261026 — sec.gov
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