On Tuesday, Amkor Technology (AMKR) experienced a significant increase in its stock price following a positive assessment from a Wall Street analyst. Charles Shi, an analyst at Needham, initiated coverage of Amkor stock with a buy rating and set a price target of 40. This endorsement led to an impressive 7.6% rise in Amkor’s stock price to reach 33.72 during afternoon trading.
Amkor is poised to benefit from the current geopolitical climate, as it is the only major outsourced semiconductor assembly and test (OSAT) provider headquartered in the U.S., according to Shi. In his note to clients, he described Amkor as an “underappreciated semiconductor reshoring and AI story” and highlighted that major customers like Apple are transitioning their orders to Amkor to minimize risks associated with their supply chains in Asia.
While OSAT services are currently dominated by companies in Taiwan, China, and Southeast Asia, Amkor’s position as a U.S.-based provider makes it a prime candidate for grants and loans from the U.S. Commerce Department to establish new manufacturing facilities in the country under the 2022 Chips and Science Act. This support aims to strengthen domestic semiconductor manufacturing capabilities and reduce reliance on foreign suppliers.
Additionally, Shi pointed out that Amkor is gaining traction due to its advanced packaging capabilities, particularly in the assembly of artificial intelligence processors. He believes that the increasing demand for AI-related technologies positions Amkor as a valuable investment opportunity for those looking for long-term growth potential in this industry segment.
Despite recent challenges in some of its core markets such as automotive and industrial chipmaking, Shi anticipates a turnaround in the near future for Amkor Technology (AMKR), with the first half of 2024 marking a potential peak in its performance.
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