WEST CHESTER, Pa. -- Amkor Technology Inc. dodged a bullet in the fourth quarter as the chip industry sank into an unexpected downturn. The contract chip manufacturer today reported fourth-quarter revenues of $637 million, a 1.8% sequential drop from $649 million in the third quarter of 2000, but it could have been worse than that if it wasn't for an increase in sales to Amkor's largest customers.
"Given the unexpectedly severe and broad-based weakness in economic activity that developed toward the end of the year, we are satisfied with our fourth quarter and full year operating results," said John Boruch, president of the world's largest contract chip assmbly house. "While we experienced a general pullback in die shipments during the fourth quarter, combined revenues from four of our five largest customers actually increased by 10% in Q4."
"During January however, industry conditions continued to deteriorate, and customer forecasts have weakened across the board," Boruch cautioned. "We expect the first quarter of 2001 to be very challenging, and we will be implementing measures to manage our operating costs in line with expected levels of business activity.
"Our current view is that second quarter revenues will be higher than in Q1 2000," he added.
For the fourth quarter of 2000, Amkor posted a net income of $41 million on sales of $637 million compared to a net income of $20 million on revenues of $538 million in Q4 1999. Amkor's assembly and test revenues were $529 million in Q4 of 2000 vs. $549 million in the third quarter. Year-to-year, the backend chip assembly and testing revenues were up 16% from $457 million in Q4 1999.
Amkor's wafer foundry revenues were $108 million in the fourth quarter compared to $100 million in the third quarter of 2000 and $81 million in Q4 1999.
The outlook for the first quarter is not good. Amkor said it expects wafer-fab revenues to decline 49% to $55 million from the fourth quarter. The drop in foundry revenues will primarily result from lower levels of demand for digital signal processors from Texas Instruments Inc.--Amkor's largest foundry customer. Amkor is expecting a 10% drop in assembly and test revenues in the first quarter from Q4 of 2000.
Amkor is now planning capital expenditures of $250 million in 2001.
"Our historic annual revenue and earnings growth has been in the range of 20% to 25%, and our goal has always been to maintain this rate of growth. I believe this remains a realistic goal for our core assembly and test business in 2001, despite the present economic conditions," said James Kim, chairman and CEO of Amkor. "We believe that the current market weakness will be relatively short-lived, and that normal semiconductor industry growth will resume in the second half of the year, preceding a broader economic rebound in late 2001 or early 2002. "