Amkor Reports Fourth Quarter and Full Year 2008 Results

Amkor Technology, Inc. (NASDAQ: AMKR) today reported financial results for the fourth quarter and full year ended December 31, 2008.

Fourth quarter net sales of $549 million were down 24% sequentially from the third quarter and declined 27% from the fourth quarter of 2007. The fourth quarter net loss, which included a goodwill impairment charge, was $623 million, or $3.40 loss per share, compared to $0.15 income per diluted share in the prior quarter and $0.46 income per diluted share in the fourth quarter of 2007.

For the full year 2008, net sales were $2.7 billion and the company had a net loss of $457 million or $2.50 loss per share. For the full year 2007, net sales were $2.7 billion and net income was $220 million, or $1.11 per diluted share.

The net loss for the fourth quarter and full year 2008 included a $671 million goodwill impairment charge, or $3.67 per share, to write off the entire carrying value of the company’s goodwill. This non-cash charge does not affect the company’s liquidity or cash flows from operating activities. Fourth quarter results also included a $36 million gain on extinguishment of debt and a $17 million net foreign currency gain primarily attributable to the depreciation of the Korean won and the resulting revaluation of the company’s Korean employee benefit plan liability.

Commenting on fourth quarter performance, James Kim, chairman and chief executive officer, said, "Difficult business conditions continue to challenge our industry, our customers and our company. Since early 2008 we have been proactively managing our cost structure while continuing to deliver high quality services, and our fourth quarter operating results reflect labor and other cost savings of approximately $18 million from previously implemented cost reduction programs.”

"In view of the continued downturn in global consumer demand, we implemented further cost reduction measures in the first quarter of 2009 that include lowering executive and other employee compensation, additional reductions in employee and contractor headcount, and shortened work weeks. Our cost reduction initiatives and lower volume are expected to reduce our costs by an additional $22 million in the first quarter,” Mr. Kim said.

"Fourth quarter gross margin of 18% was unchanged from the prior quarter,” said Joanne Solomon, chief financial officer. "Gross margin benefited by an estimated $20 million from the strengthening of the U.S. Dollar against foreign currencies and a reduction in labor and other costs of $16 million. These benefits were partially offset by the accrual of an additional $12 million for unpaid royalties relating to the final award in the Tessera arbitration issued by the ICC in January 2009.”

Unit shipments in the fourth quarter declined 30% from the prior quarter while sales declined 24% in the same period, reflecting a shift in our mix from traditional leadframe packages to more advanced packages.

Interest expense for the period was $28 million or flat sequentially, after excluding $4 million of interest accrued in the prior quarter for the Tessera arbitration, and was down $2 million from the fourth quarter of 2007. In the fourth quarter of 2008, the company recorded a $36 million gain from the repurchase of $118 million aggregate principal amount of debt due in 2011. To date in 2009, the company repurchased an additional $33 million principal amount of debt due in 2011 and expects to record a related $9 million gain in the first quarter. The aggregate repurchase of $151 million of debt is expected to reduce net interest expense by approximately $12 million through maturity. The company may from time to time continue to purchase its outstanding notes for cash.

"Capital additions were $32 million for the fourth quarter and $342 million for the full year 2008. Capital additions in the fourth quarter were lower than planned due in part to the deferment of purchases into the first quarter of 2009. After taking into account the deferrals from the fourth quarter, we expect our capital additions for the first quarter of 2009 to be approximately $40 million. Because of the significantly reduced level of customer demand we are estimating total capital additions for the full year 2009 of approximately $100 million,” said Solomon.

"While the near term outlook for the semiconductor industry has continued to weaken, our financial position and liquidity remain sound,” added Solomon. "We generated $80 million in free cash flow in the fourth quarter and ended the year with a cash balance of $424 million and total debt of just under $1.5 billion. However, we do not expect to be free cash flow positive in the first quarter of 2009 primarily as a result of $64 million in payments to Tessera and certain employee benefit and separation payments. Other than annual amortizing debt of approximately $55 million, we have no significant debt due until 2011 when the remaining $289 million of our 2.5% convertible and 7.125% senior notes become due.”

Selected operating data for the fourth quarter and full year 2008 is included in a section before the financial tables.

Business Outlook:

Increasing volatility in customer forecasts and limited visibility due to uncertainties in the U.S. and global economies have increased the risk that our actual results may differ from our expectations. Based upon the latest available information, we have the following expectations for the 2009 first quarter:

• Sales – down 30% to 38% from the fourth quarter of 2008
• Gross Margin - between 5% and negative 2%
• Net Loss – in the range of $0.34 to $0.49 per share.

The outlook for gross margin and net loss includes the impact of anticipated charges in the first quarter of 2009 related to employee workforce reductions. The charges to cost of sales for these reductions are expected to be approximately $6 million. Our guidance for first quarter net loss also includes an estimated $9 million gain from debt repurchases to date and the related interest savings.

Conference Call Information

Amkor will conduct a conference call on February 12, 2009 at 5:00 p.m. eastern time. This call is being webcast by Thomson Financial and can be accessed at Amkor’s web site at www.amkor.com. You may also access the call by dialing 303-228-2960. A replay of the call will be made available at Amkor’s web site or by dialing 303-590-3000 (access passcode #11124867).

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 further weakening in demand; expectations regarding reduced costs in the first quarter of 2009; expected gains and reduced interest expense associated with debt repurchases; our anticipated level of debt repayment; the expected dollar amount of our capital additions; our statements regarding the outlook for the semiconductor industry and our financial position and liquidity; and the statements made under Business Outlook including those regarding sales, gross margin and net loss per share. 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; deteriorating market conditions; the effect of the financial crisis 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, 2007 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.