Giel Rutten, President And Chief Executive Officer
over the last few decades, the growth of the global semiconductor industry has been primarily driven by the demand for cutting-edge electronic devices like laptops, desktops, wireless communication products, and the rise of cloud computing. However, 2020 decided to disrupt the entire business world as the COVID-19 pandemic unsettled markets globally, bringing the whole world to a standstill. Like most organizations, semiconductor companies had to move decisively in early 2020 to protect employees, secure supply chains, and adapt to more agile working methods. However, a full recovery of the industry is mainly dependent on the pace and volume of the return to a “new normal” for the supply chain ecosystem and the numerous verticals they supply.
A year later, the scenario only seems to get worse. In March this year, President Joe Biden signed off on a major review of the supply chains that deliver essential products for most U.S. industries and markets. This presidential action was primarily driven by the shortage of chips faced by the automotive industry. In 2020, several major automobile manufacturers alerted the market that they would be making 70,000 fewer cars due to the shortage of semiconductors. The impact of this shortage was not just limited to the automotive sector. Industries like PCs, gaming consoles, and any manufacturer that requires processors in their products took a hit. While the unexpected surge in demand is believed to be the chief cause of the shortage, China’s initial shutdown at this time last year due to the pandemic also played a major role. As semiconductor manufacturers battled through a challenge-laden 2020, one company stood out with increased year-on-year growth, Amkor Technology, Inc. (NASDAQ: AMKR). Established in 1968, the company is one of the world’s largest outsourced semiconductor packaging and test services providers. Having pioneered IC packaging and test outsourcing, Amkor has established itself as a strategic manufacturing partner for the world’s leading semiconductor companies, foundries, and electronics OEMs. The company’s operational base includes production facilities, product development centers, and sales and support offices located in key electronics manufacturing regions in Asia, Europe, and the U.S.
No Stopping During the Pandemic
Despite the semiconductor industry facing a severe cutback due to the pandemic, Amkor propelled itself into a league of its own with a record first-quarter sales of $1.33 billion, a 15 percent year-on-year growth.
“Continued strength in Advanced packaging and year-on-year growth of 13 percent in our mainstream business led to better than seasonal results in communications and to sequential growth in automotive & industrial, consumer, and computing end markets,” stated Giel Rutten, President and Chief Executive Officer at Amkor.
The company’s continued operation at high utilization rates across its factories in the first quarter led to a significant improvement in year-on-year profitability to 20 percent gross margin and 11 percent operating income margin. The Equity Per Share (EPS) measured at $0.49 at the end of the first quarter is also a record for the company. The robust operating results and a solid balance sheet provide Amkor a stable foundation to invest in future growth, particularly for Advanced packaging technologies.
Enabling Industry 4.0
Amkor recently unveiled new measures that will help the company achieve Industry 4.0 initiatives, extending its leadership in quality and efficiency excellence. Leveraging artificial intelligence, machine learning, and interconnected systems, Industry 4.0 challenges companies to surpass factory automation and achieve factory intelligence. The goal of factory intelligence is to improve product and service quality, decision-making speed on the factory floor, and utilization of high-value assets. The company now uses real-time, in-process decision-making to drive gains in quality, asset utilization, and efficiency. The application of Industry 4.0-era tools reduces cycle times for advanced packaging processing.
Continued strength in Advanced packaging and year-on-year growth of 13 percent in our Mainstream business led to better than seasonal results in Communications and to sequential growth in Automotive & Industrial, Consumer, and Computing end markets
With deeply integrated systems, Amkor’s K5 factory in Incheon has increased efficiency on the factory floor and throughout the manufacturing process. The company can now apply lessons learned from K5 planning, construction, and operation to other facilities as they are upgraded. Amkor aligns to an eight-pillar structure to ensure success in Industry 4.0, with five foundational pillars and three pillars that enable an intelligent factory framework; Autonomous machines and material handling, Industrial IoT for universal connectivity, Universal system integration with all backbone systems, Image analytics based on Artificial Intelligence and Machine Learning (AI/ML), Big data analytics for correlating structured and unstructured data in near real-time, Cybersecurity to protect enterprise data and intellectual property, Simulation to allow experimentation with manufacturing scenarios, and Cloud computing, which enables scaling up of data gathering, analysis and decision making.
By applying weighted scoring to continually monitor plant progress toward the automation goals supported and enabled by these pillars, Amkor has adopted a reliable standard for gauging Industry 4.0 readiness. Since implementing these initiatives, the company has seen a 60 percent improvement in productivity for process engineers from Engineering Data Analytics (EDA). Amkor’s QualityFIRST continuous improvement program is the cornerstone of its commitment to delivering zero-defect products. This is especially relevant for the automotive market, which demands zero defects in the component manufacturing process. The intelligent factories driven by Industry 4.0 can enable the company to achieve zero-defect quality for automotive and other high-stakes applications.
Strengthening its Position in Advanced Packaging
Having experienced an excellent first quarter, the company is confident in replicating and improving the results for the second quarter of 2021. “Our forecast reflects capacity constraints in wafers and substrates that are expected to affect portions of the supply chain in the near term, and we are working closely with our customers and suppliers to mitigate the impact,” adds Rutten. “Overall, we continue to see solid demand across all of our key markets and remain confident that our strong position in Advanced packaging will enable us to outgrow the semiconductor market in 2021.