AMKOR TECHNOLOGY, INC. (AMKR) stock intrinsic value fair value estimate & owner earnings analysis

Amkor is one of the world's largest providers of outsourced semiconductor packaging and test services (an "OSAT"), assembling and testing chips for customers who design them but do not want to build or run packaging factories themselves. Its plants are concentrated in Korea, Japan, Taiwan, China, Malaysia, the Philippines, Portugal and Vietnam, and it is now building a major new advanced-packaging facility in Arizona, backed by up to $407 million of CHIPS Act funding, with manufacturing expected to start in the first half of 2028. The business is capital intensive and thin-margined (gross margin was 14.0% in 2025), and it is meaningfully concentrated: Apple alone was about 30% of 2025 net sales and Qualcomm another 11%. We build our estimate of value from owner earnings - cash generated by the business after the reinvestment needed just to keep today's factories running, excluding the extra spending used to grow capacity. Owner earnings per share have swung with the semiconductor cycle over the last decade, from roughly $0.33 in the trough year of 2016 up to a peak of about $2.36 in 2022 during the pandemic chip shortage, and back down to about $0.60 in 2025 as capital spending has risen ahead of the Arizona buildout. We use the median of the last ten years, about $0.89 per share, as the normalized starting point, because that period spans a full cycle (a slow patch, a boom, and a correction) rather than picking an unusually good or bad year. In 2025, actual owner earnings per share fell about 24% from 2024, driven mainly by capital spending rising faster than cash earnings and a swing in deferred taxes; because 2026 capital spending is guided sharply higher again ($2.5-3.0 billion, versus about $0.9 billion in 2025) for construction of the Arizona facility, we do not assume a rebound in year one - we assume a further modest decline, before a return to growth as the core business stabilizes and the Arizona facility begins contributing after it starts production in 2028. We treat the large, dedicated spending on the new Arizona facility as growth investment rather than a cost of maintaining today's earnings, since it is new capacity for a market (US-based advanced packaging for AI and high-performance computing) the company does not yet serve at scale, rather than replacement of existing equipment. Ordinary maintenance spending is estimated at roughly 13% of revenue, in line with the company's ten-year average. Our base case assumes revenue and owner earnings dip slightly further in 2026 as elevated spending and new debt costs weigh on cash flow, stabilize in 2027, and then grow at a mid-single-digit to high-single-digit pace as the Arizona facility ramps from 2028 onward, without any change in the customer relationships that matter most today. On this path we estimate the shares are worth about $23 today. Roughly two-thirds of that value depends on what the business earns beyond the ten-year forecast window, which we treat as a mature, ongoing packaging franchise growing only slightly faster than inflation - reflecting that packaging and testing chips is a permanent, non-discretionary industry, but Amkor's own competitive position and thin margins argue against assuming much more than that. Our bear case (roughly a one-in-ten worst outcome, not our expectation) supposes Apple meaningfully reduces its purchases from Amkor over the next few years - plausible given how concentrated that relationship is - while a normal semiconductor downturn arrives at the same time the Arizona facility is ramping, leaving expensive new capacity underused for a period and pressuring margins. Under that scenario we estimate the shares are worth about $10. Our bull case (roughly a one-in-ten best outcome) supposes the advanced-packaging build-out is a genuine success: the Arizona facility ramps on schedule with strong utilization, Amkor's relationship with Apple and other large customers deepens rather than shrinks as more advanced packaging techniques are needed for next-generation chips, and margins expand with a richer product mix. Under that scenario we estimate the shares could be worth around $34; a large share of that figure rests on the new facility becoming a durable, growing franchise for decades, which is a real assumption worth being aware of rather than a certainty. Weighing the spread between the bear and base cases against the uncertainty in the Arizona build-out and customer concentration, the margin-of-safety price is meaningfully below our base-case estimate, around $14, and it assumes the Arizona project shows it is on schedule and cost, and that Apple's share of sales is holding steady rather than shrinking. One accounting judgment worth noting: Amkor's cash flow statement includes several smaller working-capital line items that do not sum cleanly to the total from their major components alone; we derived the net working-capital effect as a residual against reported operating cash flow rather than guessing at the missing lines, which reconciles exactly to the reported figures in every year examined.