Will Amkor's Communications segment revenue decline YoY in FY2026?

Communications grew only 1% in FY2025, which was essentially flat. However, Q4 2025 surged 28% YoY on a key iOS socket gain, and management confirmed a 'stronger footprint in the current generation of iOS phones.' This socket gain creates a favorable comp in H1 2026 that should carry forward. A full-year decline would require either (a) losing the iOS socket gained in Q4 2025, (b) a weak iPhone cycle in 2026, or (c) a material shift in Apple's packaging strategy. None of these are base cases. Android growth at 17% in Q3 provides additional support. The more likely scenario is low-to-mid single digit growth in FY2026 Communications, not a decline.

For Communications to decline YoY in FY2026, Amkor would need to reverse the socket gain or face a significant iPhone downturn. The Q4 2025 surge of 28% YoY creates a high comp for Q4 2026, which could lead to a sequential decline late in the year. But for full-year to be negative, H1 and Q3 must also be weak. Given the confirmed iOS socket gain and improving Android trends, a full-year decline is a tail scenario. The primary risk is iPhone 17 cycle weakness, which is inherently hard to predict this far out but faces no known headwinds.

The debate about whether the iOS socket gain deepens dependency or strengthens the relationship is relevant. If it strengthens the relationship, Communications grows in 2026. If Apple decides to diversify suppliers (as large customers sometimes do after concentrating too much in one supplier), Communications could face pressure. However, the insourcing/diversification risk is medium-term (2-3 years), not an FY2026 concern. The full-year 2025 growth of only 1% despite the Q4 socket gain shows the base business is sluggish, but sluggish is different from declining. The socket gain provides a revenue step-up that should persist.

The 1% growth in FY2025 shows Communications is near stagnation. The Q4 socket gain boosts the run rate, but if Q4 2025 was anomalously strong, the FY2026 comparison might not be as favorable as it appears. Full-year 2025 Communications was ~$2.9B. For FY2026 to decline, it would need to be below $2.9B. Given Q4's strong exit rate, Q1-Q3 would need to be weak. Possible if the smartphone market softens, but not the base case. I weight the Apple concentration risk more heavily — 30%+ exposure means any Apple-specific decision (supply chain shift, packaging insourcing) could materially impact the segment.

The key question is whether the Q4 2025 socket gain is durable through 2026. Management said 'stronger footprint in the current generation of iOS phones' — this implies the socket gain is tied to the current iPhone generation. If iPhone 17 uses a different SiP configuration or Apple shifts some volume, the gain could partially reverse. However, design cycles are typically multi-year, so a 2026 reversal is unlikely. More likely: Communications grows low-to-mid single digits on the socket gain. Decline requires a negative surprise from Apple.

I assign ~27% probability to a decline. The bull case for Communications (no decline) relies heavily on the iOS socket gain persisting, which is likely given multi-year design cycles. But the bear case is not negligible: the smartphone market could soften globally, Apple could reduce volumes to Amkor for cost optimization, or the wearable/IoT portions of Communications could decline (consumer was down 10% YoY in Q4). The 1% growth in FY2025 with flat H1 and strong H2 means the annual comparison is sensitive to H2 2026 performance.

Q4 2025 socket gain provides favorable comps for 2026. Management confirmed stronger iOS footprint. A decline requires a negative surprise. Low probability but Apple concentration creates tail risk.

FY2025 Communications grew only 1% — near stagnation. The socket gain helps but the base business is weak. If smartphone market softens in 2026 or Apple shifts volumes, a decline is possible. Probability around 25-30%.

Base case is low single-digit growth on socket gain carryover. Decline scenario requires Apple-specific or smartphone market weakness. Not the base case but not negligible given 30%+ Apple concentration.