Amkor Expects $1.9 Billion In Customer Prepayments Within A Year As Capital Spending Drains Free Cash Flow
Customer advances are becoming a second funding source for Amkor's $2.5 billion build-out, alongside debt, as nine-month free cash flow stays negative.
Amkor Technology, which provides outsourced semiconductor packaging and test services, now expects about $1.9 billion of customer advance payments over the next 12 months, according to its quarterly report filed Tuesday. Three months earlier the company had guided to about $300 million over two years, and it is spending far faster than it earns: free cash flow for the first nine months was negative $319.1 million.
From $300 million to $1.9 billion
The prior quarter's filing projected about $300 million of advances over two years, all requiring standby letters of credit, which are bank guarantees backing the customer's money. The new filing says only $200 million of the $1.9 billion will need one.
In October, Amkor also signed an advance payment agreement with a customer covering about $1.3 billion expected in 2027. The earlier filing had cited a $1.5 billion agreement for 2027.
Contract liabilities, which hold customer money received ahead of work, rose to $547.6 million at September 30 from $393.0 million at June 30 and $390.8 million at the end of 2025.
Capital spending outruns cash flow
Amkor spent $1,236.8 million on capital projects in the first nine months, against $472.5 million a year earlier, mostly on advanced packaging and test equipment and its Arizona facility. Operating cash flow rose to $868.3 million from $451.1 million, but free cash flow came in at negative $319.1 million, versus negative $13.2 million a year before.
Construction contract commitments rose to $1,951 million from $991 million. The company expects about $2.5 billion of capital spending for 2026.
Total debt stood at $2,467.2 million after a $1.15 billion convertible note sale in May. Amkor also repurchased 0.7 million shares for $32.3 million during the nine months.
Sales flat, margins wider
Third-quarter sales edged up 0.2% to $1,990.6 million as communications sales fell 28%, which the company attributed to timing of moving system-in-package programs from Korea to Vietnam. Computing and automotive and industrial sales each grew 37%. Gross margin rose to 18.3% from 14.3% a year earlier.
Amkor shares rose about 7% to $39.37 in Tuesday trading, for a market value of $9.1 billion.
Whether the roughly $1.9 billion arrives on schedule will show up in contract liabilities in the next quarterly report.
Sources
- 10-Q Filing — Amkor Technology (AMKR) — SEC EDGAR
- 10-Q Filing — Amkor Technology (AMKR), Q2 FY2026 filed 2026-07-28 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, amkr9302026erex-991.htm) — Amkor Technology, filed 2026-10-26 — SEC EDGAR
- These Analysts Slash Their Forecasts On Amkor Technology After Q3 Results — benzinga.com
- Amkor Technology: Q3 Earnings Snapshot | 9news.com — Associated Press
- Is Amkor Technology (AMKR) Undervalued Following Mixed Q3 Results And Weak Guidance? — Yahoo Finance
- Amkor inks dozen customer deals for Arizona packaging plant - Phoenix Business Journal — bizjournals.com
- Amkor Q3 Earnings Call Highlights AI Growth and Capacity Expansion — Yahoo Finance
