UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2021
Commission File Number 000-29472
Amkor Technology, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
23-1722724
(I.R.S. Employer
Identification Number)
2045 East Innovation Circle
Tempe, AZ 85284
(480) 821-5000
(Address of principal executive offices and zip code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.001 par value
Trading Symbol
AMKR
Name of Each Exchange on Which Registered
The NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021, based upon the closing price of the
common stock as reported by the NASDAQ Global Select Market on that date, was approximately $2,405 million.
The number of shares outstanding of each of the issuer’s classes of common equity, as of February 11, 2022, was as follows: 244,613,506 shares of Common Stock,
$0.001 par value.
Portions of the registrant’s Proxy Statement relating to its 2022 Annual Meeting of Stockholders, to be filed subsequently, are incorporated by reference into Part III of this
Report where indicated.
DOCUMENTS INCORPORATED BY REFERENCE:
Table of Contents
TABLE OF CONTENTS
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
PART IV
Forward Looking Statements
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All references to “Amkor,” “we,” “us,” “our” or the “Company” in this Annual Report on Form 10-K (this “Form 10-K”) are to Amkor Technology, Inc.
and its subsidiaries. We refer to the Republic of Korea, which is also commonly known as South Korea, as “Korea.” Amounts preceded by ¥ are in
®
Japanese yen and ₩ are in Korean won. Amkor , Amkor Technology , ChipArray , FusionQuad , J-Devices
, MicroLeadFrame , TMV , and SWIFT ,
among others, are trademarks of Amkor Technology, Inc. All other trademarks appearing herein are held by their respective owners. Subsequent use of the
above trademarks in this Form 10-K may occur without the respective superscript symbol ( and
) in order to facilitate the readability of this Form 10-K
and are not a waiver of any rights that may be associated with the relevant trademarks.
TM
TM
®
®
®
®
®
®
®
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This Form 10-K contains forward-looking statements within the meaning of the federal securities laws, including but not limited to statements regarding
(1) the amount, timing and focus of our expected capital investments in 2022, including expenditures in support of our announced expansion into Vietnam
and our advanced packaging and test equipment, (2) our ability to fund our operating activities and financial requirements for the next twelve months, (3)
the effect of changes in revenue levels and capacity utilization on our gross margin, (4) the costs attributable to compliance with environmental laws and
regulations or green initiatives, (5) the impact of the Covid-19 pandemic on our operations, financial results and supply chain, (6) the focus of our research
and development activities, (7) the anticipated impact of tax law changes in the jurisdictions in which we operate, (8) the grant and expiration of tax
holidays in jurisdictions in which we operate and expectations regarding our effective tax rate and the availability of tax incentives, (9) the creation or
release of valuation allowances related to taxes in the future, (10) our repurchase or repayment of outstanding debt, (11) payment of dividends, (12)
compliance with restrictive covenants in the indentures and agreements governing our current and future indebtedness, (13) expected contributions to
foreign pension plans and potential future conversion of our unfunded severance plan in Korea to a defined contribution plan, (14) liability for
unrecognized tax benefits and the potential impact of our unrecognized tax benefits on our effective tax rate, (15) the effect of foreign currency exchange
rate exposure on our financial results, (16) the volatility of the trading price of our common stock, (17) changes to our internal controls related to
integration of acquired operations and implementation of an enterprise resource planning system, (18) our efforts to enlarge our customer base in certain
geographic areas and markets, (19) demand for advanced packages in mobile and automotive devices and our technology leadership and potential growth in
this market, (20) our expected forfeiture rate for share-based compensation awards, (21) our expected rate of return for pension plan assets, (22) projects to
install or integrate new information technology systems or upgrade our existing systems, (23) our expected revenue recognition, (24) the anticipated
schedule for construction of our new manufacturing facility in Vietnam and (25) other statements that are not historical facts. In some cases, you can
identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” “continue,” “intend,” by the negative of these terms or other comparable terminology or by discussion of strategy, plans or intentions. These
forward-looking statements include risks, uncertainties, assumptions and other factors that could affect future results or cause actual results and events to
differ materially from those anticipated in such forward-looking statements. Other important risk factors that could affect the outcome of the events set
forth in these statements and that could affect our operating results and financial condition are discussed in Part I, Item 1A of this Form 10-K and in our
subsequent reports filed with or furnished to the Securities and Exchange Commission (“SEC”) prior to or after the date hereof. You should carefully
consider the trends, risks and uncertainties described in this Form 10-K and other reports filed with or furnished to the SEC before making any investment
decision with respect to our securities. If any of the trends, risks or uncertainties described in this Form 10-K or elsewhere in our SEC reports actually
occurs or continues, our business, financial condition or operating results could be materially adversely affected, the trading prices of our securities could
decline, and you could lose part or all of your investment. All forward-looking statements in this Form 10-K are made based on our current expectations,
forecasts, estimates and assumptions. Amkor undertakes no obligation to review or update any forward-looking statements to reflect events or
circumstances occurring after the date of the filing of this Form 10-K except as may be required by law. All forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
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Item 1.
Business
OVERVIEW
PART I
Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Amkor was a pioneer in the outsourcing of
semiconductor packaging and test services, and over the years we have built a leading position by:
• Designing and developing innovative packaging and test technologies;
•
•
•
•
•
Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies;
Collaborating with customers, foundries, original equipment manufacturers (“OEMs”) and equipment and material suppliers;
Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution;
Providing a geographically diverse operating base;
Focusing on strategic end markets that offer solid growth potential; and
• Developing a competitive cost structure through disciplined capital investment.
Our packaging and test services are designed to meet application and chip specific requirements including: the required type of interconnect technology;
size; thickness; and electrical, mechanical and thermal performance. We provide turnkey packaging and test services including semiconductor wafer bump,
wafer probe, wafer back-grind, package design, packaging, system-level and final test and drop shipment services. Our customers use us for one or more of
these services.
We provide our services to integrated device manufacturers (“IDMs”), “fabless” semiconductor companies, OEMs and contract foundries. IDMs generally
design, manufacture, package and test semiconductors in their own facilities. However, the availability of technologically advanced outsourced
manufacturing services has encouraged IDMs to outsource a portion of their manufacturing. By offering a broad package portfolio, Amkor allows IDMs to
outsource packaging and test services and focus their investments on core competencies such as silicon fabrication. Fabless semiconductor companies do
not have factories. They focus exclusively on semiconductor design and outsource virtually every step of the manufacturing process, utilizing contract
foundries to manufacture their semiconductors in wafer form and companies such as Amkor for their packaging and test needs. Some companies will
engage a contract foundry to manage the complete semiconductor manufacturing process, and in turn, the contract foundry will outsource some of its
packaging and test needs.
INDUSTRY BACKGROUND
Semiconductor devices are the essential building blocks used in most electronic products. As electronic and semiconductor devices have evolved, several
important trends have emerged that have fueled the growth of the overall semiconductor industry, as well as the market for outsourced semiconductor
packaging and test services. These trends include:
• An overall increase in the semiconductor content within electronic products to provide greater functionality and higher levels of performance.
• An increasing demand for mobile and connected devices, including the worldwide adoption of “smart” phones, tablets and other Internet-of-
Things (“IoT”) devices that can access the internet and provide multimedia capabilities.
•
The expansion of 5G infrastructure and enabled devices.
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•
The proliferation of semiconductor devices into well-established end products such as automotive systems for automation and driver assist,
electrification and infotainment systems.
• An increase in mobility and connectivity capabilities driving demand for new broadband wired and wireless networking equipment.
• Digitalization driving expansion of data generation and storage.
•
•
•
The adoption of Heterogeneous Integration (diverse dies positioned close to each other within the same package) to reduce cost, improve yields
and deliver required performance in datacenter computing, artificial intelligence and similar end uses.
The growth of advanced system-in-package (“SiP”) modules (combining multiple semiconductor and other electronic components in a single
package) to meet the demand for miniaturization and higher functionality at competitive cost.
The increase in digital format in our environment, from sensors for automobiles (e.g., pressure, radar, LiDAR and image recognition), mobile
devices (e.g., 3D motion, temperature, acceleration and imaging), and IoT (e.g., in-home sensing from temperature to weather and wearables).
As a supplier in the semiconductor industry, our business is cyclical by nature and impacted by broad economic factors, such as worldwide gross domestic
product and consumer spending. With the exception of 2020, where the Covid-19 pandemic caused worldwide gross domestic product levels to decline
during a period of strong growth in the semiconductor industry, there has generally been a strong correlation between worldwide gross domestic product
levels, consumer spending and semiconductor industry cycles.
Outsourcing Trends in Semiconductor Manufacturing
Semiconductor companies outsource their packaging and test needs to service providers such as Amkor for the following reasons:
Packaging and test service providers have developed expertise in advanced technologies.
The increasing demands for miniaturization, greater functionality, lower power consumption and improved thermal and electrical performance are driving
the continuous development of semiconductor packaging and test technologies that are more sophisticated, complex, capital intensive and customized. This
trend has led many semiconductor companies and OEMs to view packaging and test as enabling technologies requiring the technological innovation
expertise found in the leading outsourced assembly and test companies. At the same time, these companies are often looking to reduce the internal
manufacturing and research and development costs in packaging and test solutions. As a result, many of these companies are increasingly relying on
packaging and test service providers as key sources for new package designs and advanced interconnect technologies.
Packaging and test service providers offer a cost-effective solution in a cyclical, capital intensive industry.
The semiconductor industry is cyclical by nature and impacted by broad economic factors, such as changes in worldwide gross domestic product and
consumer spending. Semiconductor packaging and test are complex processes requiring substantial investment in specialized equipment, factories and
human capital. As a result of this cyclicality and the large investments required, manufacturing facilities must operate at consistently high levels of
utilization to be cost-effective. Shorter product life cycles, coupled with the need to update or replace packaging and test equipment to accommodate new
package types, make it more difficult for IDMs to maintain cost-effective utilization of their packaging and test assets throughout semiconductor industry
cycles. Packaging and test service providers, on the other hand, can typically use their assets to support a broad range of customers and multiple end
markets, potentially generating more efficient use of their production assets and a more cost-effective solution.
Packaging and test service providers can facilitate a more efficient supply chain and help shorten time-to-market for new products.
We believe that semiconductor companies, together with their customers, are seeking to shorten the time-to-market for new products and that having an
effective supply chain is a critical factor in facilitating timely and successful product
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introductions. Packaging and test service providers have the resources and expertise to timely develop and implement new packaging technology in high
volume. For this reason, semiconductor companies and OEMs are leveraging the capabilities of packaging and test service providers to bring new products
to market more quickly.
High quality packaging and test service providers enable semiconductor manufacturers to focus their resources on semiconductor design and wafer
fabrication.
As semiconductor process technology migrates to larger wafers and smaller feature sizes, the cost of building a state-of-the-art wafer fabrication factory has
risen significantly. The high cost of investing in next generation silicon technology and equipment is causing many semiconductor companies to adopt or
maintain a “fabless” or “fab-lite” strategy to reduce or eliminate their investment in wafer fabrication and associated packaging and test operations. As a
result, these companies are increasing their reliance on outsourced providers of semiconductor manufacturing services, including packaging and test
solutions.
STRATEGY AND COMPETITIVE STRENGTHS
Strategy
Amkor is a leader in advanced packaging technology in the outsourced assembly and test domain. Growth in the semiconductor industry is being driven
primarily by advanced packaging within four key megatrends of 5G, IoT, high-performance computing (“HPC”) and automotive. We believe Amkor is well
positioned in each of these end markets.
• Within our communications end market, we have a strong position across multiple device functionalities. We are collaborating with industry
leaders and emerging participants as smartphones transition to 5G and drive semiconductor growth by the continuing adoption of new wireless
standards and the integration of a broad range of applications. The trend to more functionality drives miniaturization and cost reduction enabled by
advanced packaging.
•
•
•
The IoT wearables within our consumer end market are evolving in multiple applications, such as watches, health trackers, hearables, biometrics
and smart glasses. Integration of multiple functions in small form factors, processors, sensors and connectivity devices depends on innovation in
advanced packaging.
Increased data traffic requiring higher networking speed and storage, as well as computing power increases in HPC, datacenters, cloud computing,
AI, PCs and laptops, are driving demand for more semiconductors and advanced packaging in the computing end market.
Increasing semiconductor content in automobiles is driving greater needs for advanced packaging to enable the proliferation of safety features
such as advanced driver assistance systems (“ADAS”) and radar and digital cockpit features such as infotainment displays. The increasing battery
voltage, higher voltage power converters and inverter automotive components also need innovative power packaging solutions.
Our financial goal is profitable sales growth. We believe that Amkor’s strength in advanced packaging, combined with the following strategies, will
achieve that goal and create long-term shareholder value.
Leverage Our Leadership in Services for Advanced Technologies
We are an industry leader in developing and commercializing cost-effective advanced packaging and test technologies, and we believe that our advanced
technology solutions provide increased value to our customers.
With approximately 550 employees, as of December 31, 2021, engaged in research and development and manufacturing process engineering for new
semiconductor packaging and test technologies, we are a technology leader in areas such as fine pitch bumping, advanced flip chip, wafer-level processing,
advanced SiPs and power modules.
We work closely with our customers to develop cost-effective leading-edge packages for the next generation of devices. These include integrated
technologies such as advanced SiP, wafer-level fan-out (“WLFO”), Silicon Wafer Integrated Fan-out Technology (“SWIFT”), High Density Fan-Out
(“HDFO”) and redistribution layer (“RDL”) solutions which enable very thin, very small products that combine application processors, memory, baseband
and other peripheral integrated circuits (“ICs”). Our advanced packages may utilize Through Silicon Via (“TSV”) interconnects and silicon interposers,
which enable the integration of high-performance chips such as high bandwidth memory and graphics processors into a single package. In addition, we co-
develop with customers high power modules involving gallium
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nitride (“GaN”) and silicon carbide (“SiC”) based devices. Our approach is to work with lead customers to develop processes that will enable volume
manufacturing with high yields and reliability.
We believe that demand for advanced packaging services will continue to grow as our customers and leading electronics OEMs strive for smaller device
geometries, higher levels of integration and performance and lower power consumption. We intend to continue to leverage our investment in advanced
technology to meet the demand for these services in high growth markets.
Optimize Utilization of Existing Assets and Broaden Our Customer Base
Another key to our success is to optimize the utilization of our existing assets. The transition by leading edge customers to newer packaging and test
equipment platforms typically frees up capacity in existing, previously installed equipment. As part of our strategy, we are focused on developing a second
wave of customers to utilize these assets more effectively over a longer period of time. We are building and utilizing manufacturing lines which support
multiple customers and increase factory utilization through more sophisticated planning processes and more intensive efficiency improvement activities.
Selectively Grow Our Scale and Scope through Strategic Investments
From time to time, we see attractive opportunities to grow our customer base and expand markets through strategic investments. For example, in 2021, we
announced our plans to build a new state-of-the-art manufacturing facility in Bac Ninh, Vietnam. Investing in Bac Ninh expands our manufacturing
footprint in support of customer needs for an additional cost-competitive supply chain solution for advanced SiP and other packaging solutions.
Construction is expected to begin in 2022.
We believe that selective growth through joint ventures, acquisitions and other strategic investments can help diversify our revenue streams, improve our
profits and maintain our technological leadership.
Competitive Strengths
The outsourced semiconductor packaging and test market is very competitive. We also compete with the internal semiconductor packaging and test
capabilities of many of our customers and foundries. We believe we are well-positioned in the outsourced packaging and test services market. The
following competitive strengths support our strategy to build upon our industry position and remain a preferred provider of semiconductor packaging and
test services.
Advanced Packaging Technology Leadership
We are a leader in developing and deploying advanced semiconductor packaging and test solutions. We have designed and developed several state-of-the-
art package formats and technologies, including our Dual Side Molded Ball Grid Array (“DSMBGA”) SiP platform and multi-chip modules that
incorporate silicon interposers between the module chips and substrate. In addition, we believe that as semiconductor technology continues to achieve
smaller device geometries with higher levels of integration, speed and performance, packages will increasingly require wafer-level Chip Scale Packaging
(“CSP”), WLFO, SWIFT and Flip Chip interconnect solutions, advanced SiP products, and medium and higher power density packages and modules.
We continue to invest in developing the key processes and packaging and test technologies required for our customers to deliver advanced integrated and
modular solutions to market. We are also a developer of environmentally friendly IC packaging, which involves the elimination of lead and certain other
materials.
Broad Offering of Semiconductor Package Design, Packaging and Test Services
Creating successful interconnect solutions for advanced semiconductor devices often poses unique thermal, electrical and mechanical design challenges,
and we employ a large number of engineers to solve these challenges. This wide variety of packaging offerings is necessary to meet the diverse needs of
our customers for the optimal combination of performance, size and cost. Utilizing Amkor for its innovative packaging, test and design services enables our
customers to focus their resources on semiconductor design and wafer fabrication.
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We also offer an extensive line of advanced probe and final test services for analog, digital, logic, mixed signal, memory, sensors and RF-semiconductor
devices. We believe that the breadth of our design, packaging and test services is important to customers seeking to limit the number of their suppliers.
Long-Standing Relationships and Collaboration with Prominent Semiconductor Companies
Our customers include most of the world’s largest semiconductor companies, and over the last five decades we have developed long-standing relationships
with many of these companies. We believe that our production excellence, including high quality, reliability and predictability, has been a key factor in our
success in attracting and retaining customers. We work with our customers and our suppliers to develop proprietary process technologies to enhance our
existing capabilities, reduce time-to-market, improve quality and lower costs.
We believe that our focus on research and product development will enable us to enter new markets early, capture market share and promote the adoption
of our new package designs as industry standards. We collaborate with customers and leading OEMs to develop comprehensive packaging solutions that
make it easier for next-generation semiconductors to be designed into next-generation end products. By collaborating with leading semiconductor
companies, foundries and OEM electronic companies, we are able to focus resources on developing new packages that will meet the requirements of new
products. The traditional delineation between front end semiconductor manufacturing and packaging is starting to converge. Foundries, and in some cases
IDMs, are integrating some packaging activities closer to front end wafer processes. We work closely with foundry partners to complement these offerings
by offering similar wafer-based technologies as well as downstream processing.
Geographically Diversified Operating Base
We have a broad and geographically diverse operating footprint strategically located in seven countries in many of the world’s important electronics
manufacturing regions. We believe that our scale and scope allow us to provide a flexible supply chain and cost-effective solutions to our customers by:
• Offering capacity to absorb large orders and accommodate quick turn-around times;
• Obtaining favorable pricing and supply agreements on materials and equipment by using our purchasing power and leading industry position;
• Qualifying production of customer devices at multiple manufacturing sites to mitigate the risks of supply disruptions; and
•
Providing capabilities and solutions for customer-specific requirements.
PACKAGING AND TEST SERVICES
In general, the semiconductor manufacturing process consists of IC design, wafer fabrication, wafer probe, packaging and final test. The packaging and test
services we provide occur subsequent to wafer fabrication. The wafers that we receive from our customers are generally consigned to us; we do not own the
consigned wafers or record their value in our financial statements.
Advanced Products and Mainstream Products
We offer a broad range of advanced and mainstream packaging and test services to our customers. We refer to our flip chip, wafer-level processing and
related test services as “Advanced Products”, and our wirebond packaging, power device packaging and related test services as “Mainstream Products”.
The following table sets forth, for the periods indicated, net sales for Advanced Products and Mainstream Products and the percentage of total net sales for
each service
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offering. In 2021, we began reporting memory net sales under Advanced Products. Previously, memory net sales were reported in Mainstream Products.
Prior year amounts were reclassified to conform to current year presentation.
2021
For the Year Ended December 31,
2020
(In millions, except percentage of net sales)
2019
$
$
4,409
1,729
6,138
71.8 % $
28.2 %
100.0 % $
3,605
1,446
5,051
71.4 % $
28.6 %
100.0 % $
2,482
1,571
4,053
61.2 %
38.8 %
100.0 %
Advanced Products
Mainstream Products
Total net sales
Advanced Products
Our Advanced Products include flip chip chip scale packages, wafer-level packages and flip chip ball grid array (“FCBGA”) packages. These package
families use flip chip interconnect technology so that the die can be connected to a substrate package carrier or, in the case of wafer-level chip scale
packages, directly to a printed circuit board.
Flip Chip Chip Scale Package (“FC CSP”) Products: FC CSP packages are small form factor packages where the substrate size is not much larger than the
die itself. FC CSP can be a single die or multi die format. The size advantage provided by CSP technologies has made FC CSP an attractive choice for a
wide variety of applications that require very small form factors such as smartphones, tablets and other mobile consumer electronic devices.
Flip chip stacked chip scale packages (“FC SCSP”) stack a second die on top of the original flip-chip die. The top die is typically a memory device, and
wirebond interconnects are used to attach the top die to the substrate. FC SCSP is frequently used to stack memory on top of digital baseband and
applications processors for use in mobile devices.
We continue to drive thinner package solutions for our Package on Package (“PoP”) technology through the development of ultra-thin substrates and
enhancing our pre-stacking and thin die handling capabilities.
We developed fine pitch copper pillar flip chip interconnect technology, which creates interconnections at finer pitches using a plating process to reduce the
number of substrate layers to facilitate very thin packages. This innovative solution is also an enabling technology for package stacking with TSVs.
FCBGA Products: FCBGA packages are large form factor substrate-based packages which are used where processing power and speed are a higher priority
than a small form factor. Our FCBGA packages are assembled using state-of-the-art substrates. Utilizing multiple high density routing layers, laser drilled
vias, and ultra-fine line and space metallization, FCBGA substrates have the highest routing density available. The variety of FCBGA package options,
from large single die to multi-chip packages with memory, allows package selection to be tailored to the specific thermal needs of the end product. We offer
FCBGA packaging in a variety of product formats to fit a wide range of end application requirements, including networking, storage, computing and
consumer applications.
Memory Products: Memory packages consist of either standalone packaging and testing or a combination of NAND Flash, DRAM, or a memory controller
IC using a variety of packaging technologies, including FC, SCSP, SiP, PoP and other state-of-the-art packaging technologies. These products are used as
system memory or platform data storage in all of our end markets.
Wafer-level Package Products: We offer three types of wafer-level packages: wafer-level CSP; WLFO; and SWIFT. Wafer-level CSP and WLFO are
complementary technologies. Customers can choose between the two package types as their die sizes shrink or grow.
• Wafer-level CSP packages (also known as fan-in wafer-level packages) do not utilize a package carrier. The bumped wafer is singulated into
individual die, and the wafer-level package is then attached directly to the system board. Wafer-level CSP offers one of the lowest total system
costs, enabling higher semiconductor content while leveraging the smallest form factor and one of the highest performing, most reliable
semiconductor package platforms on the market today. Applications for wafer-level CSP include power management, transceivers, sensors,
wireless charging, codecs, radar and specialty silicon for new or unique functionality.
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• WLFO packages (also known as low-density fan-out packages) are utilized for ICs where the die surface area is too small to accommodate all of
the bond pads. The fan-out package enlarges the bondable surface area by building a border around the die using low-cost molding compound.
Applications for WLFO packages include power management, transceivers, radar and specialty silicon.
•
SWIFT, also known as high-density fan-out, can either replace the laminate substrate with a thinner structure or reduce the complexity of the
substrate by housing the dense interconnects in the SWIFT structure, allowing for a less expensive substrate that provides a high level of
performance with a balanced cost structure. SWIFT solutions enable high performance at a compact form factor that combines tiled processors,
memory, I/O die and other peripheral ICs.
Mainstream Products
Our Mainstream Products include leadframe packages, substrate-based wirebond packages and micro-electro-mechanical systems (“MEMS”) packages.
These package families use wirebond interconnect technology to connect a die to a leadframe or substrate package carrier.
Leadframe Packages: Leadframe packages use wirebond or flip chip technology to connect a die to a leadframe package carrier. Leadframe packages are
used in many electronic devices and remain the most practical and cost-effective solution for many low to medium pin count analog and mixed signal
applications.
Traditional leadframe packages support a wide variety of device types and applications. Two of our most popular traditional leadframe package types are
small outline integrated circuit and quad flat package, commonly known as “dual” and “quad” products, respectively, based upon the number of sides from
which the leads extend. The traditional leadframe package family has evolved from “through hole design,” where the leads are plugged into holes on the
circuit board to “surface mount design,” where the leads are soldered to the surface of the circuit board. We offer a wide range of lead counts and body
sizes to satisfy variations in the size of customers’ semiconductor devices.
Through a process of continuous engineering and customization, we have designed several leadframe package types that are thinner and smaller than
traditional leadframe packages and can accommodate more leads on the perimeter of the package. These leadframe packages typically have superior
thermal and electrical characteristics, which allow them to dissipate heat generated by high-powered semiconductor devices while providing enhanced
electrical connectivity. We are developing increasingly smaller versions of these packages to keep pace with continually shrinking semiconductor device
sizes and demand for miniaturization of portable electronic products. One of our more successful leadframe package offerings is the MicroLeadFrame
family of quad flat no lead packages. These packages offer cost effective, miniaturized solutions for multiple analog power and signal chain applications.
Power discrete devices use a leadframe as the package carrier and primarily use wirebond interconnect technology. However, power applications that
require improved thermal and electrical performance will use packaging with copper clip interconnect technology that creates multi die power modules.
Substrate-based Wirebond Packages: Substrate-based wirebond packages use wirebond technology to connect a die to a substrate. Some of our packages in
this category include stacked CSP, wirebond ball grid array packages and plastic ball grid array (“PBGA”) packages.
Stacked CSP technology enables the stacking of a wide range of different semiconductor devices to deliver high levels of silicon integration and area
efficiency. Stacked CSP utilizes high density thin core substrates and advanced materials, along with leading-edge wafer thinning, die attach and molding
capabilities, to stack multiple die on a substrate. Stacked CSP is ideal for memory and mixed signal applications.
Wirebond ball grid array packages offer a broad selection of ball array pitches, ball counts and body sizes, single and multi-die layouts, stacked die and
passive component integration together with thermal management solutions. They are applicable for a wide range of semiconductors requiring a smaller
package size than conventional PBGAs or leadframe packages.
PBGA packages are used in applications requiring higher pin count than leadframe packages, but typically have lower pin counts than flip chip. PBGA
packages are designed for low inductance, improved thermal operation and enhanced surface-mount technology ability. Custom performance
enhancements, like ground and power planes, are also available.
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Micro-Electro-Mechanical Systems Packages: MEMS are miniaturized mechanical and electro-mechanical devices that can sense and provide information
about the physical world and sometimes trigger a response. Examples of MEMS devices include microphones, accelerometers, airbag deployment sensors,
gyrometers, magnetometers and humidity, temperature and pressure sensors. We also specialize in sensor fusion products which utilize our cavity MEMS
platform and combine multiple sensors into a single package. MEMS packages leverage our expertise in wafer thinning, die stacking, wirebonding and flip
chip interconnect to deliver sophisticated products with a very small form factor.
Advanced System-in-Package Modules
Advanced SiP modules combine multiple semiconductor and other electronic components with different functionalities into a single package. These
modules use wirebond, flip chip or wafer-level interconnect technologies. Components can include integrated circuits, passive devices (inductors,
capacitors, resistors, filters and diplexers), antennas and mechanical parts.
The increasing demand for miniaturization and higher functionality at competitive cost is driving the adoption of advanced SiP in new products. Advanced
SiP modules are used for many applications such as radio frequency (“RF”) and front end modules, basebands, connectivity, fingerprint sensors, display
and touch screen drivers, sensors and MEMS, NAND memory and solid state drives. Advanced SiP modules are found in many products including
smartphones and tablets, automobiles, IoT wearables, high-performance gaming systems, computers and network systems.
In 2021, 2020 and 2019, we had net sales of approximately $2,280 million, $1,885 million and $1,075 million, respectively, from our advanced SiP
modules, which are mostly included in Advanced Products, depending upon the interconnect technology used in the module.
Test Services
Our Test Services complement our wafer and packaging services across our Advanced and Mainstream Products. Our test services offer customers the
cycle time and cost advantages of co-located turn-key services. Our test services are used as both an interim step or as the final testing step to ensure
screening and rejection of defects, performance grading and overall outgoing quality and reliability. Interim testing eliminates the manufacturing costs of
assembling the defective chips. Below is a description of our test services:
Wafer Level Test: Wafer level test is a manufacturing step performed while a wafer is still in its full form and before being singulated for further package
processing.
Package Level Test: Package level test is performed on a product or products that have been assembled in a package.
System Level Test: As advanced packaging proliferates and the integration of more individual components into a SiP grows, system level testing becomes
more important. System level test identifies defective SiP products that may not otherwise be screened by traditional wafer level, package level or burn-in
testing.
Burn-In Test: Burn-in test is a process in which components of a system are exercised, monitored and measured in extreme operational conditions such as
high temperature, voltage and frequency over time. The purpose of the environmental and operational stress conditions of burn-in testing is to accelerate
and screen early life failures and estimate and monitor long term wear out performance.
Test Development Services: Prior to mass production, an integrated manufacturing ready test solution must be developed and deployed. Amkor’s test
development services offer both co-development and full development of complete test software and hardware solutions to our customers. These services
also enable early engagement with our customers in the product design phases for maximum compatibility with manufacturing. Our test development
teams are experienced in a full suite of test engineering disciplines for Memory, Power, RF, Mixed Signal, Analog and digital test solution development.
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End Markets
The following table lists the end markets that use our products and sets forth, for the periods indicated, the percentage of net sales in each end market:
2019
2021
2020
End Market Distribution Data (an approximation including representative devices and applications based on a sampling
of our largest customers):
Communications (smart phones, tablets)
Consumer (AR & gaming, connected home, home electronics, wearables)
Automotive and Industrial (ADAS, electrification, infotainment, safety)
Computing (datacenter, infrastructure, PC/laptops, storage)
Total net sales
RESEARCH AND DEVELOPMENT
41 %
22 %
21 %
16 %
100 %
41 %
24 %
20 %
15 %
100 %
38 %
18 %
27 %
17 %
100 %
Our research efforts focus on developing new packaging solutions and test services, as well as improving the efficiency and capabilities of our existing
production processes. We believe that technology development is one of the keys to success in the semiconductor packaging and test industry. By
concentrating our research and development on our customers’ needs for innovative packages, increased performance and lower cost, we gain opportunities
to enter markets early, successfully compete for new products and promote our new package offerings as industry leading technology.
One of our top priorities is developing highly integrated modules such as DSMBGA packages to reduce material and processing costs and minimize form
factor for wearables and 5G mobile devices. Another important focus area is the development of wafer-level packages for larger chips. These wafer-level
chip-scale packages and WLFO packages are increasingly the preferred package type for many applications in IoT and mobile devices, including power
management integrated circuits (“PMICs”), display drivers and antenna-in-package products. We are also developing new applications for the automotive
market using existing and new package technologies as higher performance compute and sensor content are used to support new automotive features
including ADAS, infotainment, optical sensors and electric vehicles.
Another focus for development is integrated multi-die solutions, including multichip modules and high-density WLFO solutions, which enable package
level integration of different types and levels of silicon technologies for high performance computing, networking and data center applications. This is
accomplished by combining processors and other chiplets into one packaged module. Through die partitioning and heterogeneous die integration, these
modules provide higher functionality at lower total product cost.
Our research and development employees are based in Korea, the United States, Portugal and throughout other locations in Asia. At December 31, 2021,
we had approximately 550 employees engaged in research and development activities. In 2021, 2020 and 2019, we incurred $166.0 million, $140.7 million
and $137.6 million, respectively, of research and development expense.
SALES AND MARKETING
Our sales offices are located throughout Asia, Europe and North America. Our support personnel manage and promote our packaging and test services and
provide key customer and technical support. To provide comprehensive sales and customer service, we typically assign our customers a direct support team
consisting of an account manager, technical program manager, test program manager and both field and factory customer support representatives. We also
support our largest multinational customers from multiple office locations to ensure that we are aligned with their global operational and business
requirements.
Our direct support teams are further supported by an extended staff of product, process, quality and reliability engineers, as well as marketing and
advertising specialists, information systems technicians and factory personnel. Together, these direct and extended support teams deliver an array of
services to our customers.
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SEASONALITY
Our sales have generally been higher in the second half of the year than in the first half due to consumer buying patterns in the U.S., Europe and Asia and
the timing of flagship mobile device launches. In addition, semiconductor companies generally reduce their production during the holidays at the end of
December, which generally results in a decrease in packaging and test services during the first quarter. General economic conditions, changes in our
product mix or overall demand in any of our end-markets can impact our seasonality.
CUSTOMERS
In 2021, we had approximately 250 customers, including many of the largest semiconductor companies in the world. Our ten largest customers accounted
for 63% of our net sales in 2021. Direct sales to Apple Inc., our largest customer, accounted for 13.7% of our net revenue for the year ended December 31,
2021.
MATERIALS AND EQUIPMENT
Materials
Our materials are used primarily for packaging activities. Our packaging operations depend upon obtaining adequate supplies of materials on a timely
basis. The principal materials used in our packaging process are laminate substrates, ICs, capacitors, leadframes and gold wire. The silicon wafer is
generally consigned from the customer. We generally do not take ownership of the customer consigned wafer, and title and risk of loss remains with the
customer for these materials. Test materials constitute a very small portion of our total test cost. Generally, we purchase materials based on Amkor’s
commitments to customer forecasts, and our customers are generally responsible for any unused materials we purchase based on such commitments. Due to
the Covid-19 pandemic and the resulting supply chain constraints and extended lead times, however, we have been placing an increasing number of our
orders for materials in advance of customer forecasts. We believe these materials will be utilized by future orders and will allow us to fulfill orders on a
timely basis.
We obtain the materials required for packaging services from various suppliers. We source most of our materials, including critical materials such as
leadframes, laminate substrates and gold wire, from a limited group of suppliers. We work closely with our primary material suppliers to ensure consistent
quality, availability and timely delivery. We also negotiate worldwide pricing agreements with our major suppliers to take advantage of the scale of our
operations.
Equipment
Our ability to meet the changing demand from our customers for manufacturing capacity depends upon obtaining packaging and test equipment in a timely
manner. We work closely with our main equipment suppliers to coordinate the ordering and delivery of equipment to meet our expected capacity needs.
The primary types of equipment used in providing our packaging services are wirebonders and die bonders. In addition, we maintain a variety of other
packaging equipment, including mold, singulation, die attach, ball attach and wafer backgrind, along with numerous other types of manufacturing
equipment. A substantial portion of our packaging equipment base can generally be used and adapted to support the manufacture of many of our packages,
with equipment used in traditional wirebond packaging being easier to redeploy than the equipment used in advanced packaging.
We also purchase wafer bumping equipment to facilitate our flip chip and wafer level packaging services. Wafer bumping equipment includes sputter and
spin coaters, electroplating equipment, reflow ovens and other types of equipment. This equipment tends to have longer lead times for delivery and
installation than other packaging equipment and is sold in relatively larger increments of capacity.
The primary equipment used in the testing process includes testers, handlers and probers. Handlers are used to transfer individual or small groups of
packaged ICs to a tester. Test equipment is generally a more capital-intensive activity than packaging, and test equipment tends to have longer delivery lead
times than most types of packaging equipment. We focus our capital expenditures on standardized tester platforms to maximize test equipment utilization
where possible. For tester platforms that are less standardized, we generally lease test equipment for the expected life cycle of the project. In some cases,
our customers will consign test equipment to us.
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GOVERNMENTAL REGULATIONS
As a public company with global operations, we are subject to various federal, state, local, and foreign laws, and our products and services are governed by
a number of rules and regulations. These regulations, which differ among jurisdictions, include financial and other external reporting disclosure rules,
accounting standards, and environmental, corporate governance, intellectual property, tax, trade, antitrust, employment, immigration and travel, privacy and
anti-corruption laws. Costs and accruals incurred to comply with these governmental regulations are presently not material to our capital expenditures,
results of operations and competitive position. Although there is no assurance that existing or future government laws applicable to our operations, services
or products will not have a material adverse effect on our capital expenditures, results of operations and competitive position, we do not currently anticipate
material expenditures for compliance with government regulations.
Environmental Matters
We use chemicals and materials in the semiconductor packaging process that generate byproducts such as wastewater, solid waste and flue gas. For
example, water used for rinsing or cooling wafers being sawed or used in the etching or solder deposition process produces wastewater. Scrap from metal
lead-frame or substrate processing or excessive molding resin produces solid waste. Emissions from solvents used for coating produce flue gases. In
addition to byproducts, semiconductor packages have historically contained lead, a naturally occurring element that can be toxic. The use of lead in our
packages has decreased over time due to the use of lead-free alternatives. The use and storage of chemicals and materials are subject to various laws and
regulations governing waste disposal, water discharge, emissions into the atmosphere and employee health and safety. We are engaged in continuing efforts
to comply with these environmental laws and regulations, including the establishment of environmental management systems, safety training for
employees and installation of pollution control equipment at our factories.
In the future, we may be subject to changes to existing environmental regulations or new green initiatives required by our customers, investors,
governments or other stakeholders. We do not believe that capital expenditures or other costs attributable to compliance with environmental laws and
regulations or green initiatives will have a material adverse effect on our business, liquidity, results of operations, financial condition or cash flows.
We are also committed to responsible environmental practices that go beyond legal requirements in conducting our business. These environmental practices
include:
•
Certification of our factories worldwide to International Organization for Standards (“ISO”) framework 14001, widely recognized as the standard for
effective environmental management systems.
• Measurement and independent verification of greenhouse gases (“GHG”) generated by our factories worldwide. Once collected, our GHG data is
submitted to, and disclosed publicly by, CDP, formerly known as the Carbon Disclosure Project. CDP is a leading organization that assesses the impact
of climate change and promotes a sustainable economy.
• Membership in the Responsible Business Alliance (“RBA”), an international industry group dedicated to corporate social responsibility. RBA
members agree to follow a uniform Code of Conduct that includes standards of environmental responsibility, and our factories have been subject to
independent audits to assess compliance with these standards.
•
Capital investment and process optimization activities to reduce GHGs include installation of solar photovoltaic panels, replacement of, or
improvements to, chiller unit systems and use of light-emitting diode (“LED”) technology.
COMPETITION
The outsourced semiconductor packaging and test market is very competitive. We face substantial competition from established packaging and test service
providers primarily located in Asia, including companies with significant manufacturing capacity, financial resources, research and development
operations, marketing and other capabilities. These companies include ASE Technology Holding Co., Ltd. and JCET Group Co., Ltd. In addition, we
compete with electronic manufacturing service providers or contract electronics manufacturers, including Universal Scientific Industrial (Shanghai) Co.,
Ltd., that also provide advanced integrated device solutions. Such companies also have
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developed relationships with most of the world’s largest semiconductor companies, including current or potential customers of Amkor.
We also compete with the internal semiconductor packaging and test capabilities of many of our customers. Our IDM customers continually evaluate the
attractiveness of outsourced services against their own in-house packaging and test services and at times may decide to shift some or all of their outsourced
packaging and test services to internally sourced capacity. We also compete with contract foundries, such as Taiwan Semiconductor Manufacturing
Company Limited and Samsung Electronics Co., Ltd., which offer full turnkey services from silicon wafer fabrication through packaging and final test. In
addition, we compete with companies that offer test-only services.
The principal elements of competition in the outsourced semiconductor packaging and test services market include price, available capacity, flexibility,
quality, customer service and support, new product introduction experience, cycle time, reputation and reliability, customer satisfaction, technological
expertise and innovation, breadth of packaging and test services offered, including turnkey services, and the ability to invest in capacity, geographic
location and scale of manufacturing. We believe that we compete favorably with respect to each of these elements.
INTELLECTUAL PROPERTY
We maintain an active program to protect and derive value from our investment in technology and the associated intellectual property rights. Intellectual
property rights that apply to our various products and services include patents, copyrights, trade secrets and trademarks. We have filed and obtained a
number of patents in the U.S. and abroad, and their durations vary depending on the jurisdiction in which each patent is filed. Although our patents are an
important element of our intellectual property strategy, we are not materially dependent on any one patent or any one technology. We expect to continue to
file patent applications when appropriate to protect our proprietary technologies, but we cannot assure you that we will receive patents from pending or
future applications. In addition, any patents we obtain may be challenged, invalidated or circumvented and may not provide meaningful protection or other
commercial advantage to us.
We also protect and maintain the confidentiality of certain information about our processes, products and strategies which we believe provides us with a
competitive advantage. We have ongoing programs designed to maintain the confidentiality of such information. As part of these efforts, all employees
who have access to Amkor’s information systems are required to participate in cybersecurity training within the first 15 days of employment, after which
recurring mandatory training is required on an annual basis. Further, to distinguish our products from our competitors’ products, we have obtained certain
trademarks and service marks and may promote our particular brands through advertising and other marketing techniques.
HUMAN CAPITAL RESOURCES
Employees
As of December 31, 2021, Amkor employed 30,400 regular full-time employees, of whom approximately 97%, 2% and 1% resided in the Asia-Pacific
region, Europe and North America, respectively. Our global workforce spans 11 countries, reflecting various cultures, backgrounds, ages, genders and
ethnicities. Of our global employee base, 93% are employed in manufacturing roles. Our employees in the Philippines, Singapore, Taiwan and the U.S. are
not represented by any union. Certain employees at our factories in China, Japan, Korea, Malaysia and Portugal are members of a union, and we operate
subject to collective bargaining agreements that we have entered into with these unions. We believe that our relations with our employees are good, and we
have not experienced a work stoppage in any of our factories.
Amkor believes that its future success is highly dependent upon our continued ability to attract, retain and motivate qualified employees. As part of our
effort to attract and motivate employees, Amkor is committed to providing competitive and comprehensive benefits that are designed to enable our
employees and their families to live healthier and more secure lives. Additionally, Amkor has implemented various retention programs to incentivize and
retain high-performing employees. Factory locations also maintain training and development programs that enable the continued learning and growth of our
employees, and senior management regularly meets to share and implement best practices among our various facilities. We believe that our efforts to
motivate and retain qualified employees is reflected in the long average tenure of our key employees. Additionally, we strive to promote our management-
level employees from within Amkor and believe that we have been successful in this effort.
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Health and Safety
The health and safety of our employees is very important to us and, accordingly, we endeavor to provide comprehensive health benefits to our full-time
employees. Our focus on health and safety is further evident in our response to the Covid-19 pandemic around the globe. Because our business involves the
manufacturing and testing of physical products, many of our employees are unable to work from home. In an effort to keep our employees safe and to
maintain operations during the Covid-19 pandemic, we implemented increased health and safety-related measures across our global footprint.
AVAILABLE INFORMATION
Amkor files annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”).
The SEC maintains a website that contains annual, quarterly and current reports, proxy statements and other information that issuers (including Amkor) file
electronically with the SEC. The SEC’s website is www.sec.gov.
Amkor’s website is www.amkor.com. Amkor makes available, free of charge, through its website: our annual reports on Form 10-K; quarterly reports on
Form 10-Q; current reports on Form 8-K; Forms 3, 4 and 5 filed on behalf of directors and executive officers; and any amendments to those reports filed or
furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC. We also make available, free of charge, through our website, our Corporate Governance Guidelines, the
charters of the Audit Committee, Nominating and Governance Committee and Compensation Committee of our Board of Directors, our Code of Business
Conduct, our Code of Ethics for Directors and other information and materials. The information on Amkor’s website is not incorporated by reference into
this Form 10-K.
Item 1A.
Risk Factors
The factors discussed below are cautionary statements that identify important factors and risks that could cause actual results to differ materially from those
anticipated by the forward-looking statements contained in this Form 10-K. For more information, see the Forward Looking Statements within this Form
10-K. You should carefully consider the risks and uncertainties described below, together with all of the other information included in this Form 10-K, in
considering our business and prospects. Many of the following risks and uncertainties have been, and may continue to be, exacerbated by the Covid-19
pandemic and any worsening of the global business and economic environment as a result. The risks and uncertainties described below are not the only
ones facing Amkor. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also adversely affect our
business operations. The occurrence of any of the risks and uncertainties described below could materially and adversely affect our business, liquidity,
results of operations, financial condition or cash flows.
Summary of Risk Factors
An investment in our common stock involves various risks, and you are urged to carefully consider all of the matters discussed in Part I, Item 1A of this
Form 10-K under the caption “Risk Factors” (in addition to those discussed under this “Summary of Risk Factors” section) in considering our business and
prospects. The following is a list of some of these risks:
Company-Specific Risk Factors
•
•
•
•
•
•
dependence on the cyclical and volatile semiconductor industry and vulnerability to industry downturns and declines in global economic and
financial conditions;
changes in costs, quality, availability and delivery times of raw materials, components and equipment;
fluctuations in operating results and cash flows;
dependence on international factories and operations, and risks relating to our customers’ and vendors’ international operations;
competition with established competitors in the packaging and test business, the internal capabilities of IDMs, and new competitors, including
foundries;
our substantial investments in equipment and facilities to support the demand of our customers;
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•
•
•
•
•
difficulty achieving the relatively high capacity utilization rates necessary to realize satisfactory gross margins given our high percentage of fixed
costs;
our absence of backlog and the short-term nature of our customers’ commitments;
the historical downward pressure on the prices of our packaging and test services;
fluctuations in our manufacturing yields;
our ability to develop new proprietary technology, protect our proprietary technology, operate without infringing the proprietary rights of others,
and implement new technologies;
• warranty claims, product return and liability risks, and the risk of negative publicity if our products fail, as well as the risk of litigation incident to
our business;
•
•
•
•
restrictive covenants in the indentures and agreements governing our current and future indebtedness;
the possibility that we may decrease or suspend our quarterly dividend;
significant severance plan obligations associated with our manufacturing operations in Korea; and
the ability of certain of our stockholders to effectively determine or substantially influence the outcome of matters requiring stockholder approval.
General Risk Factors
•
•
•
•
•
•
health conditions or pandemics, such as the Covid-19 pandemic, impacting labor availability and operating capacity, capital availability, the supply
chain and consumer demand for our customers’ products and services;
our substantial indebtedness;
fluctuations in interest rates and changes in credit risk;
difficulty funding our liquidity needs;
dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive;
difficulty attracting, retaining or replacing qualified personnel;
• maintaining an effective system of internal controls;
•
•
•
•
•
our continuing development and implementation of changes to, and maintenance and security of, our information technology systems;
challenges with integrating diverse operations;
any changes in tax laws, taxing authorities not agreeing with our interpretation of applicable tax laws, including whether we continue to qualify for
tax holidays, or any requirements to establish or adjust valuation allowances on deferred tax assets;
laws, rules, regulations and policies imposed by U.S. or other governments, such as tariffs, customs, duties, other restrictive trade barriers and
national security, data privacy and cybersecurity, antitrust and competition, tax, currency and banking, labor and environmental, health and safety
laws; and
natural disasters and other calamities, health conditions or pandemics, political instability, hostilities or other disruptions.
Company-Specific Risk Factors
Our packaging and test services are used in volatile industries and industry downturns, and declines in global economic and financial conditions could
harm our performance.
Our business is impacted by market conditions in the semiconductor industry, which is cyclical by nature and impacted by broad economic factors, such as
worldwide gross domestic product and consumer spending. The semiconductor industry has experienced significant and sometimes sudden and prolonged
downturns in the past. If the industry or
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markets in which we compete experience slower, or even negative growth, our business and results of operations may be materially and adversely affected.
Since our business is, and will continue to be, dependent on the requirements of semiconductor companies for outsourced packaging and test services, any
downturn in the semiconductor industry or any other industry that uses a significant number of semiconductor devices, such as telecommunications,
automotive, consumer electronics, or computing, could have a material adverse effect on our business and operating results. During downturns, we have
experienced, among other things, reduced demand, excess capacity and reduced sales. For example, the Covid-19 pandemic disrupted demand in the
automotive and industrial end market in 2020, and during 2019, there was weakness in the general market and an inventory correction in the smartphone
market.
In addition, declines in global economic and financial conditions have harmed our business in the past, and future global downturns could materially and
adversely affect our business. The Covid-19 pandemic and the effects of governmental initiatives to control the pandemic have adversely affected, and may
continue to adversely affect, the economies and financial markets of many countries. Although the magnitude of any potential future impact of the Covid-
19 pandemic on our business and operations remains uncertain, the continued spread, new variants or potential re-emergence of the Covid-19 pandemic or
the occurrence of other epidemics or pandemics, and the imposition of related public health measures and travel and business restrictions may materially
and adversely impact our business, financial condition, operating results and cash flows. In addition, we have experienced, and will continue to experience
disruptions to our business operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to
perform their jobs that may impact our ability to meet customer commitments. It is difficult to predict the timing, strength or duration of any economic
slowdown caused by the Covid-19 pandemic, or which end markets will experience a slowdown, or subsequent economic recovery, which, in turn, makes it
more challenging for us to forecast our operating results, make business decisions and identify risks that may materially affect our business, sources and
uses of cash, financial condition and results of operations. Additionally, if industry conditions deteriorate, we could suffer significant losses, as we have in
the past, that could materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.
Our business may suffer if the cost, quality or supply of materials or equipment changes adversely.
We obtain the materials and equipment required for the packaging and test services performed by our factories from various vendors. We source most of
our materials, including critical materials such as leadframes, laminate substrates and gold wire, from a limited group of suppliers. A disruption to the
operations of one or more of our suppliers could extend lead times for materials and equipment and have a negative impact on our business, and the Covid-
19 pandemic has created extended lead times for some materials and equipment. To the extent the impact of the Covid-19 pandemic continues or worsens,
we anticipate having greater difficulty obtaining, or waiting longer to obtain, certain equipment, supplies and other materials necessary for performance of
our services or necessary to increase the services we provide to customers. Furthermore, fire, severe weather, earthquakes, flooding and tsunamis in the past
have impacted the supply of specialty chemicals, substrates, silicon wafers, equipment and other supplies to the electronics industry.
In addition, we purchase the majority of our materials on a purchase order basis. Our business may be harmed if we cannot obtain materials and other
supplies from our vendors in a timely manner, in sufficient quantities, at acceptable quality or at competitive prices or are unable to increase price
sufficiently to recover inflationary price increases in materials or supplies. Some of our customers are also dependent on a limited number of suppliers for
certain materials and silicon wafers. Shortages or disruptions in our customers’ supply channels could have a material adverse effect on our business,
financial condition, results of operations and cash flows.
SEC rules and related industry initiatives require diligence and disclosure regarding the use of certain minerals originating from the conflict zones of the
Democratic Republic of Congo and adjoining countries. Many of our customers’ initiatives require us to certify that the covered materials we use in our
packages do not come from the conflict areas. We incur costs associated with complying with these requirements and customer initiatives, and we may be
required to increase our efforts in the future to cover additional materials and geographic areas. These requirements and customer initiatives could affect the
pricing, sourcing and availability of materials used in the manufacture of semiconductor devices, and we cannot assure you that we will be able to obtain
conflict-free materials or other materials covered by customer initiatives in sufficient quantities and at competitive prices or that we will be able to verify
the origin of all of the materials we procure. If we are unable to meet these requirements and customer initiatives, some
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customers may move their business to other suppliers, and our reputation and business could be materially and adversely affected.
We purchase new packaging and test equipment to maintain and expand our operations. From time to time, increased demand for new equipment may
cause lead times to extend beyond those normally required by equipment vendors. For example, in the past, increased demand for equipment caused some
equipment suppliers to only partially satisfy our equipment orders in the normal time frame or to increase prices during market upturns for the
semiconductor industry. The unavailability of equipment or failures to deliver equipment on a timely basis could delay or impair our ability to meet
customer orders. If we are unable to meet customer orders, we could lose potential and existing customers. Generally, we acquire our equipment on a
purchase order basis and do not enter into long-term equipment agreements. As a result, we could experience adverse changes in pricing, currency risk and
potential shortages in equipment in a strong market, any of which could have a material adverse effect on our results of operations.
We are a large buyer of gold and other commodity materials including substrates and copper. The prices of gold and other commodities used in our
business fluctuate. Historically, we have been able to partially offset the effect of commodity price increases through price adjustments to some customers
and changes in our product designs that reduce the material content and cost, such as the use of shorter, thinner gold wire and migration to copper wire.
However, we typically do not have long-term contracts that permit us to impose price adjustments, and market conditions may limit our ability to do so.
Significant price increases may materially and adversely impact our gross margin in future periods to the extent we are unable to pass along past or future
commodity price increases to our customers.
Our operating results and cash flows have varied and may vary significantly as a result of factors that we cannot control.
Many factors could have a material adverse effect on our net sales, gross profit, operating results and cash flows or lead to significant variability of
quarterly or annual operating results. Our profitability and ability to generate cash from operations is principally dependent upon demand for
semiconductors, the utilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital
expenditures and our ability to control our costs including labor, material, overhead and financing costs.
Our net sales, gross margin, gross profit, operating income, net income and cash flows have historically fluctuated significantly from quarter to quarter as a
result of many of the following factors, over which we have little or no control and which we expect to continue to impact our business:
•
•
•
•
•
•
•
•
•
fluctuations in demand for semiconductors and conditions in the semiconductor industry generally, as well as by specific customers, such as
inventory reductions by our customers impacting demand in key markets;
changes in cost, quality, availability and delivery times of raw materials, components, equipment and labor;
our ability to achieve our major growth objectives, including transitioning second-wave customers to advanced packages and increasing our share
of the automotive and industrial end market;
changes in our capacity and capacity utilization rates;
changes in average selling prices which can occur quickly due to the absence of long-term agreements on price;
changes in the mix of the semiconductor packaging and test services that we sell;
fluctuations in our manufacturing yields;
the development, transition and ramp to high volume manufacture of more advanced silicon nodes and evolving wafer, packaging and test
technologies may cause production delays, lower manufacturing yields and supply constraints for new wafers and other materials;
the absence of backlog, the short-term nature of our customers’ commitments, double bookings by customers and deterioration in customer
forecasts and the impact of these factors, including the possible delay, rescheduling and cancellation of large orders, or the timing and volume of
orders relative to our production capacity;
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inflation, including wage inflation, and fluctuations in commodity prices, including gold, copper and other precious metals;
the timing of expenditures in anticipation of future orders;
changes in effective tax rates;
the availability and cost of financing;
leverage and debt covenants;
intellectual property transactions and disputes;
• warranty and product liability claims and the impact of quality excursions and customer disputes and returns;
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costs associated with legal claims, indemnification obligations, judgments and settlements;
political instability, conflicts and government shutdowns, civil disturbances or international events;
environmental or natural disasters such as earthquakes, typhoons and volcanic eruptions;
pandemics or other widespread illnesses that may impact our labor force, operations, liquidity, supply chain and end-user demand for products
which incorporate semiconductors, such as the Covid-19 pandemic;
costs of acquisitions and divestitures and difficulties integrating acquisitions;
our ability to attract and retain qualified personnel to support our global operations;
fluctuations in interest rates and currency exchange rates, including the potential impact of the phase-out of the London Interbank Offered Rate
(“LIBOR”) on our variable rate debt;
our ability to penetrate new end markets or expand our business in existing end markets;
dependence on key customers or concentration of customers in certain end markets, such as mobile communications and automotive; and
restructuring charges, asset write-offs and impairments.
These factors may have a material and adverse effect on our business, liquidity, results of operations, financial condition and cash flows or lead to
significant volatility in our quarterly or annual operating results. In addition, these factors may materially and adversely affect our credit ratings, which
could make it more difficult and expensive for us to raise capital and could materially and adversely affect the price of our securities.
We depend on our factories and operations in various foreign jurisdictions and many of our customers’ and vendors’ operations are also located
outside of the U.S.
We provide packaging and test services through our factories and other operations located in China, Japan, Korea, Malaysia, the Philippines, Portugal,
Singapore and Taiwan. Additionally, we recently announced that we plan to expand our operations into Vietnam. Substantially all of our property, plant and
equipment is located outside of the United States. Moreover, many of our customers and the vendors in our supply chain are located outside the U.S. The
following are some of the risks we face in doing business internationally:
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health and safety concerns, including widespread outbreak of infectious diseases, such as Covid-19;
changes in consumer demand resulting from current or expected inflation or other variations in local economies;
laws, rules, regulations and policies imposed by U.S. or foreign governments in areas such as data privacy, cybersecurity, antitrust and
competition, tax, currency and banking, labor, and environmental;
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restrictive trade barriers considered or adopted by U.S. and foreign governments applicable to the semiconductor supply chain, including laws,
rules, regulations and policies in areas such as national security, licensing requirements for exports, tariffs, customs and duties;
laws, rules, regulations and policies within China and other countries that may favor domestic companies over non-domestic companies, including
customer- or government-supported efforts to promote the development and growth of local competitors;
the payment of dividends and other payments by non-U.S. subsidiaries may be subject to prohibitions, limitations or taxes in local jurisdictions;
fluctuations in currency exchange rates, particularly the U.S. dollar to Japanese yen exchange rate for our operations in Japan;
political and social conditions, and the potential for civil unrest, terrorism or other hostilities, including military conflicts;
disruptions or delays in shipments caused by customs brokers or government agencies;
difficulties in attracting and retaining qualified personnel and managing foreign operations, including foreign labor disruptions;
difficulty in enforcing contractual rights and protecting our intellectual property rights;
potentially adverse tax consequences resulting from tax laws in the U.S. and in other jurisdictions; and
local business and cultural factors that differ from our normal standards and practices, including business practices that we are prohibited from
engaging in by the U.S. Foreign Corrupt Practices Act and other anti-corruption laws and regulations.
We have significant facilities and other investments in Korea, and there have been heightened security concerns in recent years stemming from North
Korea’s nuclear weapon and long-range missile programs as well as its military actions in the region. Furthermore, there has been a history of conflict and
tension within and among other countries in the region.
In addition, the Covid-19 pandemic has impacted, and may continue to impact, our operations and the operations of our customers and suppliers as a result
of illness, quarantines, facility closures and travel and logistics restrictions in connection with the outbreak. For example, quarantine orders and orders
restricting movement have affected, and may in the future affect, our operations in the Philippines and Malaysia. Other national, regional and local
governments have implemented, and may continue to implement, similar restrictions to mitigate the spread of Covid-19, the emergence of new variants or
the potential re-emergence of Covid-19 in jurisdictions in which we, our customers and our suppliers operate, and such restrictions may materially and
adversely impact our operations and the operations of our customers and suppliers. Such restrictions may also affect end-user demand in each geography
where our customers sell their products and services, which may materially and adversely affect demand for our services, our operating results and
financial condition.
We compete against established competitors in the packaging and test business as well as internal capabilities of IDMs and face competition from new
competitors, including foundries.
The outsourced semiconductor packaging and test services market is very competitive. We face substantial competition from established and emerging
packaging and test service providers primarily located in Asia, including companies with significantly greater processing capacity, financial resources, local
presence, research and development operations, marketing, technology and other capabilities. In addition, we may compete with electronic manufacturing
service providers or contract electronics manufacturers that also provide advanced integrated device solutions. We also may face increased competition
from domestic companies located in China, where there are government-supported efforts to promote and subsidize the development and growth of the
local semiconductor industry. We may be at a disadvantage in attempting to compete with entities associated with such government-supported initiatives
based on their lower cost of capital, access to government resources and incentives, preferential sourcing practices, stronger local relationships or
otherwise. Our competitors may also have established relationships, or enter into new strategic relationships, with one or
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more of the large semiconductor companies that are our current or potential customers, or key suppliers to these customers. Consolidation among our
competitors could also strengthen their competitive position.
Historically, we have also been dependent on the trend in outsourcing of packaging and test services by IDM and foundry customers. Our IDM and foundry
customers continually evaluate the need for outsourced services against their own in-house packaging and test services. As a result, at any time and for a
variety of reasons, IDMs and foundries may decide to shift some or all of their outsourced packaging and test services to internally sourced capacity. To the
extent we limit capacity commitments for certain customers, these customers may increase their level of in-house packaging and test capabilities, which
could make it more difficult for us to regain their business when we have available capacity. If we experience a significant loss of IDM or foundry business,
it could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows, especially during a prolonged
industry downturn.
We also face competition from contract foundries, such as Taiwan Semiconductor Manufacturing Company Limited and Samsung Electronics Co., Ltd.,
which offer full turnkey services from silicon wafer fabrication through packaging and final test. These foundries, which are substantially larger than us and
have greater financial resources than we do, have expanded their operations to include packaging and test services and may continue to expand these
capabilities in the future. If a key customer decides to purchase wafers from a semiconductor foundry that provides packaging and test services, our
business could be reduced if the customer also engages that foundry for related packaging and test services.
We cannot assure you that we will be able to compete successfully in the future against our existing or potential competitors, that our customers will not
rely on internal sources or foundries for packaging and test services or that our business, liquidity, results of operations, financial condition or cash flows
will not be materially and adversely affected by such increased competition.
We make substantial investments in equipment and facilities to support the demand of our customers, which may materially and adversely affect our
business if the demand of our customers does not develop as we expect or is adversely affected.
We make significant investments in equipment and facilities in order to service the demand of our customers. The amount of our capital expenditures
depends on several factors, including the performance of our business, our assessment of future industry and customer demand, our capacity utilization
levels and availability, advances in technology, our liquidity position and the availability of financing. Our ongoing capital expenditure requirements may
strain our cash and liquidity, and, in periods when we are expanding our capital base, we expect that depreciation expense and factory operating expenses
associated with capital expenditures to increase production capacity will put downward pressure on our gross profit, at least in the near term. From time to
time, we also make significant capital expenditures based on specific business opportunities with one or a few key customers, and the additional equipment
purchased may not be readily usable to support other customers. If demand is insufficient to fill our capacity, or we are unable to efficiently redeploy such
equipment, our capacity utilization and gross profit could be negatively impacted.
Furthermore, if we cannot generate or raise additional funds to pay for capital expenditures, particularly in some of the advanced packaging and bumping
areas, as well as research and development activities, our growth and future profitability may be materially and adversely affected. Our ability to obtain
external financing in the future is subject to a variety of uncertainties, including: our future financial condition, results of operations and cash flows; general
market conditions for financing; volatility in fixed income, credit and equity markets; and economic, political and other global conditions.
Due to our high percentage of fixed costs, we may be unable to maintain satisfactory gross margins if we are unable to achieve relatively high capacity
utilization rates.
Our operations are characterized by high fixed costs and the absence of any material backlog. Our profitability depends in part not only on pricing levels
for our packaging and test services but also on the efficient utilization of our human resources and packaging and test equipment. Increases or decreases in
our capacity utilization can significantly affect gross margins. Transitions between different packaging technologies can also impact our capacity utilization
if we do not efficiently redeploy our equipment for other packaging and test opportunities. We cannot assure you that we will be
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able to achieve consistently high-capacity utilization, and if we fail to do so, our gross margins may be negatively impacted.
In addition, our fixed operating costs have increased as a result of capital expenditures for capacity expansion. The anticipated customer demand for which
we have made capital investments may not materialize, and our sales may not adequately cover fixed costs, resulting in reduced profit levels or even
significant losses, either of which may materially and adversely impact our business, liquidity, results of operations, financial condition and cash flows.
The lack of contractually committed customer demand may materially and adversely affect our sales.
Our packaging and test business does not typically operate with any material backlog. Our quarterly net sales from packaging and test services are
substantially dependent upon our customers’ demand in that quarter. Generally, our customers do not commit to purchase any significant amount of
packaging or test services or to provide us with binding forecasts of demand for packaging and test services for any future period, in any material amount.
In addition, we sometimes experience double booking by customers, and our customers often reduce, cancel or delay their purchases of packaging and test
services for a variety of reasons including industry-wide, customer-specific and Amkor-specific reasons. This makes it difficult for us to forecast our
capacity utilization and net sales in future periods. Since a large portion of our costs is fixed and our expense levels are based in part on our expectations of
future sales, we may not be able to adjust costs in a timely manner to compensate for any sales shortfall. If we are unable to adjust costs in a timely manner,
our margins, operating results, financial condition and cash flows could be materially and adversely affected.
Additionally, while we generally purchase materials based on Amkor’s commitments to customer forecasts, and our customers are generally responsible for
any unused materials we purchase based on such commitments, due to the Covid-19 pandemic and the resulting supply chain constraints and extended lead
times, we have been placing an increasing number of our orders for materials in advance of customer forecasts. If we are unable to timely fulfill our
customers’ orders, or if we are required to bear the cost of a substantial amount of unused materials, our margins, operating results, financial condition and
cash flows could be materially and adversely affected.
Historically, there has been downward pressure on the prices of our packaging and test services.
Prices for packaging and test services have generally declined over time, and sometimes prices can change significantly in relatively short periods of time.
We expect downward pressure on average selling prices for our packaging and test services to continue in the future, and this pressure may intensify during
downturns in business. If we experience declining average selling prices and are unable to offset such declines by developing and marketing new packages
with higher prices, reducing our purchasing costs, recovering more of our material cost increases from our customers and reducing our manufacturing costs,
our business, liquidity, results of operations, financial condition and cash flows could be materially and adversely affected.
Packaging and test processes are complex, and our production yields and customer relationships may suffer from defects in the services we provide or
if we do not successfully implement new technologies.
Semiconductor packaging and test services are complex processes that require significant technological and process expertise, and in line with industry
practice, customers usually require us to pass a lengthy and rigorous qualification process that may take several months. Once qualified and in production,
defective packages primarily result from:
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contaminants in the manufacturing environment;
human error;
equipment malfunction;
changing processes to address environmental requirements;
defective raw materials; or
defective plating services.
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Test is also complex and involves sophisticated equipment and software. Similar to many software programs, these software programs are complex and
may contain programming errors or “bugs.” The test equipment is also subject to malfunction, and the test process is subject to operator error.
These and other factors have, from time to time, contributed to lower production yields. They may also do so in the future, particularly as we adjust our
capacity, change our processing steps or ramp new technologies. In addition, we must continue to develop and implement new packaging and test
technologies and expand our offering of packages to be competitive. Our production yields on new packages, particularly those packages which are based
on new technologies, typically are significantly lower than our production yields on our more established packages.
Our failure to qualify new processes, maintain quality standards or acceptable production yields, if significant and prolonged, could result in loss of
customers, increased costs of production, delays, substantial amounts of returned goods and claims by customers relating thereto. Any of these problems
could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.
Our business will suffer if we are not able to develop new proprietary technology, protect our proprietary technology and operate without infringing the
proprietary rights of others.
The complexity and scope of semiconductor packaging, SiP modules and test services are rapidly increasing. As a result, we expect to develop, acquire and
implement new manufacturing processes and packaging technologies and tools in order to respond to competitive industry conditions and customer
requirements. Technological advances may lead to rapid and significant price erosion and may make our existing packages less competitive or our existing
inventories obsolete. If we cannot achieve advances in packaging design or obtain access to advanced packaging designs developed by others, our business
could suffer.
The need to develop and maintain advanced packaging capabilities and equipment could require significant research and development, capital expenditures
and acquisitions in future years. In addition, converting to new packaging designs or process methodologies could result in delays in producing new
package types, which could impact our ability to meet customer orders and materially and adversely impact our business.
Although we seek patent protection for some of our technology under U.S. and foreign patent laws, the process of seeking patent protection takes a long
time and is expensive. There can be no assurance that patents will issue from pending or future applications or that, if patents are issued, the rights granted
under the patents will provide us with meaningful protection or any commercial advantage. Any patents we do obtain will eventually expire, may be
challenged, invalidated or circumvented and may not provide us meaningful protection or other commercial advantage.
Some of our technologies are not covered by any patent or patent application. The confidentiality agreements on which we rely to protect these
technologies may be breached and may not be adequate to protect our proprietary technologies. There can be no assurance that other countries in which we
market our services will protect our intellectual property rights to the same extent as the U.S.
Our competitors may develop, patent or gain access to know-how and technology similar or superior to our own. In addition, many of our patents are
subject to cross licenses, several of which are with our competitors. The semiconductor industry is characterized by frequent claims regarding the
infringement of patent and other intellectual property rights. If any third party makes an enforceable infringement claim against us or our customers, we
could be required to:
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discontinue the use of certain processes or cease to provide the services at issue, which could curtail our business;
pay substantial damages;
develop non-infringing technologies, which may not be feasible; or
acquire licenses to such technology, which may not be available on commercially reasonable terms or at all.
We may need to enforce our patents or other intellectual property rights, including our rights under patent and intellectual property licenses with third
parties, or defend ourselves against claimed infringement of the rights of others
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through litigation, which could result in substantial cost and diversion of our resources and may not be successful. Furthermore, if we fail to obtain
necessary licenses, our business could suffer, and we could be exposed to claims for damages and injunctions from third parties, as well as claims from our
customers for indemnification. Unfavorable outcomes in any legal proceedings involving intellectual property could result in significant liabilities or loss
of commercial advantage and could have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows. The
potential impact from the legal proceedings referred to in this Form 10-K on our results of operations, financial condition and cash flows could change in
the future.
We may face warranty claims, product return and liability risks, the risk of economic damage claims and the risk of negative publicity if our packages
fail.
Our packages are incorporated into a number of end products, and our business may be exposed to warranty claims, product return and liability risks, the
risk of economic damage claims and the risk of negative publicity if our packages fail.
We receive warranty claims from our customers from time to time in the ordinary course of our business. If we were to experience an unusually high
incidence of warranty claims, we could incur significant costs and our business could be materially and adversely affected. In addition, we are exposed to
the product and economic liability risks and the risk of negative publicity affecting our customers. Our sales may decline if any of our customers are sued
on a product liability claim. We also may suffer a decline in sales from the negative publicity associated with such a lawsuit or with adverse public
perceptions in general regarding our customers’ products. Further, if our packages are delivered with defects, we could incur additional development, repair
or replacement costs or suffer other economic losses, and our credibility and the market’s acceptance of our packages could be harmed.
Covenants in the indentures and agreements governing our current and future indebtedness could restrict our operating flexibility.
The indentures and agreements governing our existing debt, and debt we may incur in the future, contain, or may contain, affirmative and negative
covenants that materially limit our ability to take certain actions, including our ability to incur debt, pay dividends and repurchase stock, make certain
investments and other payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and encumber and dispose of assets.
In addition, certain of our debt agreements contain, and our future debt agreements may contain, financial covenants and ratios.
The breach of any of these covenants by us, or the failure by us to meet any of the financial ratios or conditions, could result in a default under any or all of
such indebtedness. If a default occurs under any such indebtedness, all of the outstanding obligations thereunder could become immediately due and
payable, which could result in a default under our other outstanding debt and could lead to an acceleration of obligations related to other outstanding debt.
The existence of such a default or event of default could also preclude us from borrowing funds under our revolving credit facilities. Our ability to comply
with the provisions of the indentures, credit facilities and other agreements governing our outstanding debt and indebtedness we may incur in the future can
be affected by events beyond our control, and a default under any debt instrument, if not cured or waived, could have a material adverse effect on us.
We may decrease or suspend our quarterly dividend, and any decrease in or suspension of the dividend could cause our stock price to decline.
Since October 2020, we have paid a regular quarterly cash dividend on our outstanding common stock. However, the payment, amount and timing of future
cash dividends are subject to the final determination each quarter by our Board of Directors or a committee thereof that there are sufficient funds available
to lawfully pay a dividend, that the dividend is compliant with the applicable restrictions in our debt agreements, and that the payment of the dividend
remains in our best interests. The determination will be based on our results of operations, financial condition, cash requirements, debt restrictions and
other factors. Given these considerations, we may increase or decrease the amount of the dividend at any time and may also decide to vary the timing of or
suspend the payment of dividends in the future. Any decrease or suspension could cause our stock price to decline.
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We have significant severance plan obligations associated with our manufacturing operations in Korea which could reduce our cash flow and
negatively impact our financial condition.
Our subsidiary in Korea maintains an unfunded severance plan under which we have an accrued liability of $73.2 million as of December 31, 2021. The
plan covers certain employees that were employed prior to August 1, 2015. In the event of a significant layoff or other reduction in our labor force in
Korea, our subsidiary in Korea would be required to make lump-sum severance payments under the plan, which could have a material adverse effect on our
liquidity, financial condition and cash flows. We have made, and may in the future make, offers to some or all of the covered employees the option to
convert from the severance plan to the defined contribution plan. Some employees have accepted previous offers, and future offers to make similar
conversions could impact the timing of future payments, reducing our cash flow and affecting our financial condition.
Mr. James J. Kim and members of his family can effectively determine or substantially influence the outcome of all matters requiring stockholder
approval.
As of December 31, 2021, Mr. James J. Kim, the Executive Chairman of our Board of Directors, Ms. Susan Y. Kim, the Executive Vice Chairman of our
Board of Directors, and members of the Kim family and affiliates owned approximately 141.9 million shares, or approximately 58%, of our outstanding
common stock. The Kim family also has options to acquire approximately 0.6 million shares. If the options are exercised, the Kim family’s total ownership
would be an aggregate of approximately 142.5 million shares of our outstanding common stock or approximately 58% of our outstanding common stock.
In June 2013, the Kim family exchanged convertible notes issued by Amkor in 2009 for approximately 49.6 million shares of common stock (the “Convert
Shares”). The Convert Shares are subject to a voting agreement. The voting agreement requires the Kim family to vote these shares in a “neutral manner”
on all matters submitted to our stockholders for a vote, so that such Convert Shares are voted in the same proportion as all of the other outstanding
securities (excluding the other shares owned by the Kim family) that are actually voted on a proposal submitted to Amkor’s stockholders for approval. The
Kim family is not required to vote in a “neutral manner” any Convert Shares that, when aggregated with all other voting shares held by the Kim family,
represent 41.6% or less of the total then-outstanding voting shares of our common stock. The voting agreement for the Convert Shares terminates upon the
earliest of (i) such time as the Kim family no longer beneficially owns any of the Convert Shares, (ii) consummation of a change of control (as defined in
the voting agreement) or (iii) the mutual agreement of the Kim family and Amkor.
Mr. James J. Kim and his family and affiliates, acting together, have the ability to effectively determine or substantially influence matters submitted for
approval by our stockholders by voting their shares or otherwise acting by written consent, including the election of our Board of Directors. There is also
the potential, through the election of members of our Board of Directors, that the Kim family could substantially influence matters decided upon by our
Board of Directors. This concentration of ownership may also have the effect of impeding a merger, consolidation, takeover or other business consolidation
involving us, or discouraging a potential acquirer from making a tender offer for our shares, and could also negatively affect our stock’s market price or
decrease any premium over market price that an acquirer might otherwise pay. Concentration of ownership also reduces the public float of our common
stock. There may be less liquidity and higher price volatility for the stock of companies with a smaller public float compared to companies with broader
public ownership. Also, the sale or the prospect of the sale of a substantial portion of the Kim family shares may cause the market price of our stock to
decline significantly.
General Risk Factors
The Covid-19 pandemic has impacted, and may continue to impact, the supply chain and consumer demand for our customers’ products and services,
and the continued impact on the supply chain and consumer demand may ultimately have a material and adverse effect on our business, results of
operations, and financial condition.
Our business has been and may continue to be adversely impacted by the effects of the Covid-19 pandemic. The impacts have varied, and likely will
continue to vary, by location, by industry and by end market. We, our suppliers and our customers have been and may continue to be disrupted by worker
illness and absenteeism, quarantines and restrictions on employees’ ability to work, office and factory closures, disruptions to ports and other shipping
infrastructure and border closures or other travel or health-related restrictions. There is considerable uncertainty regarding such restrictions and potential
future governmental restrictions. Restrictions on our workforce or access to our manufacturing facilities, or similar limitations for our suppliers, or
restrictions or disruptions of transportation, such as reduced availability of air
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transport, port closures, and increased border controls, could limit our capacity to meet customer demand and have a material adverse effect on our
business, results of operations and financial condition. Such restrictions and efforts to contain the spread of Covid-19 have caused and may continue to
cause disruptions to our supply chain in connection with the sourcing of equipment, supplies and other materials. The resumption of normal business
operations after any such restrictions are lifted may be delayed or constrained by lingering effects of the Covid-19 pandemic on our suppliers or customers
or both.
The spread of Covid-19 has caused us to modify our business practices (including corporate hygiene protocols at factories, restricting employee travel and
employee work locations and cancelling physical participation in meetings, events and conferences), and we may take further actions as may be required by
government authorities or that we determine to be in the best interests of our employees, customers and suppliers. There is no certainty that such measures
will be sufficient to mitigate the current or future impacts of the Covid-19 pandemic, and our ability to perform critical functions could be harmed. While
certain governments have started to relax Covid-19-related restrictions and many countries are offering Covid-19 vaccines to their residents, vaccination
rates remain low in many areas and there remains uncertainty around the impact of new variants or resurgences of Covid-19, when remaining restrictions
will be lifted, if additional restrictions may be initiated, the timing of distribution and administration of the vaccines globally and when or if normal
economic activity and business operations will resume.
At this time, we are unable to predict the future impacts that the Covid-19 pandemic will have on our business, financial condition or results of operations
due to various uncertainties, including the duration of the outbreak and the actions that may be taken by governmental authorities and other businesses in
response to the Covid-19 pandemic.
Our substantial indebtedness could have a material adverse effect on our financial condition and prevent us from fulfilling our obligations.
We have a substantial amount of debt, and the terms of the agreements governing our indebtedness allow us and our subsidiaries to incur more debt, subject
to certain limitations. As of December 31, 2021, our total debt balance was $1,138.0 million, of which $153.0 million was classified as a current liability
and $533.3 million was collateralized indebtedness at our subsidiaries. We may consider investments in joint ventures, increased capital expenditures,
refinancings or acquisitions which may increase our indebtedness. If new debt is added to our consolidated debt level, the related risks that we face could
increase.
Our substantial indebtedness could:
• make it more difficult for us to satisfy our obligations with respect to our indebtedness, including our obligations under our indentures to purchase
notes tendered as a result of a change in control of Amkor;
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to fund future working capital, capital expenditures, research and development and other business opportunities, including joint
ventures and acquisitions;
require us to dedicate a substantial portion of our cash flow from operations to service payments of interest and principal on our debt, thereby
reducing the availability of our cash flow to fund future working capital, capital expenditures, research and development expenditures and other
general corporate requirements;
increase the volatility of the price of our common stock;
limit our flexibility to react to changes in our business and the industry in which we operate;
place us at a competitive disadvantage to any of our competitors that have less debt;
limit, along with the financial and other covenants in our indebtedness, our ability to borrow additional funds;
limit our ability to refinance our existing indebtedness, particularly during periods of adverse credit market conditions when refinancing
indebtedness may not be available under interest rates and other terms acceptable to us or at all; and
increase our cost of borrowing.
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We are exposed to fluctuations in interest rates and changes in credit risk, which could have a material adverse impact on our earnings as it relates to
the market value of our investment portfolio.
We maintain an investment portfolio of various holdings, types and maturities. Our portfolio includes available-for-sale debt investments, the values of
which are subject to market price volatility resulting from interest rate movements, changes in credit risk and financial market conditions. If such
investments suffer market price declines, we may recognize in earnings the decline in the fair value of our investments below their cost basis when the
decline is judged to be an impairment, including an allowance for credit loss.
We may have difficulty funding liquidity needs.
We assess our liquidity based on our current expectations regarding sales and operating expenses, capital spending, dividend payments, stock repurchases,
debt service requirements and other funding needs. We fund our operations, including capital expenditures and other investments and servicing principal
and interest obligations with respect to our debt, from cash flows from our operations, existing cash and cash equivalents, borrowings under available debt
facilities, or proceeds from any additional debt or equity financing. Our liquidity is affected by, among other factors, volatility in the global economy and
credit markets, the performance of our business, our capital expenditures and other investment levels, other uses of our cash including any payments of
dividends and purchases of stock under any stock repurchase program, any acquisitions or investments in joint ventures and any decisions we might make
to either repay debt and other long-term obligations out of our operating cash flows or refinance debt at or prior to maturity with the proceeds of debt or
equity financings.
Servicing our current and future customers requires that we incur significant operating expenses and continue to make significant capital expenditures and
other investments, and the amount of our capital expenditures for 2022 and thereafter may vary materially and will depend on several factors. These factors
include, among others, the amount, timing and implementation of our capital projects, the performance of our business, economic and market conditions,
advances in technology, the cash needs and investment opportunities for the business, the need for additional capacity and facilities and the availability of
cash flows from operations or financing.
The health of the worldwide banking system and capital markets also affects our liquidity. If financial institutions that have extended credit commitments to
us are adversely affected by the conditions of the U.S., foreign or international banking system and capital markets, they may refuse or be unable to fund
borrowings under their credit commitments to us. Volatility in the banking system and capital markets, as well as any increase in interest rates or adverse
economic, political, public health or other global conditions, could also make it difficult or more expensive for us to maintain our existing credit facilities
or refinance our debt.
The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations. Such fluctuations
could impact our decision or ability to utilize the equity markets as a potential source of our funding needs in the future.
In addition, there is a risk that we could fail to generate the necessary net income or operating cash flows to meet the funding needs of our business due to a
variety of factors, including the other factors discussed in this “Risk Factors” section. If we fail to generate the necessary cash flows or we are unable to
access the capital markets when needed, our liquidity could be materially and adversely impacted.
The loss of certain customers or reduced orders or pricing from existing customers may have a material adverse effect on our operations and financial
results.
We have derived and expect to continue to derive a large portion of our revenues from a small group of customers during any particular period due in part
to the concentration of market share in the semiconductor industry. Our ten largest customers accounted for, in the aggregate, 63% of our net sales for the
year ended December 31, 2021. In addition, we have significant customer concentration within our end markets. The loss of a significant customer, a
business combination among our customers, a reduction in orders or a decrease in price from a significant customer or disruption in any of our significant
commercial arrangements may result in a decline in our sales and profitability and could have a material adverse effect on our business, liquidity, results of
operations, financial condition and cash flows.
The demand for our services from each customer is directly dependent upon that customer’s financial health, level of business activity and purchasing
decisions, the quality and price of our services, our cycle time and delivery
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performance, the customer’s qualification of additional competitors on products we package or test and a number of other factors. Each of these factors
could vary significantly from time to time resulting in the loss or reduction of customer orders, and we cannot be sure that our key customers or any other
customers will continue to place orders with us in the future at the same levels as in past periods.
For example, as seen in the automotive end market in 2020, the Covid-19 pandemic and restrictions imposed by governmental authorities to mitigate the
spread of Covid-19 in our customers’ end markets may decrease demand for our customers’ products and services, thereby adversely impacting their
demand for our services.
In addition, from time to time, we may acquire or build new facilities or migrate existing business among our facilities. In connection with these facility
changes or new facility constructions, our customers require us to qualify the new facilities even though we have already qualified to perform the services
at our other facilities. We cannot assure that we will successfully qualify facility changes, that we will complete construction of new facilities in a timely
manner or that our customers will not qualify our competitors and move the business for such services.
We face risks trying to attract, retain or replace qualified employees to support our operations.
Our success depends to a significant extent upon the continued service of our key senior management, sales and technical personnel, any of whom may be
difficult to replace. Competition for qualified employees is intensifying, accelerated by increasing competition in the semiconductor industry for talent to
meet strong demand, and our business could be materially and adversely affected by the loss of the services of any of our existing key personnel, including
senior management and technical talent, as a result of competition or for any other reason. Labor shortages could also result in higher wages that would
increase our labor costs, which could reduce our profits. Other than the agreement with our Chief Executive Officer, we do not have employment
agreements with our key employees, including senior management, or other contracts that would prevent our key employees from working for our
competitors in the event they cease working for us. We cannot assure you that we will be successful in our efforts to retain or replace key employees or in
hiring and properly training sufficient numbers of qualified personnel and in effectively managing our growth. Our inability to attract, retain, motivate and
train qualified new personnel could have a material adverse effect on our business.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
Our internal controls over financial reporting may not prevent or detect misstatements because of their inherent limitations, including the possibility of
human error, the circumvention or overriding of controls, fraud or corruption. Therefore, even effective internal controls can provide only reasonable
assurance with respect to the preparation and fair presentation of financial statements. In addition, projections concerning the effectiveness of internal
controls in future periods are subject to the risk that our internal controls may become inadequate because of changes in conditions, or that the degree of
compliance with our policies or procedures may deteriorate.
We assess our internal controls and systems on an ongoing basis, and from time-to-time, we update and make modifications to our global enterprise
resource planning system. We have implemented several significant enterprise resource planning modules and expect to implement additional enterprise
resource planning modules in the future. In addition, we have implemented new shop floor management systems in certain of our factories. There is a risk
that deficiencies may occur that could constitute significant deficiencies or, in the aggregate, a material weakness.
If we fail to remedy any deficiencies or maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties
or shareholder litigation. In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our
operating results or financial condition.
We face risks in connection with the continuing development and implementation of changes to, and maintenance and security of, our information
technology systems.
We depend on our information technology systems for many aspects of our business. Our systems may be susceptible to: damage, disruptions or shutdowns
due to failures during the process of upgrading, replacing or maintaining software, databases or components thereof, power outages, hardware failures,
interruption or failures of third-party provider systems, computer viruses, attacks by computer hackers, ransomware attacks, telecommunication failures,
user errors, malfeasance or catastrophic events. Such events have occurred in the past and may occur in the future. Cybersecurity
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breaches could result in unauthorized disclosure of confidential information or disruptions to our operations. While we have not experienced a material
information security breach in the past, we cannot be sure that such a breach will not occur in the future. The IT systems in our factories are at varying
levels of sophistication and maturity as the factories have different sets of products, processes and customer expectations. Some of our key software has
been developed by our own programmers, and this software may not be easily integrated with other software and systems. From time to time, we make
additions or changes to our information technology systems. For example, we continue to further integrate our Japan operations’ information technology
systems into our existing systems and processes. We face risks in connection with current and future projects to install or integrate new information
technology systems or upgrade our existing systems. These risks include:
•
•
•
delays in the design and implementation of the system;
costs may exceed our plans and expectations; and
disruptions resulting from the implementation, integration or cybersecurity breach of the systems may impact our ability to process transactions
and delay shipments to customers, impact our results of operations or financial condition or harm our control environment.
Our business could be materially and adversely affected if our information technology systems are disrupted or if we are unable to successfully install new
systems or improve, upgrade, integrate or expand upon our existing systems. We maintain insurance policies for various types of information security risks,
including network security and privacy liability for third party claims, and business interruption and system failure reimbursement coverage, but we do not
carry insurance for all the above referred risks. With regard to the insurance we do maintain, we cannot assure you that it would be sufficient to cover all of
our potential losses. As a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected by a
disruption, failure or breach of our information technology systems.
We face challenges as we integrate diverse operations.
We have experienced, and expect to continue to experience, change in the scope and complexity of our operations resulting primarily from existing and
future facility and operational consolidations, facility and operational expansions, strategic acquisitions, joint ventures and other partnering arrangements.
Some of the risks from these activities include those associated with the following:
•
•
•
•
•
•
increasing the scope, geographic diversity and complexity of our operations;
conforming an acquired company’s standards, practices, systems and controls with our operations;
increasing complexity from combining recent acquisitions of an acquired business;
unexpected losses of key employees or customers of an acquired business;
difficulties in the assimilation of acquired operations, technologies or products; and
diversion of management and other resources from other parts of our operations and adverse effects on existing business relationships with
customers.
In connection with these activities, we may:
•
•
•
•
•
incur costs associated with personnel reductions and voluntary retirement programs;
record restructuring charges to cover costs associated with facility consolidations and related cost reduction initiatives;
use a significant portion of our available cash;
incur substantial debt;
issue equity securities, which may dilute the ownership of current stockholders;
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•
•
incur or assume known or unknown contingent liabilities; and
incur large, immediate accounting write offs and face antitrust or other regulatory inquiries or actions.
For example, the businesses we have acquired had, at the time of acquisition, multiple systems for managing their own production, sales, inventory and
other operations. Migrating these businesses to our systems typically is a slow, expensive process requiring us to divert significant resources from other
parts of our operations. We may continue to face these challenges in the future. As a result of the risks discussed above, the anticipated benefits of these or
other future acquisitions, consolidations and partnering arrangements may not be fully realized, if at all, and these activities could have a material adverse
effect on our business, financial condition and results of operations.
We could suffer adverse tax and other financial consequences if there are changes in tax laws or taxing authorities do not agree with our interpretation
of applicable tax laws, including whether we continue to qualify for tax holidays, or if we are required to establish or adjust valuation allowances on
deferred tax assets.
We earn a substantial portion of our income in foreign countries, and our operations are subject to tax in multiple jurisdictions with complicated and varied
tax regimes. Tax laws and income tax rates in these jurisdictions are subject to change due to economic and political conditions. Changes in the tax laws of
foreign jurisdictions could arise as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic
Cooperation and Development (“OECD”). The OECD, which represents a coalition of member countries, recommended changes to long-standing tax
principles related to transfer pricing and has developed new proposals including establishing a global minimum corporate income tax (tested on a
jurisdictional basis). Changes in U.S. or foreign tax laws, including new or modified guidance with respect to existing tax laws, could have a material
adverse impact on our liquidity, results of operations, financial condition and cash flows.
Our tax liabilities are based, in part, on our corporate structure, interpretations of various U.S. and foreign tax laws, including withholding tax, compliance
with tax holiday requirements, application of changes in tax law to our operations and other relevant laws of applicable taxing jurisdictions. From time to
time, taxing authorities may conduct examinations of our income tax returns and other regulatory filings. We cannot assure you that the taxing authorities
will agree with our interpretations, including whether we continue to qualify for tax holidays. If they do not agree, we may seek to enter into settlements
with the taxing authorities. We may also appeal a taxing authority’s determination to the appropriate governmental authorities, but we cannot be sure we
will prevail. If we do not prevail or if we enter into settlements with taxing authorities, we may have to make significant payments or otherwise record
charges (or reduce tax assets) that materially and adversely affect our results of operations, financial condition and cash flows. Additionally, certain of our
subsidiaries operate under tax holidays, which will expire in whole or in part at various dates in the future. As those tax holidays expire, we expect that our
tax expense will increase as income from those jurisdictions becomes subject to higher statutory income tax rates, thereby reducing our liquidity and cash
flow.
We monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance. In evaluating our
ability to recover our deferred tax assets, in the jurisdiction from which they arise, we consider all available positive and negative evidence, including
scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and results of recent operations. For most of our
foreign deferred tax assets, we believe that we will have sufficient taxable income to allow us to realize these deferred tax assets. In the event taxable
income falls short of current expectations, we may need to establish a valuation allowance against such deferred tax assets that, if required, could materially
and adversely affect our results of operations.
Environmental, health and safety liabilities and expenditures could have a material adverse effect on our business, results of operation and financial
condition.
Environmental, health and safety laws and regulations in places we do business impose various controls on the use, storage, handling, discharge and
disposal of chemicals used or generated in, or emitted by, our production processes, on the factories we occupy and on the materials contained in
semiconductor products. For example, at our foreign facilities we produce liquid waste when semiconductor wafers are diced into chips with the aid of
diamond saws, then cooled with running water. In addition, semiconductor packages have historically utilized metallic alloys containing lead (Pb) within
the interconnect terminals typically referred to as leads, pins or balls, and the European Union’s Restriction of Hazardous Substances in Electrical and
Electronic Equipment directive and similar laws in other jurisdictions, including China, impose strict restrictions on the placement into the market of
electrical and electronic equipment containing lead and
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certain other hazardous substances. We may become liable under these and other environmental, health and safety laws and regulations, including for the
cost of compliance and cleanup of any disposal or release of hazardous materials arising out of our former or current operations, or otherwise as a result of
the emission of greenhouse gasses or other chemicals, the existence of hazardous materials on our properties or the existence of hazardous substances in the
products for which we perform our services. We could also be held liable for damages, including fines, penalties and the cost of investigations and remedial
actions, we could be subject to revocation of permits, which may materially and adversely affect our ability to maintain or expand our operations.
Additionally, if Amkor is unable to align its environmental, health and safety practices with shifting customer preferences, we could suffer reputational
harm, which could have a material and adverse effect on our business, results of operations, liquidity and cash flows.
There has also been an increase in public attention and industry and customer focus on the materials contained in semiconductor products, the
environmental impact of semiconductor operations and the risk of chemical releases from such operations, climate change, sustainability and related
environmental concerns. This increased focus on sustainability and the environmental impact of semiconductor operations and products has caused industry
groups and customers to impose additional requirements on us and our suppliers, sometimes exceeding regulatory standards. These industry and customer
requirements include increased tracking and reporting of greenhouse gas emissions, reductions in waste and wastewater from operations, additional
reporting on the materials and components used in the products for which we perform our services, and the use of renewable energy sources in our factory
operations. To comply with these additional requirements, we may need to procure additional equipment or make factory or process changes and our
operating costs may increase.
Our business and financial condition could be adversely affected by natural disasters and other calamities, health conditions or pandemics, political
instability, hostilities or other disruptions.
We have significant packaging and test and other operations in China, Japan, Korea, Malaysia, the Philippines, Portugal, Singapore and Taiwan, and we
have announced our intention to expand our operations to Vietnam. Such operations are or could be subject to: natural disasters, such as earthquakes,
tsunamis, typhoons, floods, droughts, volcanoes and other severe weather and geological events, and other calamities, such as fire; the outbreak of
infectious diseases (such as Covid-19 and other coronaviruses, Ebola or flu); industrial strikes; government-imposed travel restrictions or quarantines;
breakdowns of equipment; difficulties or delays in obtaining materials, equipment, utilities and services; political events or instability; acts of war, armed
conflict, terrorist incidents and other hostilities in regions where we have facilities; and industrial accidents and other events, that could disrupt or even
shutdown our operations. While our global manufacturing footprint allows us to shift production to other factories without substantial cost or production
delays, certain of our services are currently performed using equipment located in one or a subset of our factories. A major disruption or shutdown of any
such factory could completely impair our ability to perform those services or require us to shift them to another location. As a result, our ability to fulfill
customer orders may be impaired or delayed, and we could incur significant losses.
For example, in April 2016, our Kumamoto factory was damaged by earthquakes in Japan. As a result of these earthquakes, our sales were reduced due to
the temporary disruption in operations, and we incurred earthquake-related costs for damaged inventory, buildings and equipment. Our suppliers and
customers also have significant operations in such locations, and this could compound the effect of any such disruption. In the event of such a disruption or
shutdown, we may be unable to reallocate production to other facilities in a timely or cost-effective manner (if at all), and we may not have sufficient
capacity, or customer approval, to service customer demands in our other facilities. A natural disaster or other calamity, political instability, the occurrence
of hostilities or other event that results in a prolonged disruption to our operations, or the operations of our customers or suppliers, could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
In addition, some of the processes that we utilize in our operations place us at risk of fire and other damage. For example, highly flammable gases are used
in the preparation of wafers holding semiconductor devices for flip chip packaging.
We maintain insurance policies for various types of property, casualty and other risks, but we do not carry insurance for all the above referred risks. With
regard to the insurance we do maintain, we cannot assure you that it would be sufficient to cover all of our potential losses. As a result, our business,
financial condition, results of operations and cash flows could be materially and adversely affected by natural disasters and other calamities.
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Item 1B.
Unresolved Staff Comments
None.
Item 2.
Properties
The location and size of our manufacturing and research and development facilities are set forth in the table below. All facilities are owned unless
otherwise specified. Generally, our facilities are collateral for indebtedness incurred by our subsidiary for the jurisdiction in which the facilities are located.
China (1)
Japan
Korea
Malaysia (1)
Philippines (2)
Portugal
Taiwan (1)
Total all facilities
(1) Land is leased.
Owned
Approximate Facility Size
(Square Feet)
Leased
Total
1,347,000
1,488,000
4,419,000
386,000
765,000
519,000
1,098,000
10,022,000
—
329,000
—
—
557,000
—
16,000
902,000
1,347,000
1,817,000
4,419,000
386,000
1,322,000
519,000
1,114,000
10,924,000
(2) As a result of foreign ownership restrictions in the Philippines, the land is leased. A portion of the land we lease is owned by realty companies in
which we own a 40% interest.
During 2021, we signed a land lease for a new manufacturing facility in Bac Ninh, Vietnam. We anticipate beginning construction of the new facility
during 2022.
Our executive offices, which are leased, are located in Tempe, Arizona and Singapore. We believe that our existing properties are in good condition and
suitable for the conduct of our business and that the productive capacity of such properties is substantially being utilized or we have plans to utilize it.
Item 3.
Legal Proceedings
From time to time, we may become involved in various disputes and litigation matters that arise in the ordinary course of our business. These include
disputes and lawsuits related to intellectual property, acquisitions, licensing, contracts, tax, regulatory compliance, employee relations and other matters.
For a discussion of our material legal proceedings, see Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
LISTING ON THE NASDAQ GLOBAL SELECT MARKET
PART II
Our common stock is traded on the NASDAQ Global Select Market under the symbol “AMKR.” There were approximately 120 holders of record of our
common stock as of February 11, 2022.
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DIVIDEND POLICY
In October 2020, our Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. Each quarter since the adoption
of this dividend policy, the Company has declared and paid a quarterly dividend. In November 2021, our Board of Directors approved a quarterly dividend
of $0.05 per share, representing a 25% increase.
We currently anticipate that we will continue to pay quarterly cash dividends in the future. However, the payment, amount and timing of future dividends
remain within the discretion of our Board of Directors and will depend upon our results of operations, financial condition, cash requirements, debt
restrictions and other factors. Refer to the “Liquidity” section in Item 7 of this Form 10-K for additional information.
RECENT SALES OF UNREGISTERED SECURITIES
None.
EQUITY COMPENSATION PLANS
The information required by this item regarding equity compensation plans is set forth in Part III, Item 12 of this Form 10-K.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table provides information regarding repurchases of our common stock during the three months ended December 31, 2021:
Period
Total Number of Shares
Purchased (a)
Average Price Paid Per Share
($)
Total Number of Shares
Purchased as part of Publicly
Announced Plans or Programs
(b)
Approximate Dollar Value of
Shares that May Yet Be
Purchased Under the Plans or
Programs ($) (b)
October 1 - October 31
November 1 - November 30
December 1 - December 31
Total
— $
—
173
173
—
—
22.60
22.60
— $
—
—
—
91,586,032
91,586,032
91,586,032
(a) Represents shares of common stock surrendered to us to satisfy tax withholding obligations associated with share-based compensation awards
issued to employees.
(b) On August 30, 2011, we announced that our Board of Directors had authorized the repurchase of up to $150.0 million of our common stock,
exclusive of any fees, commissions or other expenses, under the Stock Repurchase Program. On February 1, 2012, we announced that the Board
of Directors had authorized an additional $150.0 million for the repurchase of our common stock under the Stock Repurchase Program, resulting
in a total repurchase authorization under the Stock Repurchase Program of $300.0 million. Pursuant to the Stock Repurchase Program, we made
no common stock purchases for the three months ended December 31, 2021, and at December 31, 2021, approximately $91.6 million was
available for repurchase. Repurchases of our common stock under the Stock Repurchase Program are funded with available cash, and the Stock
Repurchase Program may be suspended or discontinued at any time.
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PERFORMANCE GRAPH
(1)(2)
(1) The preceding Stock Performance Graph is not deemed filed with the SEC and shall not be incorporated by reference in any of our filings under the
Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing. The stock performance shown on the performance graph above is not necessarily indicative of future performance. We will
not make or endorse any predictions as to Amkor’s future stock performance.
(2) We have added the S&P MidCap 400 index to the performance graph above because we believe that the companies included in that index are most
closely aligned with Amkor’s market capitalization.
The following table sets forth the cumulative total returns included in the preceding Stock Performance Graph for the years ended December 31, 2016
through 2021:
Amkor Technology, Inc.
S&P 500
PHLX Semiconductor
S&P Midcap 400
For the Year Ended December 31,
2016
2017
2018
2019
2020
2021
$
100.00 $
100.00
100.00
100.00
95.26 $
121.83
140.54
116.24
62.18 $
116.49
132.05
103.36
123.22 $
153.17
215.58
130.44
143.31 $
181.35
331.27
148.26
237.26
233.41
473.22
184.96
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Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section includes comparisons of certain 2021 financial information to the same information for 2020. For discussion of 2020 results in comparison
with 2019 results refer to “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K
filed with the SEC on February 19, 2021.
Overview
Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Our financial goal is profitable sales growth. To
achieve this goal, we are focused on leveraging our leadership position in services for advanced technologies, optimizing utilization of existing assets,
broadening our customer base and selectively growing our scale and scope through strategic investments.
We are an industry leader in developing and commercializing advanced packaging and test technologies. We believe these advanced technology solutions
provide substantial value to our customers, particularly in the mobile communications market, where growth generally outpaces the overall semiconductor
industry. Advanced packages are now the preferred choice in both the high-end and the mid-range segments of the smartphone market, which together
account for a high portion of mobile phone semiconductor value. The demand for advanced packages is also being driven by second-wave mobile device
customers, who are transitioning out of wirebond into wafer-level and flip-chip packages. Interest in advanced packages for automotive applications is
growing as well, largely due to new, data-intensive applications, which require increased pin count and performance. We believe that our technology
leadership and this technology transition create significant growth opportunities for us.
We typically look for opportunities in the advanced packaging and test areas where we can generate reasonably quick returns on investments made for
customers seeking leading edge technologies. We also focus on developing a second wave of customers to fill the capacity that becomes available when
leading edge customers transition to newer packaging and test equipment and platforms. In addition, we are seeking to add new customers and to deepen
our engagement with existing customers. This includes an expanded emphasis on the automotive and industrial end market where semiconductor content
continues to grow and in the analog area for our mainstream wirebond technologies.
From time to time, we identify attractive opportunities to grow our customer base and expand the markets we serve through expansion of our operations,
joint ventures, acquisitions and other strategic investments. For example, we have recently announced plans to expand our operations to Vietnam through
the construction of a new factory. We believe that taking advantage of these opportunities helps to diversify our revenue streams, improve our profits,
broaden our portfolio of services and maintain our technological leadership.
As a supplier in the semiconductor industry, our business is cyclical and impacted by broad economic factors. Historical trends indicate there has been a
strong correlation between worldwide gross domestic product levels, consumer spending and semiconductor industry cycles. The semiconductor industry
has experienced significant and sometimes prolonged cyclical upturns and downturns in the past. We cannot predict the timing, strength or duration of any
correction, economic slowdown or subsequent economic recovery.
The full potential effect of the ongoing Covid-19 pandemic is unknown, and there remains uncertainty related to the ultimate impact that the Covid-19
pandemic will have on the global economy, the semiconductor industry and our business, results of operations and financial condition. While our revenue
increased significantly in the year ended December 31, 2021, and we were able to successfully ramp new products during the year, we are subject to
industry-wide supply constraints, and these constraints had an effect of restraining growth in some of the end markets we serve. We expect these constraints
to persist throughout 2022. For additional information regarding the potential impact of macroeconomic factors, the Covid-19 pandemic and other risks on
our business, results of operations and financial condition, please refer to the “Risk Factors” section in Part I, Item 1A of this Form 10-K.
We operate in a capital-intensive industry. Servicing our current and future customers requires that we incur significant operating expenses and continue to
make significant capital expenditures, which are generally made in advance of the related revenues and without firm customer commitments. We fund our
operations, including capital expenditures and
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debt service requirements, with cash flows from operations, existing cash and cash equivalents, short-term investments, borrowings under available credit
facilities and proceeds from any additional financing. Maintaining an appropriate level of liquidity is important to our business and depends on, among
other considerations, the performance of our business, our capital expenditure levels, our ability to repay debt out of our operating cash flows or proceeds
from debt or equity financings and our investment strategy. As of December 31, 2021, we had cash and cash equivalents and short-term investments of
$826.7 million and $251.5 million, respectively.
Our net sales, gross profit, operating income, cash flows, liquidity and capital resources have historically fluctuated significantly from quarter to quarter
due to many factors, including the seasonality of our business, the cyclical nature of the semiconductor industry and other factors discussed in Part 1, Item
1A of this Form 10-K.
2021 Financial Summary
Our net sales increased $1,087.7 million or 21.5% to $6,138.3 million in 2021 from $5,050.6 million in 2020. The increase was attributable to higher sales
in all end markets led by the further adoption of 5G smartphones in the communications end market.
Gross margin increased to 20.0% in 2021 compared to 17.8% in 2020. The increase in gross margin was primarily due to the increase in volume across all
of our end markets.
Operating income margin expanded 330 basis points to 12.4% in 2021 from 9.1% in 2020. The increase in our operating income margin was primarily due
to our increase in net sales and expansion in gross margin discussed above along with disciplined cost control.
In 2021, our capital expenditures totaled $779.8 million, or 12.7% of net sales compared to $553.0 million, or 10.9% of net sales in 2020. Our spending
was primarily focused on investments in advanced packaging and test equipment.
Net cash provided by operating activities was $1,121.3 million for the year ended December 31, 2021, compared to $770.0 million for the year ended
December 31, 2020. This increase was primarily due to higher net sales, higher operating profit and an increase in contract liabilities due to customer
advance payments. This increase was offset by changes in working capital.
In November 2021, our Board of Directors approved a quarterly dividend of $0.05 per share, a 25% increase. In 2021, we paid total quarterly cash
dividends of $51.2 million.
In November 2021, we announced our plans for a new factory location in Bac Ninh, Vietnam. Construction of the first phase is expected to commence in
2022, and high volume manufacturing is expected to begin in mid-2023. Our initial investment is expected to be between $200 million and $250 million.
Results of Operations
The following table sets forth certain operating data as a percentage of net sales for the periods indicated:
Net sales
Materials
Labor
Other manufacturing costs
Gross margin
Operating income
Net income attributable to Amkor
2021
For the Year Ended December 31
2020
2019
100.0 %
46.1 %
12.3 %
21.6 %
20.0 %
12.4 %
10.5 %
100.0 %
45.5 %
13.4 %
23.3 %
17.8 %
9.1 %
6.7 %
100.0 %
40.0 %
16.0 %
28.0 %
16.0 %
5.8 %
3.0 %
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Net Sales
Net sales
$
6,138,329 $
5,050,589 $
4,052,650 $
1,087,740
21.5 % $
997,939
24.6 %
2021
2020
2019
2021 over 2020
2020 over 2019
(In thousands, except percentages)
Change
The $1.1 billion increase in net sales in 2021 compared to 2020 was due to higher sales across all end markets. Sales in the communications end market
represented 42% of the increase, driven primarily by the further adoption of 5G smartphones. The automotive and industrial end market recovered in the
current year from weakened demand relating to the Covid-19 pandemic in the prior year, representing 25% of our growth in net sales. Sales in the
computing end market accounted for 20% of the increase in 2021 due to growth in all applications, primarily due to the shift in cloud computing needs and
new product introductions within personal computing. The consumer end market continues to see strong sales, primarily due to demand for both home and
personal electronics, and made up the remaining 13% of the increase compared to 2020.
Gross Profit and Gross Margin
Gross profit
Gross margin
2021
2020
2019
2021 over 2020
2020 over 2019
(In thousands, except percentages)
$
1,225,554
$
900,814
$
649,439
$
324,740
$
251,375
20.0 %
17.8 %
16.0 %
2.2 %
1.8 %
Change
Our cost of sales consists principally of materials, labor, depreciation and manufacturing overhead. Since a substantial portion of the costs at our factories is
fixed, there tends to be a strong relationship between our revenue levels and gross margin. Accordingly, relatively modest increases or decreases in revenue
can have a significant effect on margin and on labor and other manufacturing costs as a percentage of revenue, depending upon product mix, utilization and
seasonality. Recently, we have expanded our business in advanced SiP modules, which tend to have higher material costs when compared to our other
products. As we continue to increase production of these higher material cost modules, there could be an impact on our profitability, depending on overall
utilization.
Gross profit and gross margin for 2021 increased compared to 2020, primarily due to the increase in net sales. The increase was partially offset by an
increase in fixed costs from our expanded capacity investments and an increase in the mix of products sold with higher material costs.
Selling, General and Administrative
Selling, general and administrative $
296,084 $
302,842 $
(In thousands, except percentages)
278,631 $
(6,758)
(2.2)% $
24,211
8.7 %
2021
2020
2019
2021 over 2020
2020 over 2019
Change
Selling, general and administrative expenses decreased in 2021 compared to 2020. The decrease was primarily due to a reduction of $15.1 million in costs
incurred for factory consolidation efforts in Japan compared to the prior year. These decreases were partially offset by increased professional fees.
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Research and Development
Research and development
$
166,037 $
140,727 $
(In thousands, except percentages)
137,638 $
25,310
18.0 % $
3,089
2.2 %
2021
2020
2019
2021 over 2020
2020 over 2019
Change
Research and development activities are focused on developing new packaging and test services and improving the efficiency and capabilities of our
existing production processes. The costs related to our technology and product development projects are included in research and development expense
until the project moves into production. Once production begins, the costs relating to production become part of the cost of sales, including ongoing
depreciation for the equipment previously held for research and development activities. Research and development expenses in 2021 increased compared to
2020 due to new development projects in advanced packaging technologies, primarily advanced SiP modules.
Other Income and Expense
2021
2020
2019
2021 over 2020
2020 over 2019
Change
Interest expense
Interest income
Foreign currency (gain) loss, net
Loss on debt retirement
Other
Total other expense, net
$
$
51,508 $
(1,065)
723
—
(2,799)
48,367 $
64,168 $
(5,449)
9,608
3,042
(806)
70,563 $
(In thousands, except percentages)
71,587 $
(6,655) $
1,944
8,536
(2,052)
73,360 $
(12,660)
4,384
(8,885)
(3,042)
(1,993)
(22,196)
(19.7)% $
(80.5)% $
(92.5)%
(100.0)%
>100%
(31.5)% $
(7,419)
1,206
7,664
(5,494)
1,246
(2,797)
(10.4)%
(18.1)%
>100%
(64.4)%
(60.7)%
(3.8)%
Interest expense decreased in 2021 compared to 2020, primarily due to the decrease in our average outstanding debt throughout the year.
Interest income decreased in 2021 compared to 2020, primarily due to lower interest rates in the overall market.
The changes in foreign currency (gain) loss, net for 2021 compared to 2020 were due to foreign currency exchange rate movements, mainly the Korean
won, and the associated impact on our net monetary exposure at our foreign subsidiaries.
Income Tax Expense
Income tax expense
Effective tax rate
$
69,459
$
46,183
$
37,182
$
23,276 $
9,001
9.7 %
11.9 %
23.3 %
2021
2020
2019
(In thousands, except percentages)
2021 over 2020
Change
2020 over 2019
Income tax expense, which includes foreign withholding taxes and minimum taxes, reflects the applicable tax rates in effect in the various countries where
our income is earned and is subject to volatility depending on the relative mix of earnings in each location.
The effective tax rate is below the U.S. statutory rate of 21% primarily due to lower tax rates applicable to our operations in some foreign jurisdictions
where we earn income. The effective tax rate in 2020 includes a $20.2 million income tax benefit from the recognition of deferred tax assets we expect to
utilize in future years.
During 2021, 2020 and 2019, our subsidiaries in Korea, the Philippines and Singapore operated under various tax holidays. The tax holidays granted to
certain operations in the Philippines expired during 2020 and 2021. As these tax
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holidays expire, income earned in these jurisdictions will be subject to higher statutory income tax rates, which may cause our effective tax rate to increase.
See Note 4 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information about our income tax expense.
Liquidity
We assess our liquidity based on our current expectations regarding sales and operating expenses, capital spending, dividend payments, stock repurchases,
debt service requirements and other funding needs. Based on this assessment, we believe that our cash flow from operating activities, together with existing
cash and cash equivalents, short-term investments and availability under our credit facilities, will be sufficient to fund our working capital, capital
expenditures, dividend payments, debt service and other financial requirements for at least the next twelve months.
Our liquidity is affected by, among other factors, volatility in the global economy and credit markets, the performance of our business, our capital
expenditure levels, other uses of our cash including any dividends and purchases of stock under any stock repurchase program, any acquisitions, joint
ventures or other investments and our ability to either repay debt out of operating cash flow or refinance it at or prior to maturity with the proceeds from
debt or equity offerings. There can be no assurance that we will generate the necessary net income or operating cash flows, or be able to borrow sufficient
funds, to meet the funding needs of our business beyond the next twelve months due to a variety of factors, including the cyclical nature of the
semiconductor industry and other factors discussed in Part I, Item 1A of this Form 10-K.
Our primary source of cash and the source of funds for our operations are cash flows from operations, current cash and cash equivalents, short-term
investments, borrowings under available credit facilities and proceeds from any additional debt or equity financings. Please refer to Note 6 and Note 11 to
our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information on our investments and borrowings, respectively.
As of December 31, 2021, we had cash and cash equivalents and short-term investments of $1,078.3 million. Included in our cash and short-term
investments balances as of December 31, 2021, is $918.4 million held offshore by our foreign subsidiaries. We have the ability to access cash held offshore
by our foreign subsidiaries primarily through the repayment of intercompany debt obligations. If we were to distribute this offshore cash to the U.S. as
dividends from our foreign subsidiaries, the dividends generally would not be subject to U.S. federal income tax. For the year ended December 31, 2021,
we estimate that repatriation of this foreign cash and short-term investments would generate withholding taxes and state income taxes of approximately $35
million.
As of December 31, 2021, our net liability associated with unrecognized tax benefits is $38.3 million. Due to the uncertainty regarding the amount and
timing of any future cash outflows associated with our unrecognized tax benefits, we are unable to reasonably estimate the amount and period of ultimate
settlement, if any, with the various taxing authorities.
For certain accounts receivable, we use non-recourse factoring arrangements with third party financial institutions to manage our working capital and cash
flows. Under these arrangements, we sell receivables to a financial institution for cash at a discount to the face amount. Available capacity under these
arrangements is dependent on the level of our trade accounts receivable eligible to be sold, the financial institutions’ willingness to purchase such
receivables and the limits provided by the financial institutions. These factoring arrangements can be reduced or eliminated at any time due to market
conditions and changes in the credit worthiness of customers. For the year ended December 31, 2021 and 2020, we sold accounts receivable totaling $464.4
million and $499.3 million, net of discounts and fees of $1.2 million and $2.9 million, respectively.
We operate in a capital-intensive industry. Servicing our current and future customers may require that we incur significant operating expenses and make
significant investments in equipment and facilities, which are generally made in advance of the related revenues and without firm customer commitments.
The borrowing base under our $250.0 million first lien senior secured revolving credit facility (the “Singapore Revolver”) entered into by our subsidiary,
Amkor Technology Singapore Holding Pte, Ltd. (“ATSH”), is limited to the amount of eligible accounts receivable. As of December 31, 2021, we had
availability of $250.0 million and no
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outstanding standby letters of credit. As of December 31, 2021, our foreign subsidiaries had $316.0 million available for future borrowings under revolving
credit facilities, including the Singapore Revolver, and $222.4 million available to be borrowed under term loan credit facilities for working capital
purposes and capital expenditures. For additional information regarding the Singapore Revolver, please refer to Note 11 to our Consolidated Financial
Statements in Part II, Item 8 of this Form 10-K.
As of December 31, 2021, we had debt of $1,138.0 million, with $153.0 million payable within 12 months. As of December 31, 2021, the interest payment
obligations, based on stated coupon rates for fixed rate debt and interest rates applicable at December 31, 2021 for variable rate debt, were $235.6 million
during the remaining term of the debt. Interest payment obligations payable within 12 months is $44.4 million. We were in compliance with all debt
covenants as of December 31, 2021, and we expect to remain in compliance with these covenants for at least the next twelve months. For additional
information regarding our debt arrangements, please refer to Note 11 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Certain of our debt agreements have restrictions on dividend payments and the repurchase of stock and subordinated securities. These restrictions are
determined in part by our covenant compliance and on calculations based upon cumulative net income or, in the case of our Singapore Revolver, borrowing
availability, and do not currently have a material impact on our ability to make dividend payments or stock repurchases.
The debt of Amkor Technology, Inc. is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries.
From time to time, Amkor Technology, Inc. and certain of our subsidiaries also guarantee certain debt of our other subsidiaries.
In order to reduce our debt and future cash interest payments, we may from time to time repurchase or redeem our outstanding notes for cash or exchange
shares of our common stock for our outstanding notes. Any such transaction may be made in the open market, through privately negotiated transactions or
otherwise, and would be subject to the terms of our indentures and other debt agreements, market conditions and other factors.
Our subsidiary in Korea maintains an unfunded severance plan that covers certain employees that were employed prior to August 1, 2015. As of December
31, 2021, the severance liability was $73.2 million, with $8.2 million payable within 12 months. Accrued severance benefits are estimated assuming all
eligible employees were to terminate their employment at the balance sheet date. For service periods subsequent to August 1, 2015, employees participate
in either a defined benefit pension plan or a defined contribution pension plan. From time to time, we may offer employees the option to convert from the
severance plan to the defined contribution plan which would require us to fund the converted portion of the liability. In addition, as of December 31, 2021,
we had foreign pension plan obligations of $55.2 million, for which the timing and actual amount of impact on our future cash flow is uncertain. For
additional information regarding our pension and severance plans, please refer to Note 12 to our Consolidated Financial Statements in Part II, Item 8 of this
Form 10-K.
We lease certain machinery and equipment, office space, and manufacturing facilities. As of December 31, 2021, our total remaining operating lease
obligations and finance lease obligations were $158.7 million and $89.6 million, respectively, with $68.7 million and $33.2 million payable within 12
months, respectively. The lease obligations represent our future minimum lease payments including interest payments. For additional information regarding
our leases, please refer to Note 9 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
We had off-balance sheet purchase obligations for capital expenditures, long-term supply contracts and other contractual commitments. As of December
31, 2021, the purchase obligations were $460.1 million, with $432.8 million payable within 12 months.
In 2021, we paid total quarterly cash dividends of $51.2 million. We currently anticipate that we will continue to pay quarterly cash dividends in the future.
However, the payment, amount and timing of future dividends remain within the discretion of our Board of Directors and will depend upon our results of
operations, financial condition, cash requirements, debt restrictions and other factors.
Our Board of Directors previously adopted a stock repurchase program (the “Stock Repurchase Program”) authorizing the repurchase of up to $300.0
million of our common stock, exclusive of any fees, commissions or other expenses. Under the Stock Repurchase Program, the purchase of stock may be
made in the open market or through privately
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negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by us at our discretion and will depend upon a variety
of factors including economic and market conditions, the cash needs and investment opportunities for the business, the current market price of our stock,
applicable legal requirements and other factors. We have not purchased any stock under the Stock Repurchase Program since 2012. At December 31, 2021,
approximately $91.6 million was available to repurchase common stock pursuant to the Stock Repurchase Program.
Capital Resources
We make significant capital expenditures in order to service the demand of our customers, which are primarily focused on investments in advanced
packaging and test equipment. In 2021, our capital expenditures totaled $779.8 million or approximately 12.7% of net sales.
We expect that our 2022 capital expenditures will be approximately $950 million, approximately $100 million of which we expect to spend on the
construction of our new Vietnam factory. Ultimately, the amount of our 2022 capital expenditures will depend on several factors including, among others,
the timing and implementation of any capital projects under review, the performance of our business, economic and market conditions, the cash needs and
investment opportunities for the business, the need for additional capacity to service anticipated customer demand, equipment lead times and the
availability of cash flows from operations or financing.
In addition, we are subject to risks associated with our capital expenditures, including those discussed in Part I, Item 1A of this Form 10-K under the
caption “We make substantial investments in equipment and facilities to support the demand of our customers, which may materially and adversely affect
our business if the demand of our customers does not develop as we expect or is adversely affected.”
Cash Flows
Net cash provided by (used in) operating, investing and financing activities for each of the three years ended December 31, 2021 was as follows:
Operating activities
Investing activities
Financing activities
2021
For the Year Ended December 31
2020
(In thousands)
2019
$
1,121,295 $
(943,879)
(30,102)
770,033 $
(638,705)
(333,719)
563,850
(462,489)
108,250
Operating activities: Our cash flow provided by operating activities for the year ended December 31, 2021 increased by $351.3 million compared to the
year ended December 31, 2020, primarily due to higher net sales, higher operating profit and an increase in contract liabilities due to customer advance
payments. This increase was offset by changes in working capital.
Investing activities: Our cash flow used in investing activities for the year ended December 31, 2021 increased by $305.2 million compared to the year
ended December 31, 2020, primarily due to increased payments related to property, plant and equipment and increased net payments for foreign currency
forward contracts. Payments for property, plant and equipment can fluctuate based on the timing of purchase, receipt and acceptance of equipment.
Financing activities: The net cash used in financing activities for the year ended December 31, 2021 was primarily due to dividend payments, partially
offset by net debt borrowing in Korea. The net cash used in financing activities for the year ended December 31, 2020 was primarily due to the net debt
repayments in Korea and Taiwan.
We provide the following supplemental data to assist our investors and analysts in understanding our liquidity and capital resources. We define free cash
flow as net cash provided by operating activities less payments for property, plant and equipment, plus proceeds from the sale of and insurance recovery for
property, plant and equipment, if applicable. Free cash flow is not defined by U.S. GAAP. We believe free cash flow to be relevant and useful information
to our investors
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because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free
cash flow in evaluating our liquidity, our ability to service debt, our ability to fund capital expenditures and our ability to pay dividends and the amount of
dividends to be paid. However, free cash flow has certain limitations, including that it does not represent the residual cash flow available for discretionary
expenditures since other, non-discretionary expenditures, such as mandatory debt service, are not deducted from the measure. The amount of mandatory
versus discretionary expenditures can vary significantly between periods. This measure should be considered in addition to, and not as a substitute for, or
superior to, other measures of liquidity or financial performance prepared in accordance with U.S. GAAP, such as net cash provided by operating activities.
Furthermore, our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.
Net cash provided by operating activities
Payments for property, plant and equipment
Proceeds from sale of and insurance recovery for property, plant and equipment
Free cash flow
Contingencies, Indemnifications and Guarantees
2021
For the Year Ended December 31
2020
(In thousands)
2019
$
$
1,121,295 $
(779,779)
3,261
344,777 $
770,033 $
(553,021)
3,819
220,831 $
563,850
(472,433)
11,655
103,072
Please refer to Note 17 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for a discussion of contingencies related to litigation
and other legal matters.
Critical Accounting Policies and Use of Estimates
We have identified the policies below as critical to our business operations and the understanding of our results of operations. A summary of our significant
accounting policies used in the preparation of our Consolidated Financial Statements appears in Note 1 to our Consolidated Financial Statements included
in Part II, Item 8 of this Form 10-K. Our preparation of this Form 10-K requires us to make estimates and assumptions that affect the reported amount of
assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenue and expenses
during the reporting period. There can be no assurance that actual results will not differ from those estimates, including the impact of Covid-19 and any
deterioration in the global business and economic environment.
We believe the following critical accounting estimates and policies, which have been reviewed with the Audit Committee of our Board of Directors, affect
our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Revenue Recognition. We recognize revenue, net of sales, use, value-added and other similar taxes, as a performance obligation is satisfied in an amount
reflecting the consideration to which we expect to be entitled. We apply a five-step approach in determining the amount and timing of revenue to be
recognized: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price;
(4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied.
Substantially all of our revenue is recognized as services are rendered.
Our packaging and test services are our performance obligations to our customers. Our packaging services include wafer bump, probe and assembly. We
provide packaging and test services to our customers either individually or as part of a combined offering. In a combined offering, we account for the
individual services separately if they are determined to be distinct. We determine a service to be distinct if it is separately identifiable from other services in
the combined offering and if a customer can benefit from the unique service on its own or with other resources that are readily available to the customer.
The consideration, including variable consideration, is allocated between the distinct services in a combined offering based upon the stand-alone selling
prices of the individual services. Our services involve a high degree of specialization
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which are unique based on the design and purpose of the customer’s wafers. Accordingly, our negotiated pricing reflects the customized nature of our
services and represents a customer-specific stand-alone selling price. We recognize revenue as services are rendered, which generally occurs over the
course of two to three weeks. Services are generally billed at completion of each individual packaging or test service or in some instances at the completion
of all services in a combined offering.
We recognize revenue over time as services are rendered because our services create or enhance the customer’s wafer. We utilize an input method (cost
incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. During
the period of providing our services, we generally do not control or take ownership of customers’ wafers, nor do we include the cost of the wafer in our cost
calculations. We believe that a cost-based input method is the most appropriate manner to measure how we satisfy our performance obligations to
customers because the effort and costs incurred to package and/or test customer wafers are not linear over the duration of these services.
Shipping and handling costs are accounted for as a cost to fulfill our performance obligations to customers. Accordingly, we record customer payments of
shipping and handling costs as a component of net sales, and the costs incurred for shipping and handling are then charged to cost of sales.
Income Taxes. We operate in and file income tax returns in various U.S. and non-U.S. jurisdictions which are subject to examination by tax authorities. The
tax returns for years where the statute of limitations remains open in all jurisdictions in which we do business are subject to change upon examination. We
believe that we have estimated and provided adequate accruals for potential additional taxes and related interest expense that may ultimately result from
such examinations. We believe that any additional taxes or related interest over the amounts accrued will not have a material effect on our financial
condition, results of operations or cash flows. However, resolution of these matters involves uncertainties, and there can be no assurance that the outcomes
will be favorable. In addition, changes in the mix of income from our foreign subsidiaries, expiration of tax holidays or changes in tax laws or regulations
could result in increased tax expense and effective tax rates in the future.
Additionally, we monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance. In
evaluating our ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence,
including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of recent operations. With the
exception of a certain foreign jurisdiction and select U.S. and foreign carryforwards, we consider it more likely than not that we will have sufficient taxable
income to allow us to realize these deferred tax assets. However, in the event taxable income falls short of current expectations, we may need to establish a
valuation allowance against such deferred tax assets. We have valuation allowances on certain U.S. federal net operating losses and U.S. foreign tax credit
carryforwards expected to expire unused and on select deferred tax assets in certain foreign jurisdictions. Such valuation allowances are released as the
related tax benefits are realized or when sufficient evidence exists to conclude that it is more likely than not that the deferred tax assets will be realized.
Valuation of Inventory. We order raw materials based on customers’ forecasted demand. If our customers change their forecasted requirements and we are
unable to cancel our raw materials order, or if our vendors require that we order a minimum quantity that exceeds the current forecasted demand, we will
experience a build-up in raw material inventory. We will either seek to recover the cost of the materials from our customers or utilize the inventory in
production. However, we may not be successful in recovering the cost from our customers or be able to use the inventory in production and, accordingly, if
we believe that it is probable that we will not be able to recover such costs, we reduce the carrying value of our inventory. Additionally, we reduce the
carrying value of our inventories by the cost of inventory we estimate is excess and obsolete based on the age of our inventories. When a determination is
made that the inventory will not be utilized in production or is not saleable, it is written off. The forecast of demand and the evaluation of inventory
recoverability require estimates and judgment. Although we make an effort to ensure forecasted demand and estimates of inventory are accurate, any
unanticipated changes could have a material effect on our financial condition and result of operations.
Inventories consist of raw materials and purchased components and are stated at the lower of cost and net realizable value. Cost is principally determined
by standard cost or the weighted moving average method, both of which
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approximate actual cost. For inventory valued using the standard cost method, we review and set our standard costs as needed, but at a minimum on an
annual basis.
Valuation of Long-lived Assets. We review long-lived assets, which include property, plant and equipment and goodwill, for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. Factors we consider important which could trigger an impairment
review include the following:
•
•
•
•
significant under-performance relative to expected historical or projected future operating results;
significant changes in the manner of our use of the asset;
significant negative industry or economic trends; and
our market capitalization relative to net book value.
Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of the
undiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, the
impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of are
carried at the lower of cost or fair value less the costs of disposal.
We review goodwill for impairment annually during the fourth quarter of each year and whenever events or changes in circumstances indicate that an
impairment may exist. Impairment losses are recorded when the carrying amount of the reporting unit exceeds its fair value.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market Risk Sensitivity
We are exposed to market risks, primarily related to foreign currency and interest rate fluctuations. In the normal course of business, we employ established
policies and procedures to manage the exposure to fluctuations in foreign currency values and changes in interest rates.
Foreign Currency Risk
The U.S. dollar is our reporting and functional currency for our subsidiaries, except for our Japan operations, where the Japanese yen is the functional
currency. In order to reduce our exposure to foreign currency gains and losses, we generally use natural hedging techniques to reduce foreign currency rate
risk. We also use forward contracts to mitigate foreign currency risk of certain monetary assets or liabilities denominated in foreign currencies.
We have foreign currency exchange rate risk associated with the remeasurement of monetary assets and liabilities on our Consolidated Balance Sheets that
are denominated in currencies other than the functional currency. We performed a sensitivity analysis of our foreign currency exposure as of December 31,
2021, to assess the potential impact of fluctuations in exchange rates for all foreign denominated assets and liabilities. Assuming that all foreign currencies
appreciated 10% against the U.S. dollar and taking into account our foreign currency forward contracts, our income before taxes as of December 31, 2021
would have been approximately $18 million lower, due to the remeasurement of monetary assets and liabilities.
In addition, we have foreign currency exchange rate exposure on our results of operations. For the year ended December 31, 2021, approximately 85% of
our net sales were denominated in U.S. dollars. Our remaining net sales were principally denominated in Japanese yen. For the year ended December 31,
2021, approximately 50% of our cost of sales and operating expenses were denominated in U.S. dollars and were largely for raw materials and costs
associated with property, plant and equipment. The remaining portion of our cost of sales and operating expenses was principally denominated in the Asian
currencies where our production facilities are located and largely consisted of labor. To the extent that the U.S. dollar weakens against these Asian-based
currencies, similar foreign currency denominated income and expenses in the future will result in higher sales, higher cost of sales and operating expenses,
with cost of sales and operating expenses having the greater impact on our financial results. Similarly, our sales, cost of sales and operating expenses will
decrease if the U.S. dollar strengthens against these foreign currencies. We performed a sensitivity
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analysis of our foreign currency exposure as of December 31, 2021 to assess the potential impact of fluctuations in exchange rates for all foreign
denominated sales and operating expenses. Assuming that all foreign currencies appreciated 10% against the U.S. dollar, our operating income for the year
ended December 31, 2021 would have been approximately $121 million lower.
There are inherent limitations in the sensitivity analysis presented, primarily the assumption that foreign exchange rate movements across multiple
jurisdictions would change instantaneously in an equal fashion. As a result, the analysis is unable to reflect the potential effects of more complex market or
other changes that could arise which may positively or negatively affect our results of operations.
Our Consolidated Financial Statements are impacted by changes in exchange rates at the entity where the local currency is the functional currency. The
effect of foreign exchange rate translation for these entities was a loss of $16.8 million and a gain of $7.5 million for the years ended December 31, 2021
and 2020, respectively, and was recognized as an adjustment to equity through other comprehensive income (loss).
Interest Rate Risk
We have interest rate risk with respect to our available-for-sale debt investments. Our investment portfolio consists of various security types and maturities,
with a significant portion of our portfolio having maturity of one year or less. Our primary objective with our investment portfolio is to invest available
cash while preserving capital and meeting liquidity needs. These securities are subject to interest rate risk and will decrease in value if market interest rates
increase. Due to the relatively short-term nature of our investment portfolio, we believe that an immediate increase in interest rates will not have a material
impact on the fair value of our available-for-sale debt investments. For information regarding our available-for-sale debt investments, see Note 6 to our
Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
In addition, we have interest rate risk with respect to our debt. Our fixed and variable rate debt includes foreign borrowings, revolving credit facilities and
senior notes. Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio. A change in interest rates on the
fixed portion of the debt portfolio impacts the fair value of the debt instrument but has no impact on interest expense or cash flows. A change in interest
rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows but does not generally impact the fair value of the instrument.
The table below presents the interest rates, maturities and fair value of our fixed and variable rate debt as of December 31, 2021:
2022
2023
2024
2025
2026
Thereafter
Total
Fair Value
Fixed rate debt
Average interest rate
Variable rate debt
Average interest rate
Total debt maturities
$147,219
1.4 %
5,789
0.6 %
$153,008
$130,272
1.4 %
49,064
2.8 %
$179,336
$96,383
1.4 %
44,000
1.3 %
$140,383
($ in thousands)
$60,496
1.7 %
0
— %
$60,496
$44,695
2.0 %
0
— %
$44,695
$568,857
6.3 %
0
— %
$568,857
$1,047,922
4.1 %
98,853
2.0 %
$1,146,775
$1,081,916
101,622
$1,183,538
For information regarding the fair value of our long-term debt, see Note 16 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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Item 8.
Financial Statements and Supplementary Data
We present the information required by Item 8 of Form 10-K here in the following order:
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Statements of Income — Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income — Years ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets — December 31, 2021 and 2020
Consolidated Statements of Stockholders’ Equity — Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Cash Flows — Years December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
Schedule II — Valuation and Qualifying Accounts — Years ended December 31, 2021, 2020 and 2019
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Amkor Technology, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Amkor Technology, Inc. and its subsidiaries (the “Company”) as of December 31, 2021
and 2020, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three
years in the period ended December 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the three years in
the period ended December 31, 2021 appearing under Item 8 (collectively referred to as the “consolidated financial statements”). We also have audited the
Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial
Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s
internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective
internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing
such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
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Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated
financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accounting for Income Taxes
As described in Notes 1 and 4 to the consolidated financial statements, the Company recorded income tax expense of $69.5 million for the year ended
December 31, 2021, and net deferred tax assets of $72.6 million and unrecognized tax benefits of $37.3 million as of December 31, 2021. Income taxes are
accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax basis as well as for net operating loss and tax credit carryforwards. Management monitors on an ongoing basis its ability to utilize deferred tax assets
and whether there is a need for a related valuation allowance. In evaluating the ability to recover deferred tax assets in the jurisdictions from which they
arise, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable
income, tax-planning strategies and recent results of operations. The Company operates in and files income tax returns in various U.S. and foreign
jurisdictions, which are subject to examination by tax authorities. Years open to examination contain matters that could be subject to differing
interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits.
The principal considerations for our determination that performing procedures relating to accounting for income taxes is a critical audit matter are the
significant judgment by management in determining the income tax provision and other tax positions. This in turn led to a high degree of auditor judgment,
subjectivity and effort in performing procedures and in evaluating audit evidence relating to income taxes. The audit effort involved the use of professionals
with specialized skill and knowledge to assist in evaluating the audit evidence obtained.
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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to accounting for income taxes, including the controls
addressing the completeness and accuracy of the data utilized. These procedures also included, among others (i) testing the income tax provision
calculation and underlying data, including the effective tax rate reconciliation, significant return to provision adjustments, and permanent and temporary
differences, (ii) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis, (iii) evaluating the identification of
reserves for unrecognized tax benefits and the reasonableness of the “more likely than not” determination considering the jurisdictions, court decisions,
legislative actions, statute of limitations, and developments in tax examinations, and (iv) using professionals with specialized skill and knowledge to assist
in evaluating the reasonableness of management’s judgment and estimates, including application of foreign and domestic tax laws and regulations.
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
February 18, 2022
We have served as the Company’s auditor since 2000.
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
Net sales
Cost of sales
Gross profit
Selling, general and administrative
Research and development
Total operating expenses
Operating income
Interest expense
Other (income) expense, net
Total other expense, net
Income before taxes
Income tax expense
Net income
Net income attributable to noncontrolling interests
Net income attributable to Amkor
Net income attributable to Amkor per common share:
Basic
Diluted
Shares used in computing per common share amounts:
Basic
Diluted
$
$
$
$
2021
For the Year Ended December 31,
2020
(In thousands, except per share data)
2019
6,138,329 $
4,912,775
1,225,554
296,084
166,037
462,121
763,433
51,508
(3,141)
48,367
715,066
69,459
645,607
(2,612)
642,995 $
5,050,589 $
4,149,775
900,814
302,842
140,727
443,569
457,245
64,168
6,395
70,563
386,682
46,183
340,499
(2,361)
338,138 $
2.64 $
2.62 $
1.40 $
1.40 $
243,878
245,704
241,509
242,248
4,052,650
3,403,211
649,439
278,631
137,638
416,269
233,170
71,587
1,773
73,360
159,810
37,182
122,628
(1,740)
120,888
0.50
0.50
239,725
240,122
The accompanying notes are an integral part of these statements.
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Table of Contents
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income
Other comprehensive income (loss), net of tax:
Adjustments to net unrealized gains (losses) on available-for-sale debt investments
Adjustments to unrealized components of defined benefit pension plans
Foreign currency translation
Total other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Amkor
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
645,607 $
340,499 $
122,628
(369)
9,834
(16,757)
(7,292)
638,315
(2,612)
635,703 $
21
602
7,532
8,155
348,654
(2,361)
346,293 $
—
(7,479)
2,782
(4,697)
117,931
(1,740)
116,191
$
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments (amortized cost of $251,959 and $133,744, respectively)
Accounts receivable, net of allowances of $440 and $863, respectively
Inventories
Other current assets
Total current assets
Property, plant and equipment, net
Operating lease right of use assets
Goodwill
Restricted cash
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt
Trade accounts payable
Capital expenditures payable
Short-term operating lease liability
Accrued expenses
Total current liabilities
Long-term debt
Pension and severance obligations
Long-term operating lease liabilities
Other non-current liabilities
Total liabilities
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000 shares authorized, designated Series A, none issued
Common stock, $0.001 par value, 500,000 shares authorized, 290,466 and 288,923 shares issued, and 244,315 and
242,829 shares outstanding, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock, at cost, 46,151 and 46,094 shares, respectively
Total Amkor stockholders’ equity
Noncontrolling interests in subsidiaries
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these statements.
52
December 31,
2021
2020
(In thousands,
except per share data)
826,744 $
962
251,530
1,258,767
484,959
33,601
2,856,563
2,871,058
159,742
24,516
3,815
122,860
6,038,554 $
153,008 $
828,727
210,875
64,233
422,892
1,679,735
984,988
120,472
83,937
196,876
3,066,008
698,002
1,007
133,769
962,643
297,293
40,218
2,132,932
2,566,002
147,236
27,325
3,188
145,628
5,022,311
149,007
636,434
181,339
49,748
299,459
1,315,987
1,005,339
159,610
84,420
102,996
2,668,352
—
—
290
1,977,134
1,163,939
19,978
(219,065)
2,942,276
30,270
2,972,546
6,038,554 $
289
1,953,378
562,502
27,270
(217,740)
2,325,699
28,260
2,353,959
5,022,311
$
$
$
$
Table of Contents
AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Balance at December 31,
2018
Net income
Other comprehensive income
(loss)
Treasury stock acquired
through surrender of shares
for tax withholding
Issuance of stock through
share-based compensation
plans
Share-based compensation
Subsidiary dividends to
noncontrolling interests
Balance at December 31,
2019
Net income
Other comprehensive income
(loss)
Treasury stock acquired
through surrender of shares
for tax withholding
Issuance of stock through
share-based compensation
plans
Share-based compensation
Cash dividends declared
($0.04 per common share)
Subsidiary dividends to
noncontrolling interests
Balance at December 31,
2020
Net income
Other comprehensive income
(loss)
Treasury stock acquired
through surrender of shares
for tax withholding
Issuance of stock through
share-based compensation
plans
Share-based compensation
Cash dividends declared
($0.17 per common share)
Subsidiary dividends to
noncontrolling interests
Balance at December 31,
2021
Common Stock
Shares
Par Value
Additional Paid-
In Capital
Retained Earnings
(Accumulated
Deficit)
Accumulated
Other
Comprehensive
Income (Loss)
Treasury Stock
Shares
Cost
Total Amkor
Stockholders’
Equity
Noncontrolling
Interest in
Subsidiaries
Total
Equity
(In thousands)
285,352
—
$
—
—
1,525
—
—
286,877
—
$
—
—
2,046
—
—
—
288,923
—
$
—
—
1,543
—
—
—
285
—
—
—
2
—
—
287
—
—
—
2
—
—
—
289
—
—
—
1
—
—
—
$
1,909,425
—
$
113,189
120,888
$
—
—
11,403
6,911
—
—
—
—
—
—
$
1,927,739
—
$
234,077
338,138
$
—
—
17,609
8,030
—
—
—
—
—
—
(9,713)
—
$
1,953,378
—
$
562,502
642,995
$
—
—
12,786
10,970
—
—
—
—
—
—
(41,558)
—
23,812
—
(4,697)
—
—
—
—
19,115
—
8,155
—
—
—
—
—
27,270
—
(7,292)
—
—
—
—
—
(45,967)
—
$
(216,171)
—
$
1,830,540
120,888
$
25,360
1,740
$
1,855,900
122,628
—
—
(4,697)
(105)
(1,308)
(1,308)
—
—
—
—
—
—
11,405
6,911
—
—
—
—
—
(600)
(4,697)
(1,308)
11,405
6,911
(600)
(46,072)
—
$
(217,479)
—
$
1,963,739
338,138
$
26,500
2,361
$
1,990,239
340,499
—
(22)
—
—
—
—
—
(261)
—
—
—
—
8,155
(261)
17,611
8,030
(9,713)
—
—
—
—
—
—
(601)
8,155
(261)
17,611
8,030
(9,713)
(601)
(46,094)
—
$
(217,740)
—
$
2,325,699
642,995
$
28,260
2,612
$
2,353,959
645,607
—
(57)
—
—
—
—
—
(7,292)
(1,325)
(1,325)
—
—
—
—
12,787
10,970
(41,558)
—
—
—
—
—
—
(7,292)
(1,325)
12,787
10,970
(41,558)
(602)
(602)
290,466
$
290
$
1,977,134
$
1,163,939
$
19,978
(46,151)
$
(219,065)
$
2,942,276
$
30,270
$
2,972,546
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Amortization of deferred debt issuance costs and premiums
Deferred income taxes
Loss on debt retirement
Loss (gain) on disposal of fixed assets, net
Share-based compensation
Other, net
Changes in assets and liabilities:
Accounts receivable
Inventories
Other current assets
Other assets
Trade accounts payable
Accrued expenses
Pension and severance obligations
Net operating lease ROU asset
Operating lease liabilities
Other non-current liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from insurance recovery for property, plant and equipment
Proceeds from foreign exchange forward contracts
Payments for foreign exchange forward contracts
Payments for short-term investments
Proceeds from sale of short-term investments
Proceeds from maturities of short-term investments
Other investing activities
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from revolving credit facilities
Payments of revolving credit facilities
Proceeds from short-term debt
Payments of short-term debt
Proceeds from issuance of long-term debt
Payments of long-term debt
Payments for debt issuance costs
Payments of finance lease obligations
Proceeds from issuance of stock through share-based compensation plans
Payment of dividends
Other financing activities
Net cash (used in) provided by financing activities
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
645,607 $
340,499 $
122,628
563,582
2,508
10,676
—
(1,446)
10,970
13,752
(298,854)
(190,555)
5,335
14,746
215,646
108,283
(30,013)
(14,781)
16,293
49,546
1,121,295
(779,779)
3,157
104
16,608
(69,835)
(414,208)
87,273
204,679
8,122
(943,879)
—
—
15,514
(19,927)
353,587
(316,635)
(1,294)
(20,373)
12,787
(51,213)
(2,548)
(30,102)
(17,990)
129,324
702,197
831,521 $
510,396
1,979
3,143
3,042
(2,821)
8,030
(779)
(106,693)
(75,499)
(12,348)
(22,614)
48,786
69,151
(21,535)
871
2,537
23,888
770,033
(553,021)
3,819
—
49,226
(14,031)
(535,368)
247,081
159,015
4,574
(638,705)
312,000
(332,000)
86,769
(87,353)
331,033
(648,514)
(1,644)
(9,851)
17,611
—
(1,770)
(333,719)
6,056
(196,335)
898,532
702,197 $
524,177
1,640
25,931
8,536
(4,477)
6,911
4,394
(124,140)
10,208
(2,369)
2,253
38,670
(33,297)
(12,216)
(127,743)
131,967
(9,223)
563,850
(472,433)
10,117
1,538
13,550
(15,593)
(5,935)
—
6,469
(202)
(462,489)
272,700
(272,700)
51,434
(52,635)
975,575
(862,927)
(7,027)
(6,574)
11,405
—
(1,001)
108,250
870
210,481
688,051
898,532
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
$
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest
Income taxes
Non-cash investing and financing activities:
Property, plant and equipment included in capital expenditures payable
Right of use assets acquired through operating lease liabilities
Right of use assets acquired through finance lease liabilities
Dividends declared and unpaid
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
46,932 $
24,011
61,295 $
43,404
211,421
63,314
73,894
58
181,376
41,672
10,517
9,713
65,992
44,495
77,250
60,963
10,835
—
The accompanying notes are an integral part of these statements.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements
1. Description of Business and Summary of Significant Accounting Policies
Description of Business
Amkor is one of the world’s leading providers of outsourced semiconductor packaging and test services. Amkor was a pioneer in the outsourcing of
semiconductor packaging and test services, and over the years we have built a leading position by:
• Designing and developing innovative packaging and test technologies;
•
•
•
•
•
Cultivating long-standing relationships with our customers, which include many of the world’s leading semiconductor companies;
Collaborating with customers, foundries, original equipment manufacturers (“OEMs”) and equipment and material suppliers;
Building expertise in high-volume manufacturing processes and developing a reputation for high quality and solid execution;
Providing a geographically diverse operating base;
Focusing on strategic end markets that offer solid growth potential; and
• Developing a competitive cost structure through disciplined capital investment.
Basis of Presentation
Our Consolidated Financial Statements include the accounts of Amkor Technology, Inc. and our subsidiaries (“Amkor”). Our Consolidated Financial
Statements reflect the elimination of all significant inter-company accounts and transactions. Our investments in variable interest entities in which we are
the primary beneficiary are consolidated. We reflect the remaining portion of variable interest entities and foreign subsidiaries that are not wholly owned as
noncontrolling interests.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates,
including those related to revenue recognition, income taxes, inventory and long lived assets. These estimates are based on management’s best knowledge
of current events, historical experience, actions that we may undertake in the future and on various other assumptions that are believed to be reasonable
under the circumstances. As a result, actual results could differ materially from these estimates and assumptions, including the impact of Covid-19 and any
deterioration in the global business and economic environment. Certain prior year amounts have been reclassified to conform to current year presentation.
Consolidation of Variable Interest Entities
We have variable interests in certain Philippine realty corporations in which we have a 40% ownership. We lease land and buildings in the Philippines from
these entities and we are the primary beneficiary of these arrangements. As of December 31, 2021, the combined book value of the assets and liabilities
associated with these Philippine realty corporations included in our Consolidated Balance Sheet was $17.2 million and $0.1 million, respectively. The
impact of consolidating these variable interest entities on our Consolidated Statements of Income was not significant, and other than our lease payments,
we have not provided any significant assistance or other financial support to these variable interest entities for the years ended December 31, 2021, 2020 or
2019. The creditors of the Philippine realty corporations have no recourse to our general credit.
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Foreign Currency Translation
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The U.S. dollar is the functional currency of our subsidiaries other than our Japan operations. The foreign currency asset and liability amounts at these
subsidiaries are remeasured into U.S. dollars at end-of-period exchange rates, except for nonmonetary items which are remeasured at historical rates.
Foreign currency income and expenses are remeasured at daily exchange rates, except for expenses related to balance sheet amounts which are remeasured
at historical exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are
included in other (income) expense, net in the period in which they occur.
The Japanese yen is the functional currency of our Japan operations. The asset and liability amounts of our Japan operations are translated into U.S. dollars
at end-of-period exchange rates. Income and expenses are translated into U.S. dollars at the daily exchange rate. The resulting translation adjustments are
reported as a component of accumulated other comprehensive income in the stockholders’ equity section of the balance sheet. Assets and liabilities
denominated in a currency other than the functional currency are remeasured into the functional currency prior to translation into U.S. dollars, and the
resulting transaction exchange gains or losses are included in other expense (income) in the period in which they occur.
Risks and Concentrations
The semiconductor industry is characterized by rapid technological change, competitive pricing pressures and cyclical market patterns. Our financial results
are affected by a wide variety of factors, including general economic conditions worldwide, economic conditions specific to the semiconductor industry, the
timely implementation of new package and test technologies, the ability to safeguard patents and intellectual property in a rapidly evolving market and
reliance on materials and equipment suppliers. In addition, the semiconductor market has historically been cyclical and subject to significant economic
downturns at various times. Our profitability and ability to generate cash from operations is principally dependent upon demand for semiconductors, the
utilization of our capacity, semiconductor package mix, the average selling price of our services, our ability to manage our capital expenditures and our
ability to control our costs including labor, material, overhead and financing costs.
A significant portion of our revenues is concentrated with a small group of customers (Note 18). Direct sales to our largest customer accounted for 13.7%
of our net revenue for the year ended December 31, 2021. The loss of a significant customer, a business combination among customers, a reduction in
orders or decrease in price from a significant customer or disruption in any of our significant strategic partnerships or other commercial arrangements could
have a material adverse effect on our business, liquidity, results of operations, financial condition and cash flows.
Financial instruments, for which we are subject to credit risk, consist principally of accounts receivable and cash, cash equivalents and short-term
investments. With respect to accounts receivable, we mitigate our credit risk by selling primarily to well-established companies, performing ongoing credit
evaluations and making frequent contact with customers. In addition, we may utilize non-recourse factoring to mitigate credit risk when considered
appropriate. We have historically mitigated our credit risk with respect to cash and cash equivalents through diversification of our holdings into various
high quality money market funds and bank deposit accounts. Our short-term investments are principally investments in debt securities with maximum
duration of eighteen months and ranges from AAA to BBB rated financial instruments. Our short-term investments are primarily in direct obligations of the
US Government or its agencies, corporate bonds, asset backed securities, commercial paper, and municipal bonds. At December 31, 2021, our cash and
cash equivalents were primarily maintained in various U.S. and foreign bank operating and time deposit accounts and invested in U.S. money market funds.
Contingencies and Litigation
We may be subject to certain legal proceedings, lawsuits and other claims, as discussed in Note 17. We accrue for a loss contingency, including legal
proceedings, lawsuits, pending claims and other legal matters, when we conclude that the likelihood of a loss is probable and the amount of the loss can be
reasonably estimated. When the reasonable estimate of the loss is within a range of amounts, and no amount in the range constitutes a better estimate than
any other amount, we
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
accrue for the amount at the low end of the range. We adjust our accruals from time to time as we receive additional information, but the loss we incur may
be significantly greater than or less than the amount we have accrued. We disclose loss contingencies if we believe they are material and there is at least a
reasonable possibility that a loss has been incurred. Attorney fees related to legal matters are expensed as incurred.
Cash and Cash Equivalents
We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents are
primarily maintained in various U.S. and foreign bank operating and time deposit accounts and invested in U.S. money market funds.
Restricted Cash
Restricted cash, current, consists of short-term cash equivalents used to collateralize our daily banking services. Restricted cash, non-current, mainly
consists of collateral to fulfill foreign trade compliance requirements.
Investments
Generally, we classify our short-term investments in fixed income securities as available-for-sale debt investments. All of our available-for-sale debt
investments as of December 31, 2021 are available to fund current operations and are recorded at fair value (Note 6). Unrealized gains and losses on our
available-for-sale debt investments are included as a separate component of accumulated other comprehensive income (loss), net of tax. Realized gains and
losses on our available-for-sale debt investments and declines in value judged to be an impairment are included in other (income) expense, net. The cost of
short-term investments matured or sold is based on the average cost method.
We evaluate on an ongoing basis the market conditions, trends of earnings, financial condition, credit ratings, any underlying collateral and other key
measures for our short-term investments in determining if and when a decline in value below the adjusted cost of our available-for-sale debt investments is
an impairment. An impairment is considered if (i) we have the intent to sell the security, (ii) it is more likely than not that we will be required to sell the
security before recovery of the entire amortized cost basis or (iii) we do not expect to recover the entire amortized cost basis of the security. If impairment
is considered on condition (i) or (ii) above, the entire difference between the amortized cost and the fair value of the debt security is recognized in earnings.
If impairment is considered based on condition (iii), the amount representing credit losses will be recognized in earnings and as an allowance for credit
losses. The amount relating to all other factors will be recognized in other comprehensive income.
Inventories
Inventories consist of raw materials and purchased components and are stated at the lower of cost and net realizable value. Cost is principally determined
by standard cost or the weighted moving average method, both of which approximate actual cost. We review and set our standard costs as needed, but at a
minimum on a quarterly basis. We reduce the carrying value of our inventories for the cost of inventory we estimate is excess and obsolete based on the age
of our inventories. When a determination is made that the inventory will not be utilized in production or is not saleable, it is written-off.
Other Current Assets
Other current assets consist principally of prepaid assets.
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Property, Plant and Equipment
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Property, plant and equipment are stated at cost. Depreciation is calculated by the straight-line method over the estimated useful lives of depreciable assets
which are as follows:
Buildings and improvements
Machinery and equipment
Software and computer equipment
Furniture, fixtures and other equipment
10 to 40 years
2 to 7 years
3 to 5 years
4 to 10 years
Cost and accumulated depreciation for property retired or disposed of are removed from the accounts, and any resulting gain or loss is included in earnings.
Expenditures for maintenance and repairs are charged to expense as incurred.
We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Recoverability of a long-lived asset group to be held and used in operations is measured by a comparison of the carrying amount to the sum of the
undiscounted cash flows expected to result from the use and eventual disposition of the asset group. If such asset group is considered to be impaired, the
impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value. Long-lived assets to be disposed of are
carried at the lower of cost or fair value less the costs of disposal.
Leases
We lease certain machinery and equipment, office space, and manufacturing facilities. Effective January 1, 2019, we adopted the requirements of the
Financial Accounting Standards Board Accounting Standards Codification 842, Leases, using the modified transition approach without restating the
comparative period financial statements or disclosures. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we
recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease components (e.g., fixed payments including rent, real
estate taxes and insurance costs) with the non-lease components (e.g., common-area maintenance costs) for all asset classes. We use our incremental
borrowing rate based on the information available at the lease commencement date to determine the lease liability. Our leases have remaining lease terms
ranging from less than one year to 84 years. For purposes of calculating our lease liabilities, our lease terms include options to extend or terminate the lease
when it is reasonably certain that we will exercise those options. Certain leases also include options to purchase the leased property.
Goodwill
Goodwill is recorded when the cost of an acquisition exceeds the fair value of the net tangible and identifiable intangible assets acquired. We review
goodwill for impairment annually during the fourth quarter of each year and whenever events or changes in circumstances indicate that an impairment may
exist. Impairment losses are recorded when the carrying amount of the reporting unit exceeds its fair value. The balance of goodwill in our Consolidated
Balance Sheets reflects adjustments for foreign currency translation.
Other Assets
Other assets consist principally of deferred tax assets, refundable security deposits and non-current prepaid taxes.
Derivatives
We use foreign exchange forward contracts to manage exposure to foreign exchange risk which are generally settled monthly. The derivatives are recorded
at the fair value either in other current assets or accrued expenses, with the associated gains and losses charged to other (income) expense, net in the period
in which they occur. We do not apply hedge accounting to the derivatives. See Note 15 for further discussion about the derivatives.
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Fair Value Measurements
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
We apply fair value accounting for assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring or
nonrecurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. See Note 16 for further
discussion of fair value measurements.
Revenue Recognition
We recognize revenue, net of sales, use, value-added and other similar taxes, as a performance obligation is satisfied in an amount reflecting the
consideration to which we expect to be entitled. We apply a five-step approach in determining the amount and timing of revenue to be recognized: (1)
identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the
transaction price to the performance obligations in the contract; and (5) recognizing revenue when the performance obligation is satisfied. Substantially all
of our revenue is recognized as services are rendered.
Our packaging and test services are our performance obligations to our customers. Our packaging services include wafer bump, probe and assembly. We
provide packaging and test services to our customers either individually or as part of a combined offering. In a combined offering, we account for the
individual services separately if they are determined to be distinct. We determine a service to be distinct if it is separately identifiable from other services in
the combined offering and if a customer can benefit from the unique service on its own or with other resources that are readily available to the customer.
The consideration, including variable consideration, is allocated between the distinct services in a combined offering based upon the stand-alone selling
prices of the individual services. Our services involve a high degree of specialization which are unique based on the design and purpose of the customer’s
wafers. Accordingly, our negotiated pricing reflects the customized nature of our services and represents a customer-specific stand-alone selling price. We
recognize revenue as services are rendered, which generally occurs over the course of two to three weeks. Services are generally billed at completion of
each individual packaging or test service or in some instances at the completion of all services in a combined offering.
We recognize revenue over time as services are rendered because our services create or enhance the customer’s wafer. We utilize an input method (cost
incurred plus estimated margin) to determine the amount of revenue to recognize for in-process, but incomplete, customer orders at a reporting date. During
the period of providing our services, we generally do not control or take ownership of customers’ wafers, nor do we include the cost of the wafer in our cost
calculations. We believe that a cost-based input method is the most appropriate manner to measure how we satisfy our performance obligations to
customers because the effort and costs incurred to package and/or test customer wafers are not linear over the duration of these services.
Shipping and handling costs are accounted for as a cost to fulfill our performance obligations to customers. Accordingly, we record customer payments of
shipping and handling costs as a component of net sales, and the costs incurred for shipping and handling are then charged to cost of sales.
Unbilled receivables are revenues that have been recognized for performance obligations that have been satisfied, or partially satisfied, in advance of
billing the customer. Revenue may be recognized in advance of billing as our contracts provide us with an unconditional right to consideration for work
that is performed. Total unbilled receivables as of December 31, 2021 and 2020 were $224.7 million and $146.8 million, respectively. These amounts are
included in accounts receivable, net of allowances in our Consolidated Balance Sheets.
At times, the company receives cash payments from customers in advance of the company’s performance. In such cases, we record deferred revenue until
the performance obligation is satisfied, which represents a contract liability and is included in accrued expenses and other non-current liabilities in the
consolidated balance sheets. These contract liabilities are classified as either current or long-term based on the timing of when the company expects to
recognize
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
revenue. Contract liabilities were $187.2 million and $51.6 million as of December 31, 2021 and December 31, 2020, respectively. As of December 31,
2021 and December 31, 2020, the short-term portion of the liability was $117.7 million and $30.3 million, respectively. The remainder of the December 31,
2021 contract liability balance is expected to be recognized in revenue over the next 1-3 years. Revenue recognized during the year that was included in the
contract liability balance at the beginning of the period was $29.0 million, $14.1 million, and $16.4 million, for 2021, 2020 and 2019, respectively.
Research and Development Costs
Research and development expenses include costs attributable to the conduct of research and development programs primarily related to the development
of new package designs or technologies and improving the efficiency and capabilities of our existing production processes. Such costs include salaries,
payroll taxes, employee benefit costs, materials, supplies, depreciation and maintenance of research equipment, services provided by outside contractors
and the allocable portions of facility costs such as rent, utilities, insurance, repairs and maintenance, depreciation and general support services. Costs
associated with research and development are expensed as incurred.
Income Taxes
Income taxes are accounted for using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax basis as well as for net operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided
for those deferred tax assets for which it is more likely than not that the related tax benefits will not be realized.
We monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance. In evaluating our
ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including
scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations. With exception of a
certain foreign jurisdiction and select U.S. and foreign carryforwards, we consider it more likely than not that we will have sufficient taxable income to
allow us to realize these deferred tax assets. However, in the event taxable income falls short of current expectations, we may need to establish a valuation
allowance against such deferred tax assets.
We recognize in our Consolidated Financial Statements the impact of an income tax position, if that position is more likely than not of being sustained on
audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 4 for
further discussion regarding unrecognized income tax benefits.
2. Share-Based Compensation Plans
For the years ended December 31, 2021, 2020 and 2019, we recognized share-based compensation of $11.0 million, $8.0 million and $6.9 million,
respectively, primarily in selling, general and administrative expenses. The amount of compensation expense to be recognized is adjusted for an estimated
forfeiture rate which is based on historical data. The corresponding deferred income tax benefits are $1.4 million, $1.3 million and $1.3 million for 2021,
2020 and 2019 respectively.
Equity Incentive Plans
Second Amended and Restated 2007 Equity Incentive Plan. The Second Amended and Restated 2007 Equity Incentive Plan (as amended, the “2007 Plan”)
provided for the grant of the following types of incentive awards: (i) stock options; (ii) restricted stock; (iii) restricted stock units; (iv) stock appreciation
rights; (v) performance units and performance
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
shares; and (vi) other stock or cash awards. Those eligible for awards included employees, directors and consultants who provide services to Amkor and its
subsidiaries. There were originally 17.0 million shares of our common stock reserved for issuance under the 2007 Plan. No awards have been or will be
granted under the 2007 Plan after the effective date of the 2021 Plan (as defined below), but all outstanding awards under the 2007 Plan will continue in
full force and effect, subject to their original terms.
2021 Equity Incentive Plan. On May 18, 2021, at our 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”), our stockholders approved the
Amkor Technology, Inc. 2021 Equity Incentive Plan (the “2021 Plan”) to replace the 2007 Plan. The 2021 Plan provides for the grant of the following types
of incentive awards: (i) stock options; (ii) restricted stock; (iii) restricted stock units; (iv) stock appreciation rights; (v) performance units and performance
shares; and (vi) other stock or cash awards. Those eligible for awards include employees, directors and consultants who provide services to Amkor and its
subsidiaries. The number of shares authorized and available for issuance under the 2021 Plan is 23,100,000 shares, reduced for certain awards granted
under the 2007 Plan after December 31, 2020, but before May 18, 2021. There were originally 22.8 million shares of our common stock reserved for
issuance under the 2021 Plan, and at December 31, 2021, there were 22.6 million shares available for grant under the 2021 Plan.
Stock options
Stock options are generally granted with an exercise price equal to the market price of the stock at the date of grant. Substantially all of the options granted
are exercisable pursuant to a one to four year vesting schedule, and the term of the options granted is no longer than ten years. Upon option exercise, we
may issue new shares of common or treasury stock.
In order to calculate the fair value of stock options at the date of grant, we use the Black-Scholes option pricing model. Expected volatilities are based on
historical performance of our stock. We also use historical data to estimate the timing and amount of option exercises and forfeitures within the valuation
model. The expected term of the options is based on evaluations of historical and expected future employee exercise behavior and represents the period of
time that options granted are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the
U.S. Treasury yield curve in effect at the time of grant. The dividend yield is based on the annualized declared quarterly dividend rate divided by our
closing stock price at the date of the grant.
The following table summarizes our stock option activity for the year ended December 31, 2021:
Number of
Shares
(In thousands)
Weighted-Average
Exercise Price
per Share
Weighted-Average
Remaining
Contractual Term
(Years)
Aggregate
Intrinsic
Value
(In thousands)
Outstanding at December 31, 2020
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2021
Fully vested at December 31, 2021 and expected to vest
thereafter
Exercisable at December 31, 2021
9.70
19.39
9.72
8.49
10.34
10.30
9.10
6.69 years $
6.66 years $
5.87 years $
43,735
43,049
29,502
4,366 $
180
(1,335)
(185)
3,026 $
2,972 $
1,880 $
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following assumptions were used to calculate the weighted-average fair values of the options granted:
Expected life (in years)
Risk-free interest rate
Volatility
Dividend yield
Weighted-average grant date fair value per option granted
2021
For the Year Ended December 31,
2020
2019
6.7
1.3 %
54 %
0.8%
5.6
0.3 %
52 %
0.3%
$
9.54
$
5.79
$
6.0
2.5 %
43 %
—
4.06
Total unrecognized compensation expense from stock options was $4.7 million as of December 31, 2021, which is expected to be recognized over a
weighted-average period of approximately 1.4 years beginning January 1, 2022. The total intrinsic value of options exercised during fiscal years 2021,
2020, and 2019 was $17.7 million, $8.2 million, and $6.9 million, respectively.
Restricted shares
During the year ended December 31, 2021, we granted restricted shares under both the 2007 Plan (with respect to grants made prior to the effective date of
the 2021 Plan) and the 2021 Plan (with respect to grants made after its effective date). Restricted shares granted to our non-employee directors vest on the
earlier of the one year anniversary of the grant date or the date of the annual meeting of stockholders immediately following the grant date, subject to the
recipient’s continued service as a director of Amkor on the applicable vesting date. Generally, other restricted shares vest ratably over three years, with
8.33% of the shares vesting in equal quarterly installments such that 100% of the shares will become vested on the third anniversary of the award, subject
to the recipient’s continued employment with us on the applicable vesting date. In addition, provided that the restricted shares have not been forfeited
earlier, for certain grants, the restricted shares will vest upon the recipient’s death or disability, or upon a change in control of Amkor. The value of the
restricted shares is determined based on the fair market value of the underlying shares on the date of the grant and is recognized ratably over the vesting
period.
The following table summarizes our restricted share activity for the year ended December 31, 2021:
Non-vested at December 31, 2020
Awards granted
Awards vested
Awards forfeited
Non-vested at December 31, 2021
Number of
Shares
(In thousands)
Weighted- average
Grant Date
Fair Value
(Per Share)
412 $
78
(207)
—
283
13.47
21.68
13.39
—
15.79
Total unrecognized compensation expense from restricted shares was $3.7 million as of December 31, 2021, which is expected to be recognized over a
weighted-average period of approximately 1.5 years beginning January 1, 2022.
Restricted stock units
During the year ended December 31, 2021, but prior to the effective date of the 2021 Plan, we granted time-vested restricted stock units (“RSUs”) and
performance-vested restricted stock units (“PSUs”) to certain employees under the 2007 Plan. Additionally, during year ended December 31, 2021, we
granted RSUs to an employee under the 2021 Plan. RSUs generally vest in four equal installments over a four-year period such that 100% of the RSUs will
become vested on the fourth anniversary of the award, subject to the recipient’s continued employment with us on the applicable vesting dates. In addition,
provided that the RSUs have not been forfeited earlier, they will generally vest upon the recipient’s death or disability, or upon a change in control of
Amkor, in accordance with the terms and conditions of the applicable
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
award agreement. The value of the RSUs is determined based on the fair market value of the underlying shares on the date of the grant, reduced by the
present value of dividends or dividend equivalent rights expected to be paid on our common stock prior to vesting, and is recognized ratably over the
vesting period.
PSUs generally vest in one installment after a two-year period such that 100% of the PSUs will become vested within 90 days of the second anniversary of
the award, subject to the recipient’s continued employment with us on the applicable vesting date. For PSUs granted in 2021, the number of shares of our
common stock to be received at vesting will range from 0% to 200% of the target grant amount based on Cumulative Basic EPS (as defined in the
applicable award agreement) over a two-year performance measurement period. In addition, provided the PSUs have not been forfeited earlier, the PSUs
will generally vest upon the recipient’s retirement, death or disability, or upon a change of control of Amkor, in accordance with the terms and conditions of
the applicable award agreement. The value of the PSUs is initially determined based on the fair market value of the underlying shares on the date of the
grant, reduced by the present value of dividends expected to be paid on our common stock prior to vesting, and is recognized over the vesting period.
The following table summarizes our RSU and PSU activity for the year ended December 31, 2021:
Non-vested at December 31, 2020
Awards granted
Awards vested
Awards forfeited
Non-vested at December 31, 2021
Number of
Shares
(In thousands)
Weighted- average
Grant Date
Fair Value
(Per Share)
— $
295
—
(9)
286
—
22.48
—
22.58
22.48
Total unrecognized compensation expense from RSUs and PSUs was $5.5 million as of December 31, 2021, which is expected to be recognized over a
weighted-average period of approximately 1.9 years beginning January 1, 2022.
3. Other Income and Expense
Other income and expense consists of the following:
Interest income
Foreign currency (gain) loss, net
Loss on debt retirement
Other
Total other (income) expense, net
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
(1,065) $
723
—
(2,799)
(3,141) $
(5,449) $
9,608
3,042
(806)
6,395 $
(6,655)
1,944
8,536
(2,052)
1,773
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
4. Income Taxes
Geographic sources of income (loss) before taxes are as follows:
United States
Foreign
Income before taxes
The components of the provision (benefit) for income taxes are as follows:
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
Income tax expense
2021
For the Year Ended December 31,
2020
(In thousands)
2019
81,994 $
633,072
715,066 $
38,719 $
347,963
386,682 $
1,138
158,672
159,810
2021
For the Year Ended December 31,
2020
(In thousands)
2019
9,649 $
198
48,936
58,783
20,478
361
(10,163)
10,676
69,459 $
4,608 $
134
38,298
43,040
(7,877)
(535)
11,555
3,143
46,183 $
(179)
3
11,427
11,251
1,832
299
23,800
25,931
37,182
$
$
$
$
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The reconciliation between the U.S. federal statutory income tax rate of 21% for 2021, 2020 and 2019 and our income tax expense is as follows:
U.S. federal statutory income tax rate
State taxes, net of federal benefit
Foreign income taxed at different rates
Foreign exchange (loss) gain
Excess tax benefits related to share-based compensation
Change in valuation allowance
Adjustments related to prior years
Income tax credits generated
Foreign earnings and profits
Foreign derived intangible income
Expiration of net operating losses and credits
Settlements and changes in uncertain tax positions
Other
Income tax expense
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
150,164 $
2,513
(68,007)
(16,194)
(2,055)
1,047
(1,819)
(36,401)
40,919
(7,587)
45
5,531
1,303
69,459 $
81,203 $
346
(27,988)
6,710
(142)
(15,624)
(2,433)
(21,525)
23,853
(6,339)
144
6,801
1,177
46,183 $
33,560
293
(10,600)
84
(315)
18,374
(2,875)
(9,006)
3,360
(3,195)
3,084
3,256
1,162
37,182
We recorded a valuation allowance against our interest expense carryforward due to the limitation of deductibility of interest expense under current tax law.
Realization of the carryforward is dependent on generating sufficient taxable income to overcome the interest limitation provisions. Although utilization of
this carryforward is not assured, in light of our current earnings and recent estimates of future taxable income, management believes sufficient positive
evidence existed to conclude that the valuation allowance is no longer needed and reversed the $12.4 million valuation allowance in 2020.
As a result of certain capital investments, export commitments and employment levels, income from operations in Korea, the Philippines and Singapore
was subject to reduced income tax rates and, in some cases, was exempt from income taxes. We recognized $56.7 million, $27.6 million and $14.7 million
in tax benefits as a result of the tax holidays in 2021, 2020 and 2019, respectively. The benefit of the tax holidays on diluted earnings per share was
approximately $0.23, $0.11 and $0.06 for 2021, 2020 and 2019, respectively.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following is a summary of the components of our deferred tax assets and liabilities:
Deferred tax assets:
Net operating loss carryforwards
Income tax credits
Property, plant and equipment
Deferred interest expense
Accrued liabilities
Receivable
Unrealized foreign exchange loss
Operating lease liabilities
Other
Total deferred tax assets
Valuation allowance
Total deferred tax assets net of valuation allowance
Deferred tax liabilities:
Property, plant and equipment
Deferred gain
Unrealized foreign exchange gain
Unbilled receivables
Operating lease right of use assets
Other
Total deferred tax liabilities
Net deferred tax assets
Recognized as:
Other assets
Other non-current liabilities
Total
December 31,
2021
2020
(In thousands)
$
$
$
$
36,326 $
93,257
20,181
3,397
49,554
30,996
11,409
27,446
13,407
285,973
(122,357)
163,616
40,334
10,873
3,212
5,218
26,120
5,241
90,998
72,618 $
83,596 $
(10,978)
72,618 $
24,791
93,056
25,342
10,306
57,586
33,295
5,603
20,343
11,741
282,063
(121,310)
160,753
28,440
11,907
5,620
2,031
19,704
4,514
72,216
88,537
95,045
(6,508)
88,537
We monitor on an ongoing basis our ability to utilize our deferred tax assets and whether there is a need for a related valuation allowance. In evaluating our
ability to recover our deferred tax assets in the jurisdictions from which they arise, we consider all available positive and negative evidence, including
scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies and recent results of operations.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Valuation allowance against deferred tax assets consist of the following:
Valuation allowance:
U.S.
Foreign
Total valuation allowance
Our net operating loss carryforwards (“NOLs”) are as follows:
U.S. Federal NOLs
U.S. State NOLs
Foreign NOLs
December 31,
2021
2020
(In thousands)
$
$
61,074 $
61,283
122,357 $
62,820
58,490
121,310
December 31,
2021
2020
Expiration
$
(In thousands)
21,388 $
55,694
155,323
22,683
88,170
85,960
2022-2024
2022-2038
2022-2031
At December 31, 2021 and 2020, a portion of our remaining U.S. federal net operating loss carryforward was reserved with a valuation allowance due to
ownership change limitations from a prior year acquisition as well as certain state net operating loss carryforwards expected to expire unused. Also, we
have a valuation allowance against a foreign net operating loss carryforward that we do not expect to have sufficient taxable income to realize as of
December 31, 2021 and 2020.
Our tax credit carryforwards are as follows:
U.S. Foreign Tax Credits
U.S. Other Tax Credits
Foreign Tax Credits
December 31,
2021
2020
Expiration
$
(In thousands)
57,247 $
138
35,872
70,265
168
22,623
2026-2031
2026
2022-2031
At December 31, 2021 and 2020, a portion of our U.S. and foreign tax credit carryforwards were reserved with a valuation allowance for the amount
expected to expire unused.
Distributions of cash to the U.S. as dividends generally will not be subject to U.S. federal income tax. We have not provided foreign withholding taxes or
state income taxes on the undistributed earnings of our foreign subsidiaries, over which we have sufficient influence to control the distribution of such
earnings and have determined that substantially all such earnings have been reinvested indefinitely. These earnings could become subject to foreign
withholding tax if they are remitted as dividends. For the year ended December 31, 2021, we estimate that repatriation of these foreign earnings would
generate withholding taxes and state income taxes of approximately $132.0 million.
We operate in and file income tax returns in various U.S. and foreign jurisdictions which are subject to examination by tax authorities. We have tax returns
that are open to examination in various jurisdictions for tax years 2011-2021. The open years contain matters that could be subject to differing
interpretations of applicable tax laws and regulations related to the amount and/or timing of income, deductions and tax credits. There can be no assurance
that the outcome of examinations will be favorable. Our unrecognized tax benefits are subject to change as examinations of specific tax years are completed
in the respective jurisdictions. In certain circumstances where we elect to appeal the results of an
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
examination, we may be required to make tax assessment payments to proceed with the administrative appeal process. Current examinations include 2017-
2020 Japan income tax returns, 2015-2020 Malaysia income tax returns, 2018-2020 Philippine income tax returns and our 2016 and 2018 Singapore
income tax returns.
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
Balance at January 1
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Reductions related to settlements with tax authorities
Reductions from lapse of statutes of limitations
Balance at December 31
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
32,598 $
9,562
1,740
(66)
(1,266)
(5,275)
37,293 $
26,242 $
10,427
1,173
(280)
—
(4,964)
32,598 $
25,268
8,944
188
(4,539)
(1,886)
(1,733)
26,242
The net increase in our unrecognized tax benefits was $4.7 million from December 31, 2020 to December 31, 2021. The increase was primarily related to
income attribution offset by decreases from the lapse of statutes of limitations. At December 31, 2021, all of our gross unrecognized tax benefits would
reduce our effective tax rate, if recognized. It is reasonably possible that unrecognized tax benefits related to income attribution and withholding taxes will
decrease in the next 12 months by up to $0.9 million due to the lapse of statutes of limitations in foreign jurisdictions.
The liability related to our unrecognized tax benefits, before interest and penalties, is $32.9 million as of December 31, 2021 and is reported as a
component of other non-current liabilities. The unrecognized tax benefits presented in the table above also include positions that have reduced deferred tax
assets. The balance of accrued and unpaid interest and penalties is $5.5 million and $4.7 million as of December 31, 2021 and 2020, respectively, and is
included as a component of other non-current liabilities in connection with our unrecognized tax benefits.
5. Earnings Per Share
Basic earnings per share (“EPS”) is computed by dividing net income attributable to Amkor common stockholders by the weighted-average number of
common shares outstanding during the period. The weighted-average number of common shares outstanding is reduced for treasury stock.
Diluted EPS is computed based on the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares
outstanding during the period. Dilutive potential common shares include outstanding stock options, PSUs, RSUs and unvested restricted shares.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table summarizes the computations of basic and diluted EPS:
2021
For the Year Ended December 31,
2020
(In thousands, except per share data)
2019
Net income attributable to Amkor common stockholders
$
642,995 $
338,138 $
120,888
Weighted-average number of common shares outstanding — basic
Effect of dilutive securities:
Share-based awards
Weighted-average number of common shares outstanding — diluted
Net income attributable to Amkor per common share:
Basic
Diluted
243,878
1,826
245,704
241,509
739
242,248
$
2.64 $
2.62
1.40 $
1.40
239,725
397
240,122
0.50
0.50
The following table summarizes the potential shares of common stock that were excluded from diluted EPS, because the effect of including these potential
shares was anti-dilutive:
Share-based awards
2021
For the Year Ended December 31,
2020
(In thousands)
2019
112
2,412
5,379
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6. Investments
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table summarizes our cash equivalents and available-for-sale debt investments:
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses (1)
Total Fair Value
Level 1
Level 2
(In thousands)
December 31, 2021
Fair Value Level
Cash equivalents
Commercial paper
Corporate bonds
Money market funds
Municipal bonds
U.S. government bonds
Total cash equivalents (2)
Short-term investments
Asset-backed securities
Certificate of deposits
Commercial paper
Corporate bonds
Foreign government bonds
Municipal bonds
U.S. government bonds
Variable rate demand notes
Total short-term investments
Total
$
5,499
4,921
269,251
500
4,000
284,171
12,915
12,076
30,691
179,235
458
8,418
2,966
500
247,259
531,430 $
—
—
—
—
—
—
1
—
—
1
—
1
—
—
3
3 $
—
(5)
—
—
—
(5)
(11)
—
—
(410)
(1)
(2)
(8)
—
(432)
(437) $
5,499
4,916
269,251
500
4,000
284,166
12,905
12,076
30,691
178,826
457
8,417
2,958
500
246,830
530,996 $
—
—
269,251
—
4,000
273,251
—
12,076
—
—
—
—
2,958
—
15,034
288,285 $
5,499
4,916
—
500
—
10,915
12,905
—
30,691
178,826
457
8,417
—
500
231,796
242,711
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Amortized Cost
Gross Unrealized
Gains
Gross Unrealized
Losses (1)
Total Fair Value
Level 1
Level 2
(In thousands)
December 31, 2020
Fair Value Level
Cash equivalents
Certificate of deposits
Commercial paper
Corporate bonds
Money market funds
Municipal bonds
Total cash equivalents
Short-term investments
Asset-backed securities
Certificate of deposits
Commercial paper
Corporate bonds
Municipal bonds
U.S. government agency bonds
U.S. government bonds
Variable rate demand notes
Total short-term investments
Total
$
$
976 $
5,293
1,744
138,290
400
146,703
19,111
5,046
15,148
50,771
12,702
8,415
17,605
300
129,098
275,801 $
— $
—
—
—
—
—
18
—
—
16
8
3
3
—
48
48 $
— $
—
—
—
—
—
(9)
—
—
(12)
(2)
—
—
—
(23)
(23) $
976 $
5,293
1,744
138,290
400
146,703
19,120
5,046
15,148
50,775
12,708
8,418
17,608
300
129,123
275,826 $
976 $
—
—
138,290
—
139,266
—
5,046
—
—
—
—
17,608
—
22,654
161,920 $
—
5,293
1,744
—
400
7,437
19,120
—
15,148
50,775
12,708
8,418
—
300
106,469
113,906
(1) All unrealized losses have been in a continuous loss position for less than 12 months. We do not intend to sell the investments in an unrealized loss
position, and we do not believe it is more likely than not that we will be required to sell these investments before recovery of their amortized cost
bases.
(2) During the years ended December 31, 2021 and 2020, we sold cash equivalent investments for proceeds of $12.8 million and $27.1 million,
respectively, and realized no gain or loss on such sales.
The following table summarizes the contractual maturities of our cash equivalents and available-for-sale debt investments as of December 31, 2021:
Amortized Cost
Fair Value
Within 1 year
After 1 year through 5 years
After 5 years through 10 years
After 10 years
Total
$
$
$
489,384 $
40,595
123
1,328 $
531,430 $
489,057
40,489
123
1,327
530,996
Actual maturities can differ from contractual maturities due to various factors including whether the issuers have the right to call or prepay obligations
without call or prepayment penalties, and we view our available-for-sale debt investments as available for current operations.
As of December 31, 2021 and December 31, 2020, the amortized cost and fair market value of our held-to-maturity government bonds (Level 1) maturing
within a year were $4.7 million.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
7. Factoring of Accounts Receivable
For certain accounts receivable, we use non-recourse factoring arrangements with third-party financial institutions to manage our working capital and cash
flows. Under these arrangements, we sell receivables to a financial institution for cash at a discount to the face amount. As part of the factoring
arrangements, we perform certain collection and administrative functions for the receivables sold. For the year ended December 31, 2021 and 2020, we
sold accounts receivable totaling $464.4 million and $499.3 million, net of discounts and fees of $1.2 million and $2.9 million, respectively.
8. Property, Plant and Equipment
Property, plant and equipment consist of the following:
Land
Buildings and improvements
Machinery and equipment
Finance lease machinery and equipment
Furniture, fixtures and other equipment
Software and computer equipment
Construction in progress
Total property, plant and equipment
Less accumulated depreciation and amortization
Total property, plant and equipment, net
The following table summarizes our depreciation expense:
December 31,
2021
2020
(In thousands)
$
$
218,140 $
1,711,560
6,277,684
105,294
22,125
232,251
74,662
8,641,716
(5,770,658)
2,871,058 $
221,304
1,625,355
5,736,797
40,856
20,774
231,171
48,602
7,924,859
(5,358,857)
2,566,002
Depreciation expense
$
562,962 $
509,770 $
522,011
For the Year Ended December 31,
2021
2020
(In thousands)
2019
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
9. Leases
The components of lease expense were as follows:
Operating lease cost
Finance lease cost
Amortization of leased assets
Interest on lease liabilities
Total finance lease cost
Short-term lease cost
Variable lease cost
Net lease cost
2021
For the Year Ended December 31,
2020
2019
(In thousands)
64,902 $
52,882 $
41,559
14,196
2,768
16,964
6,264
7,409
95,539 $
6,520
987
7,507
7,188
5,307
72,884 $
5,240
933
6,173
8,927
5,416
62,075
$
$
Other information related to leases was as follows:
Supplemental Cash Flows Information (in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
2021
For the Year Ended December 31,
2020
2019
$
$
64,786
1,745
20,373
$
53,323
946
9,851
39,870
893
6,574
Weighted Average Remaining Lease Term (years)
Operating leases
Finance leases
Weighted Average Discount Rate
Operating leases
Finance leases
3.2
3.1
3.6 %
3.2 %
3.9
3.1
4.0 %
4.0 %
4.7
3.6
4.2 %
4.6 %
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Maturities of lease liabilities were as follows:
2022
2023
2024
2025
2026
Thereafter
Total future minimum lease payments
Less: Imputed interest
Total
Operating Leases
Finance Leases
December 31, 2021
(In thousands)
$
$
68,653
45,762
17,075
9,122
8,769
9,316
158,697
(10,527)
148,170
$
$
33,208
30,656
18,075
2,081
1,585
4,003
89,608
(5,289)
84,319
As of December 31, 2021, we have entered into additional lease agreements that have not yet commenced of approximately $48 million.
10. Accrued Expenses
Accrued expenses consist of the following:
Payroll and benefits
Deferred revenue and customer advances
Income taxes payable
Short-term finance lease liability
Accrued interest
Accrued severance plan obligations (Note 12)
Other accrued expenses
Total accrued expenses
December 31,
2021
2020
(In thousands)
$
$
150,883 $
117,741
38,957
30,919
10,789
8,194
65,409
422,892 $
143,383
30,269
26,602
12,634
10,767
10,837
64,967
299,459
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11. Debt
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Short-term borrowings and long-term debt consist of the following:
Debt of Amkor Technology, Inc.:
Senior notes:
6.625% Senior notes, due September 2027
Other
Debt of subsidiaries:
Amkor Technology Korea, Inc.:
$30 million revolving credit facility, applicable bank rate plus 1.11% (1)
Term loan, applicable bank rate plus 1.77%, due April 2023
Term loan, fixed rate at 1.85%, due April 2024 (2)
Term loan, applicable bank rate plus 1.98%, due December 2028 (3)
Term loan, fixed rate at 2.12%, due December 2028 (4)
Amkor Technology Japan, Inc.:
Short-term term loans, variable rate (5)
Term loan, fixed rate at 0.86%, due June 2022
Term loan, fixed rate at 0.60%, due July 2022
Term loan, fixed rate at 1.30%, due July 2023
Term loan, fixed rate at 1.35%, due December 2024
Term loan, fixed rate at 1.20%, due December 2025
Term loan, fixed rate at 1.23%, due December 2026 (6)
Amkor Assembly & Test (Shanghai) Co., Ltd.:
Term loan, LIBOR plus 1.60%, due March 2022
Term loan, LIBOR plus 1.40%, due March 2022
Term loan, LIBOR plus 1.10%, due March 2024 (7)
Other:
December 31,
2021
2020
(In thousands)
$
525,000 $
—
525,000
2,039
—
47,064
—
50,000
50,000
3,789
4,345
1,303
79,075
148,592
75,773
113,834
—
—
48,000
—
51,541
—
50,000
—
6,663
14,528
3,390
138,499
220,823
105,569
—
28,000
18,250
—
$250 million senior secured revolving credit facility, LIBOR plus 1.25%-1.75%, due July 2023
(Singapore) (8)
Credit facility, TAIFX plus the applicable bank rate, due December 2024 (Taiwan) (9)
Less: Unamortized discount and deferred debt costs, net
Less: Short-term borrowings and current portion of long-term debt
Long-term debt
—
—
1,146,775
(8,779)
(153,008)
984,988 $
—
—
1,164,302
(9,956)
(149,007)
1,005,339
$
In October 2021, we renewed this revolving credit facility agreement for a one-year term with availability of $30.0 million. Principal is payable at maturity
or six months after draw of funds, whichever is sooner, and interest is payable monthly in arrears. As of December 31, 2021, $30.0 million was available to
be drawn.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
In April 2021, we entered into a ₩80.0 billion term loan agreement with the option to borrow and re-borrow the funds up to six times per year through
April 2024. Principal is payable at maturity, and interest is payable monthly. During the year ended December 31, 2021, we borrowed and repaid
$138.6 million. As of December 31, 2021, ₩80.0 billion, or approximately $67 million, was available to be drawn.
In December 2018, we entered into a term loan agreement pursuant to which we may borrow up to $90.0 million for capital expenditures. Principal is
payable in semiannual installments and interest is payable quarterly in arrears (fixed at a weighted average of 3.88% as of December 31, 2021).
In October 2021, we entered into a term loan agreement with availability of $200.0 million. Principal is payable in semiannual installments after a three-
year grace period from the date of the first drawdown, which occurred in December 2021. Interest is payable quarterly. During the year ended December
31, 2021, we borrowed $50.0 million. As of December 31, 2021, $150.0 million was available to be drawn. In February 2022, we borrowed an additional
$50.0 million under this agreement.
We entered into various short-term term loans which mature semiannually. Principal and interest are payable in monthly installments. As of December 31,
2021, $5.2 million was available to be drawn.
In December 2021, we borrowed ¥13.1 billion (US$115.0 million) under a new term loan agreement due December 2026, guaranteed by Amkor
Technology, Inc. and our subsidiary, ATSH. Principal is due in 20 equal, quarterly installments plus accrued interest, through maturity.
In March 2021, we entered into a borrowing arrangement which includes a $20.0 million term loan and a $30.0 million term loan. For each term loan,
principal is payable in semiannual installments of $0.5 million, with the remaining balance due at maturity. Interest is payable quarterly. We immediately
borrowed $50.0 million to repay the term loans due March 2022.
In July 2018, our subsidiary, ATSH, entered into a $250.0 million senior secured revolving credit facility, which is guaranteed by Amkor Technology, Inc.
The availability for our revolving credit facility is based on the amount of eligible accounts receivable. Principal is payable at maturity. As of December 31,
2021, $250.0 million was available to be drawn.
In December 2019, our subsidiary, Amkor Technology Taiwan, Ltd., entered into a $56.0 million borrowing arrangement. This arrangement included a
$20.0 million term loan and a $36.0 million revolving credit facility. As of December 31, 2021, $36.0 million was available for future borrowings under
such credit facility.
Certain of our foreign debt is collateralized by the land, buildings, equipment and accounts receivable in the respective locations. The carrying value of all
collateral exceeds the carrying amount of the collateralized debt.
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Interest Rates
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Interest is payable semiannually on our senior notes and quarterly or monthly on our other fixed- and variable-rate debt. Refer to the table above for the
interest rates on our fixed-rate debt and to the table below for the interest rates on our variable-rate debt.
Amkor Technology Korea, Inc.:
Term loan, applicable bank rate plus 1.77%, due April 2023
Amkor Technology Japan, Inc:
Short-term term loans, variable rate
Amkor Assembly & Test (Shanghai) Co., Ltd.:
Term loan, LIBOR plus 1.60%, due March 2022
Term loan, LIBOR Plus 1.40%, due March 2022
Term loan, LIBOR plus 1.10%, due March 2024
Compliance with Debt Covenants
December 31,
2021
2020
2.86 %
0.29 %
—
—
1.31 %
2.40 %
0.27 %
1.83 %
1.63 %
—
The debt of Amkor Technology, Inc. is structurally subordinated in right of payment to all existing and future debt and other liabilities of our subsidiaries.
From time to time, Amkor Technology, Inc. and certain of our subsidiaries guarantee certain debt of our other subsidiaries. The agreements governing our
indebtedness contain affirmative and negative covenants which restrict our ability to pay dividends and could restrict our operations. These restrictions are
determined in part by our covenant compliance and on calculations based upon cumulative net income or, in the case of our Singapore Revolver, borrowing
availability and do not currently have a material impact on our ability to make dividend payments or stock repurchases.
We were in compliance with all debt covenants at December 31, 2021 and 2020.
Maturities
Payments due for the year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total debt
78
Total Debt
(In thousands)
$
$
153,008
179,336
140,383
60,496
44,695
568,857
1,146,775
Table of Contents
12. Pension and Severance Plans
Korean Severance Plan
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Our subsidiary in Korea maintains an unfunded severance plan that covers certain employees that were employed prior to August 1, 2015. To the extent
eligible employees are terminated, our subsidiary in Korea would be required to make lump-sum severance payments on behalf of these eligible employees
for service provided prior to August 1, 2015. Factors used to determine severance benefits include employees’ length of service, seniority and rate of pay.
The employees’ length of service and seniority are fixed as of July 31, 2015. The employees’ rate of pay is adjusted to the rate of pay at the time of
termination. Accrued severance benefits are estimated assuming all eligible employees were to terminate their employment at the balance sheet date. Our
contributions to the National Pension Plan of the Republic of Korea are deducted from accrued severance benefit liabilities. On August 1, 2015, our
subsidiary in Korea began sponsoring a defined benefit pension plan and a defined contribution plan. Existing employees at that time were given the option
of choosing either a defined benefit pension plan or a defined contribution plan for their future benefits and new employees since that date are enrolled in a
defined contribution plan.
The changes to the balance of our accrued severance plan obligations are as follows:
Balance at January 1
Provision of severance benefits
Severance payments (1)
Foreign currency (gain) loss
Balance at December 31
Payments remaining with the National Pension Fund
Total accrued severance plan obligations at December 31
Less current portion of accrued severance plan obligations (Note 10)
Non-current portion of accrued severance plan obligations
2021
For the Year Ended December 31,
2020
(In thousands)
2019
98,162 $
6,144
(22,775)
(8,186)
73,345
(138)
73,207
8,194
65,013 $
127,547 $
6,542
(42,457)
6,530
98,162
(158)
98,004
10,837
87,167 $
142,298
1,306
(10,659)
(5,398)
127,547
(161)
127,386
13,408
113,978
$
$
(1) In 2020 and 2021, some employees accepted our offer to convert their Korean severance plan participation to a defined contribution plan.
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Foreign Defined Benefit Pension Plans
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Our subsidiaries in Japan, Korea, Malaysia, the Philippines and Taiwan sponsor defined benefit plans (the “Plans”). Charges to expense are based upon
actuarial analyses. The following table summarizes the changes to the Plans’ benefit obligations, fair value of the Plans’ assets and the funded status of the
Plans at December 31, 2021 and 2020:
Change in projected benefit obligation:
Projected benefit obligation at January 1
Service cost
Interest cost
Benefits paid
Actuarial (gain) loss
Effects of curtailment
Settlement (1)
Foreign exchange (gain) loss
Projected benefit obligation at December 31
Change in plan assets:
Fair value of plan assets at January 1
Actual gain (loss) on plan assets
Employer contributions
Settlement (1)
Benefits paid
Foreign exchange gain (loss)
Fair value of plan assets at December 31
Funded status of the Plans at December 31
For the Year Ended December 31,
2021
2020
(In thousands)
$
$
222,509 $
25,908
4,900
(10,466)
(7,169)
(954)
(18,042)
(16,499)
200,187
155,211
9,463
32,354
(18,042)
(10,466)
(11,508)
157,012
(43,175) $
207,448
29,848
4,980
(8,380)
6,104
(2,410)
(31,804)
16,723
222,509
145,158
11,400
25,080
(31,804)
(8,380)
13,757
155,211
(67,298)
(1) In 2020 and 2021, some employees accepted our offer to convert their defined benefit pension plan participation to a defined contribution plan.
Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost (included in non-current assets)
Accrued benefit liability (included in pension and severance obligations)
Net amount recognized at year end
December 31,
2021
2020
(In thousands)
$
$
11,982 $
(55,157)
(43,175) $
4,856
(72,154)
(67,298)
The accumulated benefit obligation as of December 31, 2021 and 2020 was $151.7 million and $164.7 million, respectively.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table summarizes, by component, the change in accumulated other comprehensive income (loss), net of tax related to our Plans:
Balance at December 31, 2019
Amortization and settlement gain included in net periodic pension cost
Net gain (loss) arising during period
Adjustments to unrealized components of defined benefit pension plan included in other
comprehensive income (loss)
Balance at December 31, 2020
Amortization and settlement gain included in net periodic pension cost
Net gain (loss) arising during period
Adjustments to unrealized components of defined benefit pension plan included in other
comprehensive income (loss)
Balance at December 31, 2021
$
$
Information for pension plans with benefit obligations in excess of plan assets is as follows:
Plans with underfunded or non-funded projected benefit obligation:
Aggregate projected benefit obligation
Aggregate fair value of plan assets
Plans with underfunded or non-funded accumulated benefit obligation:
Aggregate accumulated benefit obligation
Aggregate fair value of plan assets
The following table summarizes total pension expense:
Components of net periodic pension cost and total pension expense:
Service cost
Interest cost
Expected return on plan assets
Recognized actuarial (gain) loss
Net periodic pension cost
Curtailment (gain) loss
Settlement (gain) loss
Total pension expense
Prior Service
Cost
Actuarial Net Gain
(Loss)
(In thousands)
Total
602 $
—
—
—
602
—
—
(5,422) $
208
394
602
(4,820)
(457)
10,291
—
602 $
9,834
5,014 $
(4,820)
208
394
602
(4,218)
(457)
10,291
9,834
5,616
December 31,
2021
2020
(In thousands)
$
128,312 $
73,159
72,009
24,365
140,424
68,270
76,426
25,292
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
25,908 $
4,900
(5,600)
128
25,336
(954)
(743)
23,639 $
29,848 $
4,980
(5,506)
56
29,378
—
62
29,440 $
31,355
5,244
(6,412)
(374)
29,813
—
(210)
29,603
The components of net periodic pension cost other than the service cost component are included in other (income) expense, net in our Consolidated
Statements of Income.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table summarizes the weighted-average assumptions used in computing the net periodic pension cost and projected benefit obligations:
Discount rate for determining net periodic pension cost
Discount rate for determining benefit obligations at December 31
Rate of compensation increase for determining net periodic
pension cost
Rate of compensation increase for determining benefit obligations
at December 31
Expected rate of return on plan assets for determining net periodic
pension cost
2021
For the Year Ended December 31,
2020
2019
2.3 %
2.6 %
3.7 %
3.7 %
3.7 %
2.5 %
2.3 %
3.7 %
3.7 %
3.8 %
3.1 %
2.5 %
3.6 %
3.7 %
5.1 %
The measurement date for determining the Plans’ assets and benefit obligations is December 31, each year. Discount rates are generally derived from yield
curves constructed from high-quality corporate or foreign government bonds, for which the timing and amount of cash outflows approximate the estimated
payouts.
The expected rate of return assumption is based on weighted-average expected returns for each asset class. Expected returns reflect a combination of
historical performance analysis and the forward-looking views of the financial markets and include input from our actuaries. We have no control over the
direction of our investments in our defined benefit plans in Taiwan as the local Labor Standards Law Fund mandates such contributions into a cash account
balance at the Bank of Taiwan. Our defined benefit pension plan in Malaysia is a non-funded plan, and as such, no asset exists related to this plan. Our
investment strategies for our defined benefit plans in Japan, Korea and the Philippines are based on long-term, sustained asset growth through low to
medium risk investments. The current rate of return assumption targets are based on asset allocation strategies as follows:
Japan defined benefit plan
Korea defined benefit plan
Philippine defined benefit plan
Debt
Allocation
Equity
Other
67 %
15 %
45 %
31 %
40 %
50 %
2 %
45 %
5 %
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
The fair value of our pension plan assets, by asset category utilizing the fair value hierarchy as discussed in Note 16, is as follows:
Level 1
December 31, 2021
Level 2
(In thousands)
Total
Level 1
December 31, 2020
Level 2
(In thousands)
Total
$
17 $
21,450
— $
—
17
21,450
$
1,219 $
16,071
Cash and cash equivalents
Equity securities
Debt securities
Government bonds
Corporate bonds
Treasury notes
Mutual and commingled funds
Equity funds
Debt funds
Guaranteed investment contracts
Taiwan retirement fund
Other, net
Total fair value of pension plan assets
$
7,536
369
8,559
33,619
12,774
—
13,173
(1,947)
95,550 $
—
—
—
8,270
15,159
37,458
—
575
61,462 $
7,536
369
8,559
41,889
27,933
37,458
13,173
(1,372)
157,012
$
6,571
—
8,069
38,939
13,720
—
12,748
(2,365)
94,972 $
— $
—
—
—
—
7,530
17,268
34,281
—
1,160
60,239 $
1,219
16,071
6,571
—
8,069
46,469
30,988
34,281
12,748
(1,205)
155,211
The Taiwan retirement fund category of our plan assets represents accounts that our subsidiaries in Taiwan have in a government labor retirement fund in
the custody of the Bank of Taiwan. The accounts earn a minimum guaranteed rate of return and are invested in a mix of cash, domestic and foreign equity
securities and domestic and foreign debt securities.
We expect to make contributions of approximately $15 million during 2022. We closely monitor the funded status of the Plans with respect to legislative
requirements. We intend to make at least the minimum contribution required by law each year.
The estimated future benefit payments related to our foreign defined benefit plans are as follows:
2022
2023
2024
2025
2026
2027 to 2031
Defined Contribution Plans
$
Payments
(In thousands)
9,676
11,397
13,334
15,278
16,491
113,825
We sponsor defined contribution plans in Korea, Malaysia, Taiwan and the U.S. Total defined contribution expense was $21.8 million, $16.5 million and
$13.6 million for 2021, 2020 and 2019, respectively.
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13. Dividends
AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
In October 2020, our Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. Each quarter since the adoption
of this dividend policy the Company has declared and paid a quarterly dividend. In November 2021, our Board of Directors approved a 25% increase to our
quarterly dividend, increasing to $0.05 per share.
14. Accumulated Other Comprehensive Income (Loss)
The following table reflects the changes in accumulated other comprehensive income (loss), net of tax:
Unrealized Gain
(Losses) on Available-
for-Sale Debt
Investments (1)
Defined Benefit
Pension (2)
Foreign Currency
Translation
Total
(In thousands)
Balance at December 31, 2019
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Other comprehensive income (loss)
Balance at December 31, 2020
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive
income (loss)
Other comprehensive income (loss)
Balance at December 31, 2021
$
$
$
— $
17
4
21
21 $
(454)
85
(369)
(348) $
(4,820) $
394
208
602
(4,218) $
10,291
(457)
9,834
5,616 $
23,935 $
7,532
—
7,532
31,467 $
(16,757)
—
(16,757)
14,710 $
19,115
7,943
212
8,155
27,270
(6,920)
(372)
(7,292)
19,978
(1) Amounts reclassified out of accumulated other comprehensive income (loss) are included as other (income) expense, net (Note 3).
(2) Amounts reclassified out of accumulated other comprehensive income (loss) are included as a component of net periodic pension cost (Note 12) or
other (income) expense, net (Note 3).
15. Derivatives
We use foreign currency forward contracts to mitigate foreign currency risk of certain assets and monetary liabilities denominated in foreign currencies. We
do not enter into such contracts for trading or speculative purposes. These derivative instruments are not designated as hedging instruments.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
As of December 31, 2021 and 2020, our foreign exchange forward contracts consisted of the following:
Japanese yen
Korean won
Philippine peso
Total forward contracts
December 31, 2021
Notional Value
Fair Value (Level
2)
Balance Sheet Location
Notional Value
December 31, 2020
Fair Value (Level
2)
Balance Sheet Location
$
$
396,946 $
125,321
4,001
526,268 $
(901) Accrued expenses
(492) Accrued Expenses
(In thousands)
$
Other Current
Assets
7
(1,386)
$
465,192 $
161,612
10,974
637,778 $
1,279 Other current assets
190 Other current assets
(7) Accrued expenses
1,462
For the year ended December 31, 2021, the derivatives resulted in a net loss of $58.8 million, which was offset by the foreign currency gains associated
with the underlying net assets or liabilities. For the years ended December 31, 2020 and 2019, the derivatives resulted in a net gain of $35.9 million and
$0.1 million respectively, which were offset by the foreign currency losses associated with the underlying net liabilities.
16. Fair Value Measurements
The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair
value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of
three tiers as follows: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than
Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active,
model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not
corroborated by market data. For our Level 2 short-term investments, we consider factors such as actual trade data, benchmark yields, broker/dealer quotes,
and other similar data obtained from quoted market prices and independent pricing vendors to determine the fair value of these assets and liabilities.
The fair values of cash, accounts receivable, trade accounts payable, capital expenditures payable, and certain other current assets and accrued expenses
approximate carrying values because of their short-term nature. The carrying value of certain other non-current assets and liabilities approximates fair
value. Our assets and liabilities recorded at fair value on a recurring basis include restricted cash money market funds and short-term investments, including
investments classified as cash equivalents. Cash equivalent money market funds and restricted cash money market funds are invested in U.S. money market
funds and various U.S. and foreign bank operating and time deposit accounts, which are due on demand or carry a maturity date of less than three months
when purchased. No restrictions have been imposed on us regarding withdrawal of balances with respect to our cash equivalents as a result of liquidity or
other credit market issues affecting the money market funds we invest in or the counterparty financial institutions holding our deposits.
Our derivative financial instruments are valued using quoted market prices for similar assets. Counterparties to these derivative contracts are highly rated
financial institutions.
We also measure certain assets and liabilities, including property, plant and equipment and goodwill, at fair value on a nonrecurring basis.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
We measure the fair value of our debt for disclosure purposes. The following table presents the fair value of financial instruments that are not recorded at
fair value on a recurring basis:
Senior notes (Level 1)
Revolving credit facilities and term loans (Level 2)
Total financial instruments
$
$
555,655 $
627,883
1,183,538 $
(In thousands)
520,436 $
617,560
1,137,996 $
570,339 $
647,557
1,217,896 $
519,803
634,543
1,154,346
December 31, 2021
December 31, 2020
Fair
Value
Carrying
Value
Fair
Value
Carrying
Value
The estimated fair value of our senior notes is based primarily on quoted market prices reported on or near the respective balance sheet dates. The estimated
fair value of our revolving credit facilities and term loans is calculated using a discounted cash flow analysis, which utilizes market based assumptions
including forward interest rates adjusted for credit risk.
17. Commitments and Contingencies
We generally warrant that our services will be performed in a professional and workmanlike manner and in compliance with our customers’ specifications.
We accrue costs for known warranty issues. Historically, our warranty costs have been immaterial.
Legal Proceedings
We are involved in claims and legal proceedings and may become involved in other legal matters arising in the ordinary course of our business. We
evaluate these claims and legal matters on a case-by-case basis to make a determination as to the impact, if any, on our business, liquidity, results of
operations, financial condition or cash flows. Although the outcome of these matters is uncertain, we believe that the ultimate outcome of these claims and
proceedings, individually and in the aggregate, will not have a material adverse impact to us. Our evaluation of the potential impact of these claims and
legal proceedings on our business, liquidity, results of operations, financial condition or cash flows could change in the future.
Purchase Commitments
In order to provide packaging and test services, we purchase materials under various long-term supply contracts. Future minimum payments to be made
under these contracts for the period 2022 through 2027 are $7.1 million.
18. Business Segments, Customer Concentrations and Geographic Information
We operate as a single operating segment as managed by our Chief Executive Officer, who is considered our chief operating decision maker (“CODM”).
The CODM bears the ultimate responsibility for, and is actively engaged in, the allocation of resources and the evaluation of our operating and financial
results. We have concluded that we have a single operating segment based on the following:
• We are managed under a functionally-based organizational structure with the head of each function reporting directly to the CODM;
• We assess performance, including incentive compensation, based on consolidated operating performance and financial results;
• Our CODM allocates resources and makes other operating decisions based on specific customer business opportunities and
• We have an integrated process for the design, development and manufacturing services we provide to all of our customers. We also have
centralized sales and administrative functions.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
In 2021, we began reporting memory net sales in Advanced Products. Previously, memory net sales were reported in Mainstream Products. Prior year
amounts were reclassified to conform to current year presentation. Net sales by product group consist of the following:
Advanced Products
Mainstream Products
Total net sales
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
4,409,207 $
1,729,122
6,138,329 $
3,604,365 $
1,446,224
5,050,589 $
2,481,783
1,570,867
4,052,650
(1) Advanced Products include flip chip and wafer-level processing and related test services.
(2) Mainstream Products include wirebond packaging and related test services.
Net sales by end market consist of the following:
Communications (smart phones, tablets)
Consumer (AR & gaming, connected home, home electronics, wearables)
Automotive and Industrial (ADAS, electrification, infotainment, safety)
Computing (datacenter, infrastructure, PC/laptops, storage)
Total net sales
Net sales by region based on customer headquarters location consist of the following:
Japan
Europe, Middle East and Africa
Asia Pacific (excluding Japan)
Total foreign countries
United States
Total net sales
2021
For the Year Ended December 31,
2020
2019
41 %
22 %
21 %
16 %
100 %
41 %
24 %
20 %
15 %
100 %
38 %
18 %
27 %
17 %
100 %
2021
For the Year Ended December 31,
2020
(In thousands)
2019
$
$
1,253,717 $
1,061,369
999,591
3,314,677
2,823,652
6,138,329 $
1,152,641 $
848,301
672,563
2,673,505
2,377,084
5,050,589 $
1,061,265
625,592
487,406
2,174,263
1,878,387
4,052,650
In 2021 and 2020, one customer accounted for 13.7% and 14.5% of total net sales, respectively. No single customer accounted for more than 10% of net
sales in 2019.
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AMKOR TECHNOLOGY, INC.
Notes to Consolidated Financial Statements — (Continued)
Property, plant and equipment, net, based on physical location, consist of the following:
China
Japan
Korea
Malaysia
Philippines
Portugal
Taiwan
Other foreign countries
Total foreign countries
United States
Total property, plant and equipment, net
19. Restructuring and Other Exit Activities
December 31,
2021
2020
(In thousands)
$
$
431,862 $
147,253
1,719,842
33,416
189,478
79,326
264,540
694
2,866,411
4,647
2,871,058 $
397,849
172,520
1,428,855
37,718
187,108
69,458
264,959
910
2,559,377
6,625
2,566,002
As part of our ongoing efforts to improve our manufacturing operations and manage costs, we regularly evaluate our staffing levels and facility
requirements compared to business needs. The following table summarizes our exit activities associated with these efforts. “Charges” represents the initial
charge related to the exit activity. “Cash Payments” consists of the utilization of “Charges.” “Non-cash Amounts” consists of asset impairment and
translation adjustments.
Japan Consolidation Activities
During the year ended December 31, 2021, we recorded restructuring charges of $2.9 million associated with our Japan factory consolidation efforts. We
recorded these charges to selling, general and administrative expenses within the Consolidated Statements of Income. We completed these restructuring
actions in the second quarter of 2021.
Facility Costs (1)
Employee Separation
Costs
Other Exit Costs (2)
Total
Accrual at December 31, 2019
Charges
Cash payments
Non-cash amounts
Accrual at December 31, 2020
Charges
Cash Payments
Non-cash Amounts
Accrual at December 31, 2021
Total cumulative charges incurred to date
Estimated additional charges to be incurred
$
$
$
$
2,196 $
9,679
(7,536)
26
4,365 $
2,077
(5,733)
(709)
— $
16,255 $
—
(In thousands)
271 $
5,548
(4,056)
(4)
1,759 $
496
(2,253)
(2)
— $
8,754 $
—
174 $
2,779
(2,731)
(3)
219 $
360 $
(578) $
(1)
— $
3,884 $
— $
2,641
18,006
(14,323)
19
6,343
2,933
(8,564)
(712)
—
28,893
—
(1) Facility costs primarily consist of equipment relocation costs directly resulting from the restructuring actions.
(2) Other exit costs primarily consist of employee relocation and training costs directly resulting from the restructuring actions.
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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
Deferred tax asset valuation allowance:
Year ended at December 31, 2019
Year ended at December 31, 2020
Year ended at December 31, 2021
Balance at
Beginning of
Period
Additions
(Credited) Charged
to Expense
Write-offs
Balance at
End of Period
(In thousands)
$
$
$
118,560
136,934
121,310
21,496
(15,311)
3,653
(3,122)
(313)
(2,606)
$
$
$
136,934
121,310
122,357
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Table of Contents
Item 9.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports to the
Securities and Exchange Commission (“SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure, based on the definition of “disclosure controls and procedures” in Rule 13a-
15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended. In designing and evaluating the disclosure controls and procedures,
management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of
possible disclosure controls and procedures.
We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021, and concluded those
disclosure controls and procedures were effective as of that date.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies and procedures may deteriorate.
Management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2021, based on the
framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based on the results of this evaluation, our management concluded that our internal control over financial reporting was effective
as of December 31, 2021, based on criteria in Internal Control — Integrated Framework (2013) issued by the COSO.
The effectiveness of our internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report which appears under Item 8 of this Form 10-K.
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Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2021 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Other Information
None.
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
The information required by this Item 10, with the exception of information relating to our Code of Business Conduct (the “Code of Business Conduct”) as
disclosed below, is incorporated herein by reference from the material included under the captions “Election of Directors,” “Executive Officers,”
“Corporate Governance,” and “Delinquent Section 16(a) Reports” in our definitive proxy statement to be filed with the SEC pursuant to Regulation 14A in
connection with our 2022 Annual Meeting of Stockholders (the “Proxy Statement”).
The Code of Business Conduct is written and is applicable to all employees, including our Chief Executive Officer, Chief Financial Officer, and Controller.
The Code of Business Conduct and our Code of Ethics for Directors, Corporate Governance Guidelines, and the charters of the Audit Committee,
Nominating and Governance Committee and Compensation Committee of our Board of Directors are available and maintained on our website
(http://www.amkor.com). We intend to disclose on our website future amendments or waivers of the Code of Business Conduct required to be disclosed
pursuant to applicable rules and regulations.
Item 11.
Executive Compensation
The information required by this Item 11 is incorporated herein by reference from the material included under the captions “Executive Compensation,”
“Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Proxy Statement.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12, with the exception of the equity compensation plan information presented below, is incorporated herein by
reference to the Proxy Statement.
91
EQUITY COMPENSATION PLAN
The following table summarizes our equity compensation plan as of December 31, 2021:
Equity compensation plan approved by stockholders (2)
Equity compensation plans not approved by stockholders
Total equity compensation plans
(a)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants and
Rights
(In thousands)
(b)
Weighted
Average
Exercise Price of
Outstanding
Options, Warrants and
Rights (1)
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column(a))
(In thousands)
3,312 (3) $
—
3,312
10.34
—
22,558 (4)
—
22,558
(1) Calculated without taking into account shares of common stock subject to outstanding RSUs and PSUs that will become issuable as those units vest
without any cash consideration or other payment required for such shares.
(2) Consists of the 2007 Plan and the 2021 Plan.
(3) Includes 0.3 million shares of common stock subject to RSUs and PSUs, which entitle each holder to one share of common stock for each unit that
vests over the holder’s period of continued service or based on the achievement of certain performance criteria.
(4) Represents the number of shares of common stock available for issuance under the 2021 Plan, as adjusted to account for full-value awards, which
reduce the shares of common stock available for future issuance at a fungible ratio of 1:1.5 for each full-value award previously awarded. The
2007 Plan terminated on the date of the 2021 Annual Meeting, and, accordingly, there were no shares available for future grants under the 2007
Plan as of December 31, 2021. However, if an award under the 2021 Plan or under the 2007 Plan is forfeited, terminated, canceled, expires or is
paid in cash, the shares subject to such award, to the extent of the forfeiture, termination, cancellation, expiration or cash payment, may be added
back to the shares available for issuance under the 2021 Plan on a 1:1 basis for options and stock appreciation rights and on a 1.5:1 basis for all
other equity awards.
The 2021 Plan, which was approved by our stockholders at the 2021 Annual Meeting, superseded and replaced the 2007 Plan. As of December 31, 2021, a
total of 22.6 million shares were available for issuance under the 2021 Plan. Shares available for issuance under our 2021 Plan can be granted pursuant to
stock options, restricted stock, RSUs, stock appreciation rights, PSUs and performance shares. For additional information regarding the 2007 Plan and the
2021 Plan, see Note 2 to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is incorporated herein by reference from the material included under the captions “Certain Relationships and
Related Transactions” and “Proposal One — Election of Directors” in the Proxy Statement.
Item 14.
Principal Accountant Fees and Services
The information required by this Item 14 is incorporated herein by reference from the material included under the proposal “Ratification of Appointment of
Independent Registered Public Accounting Firm” in the Proxy Statement
92
Item 15. Exhibits and Financial Statement Schedules
(a) Financial Statements, Financial Statement Schedules and Exhibits
PART IV
The financial statements and schedules filed as part of this Form 10-K are listed in the index under Part II, Item 8 of this Form 10-K.
The exhibits required by Item 601 of Regulation S-K that are filed with this Form 10-K or incorporated by reference herein are set forth below.
Management contracts or compensatory plans or arrangements are identified by an asterisk.
Exhibit
Number
Exhibit Description
2.1 Sales Contract of Commodity Premises between Shanghai
Waigaoqiao Free Trade Zone Xin Development Co., Ltd. and Amkor
Assembly & Test (Shanghai) Co., Ltd. dated May 7, 2004.
3.1 Certificate of Incorporation.
3.2 Certificate of Correction to Certificate of Incorporation.
3.3 Restated Bylaws as amended on November 5, 2013.
4.1 Specimen Common Stock Certificate.
4.2
Indenture, dated March 15, 2019, by and between Amkor Technology,
Inc. and U.S. Bank National Association, as trustee, regarding the
6.625% Senior Notes due 2027.
4.3 Description of the Registrant’s Securities Registered Pursuant to
Section 12 of the Securities Exchange Act of 1934.
10.1 Form of Indemnification Agreement for directors and officers.
10.2 2009 Voting Agreement, dated as of March 26, 2009, between Amkor
Technology, Inc., James J. Kim and 915 Investments, LP.
10.3 Employment Letter Agreement, dated February 27, 2017, between
Amkor Technology, Inc. and Stephen D. Kelley.*
10.4 Form of Stock Option Award Agreement under the Second Amended
and Restated 2007 Equity Incentive Plan.*
10.5 Form of Restricted Stock Award Agreement under the Second
Amended and Restated 2007 Equity Incentive Plan.*
10.6 Form of Outside Director Stock Option Award Agreement under the
Second Amended and Restated 2007 Equity Incentive Plan.*
10.7 Second Amended and Restated 2007 Equity Incentive Plan*
10.8 Amendment One to Second Amended and Restated 2007 Equity
Incentive Plan*
10.9 Form of Global Stock Option Award Agreement under the Second
Amended and Restated 2007 Equity Incentive Plan.*
Incorporated by Reference
Included
Herewith
Form
10-Q
Period Ending
6/30/04
Exhibit
2.3
Filing Date
8/6/04
S-1
POSAM
10-K
S-1/A
8-K
12/31/13
10-K
12/31/19
S-1/A
8-K
8-K
10-Q
10-Q
10-Q
8-K
10-Q
10-Q
3/31/17
3/31/17
3/31/17
6/30/19
6/30/20
3.1
—
3.3
4.1
4.1
4.3
10.1
10.1
10.1
10.2
10.3
10.4
10.1
10.3
10.1
10/6/97
8/26/98
2/28/14
3/31/98
3/5/19
2/19/20
3/31/98
4/1/09
3/3/17
5/5/17
5/5/17
5/5/17
5/5/17
8/1/19
7/30/20
93
Exhibit
Number
Exhibit Description
10.10 Form of Global Restricted Stock Award Agreement under the Second
Amended and Restated 2007 Equity Incentive Plan.*
10.11 Form of Global Outside Director Nonstatutory Stock Option Award
Agreement under the Second Amended and Restated 2007 Equity
Incentive Plan.*
10.12 Form of Global Outside Director Restricted Stock Award Agreement
under the Second Amended and Restated 2007 Equity Incentive
Plan.*
10.13 Form of Global Performance-Vested Restricted Stock Unit Award
Agreement under the Second Amended and Restated 2007 Equity
Incentive Plan.*
10.14 Form of Global Time-Vested Restricted Stock Unit Award Agreement
under the Second Amended and Restated 2007 Equity Incentive
Plan.*
10.15 Amkor Technology, Inc. 2021 Equity Incentive Plan*
10.16 Form of Global Non-Employee Director Nonstatutory Stock Option
Award Agreement*
10.17 Form of Global Non-Employee Director Restricted Stock Award
Agreement*
10.18 Form of Global Stock Option Award Agreement*
10.19 Form of Global Restricted Stock Award Agreement*
10.20 Form of Global Performance-Vested Restricted Stock Unit Award
Agreement*
10.21 Form of Global Time-Vested Restricted Stock Unit Award
Agreement*
10.22 Amended and Restated Executive Incentive Bonus Plan*
10.23 Employment Letter Agreement, dated June 24, 2020, between Amkor
Technology, Inc. and Guillaume Marie Jean Rutten.*
10.24 Separation Agreement and Release, effective July 4, 2020, between
Amkor Technology, Inc. and Stephen D. Kelley.*
10.25 Separation and Release Agreement, dated September 27, 2021,
between Amkor Technology, Inc. and John C. Stone*
10.26 Syndicated Loan Agreement among
Sumitomo Mitsui Banking Corporation and other
institutions, dated as of July 13, 2018 (English translation).
J-Devices Corporation,
financial
10.27 Guaranty by Amkor Technology, Inc. in favor of Sumitomo Mitsui
Banking Corporation and other financial institutions, dated as of July
13, 2018 (English translation).
10.28 Loan and Security Agreement, dated as of July 13, 2018, by and
among Amkor Technology Singapore Holding Pte, Ltd., Bank of
America, N.A. and other financial institutions.
94
Incorporated by Reference
Included
Herewith
Form
10-Q
10-Q
Period Ending
6/30/20
Exhibit
10.2
Filing Date
7/30/20
9/30/20
10.1
10/30/20
10-Q
9/30/20
10.2
10/30/20
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
8-K
10-Q
10-Q
10-Q
8-K
8-K
8-K
10.1
2/5/21
10.2
2/5/21
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.2
10.3
10.4
10.1
10.1
5/20/21
5/20/21
5/20/21
5/20/21
5/20/21
5/20/21
5/20/21
5/5/17
10/30/20
10/30/20
10/29/21
7/19/18
10.2
7/19/18
10.3
7/19/18
6/30/20
6/30/20
9/30/21
Exhibit
Number
Exhibit Description
10.29 Amendment to Loan and Security Agreement, dated as of July 8,
2019, by and amount Amkor Technology Singapore Holding Pte, Ltd.,
Bank of America, N.A. and other financial institutions.
10.30 Guaranty and Security Agreement, dated as of July 13, 2018, by and
among Amkor Technology, Inc., and Bank of America, N.A.
10.31 Syndicated Loan Agreement among
Sumitomo Mitsui Banking Corporation and other
institutions, dated as of December 23, 2019 (English translation)
10.32 Guaranty by Amkor Technology, Inc. in favor of Sumitomo Mitsui
Banking Corporation and other financial institutions, dated as of
December 23, 2019 (English translation)
J-Devices Corporation,
financial
10.33 Deed of Guaranty by Amkor Technology Singapore Holding Pte. Ltd.
in favor of Sumitomo Mitsui Banking Corporation and other financial
institutions, dated as of December 23, 2019 (English translation)
10.34 Non-Employee Director Compensation Policy
10.35 Form of Global Non-Employee Director Time-Vested Restricted
Stock Unit Award Agreement*
10.36 Amendment One to the Amkor Technology, Inc. 2021 Equity
Incentive Plan*
21.1 List of subsidiaries of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
31.1 Certification of Guillaume Marie Jean Rutten, Chief Executive Officer
of Amkor Technology, Inc., Pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as amended.
31.2 Certification of Megan Faust, Chief Financial Officer of Amkor
Technology, Inc., Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934, as amended.
32.1 Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document - the instance document does not
appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
95
Incorporated by Reference
Included
Herewith
Form
10-Q
Period Ending
6/30/19
Exhibit
10.2
Filing Date
8/1/19
8-K
8-K
8-K
8-K
10.4
10.1
7/19/18
12/26/19
10.2
12/26/19
10.3
12/26/19
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Exhibit
Number
Exhibit Description
Form
Period Ending
Exhibit
Filing Date
Incorporated by Reference
104 Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101)
* Indicates management compensatory plan, contract or arrangement.
Included
Herewith
X
Item 16. Form 10-K Summary
None.
96
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Annual Report
on Form 10-K to be signed, on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
AMKOR TECHNOLOGY, INC.
By: /s/ Guillaume Marie Jean Rutten
Guillaume Marie Jean Rutten
President and Chief Executive Officer
Date: February 18, 2022
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Guillaume Marie Jean Rutten
and Megan Faust, and each of them, his or her attorneys-in-fact, and agents, each with the power of substitution, for and in the name, place and stead of
such person, in any and all capacities, to sign any and all amendments to this Form 10-K, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and conforming all that said attorneys-in-fact and agents of any of them, or his, her or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Guillaume Marie Jean Rutten
Guillaume Marie Jean Rutten
President and Chief Executive Officer
(Principal Executive Officer)
February 18, 2022
/s/ Megan Faust
Megan Faust
/s/ James J. Kim
James J. Kim
/s/ Susan Y. Kim
Susan Y. Kim
/s/ Douglas A. Alexander
Douglas A. Alexander
/s/ Roger A. Carolin
Roger A. Carolin
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
February 18, 2022
Executive Chairman
February 18, 2022
Executive Vice Chairman
February 18, 2022
February 18, 2022
February 18, 2022
Director
Director
97
Name
/s/ Winston J. Churchill
Winston J. Churchill
/s/ Daniel Liao
Daniel Liao
/s/ MaryFrances McCourt
MaryFrances McCourt
/s/ Robert R. Morse
Robert R. Morse
/s/ Gil C. Tily
Gil C. Tily
/s/ David N. Watson
David N. Watson
Date
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
February 18, 2022
Title
Director
Director
Director
Director
Director
Director
98
Amkor Technology, Inc.
Non-Employee Director Compensation Policy
Adopted: February 8, 2022
Exhibit 10.34
Each member of the Board of Directors (the “Board”) of Amkor Technology, Inc., a Delaware corporation (the “Company”), who is
a non-employee director of the Company (each such member, a “Non-Employee Director”) will be eligible to receive the compensation
described in this Non-Employee Director Compensation Policy (the “Policy”) for his or her Board service. Unless otherwise defined herein,
capitalized terms used in this Policy will have the meaning given to such terms in the Company’s 2021 Equity Incentive Plan (the “Plan”) or
any successor equity incentive plan.
The Policy became effective on February 8, 2022 (the “Effective Date”). The Policy may be amended at any time in the sole
discretion of the Board.
Following the Effective Date, each Non-Employee Director will be eligible to receive the applicable compensation set forth below.
Any equity compensation contemplated under this Policy will be granted under the Plan or any successor equity incentive plan.
(a)
Cash Retainer for Board Service. Each person serving as a Non-Employee Director will be paid an annual cash retainer of
$60,000, payable in quarterly installments. Each Non-Employee Director will be paid an additional annual cash retainer of $2,000, payable in
quarterly installments, for participation in each in-person Board meeting (or $1,000 for participation in each telephonic Board meeting).
The following additional annual cash retainers, payable in quarterly installments, will be paid to a Non-Employee Director
serving in each of the following applicable roles:
Lead Independent Director: $25,000
Executive Vice Chair: $150,000
Strategic Oversight Role: $75,000
(b)
Cash Retainer for Committee Service. Each Non-Employee Director serving on the Audit, Compensation, and Nominating
& Corporate Governance Committees will be paid an additional annual cash retainer of $2,000, payable in quarterly installments, for
participation in each in-person committee meeting (or $1,000 for participation in each telephonic committee meeting).
The following annual cash retainers, payable in quarterly installments, will be paid to a Non-Employee Director serving as
the Chair of a committee of the Board as listed below:
Audit Chair: $25,000
Compensation Chair: $15,000
Nominating & Corporate Governance Chair: $10,000
1
(c)
Annual Equity Award Grant. Without any further action by the Board, at the close of business on the date of each annual
meeting of the stockholders of the Company following the Effective Date (each, an “Annual Meeting”), each person who is then a Non-
Employee Director will automatically be granted Restricted Stock Units equal to (A) $175,000, divided by (B) the Fair Market Value of a
share of Common Stock on the date of the applicable Annual Meeting (each, an “Annual Grant”). A Non-Employee Director who has been
elected or appointed for the first time to be a Non-Employee Director after the Annual Meeting (a “New Director”) will receive a pro-rated
Annual Grant (I) the value of which will be equal to the product of (1) the Annual Grant value by (2) a fraction, the numerator of which will
be equal to the number of days in the period beginning on the date the New Director was elected or appointed to the date of the next
subsequent Annual Meeting (the “Pro-Rated Annual Grant”) and (ii) the number of RSUs covered by such pro-rated Annual Grant which
will be equal to (1) the Pro-Rated Annual Grant divided by (2) the Fair Market Value of a share of Common Stock on the date of grant. Each
Annual Grant will fully vest on the earlier of (1) the first anniversary of the applicable grant date and (2) the date of the first Annual Meeting
following the applicable grant date, subject to the Non-Employee Director’s continuous service as a Director through the vesting date.
(i)
Change in Control. Notwithstanding the foregoing, all unvested equity awards granted pursuant to Section (c) will
fully vest upon a Change in Control if the successor or acquiring company does not assume or provide a substitute for the awards in
connection with the Change in Control.
(d)
Death or Disability. Notwithstanding the foregoing, equity awards granted to Non-Employee Directors pursuant to the
Policy will fully vest upon such Non-Employee Director’s death or termination of service as a Director due to disability.
(i)
Other Terms. The remaining terms and conditions of each Restricted Stock Unit award will be as set forth in the
Plan and the applicable Restricted Stock Unit award agreement for Directors, in the form adopted from time to time by the Board.
2.
Non-Employee Director Compensation Limit
Notwithstanding anything herein to the contrary, the cash and equity compensation each Non-Employee Director is eligible to
receive under this Policy (or otherwise) will be subject to the limits set forth in Section 12 of the Plan.
3.
Expenses
The Company will reimburse each Non-Employee Director for ordinary, necessary and reasonable out-of-pocket travel expenses to
cover in-person attendance at and participation in Board and committee meetings, subject to the Non-Employee Director submitting to the
Company appropriate documentation substantiating such expenses in accordance with the Company’s travel and expense policy, as in effect
from time to time.
2
AMKOR TECHNOLOGY, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL NON-EMPLOYEE DIRECTOR
TIME-VESTED RESTRICTED STOCK UNIT AWARD AGREEMENT
Exhibit 10.35
Unless otherwise defined herein, each term used in this Global Non-Employee Director Restricted Stock Unit Award Agreement, including the
general terms and conditions for all non-U.S. Participants and the additional terms and conditions for certain countries, all as set forth in the appendix
attached hereto (the “Appendix” and, together with the Global Non-Employee Director Restricted Stock Unit Award Agreement, the “Award Agreement”)
and defined in the Amkor Technology, Inc. 2021 Equity Incentive Plan (the “Plan”) will have the same meaning as is given to such term in the Plan.
Participant Name:
You have been granted the right to receive an Award of Restricted Stock Units, subject to the terms and conditions of the Plan and this Award
Agreement, as follows:
Grant Number
Date of Grant
Number of Restricted Stock Units Granted
1.
Grant. The Company hereby grants to the individual named above (“Participant”) under the Plan an Award of Restricted Stock Units, subject to all
of the terms and conditions in this Award Agreement and the Plan, which is incorporated herein by reference. In the event of a conflict between the terms
and conditions of the Plan and the terms and conditions of this Award Agreement, the terms and conditions of the Plan will prevail.
2.
Dividend Equivalents. On each date that a cash dividend is paid to holders of Shares from the Date of Grant through the date immediately prior to
the date the Restricted Stock Units are settled, an amount (the “Dividend Equivalent Amount”) equal to the cash dividend that is paid on each Share,
multiplied by the Number of Restricted Stock Units Granted, will be credited to Participant, and such credited amount will be converted into an additional
number of Restricted Stock Units (“Dividend Equivalent Units”) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a
Share on the date of the dividend payment. Dividend Equivalent Units will be subject to the same conditions as the underlying Restricted Stock Units with
respect to which Dividend Equivalent Units were paid, including without limitation, the provisions governing time and form of settlement applicable to the
underlying Restricted Stock Units. Unless expressly provided otherwise, as used elsewhere in this Agreement, references to Restricted Stock Units in this
Agreement shall also include Dividend Equivalent Units that have been credited to Participant pursuant to this Section 2.
3.
Vesting Schedule. 100% of the Shares subject to this Award shall become vested on the earlier of the first anniversary of the Date of Grant or the
date of the first annual meeting of the stockholders of the Company immediately following the Date of Grant. 100% of the Shares subject to this Award
also shall vest upon Participant’s death or cessation as a Director due to Disability. “Disability” for purposes of this Agreement shall mean the Director’s
inability to perform in all material respects such Director’s duties and responsibilities to the Company by reason of a physical or mental disability or
infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive months or (ii) such shorter period as
the Administrator may reasonably determine in its sole discretion. In the event of a Change in Control, the Award will be treated as the Administrator
determines in accordance with the Plan, including, without limitation, assumption or grant of a substitute award by the successor or acquiring company. If
the successor or acquiring company does not assume or provide a substitute for the Award, the Award will fully vest in connection with such Change in
Control. Vesting on the dates set forth above, or upon death, Disability or Change in Control shall be subject in all cases to Participant continuing to be a
Director on such dates.
4.
Settlement. Subject to Section 7 hereof, and except as otherwise provided pursuant to an election made by Participant to defer the settlement of the
Restricted Stock Units is deferred by Participant, promptly following the applicable vesting date (including any accelerated vesting date under Section 3),
and in any event within thirty (30) days thereof, the Company shall, in the Administrator’s sole discretion, either (i) pay to Participant an amount in cash
equal to the Fair Market Value of the Shares represented by the Restricted Stock Units that vested as of the most recent vesting date or (ii) (a) issue and
deliver to Participant the number of Shares equal to the number of vested Restricted Stock Units and (b) enter Participant’s name on the books of the
Company as the stockholder of record with respect to the Shares delivered to Participant.
5.
Forfeiture upon Termination of Status as a Director. Notwithstanding any contrary provision of this Award Agreement, but subject to the vesting
provisions set forth in this Award Agreement and Section 3 above, the balance of the Restricted Stock Units that have not vested at the time of Participant’s
termination as a Director for any reason will be forfeited (with no consideration due to Participant) and Participant will have no further rights thereunder.
6.
Death of Participant. Notwithstanding any provision of this Award Agreement to the contrary, any distribution or delivery to be made to
Participant under this Award Agreement will, if Participant is then deceased, be made to the administrator or executor of Participant’s estate, Participant’s
legal heirs or, provided such designation has been permitted by the Company and/or is valid under Applicable Laws, Participant’s designated beneficiary.
Any such transferee must furnish the Company with (a) written notice of his or her status as transferee and (b) evidence satisfactory to the Company to
establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.
7.
Responsibility for Taxes.
(a)
Participant acknowledges and agrees that Participant will consult with his or her own personal tax advisor regarding any income tax,
social insurance contributions, or other tax-related items legally applicable to Participant or deemed legally applicable to Participant (“Tax-Related
Items”) that may arise in connection with the Restricted Stock Units and Participant’s participation in the Plan. Participant is relying solely on such
advisor and is not relying in any part on any statement or representation of the Company or any of its agents in relation to the Restricted Stock Units and
this Agreement. The Company shall not be responsible for payment of any Tax-Related Items, unless it is required to withhold Tax-Related Items under
Applicable Law. Participant further acknowledges that the Company: (i) makes no representations or undertakings regarding the treatment of any Tax-
Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting, or settlement of the Restricted
Stock Units, the issuance of Shares in settlement of the Restricted Stock Units, or the subsequent sale of Shares acquired at vesting or settlement and the
receipt of any dividends or Dividend Equivalent Units; and (ii) does not commit to and is under no obligation to structure the terms of the grant or any
aspect of the Restricted Stock Units to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result.
2
(b)
The Company may take such action as it deems appropriate to ensure that all Tax-Related Items, which are Participant’s sole and absolute
responsibility, are withheld or collected from Participant, if and to the extent required by Applicable Law. If withholding of Tax-Related Items is required
by Applicable Law, Participant authorizes the Company, or its agents, at their discretion, to satisfy any such withholding obligations by one or a
combination of the following: (i) withholding from Participant’s cash fees or any other compensation payable to Participant by the Company; (ii) causing
Participant to tender a cash payment (i.e., check or bank wire); (iii) withholding from proceeds of the sale of the Shares subject to the Restricted Stock
Units either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization without
further consent); (iv) withholding Shares subject to the Restricted Stock Units; or (v) any method determined by the Administrator to be in compliance with
Applicable Laws.
(c)
The Company may withhold or account for Tax-Related Items by considering statutory withholding amounts or other applicable
withholding rates, including maximum rates applicable in the jurisdiction(s) in which the Tax-Related Items are due. In the event of over-withholding,
Participant may receive a refund of any over-withheld amount in cash (with no entitlement to the equivalent in Shares), or if not refunded, Participant may
be able to seek a refund from the applicable tax authorities. In the event of under-withholding, Participant may be required to pay any additional Tax-
Related Items directly to the applicable tax authorities or to the Company. If the obligation for Tax-Related Items is satisfied by withholding Shares, for tax
purposes, Participant is deemed to have received the full number of Shares subject to the vested Restricted Stock Units, notwithstanding that a number of
the Shares is held back solely for the purpose of paying the Tax-Related Items.
(d)
The Company shall not be obligated to deliver any new certificate representing Shares to Participant or Participant’s legal representative
or enter such Shares in book entry form unless and until Participant or Participant’s legal representative shall have paid or otherwise satisfied Participant’s
obligations in connection with the Tax-Related Items resulting from the Restricted Stock Units or the Shares subject to the Restricted Stock Units.
8.
Rights as Stockholder. Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a
stockholder of the Company in respect of any Shares deliverable hereunder unless and until the Restricted Stock Units have vested and are settled by the
issuance of Shares in accordance with Section 4, the Share issuance is recorded on the records of the Company or its transfer agents or registrars, and
certificates representing such Shares have been issued (if the Shares are certificated or evidence of book entry if the Shares are not certificated) and
delivered to Participant. After such vesting, settlement, issuance, recordation and delivery, Participant will have all the rights of a stockholder of the
Company with respect to such Shares for which such conditions are met, including voting and receipt of dividends and distributions on such Shares.
9.
Appendix. For Participants outside the United States, the Restricted Stock Units shall be subject to the general terms and conditions for all non-
U.S. Participants and the additional terms and conditions for certain countries set forth in the Appendix attached hereto. Moreover, if Participant relocates
from the U.S. to one of the countries included in the Appendix or if Participant relocates between countries included in the Appendix during the vesting
period of the Restricted Stock Units, the general terms and conditions for all non-U.S. Participants and the additional terms and conditions for such country
shall apply to Participant, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or
administrative reasons. The Appendix constitutes part of this Award Agreement.
10.
No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations
regarding participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant acknowledges that he or she should consult with
his or her own personal tax, legal and financial advisors regarding participation in the Plan before taking any action related to the Restricted Stock Units.
11.
Address for Notices. Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company, in care
of its General Counsel at Amkor Technology, Inc., 2045 East Innovation Circle, Tempe, AZ 85284, or at such other address as the Company may hereafter
designate in writing.
12.
construed as a waiver of any other provision of this Award Agreement, or of any subsequent breach by Participant or any other participants.
Waivers. Participant acknowledges that a waiver by the Company of breach of any provision of this Award Agreement shall not operate or be
3
13.
Grant is Not Transferable. Except to the limited extent provided in Section 6, the unvested Restricted Stock Units subject to this grant and the
rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and
will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
any unvested Restricted Stock Units subject to this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution,
attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.
14.
Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Award Agreement will be binding upon and
inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto (provided that neither the Restricted Stock Units
nor this Award Agreement may be assigned by Participant).
15.
Additional Conditions. The Company will not be required to issue any certificate or certificates (or evidence of book entry) for Shares hereunder
prior to fulfillment of all the following conditions: (a) the admission of such Shares to listing on all stock exchanges on which such class of stock is then
listed; (b) the completion of any registration or other qualification of such Shares under any Applicable Laws or under the rulings or regulations of the U.S.
Securities and Exchange Commission or any other U.S. or non-U.S. governmental regulatory body, which the Administrator, in its absolute discretion,
deems necessary or advisable; (c) the obtaining of any approval or other clearance from any U.S. or non-U.S. governmental agency, which the
Administrator, in its absolute discretion, determines to be necessary or advisable; and (d) the lapse of such reasonable period of time following the Date of
Grant of the Restricted Stock Units as the Administrator may establish from time to time for reasons of administrative convenience. Participant understands
that the Company is under no obligation to register or qualify the Shares subject to the Restricted Stock Units with any U.S. state or non-U.S. securities
commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, Participant agrees that the
Company shall have unilateral authority to amend the Plan and this Award Agreement without Participant’s consent to the extent necessary to comply with
Applicable Laws.
16.
Administrator Authority. The Administrator has the power to interpret the Plan and this Award Agreement and to adopt such rules for the
administration, interpretation and application of the Plan and this Award Agreement as are consistent therewith and to interpret or revoke any such rules
(including, but not limited to, the determination of whether or not any Restricted Stock Units have vested). All actions taken and all interpretations and
determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. No
member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this
Award Agreement.
17.
Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock
Units or the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive
such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the
Company or a third party designated by the Company.
18.
Agreement.
Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award
19.
from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Award Agreement.
Agreement Severable. In the event that any provision in this Award Agreement is held invalid or unenforceable, such provision will be severable
20.
Modifications to the Award Agreement. The Plan and this Award Agreement constitute the entire understanding of the parties on the subjects
covered herein. Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or
inducements other than those contained herein. Except as otherwise provided herein or in the Plan, modifications to this Award Agreement can be made
only in an express written contract executed by Participant and a duly authorized officer of the Company.
4
21.
Code Section 409A. The Award Agreement is intended to comply with, or be exempt from, Code Section 409A and all regulations, guidance,
compliance programs and other interpretative authority thereunder, and shall be interpreted in a manner consistent therewith. Notwithstanding anything
contained herein to the contrary, in the event the Award Agreement is subject to Code Section 409A, the Company may, in its sole discretion and without
Participant’s prior consent, amend the Plan and/or the Award Agreement, adopt policies and procedures, or take any other actions as deemed appropriate by
the Company to (i) exempt the Plan and/or the Award Agreement from the application of Code Section 409A, (ii) preserve the intended tax treatment of the
Award Agreement or (iii) comply with the requirements of Code Section 409A. Notwithstanding anything contained herein to the contrary, in no event
shall the Company or any Subsidiary have any liability or obligation to any Participant or any other person in the event that the Plan or the Award
Agreement is not exempt from, or compliant with, Code Section 409A.
Furthermore, notwithstanding anything in this Agreement to the contrary, any Restricted Stock Units that become vested under this Agreement as
of the date or at a time that is by reference to Participant’s termination of service and that constitute an item of non-qualified deferred compensation subject
to Code Section 409A shall not be settled unless Participant experiences a “separation from service” within the meaning of Code Section 409A (a
“Separation from Service”); provided that if Participant is a “specified employee” within the meaning of Code Section 409A as of the date of the
Separation from Service (as determined according to the methodology established by the Company as in effect on the date of Participant’s termination of
service), the Restricted Stock Units shall instead be settled on the first business day that is after the earlier of (i) the date that is six months following the
date of the Separation from Service or (ii) the date of Participant’s death, to the extent such delayed payment is otherwise required in order to avoid a
prohibited distribution under Section 409A(a)(2) of the Code, or any successor provision thereto. Anything in the foregoing notwithstanding, the settlement
provisions set forth in any election to defer the settlement of Restricted Stock Units shall supersede the provisions set forth in this paragraph.
22.
Effect of Plan. By accepting the Restricted Stock Units, Participant expressly warrants that he or she has received an Award of Restricted Stock
Units under the Plan, and has received, read and understands the Plan. Participant understands that the Plan is discretionary in nature and may be amended,
suspended or terminated by the Company at any time, to the extent permitted by the Plan.
23.
Governing Law; Venue. This Award Agreement will be governed by the laws of the State of Delaware, without giving effect to the conflict of law
principles thereof. For purposes of litigating any dispute that arises under this Award or this Award Agreement, the parties hereby submit to and consent to
the exclusive jurisdiction of the State of Arizona and agree that such litigation will be conducted solely in the courts of Maricopa County, Arizona, or the
federal courts for the United States for the District of Arizona in Maricopa County, Arizona, and no other courts.
24.
Insider Trading Restrictions/Market Abuse Laws. By accepting the Restricted Stock Units, Participant acknowledges that he or she is bound by all
the terms and conditions of the Company’s insider trading policy as may be in effect from time to time. Participant further acknowledges that, depending on
Participant’s or his or her broker’s country or the country in which the Shares are listed, he or she may be subject to insider trading restrictions and/or
market abuse laws which may affect Participant’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares, or rights linked to the
value of Shares during such times as Participant is considered to have “inside information” regarding the Company (as defined by the laws in the applicable
jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders Participant placed before Participant
possessed inside information. Furthermore, Participant could be prohibited from (i) disclosing the inside information to any third party and (ii) “tipping”
third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any
restrictions that may be imposed under the Company’s insider trading policy as may be in effect from time to time. Participant acknowledges that it is
Participant’s responsibility to comply with any applicable restrictions, and Participant should speak to his or her personal advisor on this matter.
25.
Agreement. Participant's acceptance of the Restricted Stock Units by signing below or by otherwise accepting the Restricted Stock Units
following such procedures as established by the Company (including an online acceptance process) constitute Participant’s agreement to be bound by the
terms and conditions of this Award Agreement and the Plan. The Company may refuse to allow Participant to vest in the Restricted Stock Units unless
Participant has signed this Award Agreement or otherwise accepted the Restricted Stock Units following such procedures as established by the Company
(including an online acceptance process).
5
PARTICIPANT
Signature:
Print Name:
Address:
AMKOR TECHNOLOGY, INC.
By:
Title:
6
APPENDIX TO
AMKOR TECHNOLOGY, INC.
2021 EQUITY INCENTIVE PLAN
GLOBAL NON-EMPLOYEE DIRECTOR RESTRICTED STOCK UNIT AWARD AGREEMENT
Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the Global Non-
Employee Director Restricted Stock Unit Award Agreement.
Terms and Conditions
This Appendix includes general terms and conditions for all non-U.S. Participants and additional terms and conditions that govern the Restricted
Stock Units if Participant resides in one of the countries listed below. If Participant is a citizen or resident of a country other than the one in which
Participant is currently residing (or is considered as such for local law purposes), or if Participant transfers residency to a different country after the
Restricted Stock Units are granted, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will apply
to Participant.
Notifications
This Appendix also includes information regarding certain other issues of which Participant should be aware with respect to Participant’s
participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of December
2021. Such laws are often complex and change frequently. As a result, Participant should not rely on the information noted herein as the only source of
information relating to the consequences of participation in the Plan because the information may be out-of-date at the time the Restricted Stock Units vest
or Participant sells any Shares acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation. As a result, the Company
is not in a position to assure Participant of any particular result. Accordingly, Participant should seek appropriate professional advice as to how the relevant
laws in Participant’s country may apply to Participant’s individual situation.
If Participant is a citizen or resident of a country other than the one in which Participant is currently residing (or is considered as such for local law
purposes), or if Participant transfers residency to a different country after the Restricted Stock Units are granted, the information contained in this Appendix
may not be applicable to Participant in the same manner.
1
GENERAL TERMS AND CONDITIONS APPLICABLE TO ALL NON-U.S. PARTICIPANTS
1. Data Privacy Information and Consent.
(a) Data Collection and Usage. The Company collects, processes and uses certain personal information about Participant, including, but
not limited to, Participant’s name, home address, telephone number, email address, date of birth, social insurance number, passport or other
identification number, nationality, job title, any shares or directorships held in the Company, details of all awards granted under the Plan or any other
entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”), for purposes of implementing,
administering and managing the Plan. The legal basis, where required, for the processing of Data is Participant’s consent.
(b) Stock Plan Administration Service Providers. The Company transfers Data to E*TRADE Financial Corporate Services, Inc. and
certain of its affiliates (“E*TRADE”), an independent service provider which is assisting the Company with the implementation, administration and
management of the Plan. The Company may select a different service provider or additional service providers and share Data with such other provider
serving in a similar manner. Participant may be asked to agree on separate terms and data processing practices with E*TRADE and such other service
providers, with such agreement being a condition to the ability to participate in the Plan.
(c)
International Data Transfers. The Company and E*TRADE are based in the U.S., which means that it will be necessary for Data to
be transferred to, and processed in, the U.S. Participant’s country or jurisdiction may have different data privacy laws and protections than the U.S.
The Company’s legal basis for the transfer of Data, where required, is Participant’s consent.
(d) Data Retention. The Company will hold and use Data only as long as is necessary to implement, administer and manage Participant’s
participation in the Plan, or as required to comply with legal or regulatory obligations, including under tax, exchange control, labor and securities
laws. This period may extend beyond Participant's period as a Director. When the Company no longer needs Data for any of the above purposes, the
Company will cease processing it in this context and remove it from all of its systems used for such purposes to the fullest extent practicable.
(e) Voluntariness and Consequences of Consent Denial or Withdrawal. Participation in the Plan is voluntary and Participant is providing
the consents herein on a purely voluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, Participant’s
status as a Director will not be affected; the only consequence of refusing or withdrawing consent is that the Company would not be able to grant the
Restricted Stock Units or other equity awards to Participant under the Plan or administer or maintain such awards.
(f) Data Subject Rights. Participant may have a number of rights under data privacy laws in his or her jurisdiction. Depending on where
Participant is based, such rights may include the right to (i) request access to or copies of Data the Company processes, (ii) rectify incorrect Data, (iii)
delete Data, (iv) restrict the processing of Data, (v) restrict the portability of Data, (vi) lodge complaints with competent authorities in Participant’s
jurisdiction, and/or (vii) receive a list with the names and addresses of any potential recipients of Data. To receive clarification regarding these rights or
to exercise these rights, Participant can contact the Company.
(g) Other Legal Basis and Additional Consent. Participant understands that the Company may rely on a different legal basis for the
collection, processing or transfer of Data in the future and/or request Participant to provide another data privacy consent. If applicable, upon request
of the Company, Participant will provide a separate executed data privacy agreement (or any other agreements or consents) that the Company may
deem necessary to obtain from Participant for the purpose of administering his or her participation in the Plan in compliance with the data privacy
laws in Participant’s country, either now or in the future. Participant understands and agrees that Participant will not be able to participate in the Plan
if Participant fails to provide any such agreement requested by the Company.
2. Nature of Grant. By accepting the Restricted Stock Units, Participant acknowledges, understands, and agrees that:
2
(a)
the Plan is established voluntarily by the Company, it is discretionary in nature and may be amended, suspended or terminated by the
Company at any time, to the extent permitted by the Plan;
(b)
the grant of the Restricted Stock Units is exceptional, voluntary and occasional and does not create any contractual or other right to
receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past;
(c)
all decisions with respect to future restricted stock unit or other grants, if any, will be at the sole discretion of the Company;
(d)
Participant is voluntarily participating in the Plan;
(e)
the future value of the Shares underlying the Restricted Stock Units is unknown, indeterminable, and cannot be predicted with certainty;
(f)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from the
termination of Participant’s status as a Director;
(g)
unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this
Award Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor
to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and
(h)
neither the Company nor any other Subsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local
currency and the U.S. dollar that may affect the value of the Restricted Stock Units or of any amounts due to Participant pursuant to the Restricted Stock
Units or the subsequent sale of any Shares subject to the Restricted Stock Units.
3. Language. Participant acknowledges that he or she is sufficiently proficient in English, or has consulted with an advisor who is sufficiently
proficient in English, so as to allow Participant to understand the terms and conditions of this Award Agreement. If Participant has received this Award
Agreement, or any other documents related to the Restricted Stock Units and/or the Plan translated into a language other than English and if the meaning of
the translated version is different than the English version, the English version will control.
4. Foreign Asset/Account, Exchange Control and Tax Reporting. Participant may be subject to foreign asset/account, exchange control, tax reporting
or other requirements which may affect Participant’s ability acquire or hold Restricted Stock Units, Shares or cash received from participating in the Plan
(including dividends and the proceeds arising from the sale of Shares) in a brokerage/bank account outside Participant’s country. The Applicable Laws of
Participant’s country may require that he or she report such Restricted Stock Units, Shares, accounts, assets or transactions to the applicable authorities in
such country and/or repatriate funds received in connection with the Plan to Participant’s country within a certain time period or according to certain
procedures. Participant acknowledges that he or she is responsible for ensuring compliance with any applicable requirements and should consult his or her
personal legal advisor to ensure compliance with Applicable Laws.
ADDITIONAL TERMS AND CONDITIONS FOR CERTAIN COUNTRIES
TAIWAN
Notifications
Securities Law Information. The offer of participation in the Plan is available only for Service Providers. The offer of participation in the Plan is not a
public offer of securities by a Taiwanese company.
Exchange Control Information. Participant may acquire and remit foreign currency (including funds for the purchase of Shares and proceeds from the sale
of Shares) up to US $5,000,000 per year without justification. If the transaction amount is TWD 500,000 or more in a single transaction, Participant must
submit a Foreign Exchange Transaction Form. If the transaction amount is US $500,000 or more in a single transaction, Participant must also provide
supporting documentation to the satisfaction of the remitting bank.
3
AMENDMENT ONE
TO THE
AMKOR TECHNOLOGY, INC.
2021 EQUITY INCENTIVE PLAN
Exhibit 10.36
Pursuant to the authority reserved to it in Section 22 of the Amkor Technology, Inc. 2021 Equity Incentive Plan (the “Plan”), the
Board of Directors (the “Board”) of Amkor Technology, Inc. (the “Company”) hereby amends the Plan as follows, effective February 8,
2022:
Section 12 of the Plan is hereby amended in its entirety to read as follows:
12. Grants to Non-Employee Directors. The Administrator may grant Awards to Non-Employee Directors pursuant to the terms of
a director compensation policy adopted by the Board, as amended from time to time. In no event may any Non-Employee Director be
awarded compensation by the Company for service as a Non-Employee Director with a total value of more than $750,000 in any given fiscal
year, which such amount to include the sum of (i) cash compensation and (ii) the grant date fair value of equity compensation awarded to the
Non-Employee Director, provided, however, that the limitation contained herein will not apply to the extent a Non-Employee Director has
been or becomes an employee of the Company during such fiscal year.
Subsidiary
Jurisdiction of Organization
AMKOR TECHNOLOGY, INC.
LIST OF SUBSIDIARIES
Exhibit 21.1
Amkor Advanced Technology Taiwan, Inc.
Amkor Assembly & Test (Shanghai) Co., Ltd.
Amkor Technology Euroservices, S.A.S.
Amkor Technology Holding, B.V.
Amkor Technology Holding, B.V., Germany (A Branch of a Netherlands Company)
Amkor Technology Japan, Inc.
Amkor Technology Korea, Inc.
Amkor Technology Limited
Amkor Technology Malaysia Sdn. Bhd.
Amkor Technology Philippines, Inc. (A Branch of a Singapore Company)
Amkor Technology Singapore Investment Pte. Ltd.
Amkor Technology Singapore Holding Pte. Ltd.
Amkor Technology Singapore Holding Pte. Ltd., Taiwan Branch (A Branch of a Singapore Company)
Amkor Technology Taiwan Ltd.
Amkor Technology Vietnam Limited Liability Company
Amkor Worldwide Services LLC
Amkor Worldwide Services LLC - ROHQ (A Branch of a United States Company)
ATEP - Amkor Technology Portugal, S.A.
Guardian Assets, Inc.
Taiwan
China
France
Netherlands
Germany
Japan
Korea
Cayman Islands
Malaysia
Philippines
Singapore
Singapore
Taiwan
Taiwan
Vietnam
Delaware
Philippines
Portugal
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-149376 and 333-256241) and Form S-3 (No.
333-255655) of Amkor Technology, Inc. of our report dated February 18, 2022, relating to the financial statements and financial statement schedule and the
effectiveness of internal control over financial reporting, which appears in this Form 10‑K.
Exhibit 23.1
/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
February 18, 2022
SECTION 302(a) CERTIFICATION
Exhibit 31.1
I, Guillaume Marie Jean Rutten, certify that:
1. I have reviewed this annual report on Form 10-K of Amkor Technology, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
/s/ Guillaume Marie Jean Rutten
By:
Title:
Date:
Guillaume Marie Jean Rutten
President and Chief Executive Officer
February 18, 2022
SECTION 302(a) CERTIFICATION
Exhibit 31.2
I, Megan Faust, certify that:
1. I have reviewed this annual report on Form 10-K of Amkor Technology, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.
/s/ Megan Faust
By:
Title:
Date:
Megan Faust
Executive Vice President and Chief Financial Officer
February 18, 2022
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
For purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, each of the undersigned officers of Amkor Technology, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s
knowledge, that the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that the information contained in the Form
10-K fairly presents in all material respects the financial condition and results of operations of the Company.
/s/ Guillaume Marie Jean Rutten
By:
Title:
Date:
Guillaume Marie Jean Rutten
President and Chief Executive Officer
February 18, 2022
/s/ Megan Faust
By:
Title:
Date:
Megan Faust
Executive Vice President and Chief Financial Officer
February 18, 2022
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