Amkor Technology AMKR shares have plunged 23.7% year to date, underperforming the Zacks Electronics - Semiconductors industry, Zacks Computer and Technology sector and the S&P 500 index’s return of 33%, 26.3% and 23.9%, respectively.
Amkor stock continues to face a steady decline due to prolonged pressure on its top-line growth owing to weakness across traditional servers, networking and automotive end markets. AMKR’s mainstream product segment has been witnessing a year-over-year decline for the consecutive nine quarters.
Weak Automotive and Consumer Market Hurts AMKR
Amkor provides advanced packaging solutions to the producers of automotive and IoT wearable devices. In the automotive market, AMKR had been capitalizing on the growing use of semiconductor content used for advanced driver assistance systems, radar systems, infotainment, microcontrollers and telematics systems.
The rise in the use of IoT wearables, including hearables, watches, health trackers and augmented reality and virtual reality devices, created an opportunity for Amkor. AMKR provided advanced packaging solutions needed to build these small form factor systems like processors, sensors and connectivity devices.
However, due to the recent geopolitical tensions and macroeconomic pressure, the demand for advanced automotive and consumer electronic products has been subdued affecting Amkor’s revenues. In the third quarter of 2024, Amkor reported that sales across its industrial and automotive end market declined 17% year over year.
Amkor YTD Performance
Image Source: Zacks Investment Research
Amkor Grapples With Competitive Pressures
The advanced packaging solution market is moderately fragmented with players, including Advanced Semiconductor Engineering ASX, Taiwan Semiconductor Manufacturing Company TSM, Intel INTC and JCET Group. Other companies owning foundries and Integrated Device Manufacturers with an internal capacity to manufacture advanced packaging solutions also pose a threat to Amkor.
ASX uses its Integrated Design Ecosystem for advanced packaging and enables transitioning from single-die SoCs to multi-die designs using technologies like 2.5D and advanced fanout packaging. TSM’s 3D Fabric advanced packaging technology enables customers to design systems using mini-chips instead of larger monolithic die. Intel offers testing facilities like Amkor through Intel Foundry ASAT.
The competitive pressure from these companies is a concern for Amkor’s business growth. These factors do not bode well for the company’s top line. Amkor expects fourth-quarter 2024 revenues in the range of $1.6-$1.7 billion. The Zacks Consensus Estimate for the same is pegged at $1.65 billion, indicating a year-over-year decline of 5.8%. The Zacks Consensus Estimate for fourth-quarter 2024 earnings per share is pegged at 41 cents, indicating a year-over-year decline of 14.6%.
What Should Investors Do?
Amkor is suffering from a slowdown in demand across traditional servers, networking, consumer electronics and automotive end markets, resulting in weak financial results. The competitive pressure from other advanced packaging and testing service providers amid the weak global economy is also a concern for Amkor’s near-term prospects.
Considering all these factors, we suggest investors to stay away from this Zacks Rank #5 (Strong Sell) stock at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpIntel Corporation (INTC) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
Amkor Technology, Inc. (AMKR) : Free Stock Analysis Report
ASE Technology Holding Co., Ltd. (ASX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
