Core Viewpoint - Amkor Technology is facing challenges due to weak demand, leading to the decision to close its Hakodate factory in Japan by December 2027, with production capacity being consolidated to existing facilities in Kyushu [1][2]. Group 1: Company Overview - Amkor Technology, established in 1968 and headquartered in Tempe, Arizona, is a leading provider of semiconductor packaging and testing services, offering solutions such as wafer bumping, packaging design, and advanced packaging technologies [2]. - The company recently saw its stock price surge over 10%, reaching a 25-year high, driven by analysts raising the target price and optimistic projections regarding its position in the CoWoS (Chip-on-Wafer-on-Substrate) market [2][3]. Group 2: Market Dynamics - The semiconductor industry is a significant driver for Amkor, accounting for 34.57% of its sales, with the company positioning itself as an advanced packaging supplier and collaborating with industry leaders like Nvidia, which controls about 60% of the CoWoS demand [3]. - Amkor is expected to build a monthly capacity of approximately 50,000 wafers for CoWoS over the next five years, which could substantially contribute to its revenue if fully utilized [3]. Group 3: Future Outlook - Amkor is investing $7 billion in a new facility in Peoria, Arizona, to prepare for advanced packaging technologies, supported by $407 million in incentives from the U.S. CHIPS and Science Act, with plans for production to begin in mid-2028 [4]. - The company anticipates a rebound in revenue growth, projecting total revenue of $6.65 billion in fiscal year 2025, a year-on-year increase of 5.31%, driven by the growth of artificial intelligence [5]. - For 2026, revenue is expected to reach $7.27 billion, reflecting a year-on-year growth of 9.29%, bolstered by potential orders from Nvidia [6].

Core Viewpoint - Amkor Technology Inc. (NASDAQ: AMKR) is rated as a Buy, primarily due to its significant customer base in the semiconductor industry, which accounts for 34.57% [1] Company Analysis - The partnership with Nvidia is highlighted as a key factor contributing to Amkor's positive outlook [1] - The company is positioned within the technology sector, focusing on innovation and sustainability [1] Investment Strategy - The investment approach is based on "First Principles," which involves deconstructing complex problems to identify overlooked investment opportunities [1] - The analyst has a strong background in investment, private equity, and venture capital, indicating a robust capability to deliver strong returns [1]

Group 1 - UBS downgraded Amkor Technology (AMKR.US) from "Buy" to "Neutral" while raising the target price from $38 to $55, citing that the recent stock price increase reflects strong expectations for computing capability growth but must weigh costs and risks [1] - Since the low point in April 2025, Amkor's stock price has risen by 250%, but UBS believes the stock price reflects faster growth expectations in computing capability, recovery in smartphone SiP, cyclical mainstream market recovery, and the potential of long-term projects in Arizona [1] - UBS expects strong growth in computing demand for 2026-2027, raising the 2025 sales growth forecast from 5% to 6%, while maintaining growth expectations of 14% and 12% for 2026 and 2027, respectively, which is above market expectations of 9% for both years [2] Group 2 - The growth of mature businesses is moderate, with high growth in computing business balanced by low-profit SiP in consumer electronics, smartphones, and automotive/industrial sectors [3] - UBS anticipates a mild recovery in automotive/industrial business with expected growth of 10% and 5% for 2026 and 2027, respectively, due to normalized inventory post-COVID and Amkor's advantages in ADAS/information entertainment [3] - Investment cycles are extended, and high valuations limit upside potential, with Amkor's $7 billion Arizona wafer fab expected to start production in 2028 and profitability in 2029, leading to negative free cash flow of $1 billion from Q4 2025 to 2028 [4]

Market Overview - U.S. stock markets ended positively with the Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 gaining 1.18%, 1.08%, and 0.93% respectively despite mid-week volatility [1] - Market direction was influenced by U.S. policy developments regarding Venezuela, enthusiasm for AI-linked technology stocks, and mixed economic data [1] Economic Indicators - The manufacturing Purchasing Managers' Index (PMI) fell to 47.9 in December 2025, the lowest since October 2024, indicating contraction [2] - Conversely, the Services PMI unexpectedly rose to 54.4 in December from 52.6 in the previous month, indicating expansion [2] - Nonfarm Payrolls increased by 50,000 jobs in December, below expectations, while the unemployment rate slightly declined to 4.4% from 4.5% in November [2] - Average Hourly Earnings increased by 3.8% year-over-year, up from 3.6% in November [2] Stock Performance - Indivior PLC shares rose 21.7% since being upgraded to Zacks Rank 1 (Strong Buy) on October 31, outperforming the S&P 500's 2% increase [4] - FormFactor, Inc. shares increased by 15.9% since its upgrade to Zacks Rank 2 (Buy) on October 31, also outperforming the S&P 500 [5] - An equal-weight portfolio of Zacks Rank 1 stocks outperformed the equal-weight S&P 500 index by 7 percentage points, returning +17.81% compared to +10.85% for the index [5] Focus List and Model Portfolios - The Zacks Focus List portfolio returned +22.1% in 2025, outperforming the S&P 500 index's +17.9% gain [12] - The Focus List has consistently outperformed the S&P 500 over various time frames, including a +22.1% return in the last year compared to +17.9% for the index [14] - The Earnings Certain Admiral Portfolio (ECAP) returned -1.67% in 2025, underperforming the S&P 500's +17.9% gain [15] - The Earnings Certain Dividend Portfolio (ECDP) returned -0.6% in 2025, also underperforming compared to the S&P 500 [19] Notable Stock Recommendations - FIGS, Inc. shares surged 56.8% since being upgraded to Outperform on November 7, significantly outperforming the S&P 500's 3.5% increase [8] - Five Below, Inc. shares increased by 21.7% since its upgrade on October 29, again outperforming the S&P 500 [8] - Mettler-Toledo International Inc. and Accenture plc saw returns of 16.6% and 16.5% respectively over the past 12 weeks [14]

Core Insights - Amkor Technology (AMKR) is evolving beyond its traditional role as an outsourced semiconductor assembly and test (OSAT) provider, indicating a shift in its operational focus and capabilities [1] Company Overview - Amkor Technology is headquartered in Arizona and is primarily known for its OSAT services, which typically operate at the end of the silicon value chain [1] Industry Context - The role of OSATs is becoming increasingly complex, suggesting that companies like Amkor may be expanding their services and capabilities beyond conventional boundaries [1]

Summary of Key Points from Conference Call Records Industry Overview: Semiconductors Core Insights - **Sustained WFE Growth**: The semiconductor industry is expected to see an 11% year-over-year (YoY) growth in wafer fabrication equipment (WFE) by 2026, driven by transitions in leading-edge logic and DRAM due to AI datacenter expansions [1][6][10]. - **Memory Market Dynamics**: The NAND supply/demand balance has tightened significantly, with price increases anticipated through 2026, supported by strong SSD demand from hyperscalers and enterprises [1][6]. - **Investor Expectations**: Elevated investor expectations following strong third-quarter results mean that upcoming earnings and guidance must meet high standards [1][7]. Company-Specific Insights Applied Materials (AMAT) - **Rating**: Buy - **Outlook**: Expected upside in guidance due to improved memory spending outlook, with a focus on DRAM and foundry/logic segments [2][6]. - **Financial Estimates**: Anticipated 1% revenue upside for the quarter and 4% quarter-over-quarter (QoQ) revenue improvement, with non-GAAP EPS estimates 8% above consensus for CY26 [8][10]. Entegris (ENTG) - **Rating**: Sell - **Concerns**: Cautious outlook due to margin headwinds and limited growth from fab construction-related CapEx, which constitutes about 25% of revenue [3][58]. - **Financial Estimates**: Expected 2% revenue downside for the quarter, with guidance for flattish revenue QoQ [60]. Lam Research (LRCX) - **Rating**: Buy - **Focus Areas**: Investors are expected to concentrate on DRAM spending and NAND upgrades, with modest revenue upside anticipated for the quarter [16][18]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 1% above consensus for CY26 [17]. KLA (KLAC) - **Rating**: Neutral - **Investor Focus**: Management's view on process control intensity and growth expectations for 2026 WFE will be critical [24][26]. - **Financial Estimates**: Anticipated over 1% revenue upside for the quarter, with guidance for flat revenue QoQ [25]. MKS Instruments (MKSI) - **Rating**: Sell - **Outlook**: Focus on 2026 WFE expectations and chemistry momentum, with a balanced investor positioning [32][34]. - **Financial Estimates**: Expected 1% revenue upside for the quarter, with guidance for slight revenue growth QoQ [33]. Teradyne (TER) - **Rating**: Buy - **Key Focus**: Sustainability of semi-test growth and Merchant GPU qualification progress [40][43]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 13% above consensus for CY26 [42]. Qnity (Q) - **Rating**: Buy - **Investor Focus**: Wafer start recovery and operational execution will be key areas of interest [49][52]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with guidance for flattish revenue QoQ [51]. SanDisk (SNDK) - **Rating**: Buy - **Focus Areas**: Sustainability of NAND pricing growth and enterprise SSD qualification momentum [66][68]. - **Financial Estimates**: Expected 2% revenue upside for the quarter, with non-GAAP EPS estimates 9% below consensus for CY26 [67]. Seagate (STX) - **Rating**: Buy - **Investor Focus**: Sustainability of HDD pricing growth and HAMR production ramp [73][75]. - **Financial Estimates**: Expected 1% revenue upside for the quarter, with guidance for flattish revenue QoQ [74]. Additional Considerations - **CapEx Monitoring**: Investors are advised to closely monitor CapEx revisions from leading foundry and memory players, as well as signs of wafer start recovery, which could create upside for select suppliers [1][19]. - **China Exposure**: Continued focus on China exposure and its implications for revenue growth in 2026 remains a critical point for investors [9][26]. This summary encapsulates the key insights and financial expectations from the semiconductor industry and specific companies, highlighting potential investment opportunities and risks.

Group 1: Investment Potential - Amkor Technology Inc. is identified as a hot tech stock with a raised price target of $50 from Needham, reflecting a strong Buy rating [1] - The firm anticipates significant growth in AI wafer demand, particularly in GPUs and custom AI chips, positioning Amkor as a primary beneficiary in the CoWoS (advanced packaging) market over the next five years [1] Group 2: Infrastructure Expansion - The company is making a substantial $7 billion investment in a new advanced packaging and test campus in Arizona, expected to create up to 3,000 jobs [2] - Management is optimizing its manufacturing footprint in Japan, which is projected to enhance corporate gross margins by approximately 100 basis points by the end of 2027 [2] Group 3: Revenue Outlook - Amkor expects a sequential revenue decline of around 8% in Q4 2025, with guidance set between $1.775 billion and $1.875 billion, influenced by seasonal factors and a 5% year-over-year decline in consumer revenue due to a specific wearable product lifecycle [3]

Core Viewpoint - Morgan Stanley has raised its CoWoS capacity forecasts for 2026 and 2027 by 8% and 13% respectively, driven by TSMC's capacity expansion and strong demand for TPUs [1][2]. Group 1: CoWoS Capacity Forecasts - TSMC's CoWoS capacity is expected to reach 115,000 wafers per month by the end of 2026, with additional capacity from external suppliers (mainly ASE and Amkor) contributing 12,000 to 15,000 wafers per month [2]. - The capacity increase is primarily due to rising demand from the ASIC supply chain, with TSMC focusing on CoWoS-L technology while CoWoS-S supply remains stable [2]. Group 2: TPU Demand and Shipments - Morgan Stanley has raised its TPU shipment forecasts for 2026 and 2027 to 3.7 million and 5 million units respectively, reflecting strong market demand and TSMC's ongoing capacity expansion [3][4]. - To meet TPU demand, Broadcom's CoWoS wafer allocation has been increased to 230,000 wafers in 2026 and 350,000 wafers in 2027, while MediaTek is expected to receive 18,000 and 55,000 wafers in the same years [5]. Group 3: Key Players and Projects - NVIDIA's CoWoS allocation for 2026 remains at 700,000 wafers, with slight adjustments in product mix due to HBM4 readiness issues [6]. - AMD's CoWoS forecasts remain unchanged at 90,000 and 120,000 wafers for 2026 and 2027, with potential delays in the MI450 project [6]. - AWS's Trainium project has seen a slight reduction in 2026 shipment expectations to 2.1 million units, with lifecycle totals unchanged [7]. Group 4: Outsourcing and Equipment Suppliers - Due to TSMC's capacity constraints, smaller projects are being outsourced to packaging factories, with ASE expected to benefit from various CPU and TPU projects [8]. - Equipment suppliers are projected to see a 20% to 30% increase in equipment shipments in 2026, driven by strong demand for CoWoS, WMCM, and FOCoS technologies [9].

Group 1 - The semiconductor equipment and materials sector continues to rise, with notable gains in several companies [1] - Amkor Technology (AMKR.US) increased by over 6%, reaching a peak increase of more than 6% earlier [1] - Lam Research Corporation (LRCX.US) rose by over 4.7%, while Applied Materials (AMAT.US) saw a 3% increase [1] - ASML (ASML.US) experienced an increase of over 1% and reached a historical high [1]

Group 1 - The semiconductor equipment and materials sector is experiencing significant gains, with notable increases in stock prices for key companies [1] - Amkor Technology (AMKR.US) saw its stock rise over 6%, reaching a peak increase of more than 6% [1] - Lam Research (LRCX.US) increased by over 4.7%, while Applied Materials (AMAT.US) rose by 3% [1] - ASML (ASML.US) also experienced a rise of over 1% and reached a historical high [1]