Amkor Reports Second Quarter 2009 Results

Amkor Technology, Inc. (NASDAQ: AMKR), a leading provider of semiconductor assembly and test services, today reported its financial results for the quarter ended June 30, 2009.

Second quarter net sales of $507 million were up 30% sequentially from the first quarter of 2009 and down 27% from the second quarter of 2008. Second quarter net income was $9 million or $0.05 per diluted share, compared to a net loss of $22 million or $0.12 per share in the first quarter. Net income for the second quarter of 2008 was $65 million, or $0.33 per diluted share.

"I am pleased with our second quarter performance in a very difficult economic environment,” commented James Kim, Amkor’s chairman and chief executive officer. “Our strategy of managing and aligning costs with customer demand is working. We achieved gross margin of 20% for the quarter, up sequentially from 12% in the first quarter of 2009, despite a $7 million charge to exit our manufacturing operations in Singapore. At the same time, we continued our disciplined approach in making capital spending decisions, which allowed us to generate free cash flow and strengthen our cash position.”

“We are seeing improvement in customer demand for the second half of 2009. Based on current customer forecasts, we expect third quarter 2009 net sales to increase 17% to 21% from the second quarter of 2009, reflecting higher than typical seasonal growth, and gross margin of 23% to 25%,” added Kim.

“Overall unit shipments were up 43% sequentially with advanced laminate and flip chip packages up nearly 60%,” said Ken Joyce, Amkor’s president and chief operating officer. “Net sales grew 30% driven by inventory adjustments by customers from historically low levels in the first quarter, strength of 3D packaging principally in support of wireless applications and improved demand for our leadframe packages.”

“We generated $69 million in free cash flow in the second quarter and ended the quarter with a cash balance of $455 million and total debt of just under $1.6 billion,” said Joanne Solomon, Amkor’s chief financial officer. “We used $135 million of the proceeds from our recent $250 million convertible note offering to repurchase $144 million principal amount of debt due in 2011 and recorded a related $8 million net gain. We have an aggregate of $97 million of debt coming due through the end of 2010, and the remaining $144 million of 7.125% notes and 2.5% convertible notes mature in 2011.”

“Second quarter 2009 capital additions were $27 million. We expect capital additions for the third quarter to be approximately $70 million and we are increasing our estimated capital additions for the full year 2009 to approximately $150 million. Our planned capital additions are primarily related to expanding our wafer bumping capacity in support of advanced interconnect technologies in response to increased level of customer demand,” said Solomon.

Selected operating data for the second quarter of 2009 is included in a section before the financial tables.

Business Outlook

Based upon the latest available information, we have the following expectations for the third quarter of 2009:

• Net sales up 17% to 21% from the second quarter of 2009
• Gross margin between 23% and 25%
• Net income – in the range of $0.17 to $0.22 per diluted share

Conference Call Information

Amkor will conduct a conference call on July 29, 2009 at 5:00 p.m. eastern time. This call is being webcast and can be accessed at Amkor’s web site at www.amkor.com. You may also access the call by dialing 877-941-9205. A replay of the call will be made available at Amkor’s web site or by dialing 800-406-7325 (access passcode # 4108562). The webcast is also being distributed over Thomson Financial’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through Thomson Financial individual investor center at www.companyboardroom.com or by visiting any of the investor sites in Thomson Financial’s Individual Investor Network. Institutional investors can access the call via Thomson Financial’s password-protected event management site, StreetEvents (www.streetevents.com).

About Amkor

Amkor is a leading provider of semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronics design and manufacturing services. More information on Amkor is available from the company’s SEC filings and on Amkor’s website: www.amkor.com.

Forward-Looking Statement Disclaimer

This press release contains forward-looking statements within the meaning of federal securities laws. All statements other than statements of historical fact are considered forward-looking statements including, without limitation, statements regarding the following: expectations regarding net sales and gross margin in the third quarter of 2009; customer demand for the second half of 2009; plans to exit our manufacturing operations in Singapore; the expected dollar amount of our capital additions; and the statements made under Business Outlook including those regarding net sales, gross margin and net income. These forward-looking statements involve a number of risks, uncertainties, assumptions and other factors that could affect future results and cause actual results and events to differ materially from historical and expected results and those expressed or implied in the forward-looking statements, including, but not limited to, the following: the highly unpredictable nature of the semiconductor industry; the effect of the global economy on credit markets, financial institutions, customers, suppliers and consumers; inability to achieve high capacity utilization rates; volatility of consumer demand for products incorporating our semiconductor packages; weakness in the forecasts of Amkor’s customers; customer modification of and follow through with respect to forecasts provided to Amkor; curtailment of outsourcing by our customers; our substantial indebtedness and restrictive covenants; failure to realize sufficient cash flow to fund capital additions; the effects of a recession in the U.S. and other economies worldwide; the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters; the outcome of the pending SEC investigation; worldwide economic effects of terrorist attacks, natural disasters and military conflict; our ability to reduce costs; competitive pricing and declines in average selling prices; timing and volume of orders relative to production capacity; fluctuations in manufacturing yields; competition; dependence on international operations and sales; dependence on raw material and equipment suppliers and changes in raw material costs; exchange rate fluctuations; dependence on key personnel; difficulties in managing growth; enforcement of intellectual property rights; environmental and other governmental regulations; and technological challenges.

Other important risk factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2008 and in the company’s subsequent filings with the Securities and Exchange Commission made prior to or after the date hereof. Amkor undertakes no obligation to review or update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.

* We define free cash flow as net cash provided by operating activities less purchases of property, plant and equipment. Free cash flow is not defined by generally accepted accounting principles. However, we believe free cash flow to be relevant and useful information to our investors because it provides them with additional information in assessing our liquidity, capital resources and financial operating results. Our management uses free cash flow in evaluating our liquidity, our ability to service debt and our ability to fund capital additions. However, this measure should be considered in addition to, and not as a substitute for, or superior to, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles, and our definition of free cash flow may not be comparable to similarly titled measures reported by other companies.