Semiconductor packaging and testing company Amkor Technology (NASDAQ:AMKR) missed analysts' expectations in Q1 CY2024, with revenue down 7.2% year on year to $1.37 billion. On the other hand, next quarter's outlook exceeded expectations with revenue guided to $1.45 billion at the midpoint, or 4.3% above analysts' estimates. It made a GAAP profit of $0.24 per share, improving from its profit of $0.18 per share in the same quarter last year.
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Amkor (AMKR) Q1 CY2024 Highlights:
- Revenue: $1.37 billion vs analyst estimates of $1.38 billion (0.9% miss)
- EPS: $0.24 vs analyst estimates of $0.11 ($0.13 beat)
- Revenue Guidance for Q2 CY2024 is $1.45 billion at the midpoint, above analyst estimates of $1.39 billion
- Gross Margin (GAAP): 14.8%, up from 13.2% in the same quarter last year
- Inventory Days Outstanding: 26, up from 24 in the previous quarter
- Free Cash Flow was -$82.07 million, down from $336 million in the previous quarter
- Market Capitalization: $7.54 billion
Operating through a largely Asian facility footprint, Amkor Technologies (NASDAQ:AMKR) provides outsourced packaging and testing for semiconductors.
Semiconductor ManufacturingThe semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
Sales GrowthAmkor's revenue growth over the last three years has been unimpressive, averaging 7.7% annually. This quarter, its revenue declined from $1.47 billion in the same quarter last year to $1.37 billion. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Amkor had a difficult quarter as revenue dropped 7.2% year on year, missing analysts' estimates by 0.9%. This could mean that the current downcycle is deepening.
Amkor may be headed for an upturn. Although the company is guiding for a year-on-year revenue decline of 0.5% next quarter, analysts are expecting revenue to grow 4.4% over the next 12 months.
Product Demand & Outstanding InventoryDays Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Amkor's DIO came in at 26, which is 4 days below its five-year average. These numbers show that despite the recent increase, there's no indication of an excessive inventory buildup.
Key Takeaways from Amkor's Q1 Results We were impressed by Amkor's strong gross margin and inventory improvements this quarter. We were also glad its operating margin and EPS beat analysts' expectations, driven by better-than-expected performance in its advanced product segment.
Looking ahead, the company's revenue and EPS guidance for the next quarter beat estimates as it expects demand to return after a multi-quarter industry downturn.
Overall, this quarter's results still seemed fairly positive and shareholders should feel optimistic. The stock is up 6.9% after reporting and currently trades at $33.7 per share.
