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Amkor Worth a Look

Posted on Wednesday, Jul 9th 2008

Amkor Technology (AMKR) provides semiconductor packaging and test services. Their products range from the traditional, “off-the-shelf” leadframe configurations to leading-edge chip scale, flip chip and system-in-package (SiP) solutions incorporating highly customized designs. The company is of interest because of the surge in SiP, Multi-chip Modules (MCM) and 3D designs in general that are bringing about the revolution in electronics miniaturization.

Amkor announced their Q1 results on April 30. Revenue of $699 million was sequentially down by 6.3% but grew 7.4% over the year. Q1 EPS of $0.36 was down by a substantial 22% while increasing 100% over the year. Both revenue and EPS were significantly higher than the market’s expectations of $685 million and $0.26, respectively.

Management described the sequential slowdown as a seasonal trend and attributed growth to the wireless communications and networking applications segment.

For Q2, the company expects sequential revenue growth of 1% to 3%, translating to revenue of $706-$720 million with an EPS of $0.32-$0.36.

The Street was looking for Q2 revenues of $700 million. The impressive Q2 outlook sent the stock soaring to $12.33 from $9.55, a 29% gain, before the results announcement. The stock is currently trading at $10.10 levels.

1yr AMKR

Amkor has been innovating in their products and recently announced the launch of a new “flip chip packaging technology which utilizes an advanced molding process technology that is expected to provide a number of design, cost and performance benefits.” They also seem to have gotten over the recently reported product shipment disruption and delay they were facing due to the newly implemented ERP system in the Philippines.

Amkor is a relatively overlooked stock that may be worth examining as one of the beneficiaries of the electronics miniaturization trend.

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