Amkor Technology, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This annual filing provides full-year results; it does not provide a clear standalone fourth-quarter financial summary.
Business context
Amkor provides outsourced semiconductor packaging and test services to semiconductor companies and other customers. Its markets include communications, consumer, automotive and industrial, and computing. Advanced Products include flip-chip and wafer-level services; Mainstream Products primarily include wirebond services.
Financial performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net sales | $6.138 billion | $5.051 billion |
| Gross profit / margin | $1.226 billion / 20.0% | $901 million / 17.8% |
| Operating income / margin | $763 million / 12.4% | $457 million / 9.1% |
| Net income attributable to Amkor | $643 million | $338 million |
| Diluted earnings per share | $2.62 | $1.40 |
| Cash from operating activities | $1.121 billion | $770 million |
| Capital expenditures | $780 million | $553 million |
| Free cash flow (company-defined, non-GAAP) | $345 million | $221 million |
Sales rose 21.5%, with growth across all end markets. Management attributed the largest contribution to communications, led by further adoption of 5G smartphones; automotive and industrial recovered from pandemic-related weakness. Gross-margin expansion was primarily driven by higher volume, partly offset by added capacity costs and a greater mix of products with higher material costs. Operating-margin improvement also reflected disciplined cost control.
Advanced Products generated $4.409 billion, or 71.8% of sales, versus $3.604 billion, or 71.4%, in 2020. Advanced SiP module sales were approximately $2.280 billion, up from $1.885 billion. The company reclassified memory sales into Advanced Products and recast prior-year product-group figures.
Liquidity, debt and capital allocation
At year-end, cash and cash equivalents were $827 million and short-term investments were $252 million, or $1.078 billion combined. Total debt was approximately $1.138 billion net of debt discounts and issuance costs; $153 million was current. The company reported $250 million available under its Singapore revolving facility and $316 million of total availability under foreign revolving facilities, plus $222 million available under term-loan facilities for working capital and capital expenditures. Management said liquidity sources were expected to cover requirements for at least the next 12 months and reported compliance with debt covenants.
Capital expenditures were $780 million in 2021. The company expected approximately $950 million in 2022 capex, including about $100 million for its planned Vietnam factory. It paid $51 million in dividends in 2021 and raised the quarterly dividend 25% to $0.05 per share in November. No shares were repurchased under the stock repurchase program during the fourth quarter.
Other obligations include $460 million of purchase commitments, of which $433 million was due within 12 months; $73 million in Korean severance-plan obligations; and $55 million in foreign defined-benefit pension obligations. These amounts are distinct from reported debt.
Outlook, risks and unusual items
- Management expected industry-wide supply constraints to persist throughout 2022. It forecast 2022 capital expenditures of approximately $950 million, subject to business conditions, project timing, capacity needs, equipment lead times and financing.
- Construction of the Bac Ninh, Vietnam facility was expected to begin in 2022, with high-volume manufacturing targeted for mid-2023. The initial investment estimate was $200–$250 million.
- Principal risks include semiconductor-industry cyclicality, high fixed costs and dependence on capacity utilization; short-term customer commitments and limited backlog; pricing pressure; supply and equipment constraints; customer concentration; and pandemic-related disruptions. The ten largest customers accounted for 63% of 2021 sales; Apple represented 13.7%.
- International operations expose the company to foreign-exchange, geopolitical, regulatory and natural-disaster risks. Management’s sensitivity analysis estimated that a 10% appreciation of foreign currencies against the U.S. dollar would reduce 2021 operating income by approximately $121 million.
- The effective tax rate was 9.7%, compared with 11.9% in 2020. Tax holidays provided an estimated $56.7 million tax benefit in 2021; expirations and tax-authority challenges could raise future tax expense. Tax accounting was identified as a critical audit matter.
- Japan factory-consolidation restructuring was completed in the second quarter of 2021; the company recorded $2.9 million of related charges in 2021. Management stated that ordinary-course legal claims were not expected to have a material adverse impact, while noting outcomes could change.
Investor verification priorities
- Review quarterly filings for standalone Q4 results and whether supply constraints, utilization and product mix affected margins after year-end.
- Track 2022 capex execution, funding, returns on investment and the Vietnam construction and production schedule.
- Assess customer concentration and any changes in major-customer orders, pricing or sourcing decisions.
- Monitor debt maturities, covenant restrictions, purchase commitments, severance and pension funding needs, and the sustainability of dividends.
- Verify tax-holiday status, open tax examinations and potential changes in effective tax rate; review the filing’s full legal-contingency disclosures for developments.