Amkor computing sales up 37% as a dozen customers prepay

Amkor's computing sales rose 37% from a year earlier while total sales stayed flat, and management said a dozen customers have now paid in advance for capacity, which tells us chip packaging has joined silicon and memory as a step AI buyers pay to queue for, with the bill landing in Korea and Arizona factories rather than at the chipmaker.

What happened?

• The quarter: Amkor Technology, the largest US-headquartered outsourced packaging and test company, reported third-quarter results on 26 October 2026, after the US close. Net sales were $1.99 billion, up 5% from the second quarter and flat from a year earlier. Gross margin was 18.3%, against 14.3% a year earlier. Net income was $191 million, against $127 million.
• The mix: Computing, which covers data centre, infrastructure, PC and storage chips, was 26% of sales, up from 19% a year earlier. On the call, chief financial officer Megan Faust said computing revenue rose 25% from the second quarter to a record, and the company put the year-on-year rise at 37%. Communications, mainly smartphones, fell to 37% of sales from 51%.
• The prepayments: Faust said that since 2025 Amkor has signed advance payment arrangements with a dozen customers, mainly for advanced packaging capacity in Korea and Arizona, with several more under discussion. Five days earlier, on 21 October, Amkor said its multi-year agreements with NVIDIA across Arizona and South Korea now total $3 billion.
• The guide: Amkor expects fourth-quarter sales of $1.9 billion to $2.0 billion, with computing up low double digits from the third quarter and more than 50% from a year earlier. It narrowed 2026 capital spending to about $2.5 billion.

Why does it matter?

The direct signal. Advanced packaging is the step where a GPU or custom AI chip is joined to its memory and its neighbours on one module. Without it, a finished wafer cannot become a working accelerator. Amkor's computing line is the part of its business closest to that work. Our arithmetic from the reported shares: computing revenue was about $518 million in the quarter, against about $378 million a year earlier, while communications fell from about $1.01 billion to about $0.74 billion. A flat headline hides a large swing towards AI and data centre work.

The second-order signal: customers now fund the factory. Chief executive Kevin Engel told analysts that customers understand silicon and memory supply for 2027 better than they did, "and I think that has highlighted even more that packaging is becoming one of the key bottlenecks." He said customers are working to secure capacity into 2027 and even 2028, which is where the advance payment talks come from. The filings show what that looks like in cash:

• In its second-quarter filing, Amkor said it received $100 million of customer advance payments in July and separately signed an agreement under which it expects about $1.5 billion from one customer in 2027. It did not name the customer.
• The 21 October release with NVIDIA added a $1.3 billion Korea agreement and put the two-country total at $3 billion. NVIDIA's own release the same day said the Korea plan targets more than a 300% increase in interposer wafer capacity by the end of 2028.
• Engel said the pricing environment for these multi-year agreements is attractive because computing customers "are more focused on making sure they secure the capacity" than on the margin Amkor earns.

When the buyer pays before the line exists, the scarce item is the line itself. The packaging house gets paid first; the chip designer carries the risk that its programme changes.

Margins are moving with the mix. Materials fell to 50.7% of sales from 57.5% a year earlier, and gross margin rose 4 percentage points. Faust said the expansion came mainly from a richer mix of high-value advanced packaging. Engel added that cost increases for substrates and materials are typically being passed on to customers.

What does it change?

Near term (to the end of 2026)

• Spending runs ahead of sales. Our arithmetic from the cash flow statement: Amkor paid $1.24 billion for plant and equipment in the first nine months, 2.6 times the $473 million a year earlier. Unpaid capital spending bills on the balance sheet doubled to $496 million from $244 million at the end of 2025.
• The gap is funded by debt for now, prepayments later. Long-term debt rose to $2.32 billion from $1.28 billion after $1.15 billion of new borrowing this year. Faust said customer advance payments "are expected to provide significant funding support" for the next step-up, and that the balance sheet is solid through 2027.
• Two new 2.5D programmes start in the fourth quarter. Engel said one is in networking and one in data centre, alongside a second high-density fan-out CPU programme for a hyperscaler that began ramping in the third quarter.

Longer term (2027 and beyond)

• A bigger build in three countries. Faust said 2027 spending on the Arizona campus could reach up to 15% of its $12 billion estimated cost, with $400 million to $450 million for buildings in Korea and about $50 million in Vietnam, "higher than $2 billion" in total for those programmes. Our arithmetic: 15% of $12 billion is $1.8 billion. Formal 2027 capital spending guidance comes with fourth-quarter results in February.
• Korea becomes the first relief valve. The new Songdo building is due by the end of 2026, two new Gwangju buildings finish in late 2027, and Amkor expects its Korea footprint to be 40% larger in 2028 than in 2025. Arizona's first phase is due by the end of 2027, and Faust said the customer ramp there looks more like late 2028.
• What we cannot see yet: how much of the $3 billion is cash already received versus cash due, how prepayments are credited back through pricing, and what happens if a programme slips. The third-quarter Form 10-Q should update the advance payment and letter-of-credit figures.

What should we watch next?

• Amkor's third-quarter Form 10-Q, expected within days. In 2025 and in July 2026 the quarterly filing came one day after results. It should show how much prepaid cash has arrived and how many standby letters of credit back it. It is on our Catalyst calendar.
• SK hynix results on 28 October and Ibiden results on 29 October. Memory and substrates sit either side of packaging; both will show whether the bind is moving or spreading.
• Fourth-quarter computing growth. Amkor guided to more than 50% year on year. A miss would suggest the slow line loading Engel described, a process of more than 300 steps, is still holding output back.
• What would weaken the catalyst: customers pausing prepayment talks, computing growth slowing while capital spending keeps rising, or Arizona construction slipping past the end of 2027.

FAQ

What does Amkor do?
Amkor packages and tests chips for other companies. It takes finished wafers from foundries and turns them into chips that can be mounted on a board, including advanced packages that put several chips and memory side by side. Its main operations are in Korea and elsewhere in Asia, and it is building a new campus in Arizona.

Why would a customer pay for capacity in advance?
To make sure the factory space exists when its chips need it. New space takes time: Amkor's two new Gwangju buildings broke ground this year and finish in late 2027. Amkor's chief executive says packaging is now one of the key bottlenecks. Paying early lets the customer hold its place, and lets Amkor build without taking all of the risk.

Does a flat year mean demand is weak?
No. Total sales were flat because smartphone work fell while computing rose 37%. The mix matters more than the total here, and it is the mix that lifted gross margin by 4 percentage points.

How does this connect to CoWoS and other advanced packaging?
CoWoS is TSMC's main way of joining AI chips to high-bandwidth memory. Amkor's 2.5D and high-density fan-out work does a similar job outside TSMC. Our CoWoS explainer covers how the step works.

Takeaway: Amkor's quarter shows AI chip buyers now treat packaging capacity like memory, something they pay for years ahead, and the money is going into Korean and Arizona factories before the chips that need them exist.

References

1. Amkor Technology, third-quarter 2026 results (Form 8-K, Exhibit 99.1), 26 Oct 2026.
2. Amkor Technology, third-quarter 2026 earnings call transcript (The Motley Fool), 26 Oct 2026.
3. Amkor Technology, Amkor Technology and NVIDIA advance strategic partnership for AI infrastructure, 21 Oct 2026.
4. NVIDIA, NVIDIA and supply chain partners expand capacity to accelerate AI infrastructure buildout, 21 Oct 2026.
5. Amkor Technology, Form 10-Q for the quarter ended 30 June 2026, 28 Jul 2026.
6. JCET, 2026 third-quarter report, 22 Oct 2026.
7. SEC EDGAR, Amkor Technology filing history, accessed 27 Oct 2026.