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Riding High: Amkor Technology


Shares of Amkor Technology Inc. (AMKR), which sank to a 52-week low of $8.32 on August 18, 2017, have since gained 30%.

The Company is a provider of outsourced semiconductor packaging and test services, and the who's who of its clients include Intel Corp; Renesas Electronics; STMicroelectronics N.V.; Texas Instruments Inc.; Toshiba; Broadcom Limited; Qualcomm Inc; GlobalFoundries Inc. and Taiwan Semiconductor Manufacturing Company Ltd.

According to a recent report by ReportLinker, "the global semiconductor market was valued at $463.5 billion in 2016, and is projected to reach $831.5 billion by 2024, growing at an estimated CAGR of 7.67%, for the forecast period of 2017-2024".

It's hard to imagine life today without semiconductors because they are present in almost all the electronic products that we use.

Communications, Automotive & industrial, Consumer, Networking, and Computing are the end markets that use Amkor's products.

The Company has diversified its revenue streams, improved profits, and broadened its portfolio of services through joint ventures, acquisitions and other strategic investments.

In 2009, Amkor invested in JDevices, a joint venture to provide semiconductor packaging and test services in Japan. Amkor increased its investment in J-Devices to 60% in 2013 and to 100% in 2015 through the exercise of additional options. Also, in 2013, the Company acquired Toshiba's power discrete semiconductor packaging and test factory in Malaysia.

Early this year, Amkor acquired Porto, Portugal-based NANIUM S.A. to strengthen its position in the fast growing market of wafer-level packaging for smartphones, tablets and other applications.

Let's take a look at how the Company has fared in terms of profits and sales in recent years.

Metrics20152016*YTD 2017
Net sales$2.88Bln$3.89Bln$3.04Bln
*Net income$51Mln$164Mln$159.9Mln
Gross Margin16.6%17.9%17.5%

* YTD: First nine months of 2017
* Net income attributable to Amkor

Looking ahead to full year 2017, the Company expects net income of roughly $205 million, or around $0.85 per share; net sales of about $4.13 billion, and gross margin of 17% to 18.5%.

A growing demand for mobile and internet-connected devices, the broad adoption of Internet of Things technology, increasing integration of semiconductor devices, and proliferating semiconductor content in electronic system are fueling the growth of the overall semiconductor industry, as well as the market for outsourced semiconductor packaging and test services. So, Amkor, which is also operating in this space, is a stock worth keeping an eye on.

AMKR, which has thus far hit a low of $8.32 and a high of $12.48 over the last 1 year, closed Friday's (Nov.17) trading at $10.89, up 0.28%.

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