Greg Johnson – Senior Director of Investor Relations and Corporate Communications Stephen Kelley – President and Chief Executive Officer Joanne Solomon – EVP and Chief Financial Officer.

Chad Dillard – Deutsche Bank Securities, Inc. Randy Abrams – Credit Suisse Suji De Silva – Topeka Capital Markets Jairam Nathan – Sidoti & Co. Atif Malik – Citigroup Global Markets Inc. Geoffrey Hulme – Amici Capital LLC.

Good day, ladies and gentlemen, and welcome to the Amkor Technology Third Quarter 2014 Earnings Conference Call. My name is Candice, and I will be your conference facilitator today. At this time, all participants are in a listen-only mode. After the speakers' remarks, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded. I would now like to turn the call over to Greg Johnson, Senior Director of Investor Relations and Corporate Communications. Mr. Johnson, please go ahead..

Thank you, Candice, and good afternoon, everyone. Joining me today are Steve Kelley, our President and Chief Executive Officer; and Joanne Solomon, our Chief Financial Officer. Our earnings press release was filed with the SEC this afternoon and is available on our web-site.

During this conference call, we will use non-GAAP financial measures and you can find the reconciliations to the U.S. GAAP equivalent at our web-site. We will also make forward-looking statements about our expectations for Amkor's future performance based on the environment as we currently see it. Of course, actual results could be different.

Please refer to our press release and other SEC filings for information on risk factors, uncertainties and exceptions that could cause actual results to differ materially from these expectations. Please note, that the financial results discussed today are preliminary and final data will be included in our Form 10-Q.

With that, let me hand it over to Steve..

Good afternoon and thanks for joining the call today. We delivered all-time record revenue in the third quarter, driven by strength in mobile communications. Sales grew 6% sequentially and year-on-year, following 10% sequential growth in the second quarter.

Excluding revenue from our divested Japanese subsidiary Amkor revenues grew 8.5% sequentially and year-on-year. Our advanced products sales grew strongly in the third quarter, with flip chip and wafer-level packages leading the way.

Normalizing for the sale of our Japanese factory, mainstream product sales also grew in the quarter driven primarily by increased demand for MEMS products. We had expected even stronger growth in Q3 but fell short of our goal principally due to the ripple effect of lower demand in the high-end android market.

This demand pattern also impacted our 4Q revenue expectations. We experienced impressive strength in the iOS ecosystem, and this strength is carrying over to Q4. We increased our sales to fabless companies in China and Taiwan by 40% sequentially and are on track to double our sales to these customers year-on-year.

The automotive market is also a key element of our growth plan. We expect our automotive sales to grow roughly 25% this year. This market segment is attractive to Amkor because of its steady growth, relative stability and need for high quality and viability, which leverage one of Amkor’s strengths.

We expect that Amkor and J-Devices together would generate more than $750 million in automotive revenue this year and reach a $1 billion run-rate by 2017. In our other major markets, computing, consumer, networking and industrial, we expect to see steady year-over-year growth.

Our efforts to broaden Amkor’s customer base and expand our business with current customers are beginning to pay off. Now the foundation of our future growth is our leading edge technology. In Q3, we ramped a major 20 nanometer product to high volume, exceeding our yield and throughput targets.

We are working closely with multiple foundries and customers, at the 14 nanometer, 15 nanometer and 16 nanometer nodes. And we expect to ramp the 15 nanometer memory product to volume in the fourth quarter. Also in the third quarter, we ramped both RF, System-in-Package, and Power System-in-Package products to high volume.

These SIP products are expanding Amkor’s participation in the smartphone and tablet markets. We also achieved significant milestones in the mainstream business last quarter. We began high volume manufacturing of a sensor fusion product, which combines pressure, temperature and humidity sensors in a single MEMS package.

We ramped a memory module, combining NAND flash and DRAM, aimed at the entry level and mid-range smartphone markets, and we began to ramp our power FET business with multiple customers, leveraging our copper clip technology. Now, J-Devices delivered record sales this quarter.

The J-Devices management team is focused on a consolidate-and-field strategy, to improve structural profitability. The alignment and collaboration between Amkor and J-Devices is quite good. And both parties are seeing clear benefits from the alliance. For reporting purposes, we currently treat J-Devices as an investment.

We expect to consolidate their results no later than 2016, adding roughly $1 billion to Amkor’s annual revenue. Looking ahead to the fourth quarter, we expect mobile communications revenue to grow, offset by seasonal declines in the consumer, computing and industrial market.

We expect between $755 million and $805 million in revenues in the fourth quarter. We are maintaining our 2014, capital investment plan at roughly $675 million. Most of this investment is for wafer-level packaging, advanced flip chip and advanced test equipment.

The demand for this capacity is spread across many customers, which reduces our investment risks. We believe that these investments are critical to maintaining our technology leadership and our position as a leader in the advanced products business. In late Q3, we began construction on K5, our new factory and R&D center in Korea.

We plan to make K5 the world’s most efficient advanced packaging and test facility, the world’s premier center for packaging R&D, and a magnet for talented engineers and scientists. Construction work will continue through 2015 and into early 2016. Joanne will now provide more detailed financial information..

Thank you, Steve, and good afternoon, everyone. We saw a solid, sequential and year-over-year sales growth in the quarter, driven by share gains in the mobile device end market. Gross profit remains flat sequentially as we invested in our infrastructure, people and equipment in support of this year’s major premium smartphone launches.

Gross margin for the fourth quarter is expected to be 18.5% on the lower revenues. We expect to see improvement in our gross margin in the coming quarters, from revenue growth and utilization improvements. Operating expenses in the quarter were $78 million, which was down from $90 million in the second quarter.

R&D expenses decreased as our 20 nanometer and other technology initiatives moved from the development stage into production. Our SG&A expenses were down principally from lower incentive compensation and lower legal fees. For the fourth quarter we expect our operating expenses to be around $80 million.

Our earnings benefited from an $8 million favorable impact from foreign currency. This was primarily attributable to the depreciation of the Korean-won and the resulting impact on our balance sheet items denominated in that currency.

Our effective tax rate in the third quarter was 25%, and we expect an effective tax rate around 25% for the fourth quarter. Finally, at September 30, we had total debt of $1.5 billion, and our debt to EBITDA was 2 times.

Our liquidity is solid with $485 million in cash and $435 million in available revolving credit lines and undrawn secured term loans. With that, we will now open the call up to your questions.

Operator?.

Thank you. (Operator Instructions) And our first question comes from the line of Chad Dillard of Deutsche Bank. Your line is now open..

Hi.

How are you guys doing?.

Good, Chad..

Good.

Can you talk about, what you are seeing for the first-half 2015 demand, and whether it's as robust as you were expecting two months ago? And I guess, what I'm trying to get at is, how does this change your calculus for CapEx for the next 12 months?.

the Apple ecosystem, which we think will continue doing well in the first-half; the Samsung ecosystem, we're not sure, but we have high hopes for the Galaxy phone; and then China. And China has some positive stimulus from the 4G ramp. So, again, difficult to predict, but those are the major variable on the mobile communication side.

Everything else the non-mobile communications markets, I don't foresee much either up or down. We're forecasting low single-digit growth or decline. We'll just have to see how it plays out. What that means for our capital is, we intend to constrain our capital next year.

Right now, we would target to spend something less than $500 million in new capital equipment, that's excluding our expenditures on K5..

That's helpful.

And just secondly, just want to get a sense of how your market share is tracking if you compare where you were on 28-nonometer versus some of the future nodes 20 to 16?.

That's a great question. We actually thought and we think we picked up some market share this quarter and we're on track to pick up some more next quarter. And we just compare our revenue growth in Q3 versus our peers, and we certainly like the trend this quarter. I think in 20-nanometers, we're very well positioned.

We're engaged with all of the major players at 20-nano, and it’s driving our growth here in the second-half of the year..

Great..

Thank you. And our next question comes from the line of Randy Abrams of Credit Suisse. Your line is now open..

Hey, yes, thank you. The first question I wanted to ask on the margins that you reported, it looks like a modest decline, but wanted to see if the mix looked like the advanced products still did pretty well.

So just wanted to go through, I think, factors for margin what may have impacted a bit relative to your earlier expectations, whether pricing or product mix or other factors?.

Hey, Randy, it's s a good question. I don't think it’s really pricing or product mix per se. I think what happened was we saw our fixed costs go up in Q3. And we were planning for obviously a stronger quarter. And so we just didn’t have the absorption that we planned to have in Q3 which impacted our margins.

I think, our outlook is still to grow significantly in 2015 and grow faster than the market, so I think, we'll grow into our new fixed cost structure, but it hit us in Q3..

Okay, great. And for one of the growth drivers, you mentioned automotive with J-Devices have $750 million and direction to move to $1 billion, by I think, you said by 2016.

Could you talk about how much is maybe the split between what's the core Amkor versus the J-Devices? And how much you think is organic like the end market growth versus, is there a component that you see market share opportunities to get to that $1 billion level?.

Yes. So my statement was $1 billion run rate by 2017. And the split is roughly $400 million J-Devices, $350 million Amkor in 2014. Now, the growth will be a combination of organic, as well as some movement into the company.

So we have some things happening on the J-Devices side, and this – it's not organic growth, it's going to boost their sales level in 2016. So, I think, we have a good degree of confidence in this target of $1 billion for 2017. And, again, that that puts us in a leadership position in the automotive OSAT market..

A follow-up on that, could you talk about the profitability as we look to consolidate if you are at 80% ownership by 2016, how we should think about the impact on gross and operating margins just to flow – if we flow through the model by 2016?.

Yes, I think, if you take a look at J-Devices, what we see today we have gross margins in the – let’s say, 12% to 14% range. And we're working on plans to move those into the 15% plus range. So ideally, we would like to see that business settled in – in the mid-teens.

But, again, that's part of the consolidate-and-field strategy bringing business into the factories in Japan and consolidating factories within Japan..

Thank you. And our next question comes from the line of Suji De Silva of Topeka. Your line is now open..

Thanks. Hi, guys.

A couple of questions, first of all on some of the differentiated products, the RF, the memory, the sensors, what kind of relative margins those have relative to the rest of the business? And are they going to material percent of the revenues, or are they still early stage?.

Yes. So let me just clarify your question, you are saying on the differentiated products the – our customers’ sole-sourced products, if we get a better margin with those as opposed to other products..

Correct, and if they are going to material part of the revenue, Steve..

Okay. Yes, I think that if you take a look at the products that are growing this year, much of that growth is occurring in mobile com, and many of those products are sole-source. So I think that that helps, obviously, it creates more margin for our customers. However, the competition is still pretty fierce, even for those sole-sourced products.

So I think that for us, it gets back to how fast can we get the money back to these capital investments that we make to support these leading edge products. So it's more of a capital return on investment dynamic that it is flowing directly from the sole-sourced nature of our customer's product..

Understood.

And then another question is a little longer-term, maybe perhaps on a 2.5 and 3D packaging, is that something that you think can have a material impact in the financials near-term, or whether it's kind of a further out trend, or whether you are starting to see some of the impact today?.

I think we are starting to see some of that impact, 2.5 D is a pretty broad definition..

Sure..

And I think what you're seeing is a lot of activity at Amkor, at TSMC, at other OSATs, where we're trying to find the right model, because whatever approach we take it has to make economic sense for our customers, and so I see a lot of innovation right now, particularly within Amkor, trying to achieve that goal.

And the goal is to squeeze more functionality into the same amount of space. And so we are seeing a strong trend that way. And I think, we're engaged with a number of our customers trying to get to a low-cost way to putting more functionality into a given amount of space, and so I'm encouraged.

I think, it is going to have a material impact on our revenue probably starting in 2016..

Okay, great. Thank you..

Thank you. And our next question comes from the line of Jairam Nathan of Sidoti. Your line is now open..

Hi. Thanks for taking my question. You've kind of put the earlier – to an earlier question you put the revenue picture in the first-half into three buckets, Apple, Samsung, and China.

Is there – can you give us some idea about the relative content that Amkor has between these three?.

Yes, I think within the Apple ecosystem we have strong content. Samsung also probably not quite as strong but we do pretty well particularly with the higher-end models. China we have the least exposure, so there is one customer that we have who’s a leading customer in that ecosystem.

But we still have a long way to go become more exposed, China and Taiwan sales. So, we’re growing rapidly; we’ll double the sales year-on-year, but we need to continue that type of growth rate over the next few years..

Okay, thanks.

Just my follow-up on kind of one continuing on the growth rate, longer-term how should we kind of look at Amkor’s revenue growth, either as more as an outperformance versus - compared to wafer starts for the industry?.

Yes, well, our goal is to grow a bit faster than the industry and we did that last year and I think we’ll do that this year. It’s going to be close. So I think that’s the way you should model it, take the industry growth rate and put something a little bit higher than that for Amkor..

Okay. All right, thanks..

Thank you. (Operator Instructions) And our next question comes from the line of Atif Malik of Citi. Your line is now open..

Hi, thanks for taking my questions. Maybe, you guys had a market share of about 15% last year, 12% Amkor, 3% for J-Devices.

Can you provide us a guess, where your market share could stand this year and then maybe next year?.

We don’t forecast market share, but I could tell you, I think the trends are positive. I think Amkor will gain market share in the second half of this year. And we certainly are trying to gain market share again next year. What I see with J-Devices is also positive, that continue to gain market share within the Japanese supply-base.

So I would say the bias is positive, but we don’t really forecast it..

Got it.

And then a follow-up, can you talk about your utilization rate in the September quarter and what are you expecting for the December quarter?.

We start publishing the utilization rates some quarters ago, because didn’t find – it had a lot of meaning for us. We may commence that again sometime next year, but I think the best proxy for us is looking at our gross margin and here the problem we have is that, we didn’t utilize enough of our equipment in Q3 and we won’t do it in Q4 either.

And so we are basically trying to move more revenue, more customers into Amkor, to get that utilization up..

Got it. And one last one the industrial auto (inaudible) about 11% of your sales.

Did you guys see any kind of weakness from your customers in the industrial market, we have heard Microchip – a couple of other companies talk about China being a weaker for industrial demand, are you just – are you seeing a seasonal trend there?.

I have to say, we’re seeing seasonal trends. We still have a relatively strong forecast from our customers. So we’re actually – appoint of bit of judgment to the forecast we have today. So I can’t say that we’ve seen any wholesale correction we're seeing.

I think there are pockets in the industry, where there are maybe inventory issues such as 3G phones in China, but we’re not that exposed to that market..

Thank you, and our next question comes from the line of Geoffrey Hulme of Amici Capital LLC. Your line is now open..

Geoffrey Hulme – Amici Capital LLC:.

– :.

From our perspective, we believe the recent decisions are in error, so we are planning to pursue all avenues that appeal. So as far as updates go, we’re going to file our SEC document over the next couple of weeks, and any further updates you can see it there. .

Okay. Thank you, Geoff. That’s all the Q&A that we have, so that ends the call today. I’d like to turn it over to Steve for his closing remarks..

Yes, thank you, Greg. Let me just recap our key messages. First, excluding revenue from our divested Japanese subsidiary, our Q3 revenues grew 8.5% sequentially and year-on-year. We successfully ramped the flagship 20 nanometer product to high volume and are engaged in development programs at the 14 nanometer, 15 nanometer, and 16 nanometer nodes.

Sales to Taiwan and China fabless companies grew 40% sequentially. And finally, we are encouraged by the macro trends in our business, particularly the move to functional integration of the package in module level, which offers Amkor an opportunity to add more value. And thank you for joining us today..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Have a great day everyone..