Amkor is amicable about helping with microchip packaging and testing. The company claims a top spot in contract chip assembly and testing services for semiconductor manufacturers. Serving various technology sectors, it handles chips that end up in products such as PCs, handheld devices, TVs, gaming machines, routers, automobiles, and in communications and industrial settings. The company's some 225 customers worldwide include big semiconductor companies and electronics makers, such as Altera, Broadcom, IBM, QUALCOMM, Texas Instruments, and Toshiba. Customers in the US comprise about 40% of sales.
Amkor maintains a geographically diversified business, with facilities in China, Japan, the Philippines, Singapore, South Korea, Taiwan, and the US that cover R&D, engineering, and production. The company's two largest sales regions outside the US are Singapore (one-fifth of revenue) and Japan (12%).
After seeing a year of recovery, in 2011 Amkor saw weaknesses in the consumer, networking, and computing markets, which outweighed growth in the communications sector for smartphones and tablets. That drove sales down by 6% to $2.8 billion. An increase in the cost of gold (one of the company's key materials) and a labor force dealing with lower demand drove cost of sales up, contributing to the net income slump of 60% to about $90 million. The sliding revenues only happened overseas, however, as sales to US customers grew 22% to $1.1 billion.
Amkor gets its critical production materials - leadframes, laminate substrate, and gold wire - from a limited number of suppliers. The company's primary packaging equipment are wirebonders and die bonders, but it also uses various others, such as mold, die attach, and wafer bumping. Much of its equipment can be retooled for use in a variety of packaging, though advanced equipment is harder to adapt than traditional equipment. Amkor's testing equipment is usually the more capital intensive, so the company focuses on standardized tester platforms.
As a company that helped pioneer the chip packaging industry, Amkor follows a strategy of being a leading technology innovator. It employs about 400 R&D personnel to design and develop cutting-edge packaging formats and technologies to help the company stay among the leaders. Amkor operates in a naturally competitive, cyclical industry. Its business is established largely on high-volume manufacturing processes and in developing new, broad, and tailored packaging and test technologies. Its production is typically heavier in the second half of the year because of consumer buying patterns of related products both at home and abroad. Consequently, Amkor's customers typically pull back on orders after the major consumer buying season, at the end of the year.
Amkor received nearly 30% of 2011 revenues from two customers: QUALCOMM and Texas Instruments. Although Amkor didn't specify which of these clients it was, one of them accounted for 30% of test sales. The company's top 10 customers bring in more than 60% of sales, with the top 25 representing nearly 85%. Other customers included in that top 25 are Analog Devices, Freescale Semiconductor, Micron Technology, Panasonic, Samsung Electronics, and Sony. Amkor also has to compete with some of its clients, as they maintain some of their own packaging capabilities.
Founder and chairman James Kim and his family own more than 60% of Amkor Technology, with Kim himself owning about a quarter. – less