Amkor Stock Under Pressure: Analyst Cuts Rating Due To Trade Policy Concerns, Slowing End Market Growth

Core Viewpoint - Keybanc analyst Steve Barger downgraded Amkor Technology from Overweight to Sector Weight due to reduced visibility into demand for mobile phones, automobiles, and consumer products, influenced by fluctuating trade policy [1] Demand and Market Conditions - Analyst expressed concerns about Amkor's lower-visibility, high-capex business model, which may face gross margin pressure in the first half of 2025 due to a temporary socket loss in the mobile end market [2] - Shares are expected to remain under pressure until stabilization and growth are observed in major end markets like Automotive and Mobile [3] Financial Estimates - Barger lowered his 2025 earnings estimate for Amkor to $1.40 from$1.48, reflecting a -2% growth rate at a 6% decremental margin, and the 2026 estimate to $1.91 from$2.04, indicating 9% growth on a 34% incremental margin [6] Strategic Focus - In a broader upcycle scenario, Amkor could exhibit substantial operating leverage with higher factory utilization, contingent on recovery and growth in high-volume end markets [4] - Amkor is focusing on high-performance computing as a margin-accretive and higher-growth vector, despite volumes being too small to drive consolidated company outperformance without participation from traditional end markets [5] Market Position and Competitiveness - Amkor may remain a "second choice" for leading-edge chip companies compared to Taiwan Semiconductor Manufacturing Co [5] - The analyst noted a more positive outlook for companies exposed to upgrade cycles or with reduced channel inventory, such as memory [8]