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Amkor Technology, the No. 1 semiconductor back-end processing company in the United States, saw its shares surge by double digits after signing a 2 trillion won advanced semiconductor packaging deal with Nvidia. As the importance of advanced packaging technology in artificial intelligence (AI) chips has come to the fore, the semiconductor back-end processing industry, which had been relatively deprioritized, is drawing attention.
According to Bloomberg on the 23rd, Nvidia signed a semiconductor packaging deal worth $1.5 billion (about 2.2 trillion won), including an advance payment, with Amkor to expand semiconductor production within the United States. The two companies plan to jointly develop packaging and testing technology for Nvidia's AI and accelerated computing platforms, focusing on technology that combines different types of chips into a single package. On the news, Amkor shares surged 17% in after-hours trading. Amkor has risen 63.14% year-to-date.
Semiconductor back-end processing refers to the final stages of chip production, including packaging and testing. Among these, packaging is the key step of mounting completed chips into cases so they can be connected to other components. Completing components such as advanced accelerator chips for AI requires highly sophisticated packaging technology, including special materials and precision processes. As a result, the semiconductor back-end processing industry has recently emerged as a new supply bottleneck in the chip industry. Amkor previously specialized in relatively simple chip packaging, but has been making efforts to enter more advanced technology stages through partnerships such as one with Taiwan's TSMC.
Beyond Nvidia, global semiconductor giants are joining hands with Amkor. In June this year, Amkor signed a 10-year long-term partnership with TSMC, the world's largest foundry (contract chip manufacturer), to strengthen its semiconductor packaging capabilities in the United States. Amkor is also collaborating on chip packaging with AMD, a competitor of Nvidia.
Amkor is the No. 1 packaging company in the United States and No. 2 globally, but leadership in the semiconductor packaging industry lies in Asia. According to a 2024 Deloitte report, the semiconductor back-end processing industries of major Asian countries such as Taiwan, China, and South Korea are overwhelmingly dominant, accounting for about 90% of the total market. In fact, the world's No. 1 semiconductor back-end processing company is Taiwan's ASE Technology, which recorded revenue three times that of Amkor as of last year.
Nevertheless, the semiconductor industry is paying attention to Amkor because of the US government's semiconductor supply chain reshoring (the return of overseas companies to their home country) trend. In 2023, Amkor announced it would build its first large-scale packaging plant in North America in Peoria, Arizona. The following year, it was promised support under the CHIPS Act from the US Department of Commerce, quickly emerging as a key pillar of the US semiconductor supply chain. The Peoria plant, being built at a cost of $7 billion across 690,000 square meters, broke ground last year. It aims to begin commercial production in 2028.
Amkor also has deep ties with Korea. Its predecessor was Amkor Electronics, which was established in the United States for sales and marketing by Chairman James Kim, the eldest son, after his late father Honorary Chairman Kim Hyang-soo, founder of the Anam Group, started the semiconductor business in 1968. When the Anam Group was dissolved in the late 1990s, Amkor Electronics acquired the semiconductor packaging division of the then Anam Semiconductor, and changed its name to the current Amkor Technology when it listed on the Nasdaq in 1998.
