Amkor, ASE, JCET Post Mixed Results For Q3
ASE is expanding its capacity to meet demand. Amkor is building new facilities, while JCET acquired a plant.
By Mark LaPedus
Amkor, ASE and JCET this week posted mixed results for the third quarter of 2024. These companies provide third-party chip-assembly, IC packaging and test services for customers. Here’s what each company reported:
ASE Technology Holding
Taiwan’s ASE, the world’s largest outsourced semiconductor assembly and testing (OSAT) vendor, reported unaudited net revenues of NT$160,105 million (US$5 billion) for the third quarter of 2024, up by 3.9% year-over-year and up by 14.2% sequentially. Net income for the quarter totaled NT9,666 million, up by 10% year-over-year and up by 24% sequentially.
In the third quarter, ASE’s IC assembly, testing, and material (ATM) revenues were slightly better than originally anticipated. The growth was driven by strength in leading-edge advanced packaging as well as the seasonal ramps of some smartphone products.
Net revenues from packaging operations, testing operations, EMS operations, and others represented approximately 43%, 9%, 47%, and 1% of the total net revenues for the quarter, respectively. Overall, ASE’s factory utilization rates were 65% to 70% for the quarter.
For the fourth quarter, ASE’s ATM revenues should grow slightly quarter-over-quarter.
For ASE and others, there are other major factors that could impact the fourth quarter of 2024 and beyond. As reported, for some time, TSMC has experienced a shortfall in manufacturing capacity for its advanced packaging technology, especially for 2.5D. Reports have surfaced that TSMC will likely outsource some percentage of its 2.5D packaging to a pair of OSATs—Amkor and ASE. Both Amkor and ASE will likely benefit from the move, but that largely depends on several factors.
In a conference call, Joseph Tung, chief financial officer of ASE, addressed several other issues. Here’s what ASE’s CFO said based on the transcript of the call:
ASE’s utilization rates for Q3 and Q4
“I think the utilization will be very similar between the two quarters. Right now, for both packaging and testing, we're running at 65% to 70%,” Tung said.
Growth for advanced packaging at ASE
“We continue to be ahead of our target of doubling our revenue from leading-edge, both for packaging as well as test revenue. And going forward, I think we continue to see very, very strong demand coming in. And as we are scrambling to increase our capacity, we do see a very healthy pickup next year in terms of leading-edge. I think it's safe to say that we will be having over 10% of our revenue, (although) it's now more likely to be at low-teens of overall ATM revenue, coming from leading-edge,” Tung said.
General outlook for 2024 and 2025
“I think the general market this year is still not recovering very well. And I think going into next year in terms of the general market, (it) is still going to be a lukewarm year. I think the only bright spot at this point is really the leading-edge and/or an AI, HPC-related type of business. And so, this year, if you look at non-memory, and if you exclude AI or HPC, I think the whole market actually came down to some degree,” Tung said. “Going into next year, if you look at different analysis of different research reports, I think people's view on next year is really all over the map. So at this point, I think the situation is really very unclear.”
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Amkor Technology
U.S.-based Amkor, the world’s second largest OSAT, reported sales of $1.86 billion in the third quarter of 2024, up 27% sequentially and up 2% from a year ago. Net income was $123 million, or $0.49 per share, for the third quarter. This compares to $67 million, or $0.27 per share, in the previous quarter, and $133 million, or $0.54 per share, a year ago.
During the quarter, Amkor saw strong growth in the 2.5D packaging segment for AI applications. But the automotive, communications and industrial sectors were sluggish. “Amkor delivered third quarter revenue of $1.86 billion, up 27% sequentially, driven by strong demand for our advanced SiP technology to support the communications and consumer end markets,” said Giel Rutten, Amkor’s president and chief executive, during a conference call.
Here is Amkor’s guidance for the fourth quarter of 2024:
*Net sales of $1.60 billion to $1.70 billion
*Net income of $70 million to $110 million, or $0.28 to $0.44 per diluted share
*Full year 2024 capital expenditures of approximately $750 million
Here are three major things to watch for at Amkor:
U.S. facility
The U.S.’s share of worldwide semiconductor manufacturing fab capacity has declined from 37% in 1990, to 19% in 2000, and to 10% in 2022, according to the U.S. Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG). In addition, the U.S.’s share of worldwide packaging manufacturing capacity is less than 5%. A large percentage of the world’s chip and packaging manufacturing capacity is located in Asia.
In response, the U.S. government in 2022 launched a new program called the CHIPS and Science Act, which is designed to expand the production of chips and packaging in the U.S. Recently, the U.S. government has awarded select companies with grants and/or tax credits for use in building new fabs or expanding existing chip facilities in the U.S.
In 2024, Amkor signed a preliminary memorandum of terms with the U.S. Department of Commerce to receive proposed funding as part of the CHIPS and Science Act. The funding will help Amkor build a packaging plant in Peoria, Ariz. This will represent the first large-scale packaging plant in the U.S.
Under the CHIPS Act, Amkor will obtain up to $400 million in proposed direct funding, and access to $200 million in proposed loans. Amkor has secured 55 acres with intent to build a state-of-the-art manufacturing campus with more than 500,000-square-feet of clean room space. The first phase of the manufacturing facility is targeted to be ready for production within three years.
Amkor-TSMC deal
Amkor and TSMC recently signed a memorandum of understanding to collaborate and bring advanced packaging and test capabilities to Arizona.
Under the agreement, TSMC will contract turnkey advanced packaging and test services from Amkor in its planned facility in Peoria. TSMC will leverage these services to support its customers. The companies are defining the specific packaging technologies in the alliance. It may involve TSMC’s fan-out and 2.5D packaging technologies.
Other facilities
In 2021, Amkor announced plans that it would build a state-of-the-art packaging facility in Bac Ninh, Vietnam.
Then, in early 2024, Amkor and GlobalFoundries announced a strategic partnership at Amkor’s packaging facility in Porto, Portugal. Also in 2024, Amkor and Infineon announced plans to operate a packaging and test center at Amkor’s manufacturing site in Portugal. Operations are expected to commence in the first half of 2025.
“Our new Vietnam location started initial production in Q3 (of 2024) with anticipated volume ramps in the fourth quarter. In Portugal, we are expanding our technology portfolio for wafer-level processing, advanced flip-chip and test solutions,” Rutten said.
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JCET Group
China’s JCET, the world’s third largest OSAT, posted sales of RMB 9.49 billion (US$1.3 billion) for the third quarter, an increase of 14.9% year-on-year and 9.8% quarter-on-quarter. This was a record quarter in the company’s history.
After deducting non-recurring gains and losses, net profit was RMB 0.44 billion in Q3 2024, an increase of 19.5% year-on-year.
JCET’s acquisition of 80% equity of SanDisk (Shanghai), a factory for memory chip packaging, has been completed. This will expand its share in the memory market.