CHANDLER, Ariz.---July 26, 2006--Amkor Technology, Inc. (NASDAQ: AMKR) reported record second quarter 2006 sales of $687 million, up 40% from the second quarter of 2005 and up 6% from the first quarter of 2006. Amkor's second quarter 2006 net income was $24 million, or $0.13 per diluted share, compared with a net loss of $52 million, or ($0.30) per share, in the second quarter of 2005. During the second quarter of 2006, in connection with refinancing transactions to address near-term debt maturities, Amkor recorded charges, with no net tax effect, of $28 million, or $0.14 per share.

"I am pleased with our performance this quarter, as we realized continued strong growth in flip chip, 3D packaging and test, consistent with the strategic investments we've made in these areas during the past two years," said James Kim, Chairman and Chief Executive Officer. "During the quarter, we continued to build on our industry leadership in a variety of advanced package applications."

"We expect that the robust year-over-year growth rates achieved over the past several quarters will begin to moderate," said Kim. "While there are signs that the U.S. economy is slowing, the global economy does not appear to be slowing as fast. Given the breadth of our customer base and end markets that we support, we believe that this should provide some stability with respect to overall demand."

"During the second quarter, we completed a series of financing transactions to address our near-term debt maturities and reduce ongoing interest expense. We also used available cash to retire $132 million in 5.75% convertible subordinated notes at maturity on June 1, 2006 and to repurchase $4 million in 5% convertible notes due March 2007," said Kim. "To put our improved liquidity into perspective, at the beginning of 2005, we had more than $1.1 billion of debt maturing through 2009. Today the amount is approximately $360 million."

"We remain committed to maintaining a disciplined approach to our business model, with rational capital investments, continued cost management, and a clear focus on driving operating efficiencies throughout the organization," said Kim. "I expect that we will make additional progress in utilizing free cash flow to reduce our remaining debt. Based on current forecasts, we believe we will have sufficient cash resources available to retire the remaining $142 million of 5% convertible notes due March 2007."

"We achieved record sales and units in the second quarter, driven by high performance applications, cell phones and other portable devices," said Ken Joyce, Amkor's Chief Financial Officer.

Second quarter gross margin rose to 25% from 24% in the first quarter. "During the second quarter, we commenced the build out of our new wafer bumping and test facility in Singapore and our new assembly and test factory in Shanghai," said Joyce. "Depreciation expense and other costs associated with these factories will continue to influence gross margin until we build a critical mass of revenue in these operations."

During the quarter, we recorded a $3 million impairment of an equity investment, which is reflected in Other (income) expense, net.

Capital expenditures totaled $93 million in the second quarter and $196 million for the first six months. "We currently plan to limit our full year 2006 capital additions to $300 million, which includes approximately $50 million for facilities principally for our new factories in China and Singapore," said Joyce. "Our 2006 capital equipment budget remains focused on strategic growth areas of wafer level processing, test, and flip chip assembly. We will continue to monitor business conditions and are prepared to adjust this estimate."

"During the quarter, we took several steps to strengthen our financial liquidity," said Joyce. "We issued $400 million of 9.25% senior notes due 2016 and used most of the net proceeds to repurchase $352 million of our 9.25% senior notes due 2008. In addition, we issued $190 million in 2.5% convertible senior subordinated notes due 2011 and used the net proceeds to redeem $178 million of our $200 million in 10.5% senior subordinated notes due 2009. In connection with the repurchased and redeemed notes, we recognized charges, with no net tax effect, totaling $28 million, or $0.14 per share. Going forward, we expect to realize substantial interest savings from refinancing most of the 10.5% senior subordinated notes with 2.5% senior subordinated convertible debt."

"We have achieved positive free cash flow for the past three quarters, and given our financial strategy and current view of business conditions, we anticipate that this trend should continue for the rest of the year," said Joyce.

For the full year 2006, we anticipate an effective tax rate of 7.8% which reflects the utilization of U.S. and foreign net operating loss carryforwards and tax holidays in certain of our foreign jurisdictions. At June 30, 2006, Amkor had U.S. net operating losses available for carryforward totaling $336 million expiring through 2025. Additionally, at June 30, 2006, we had $78 million of non-U.S. operating losses available for carryforward, expiring through 2011.

Selected operating data for the second quarter 2006 is included in a section before the financial tables.

Business Outlook

On the basis of our customers' forecasts, we have the following expectations for the third quarter of 2006:

  • Sales flat to up 2% from the second quarter of 2006
  • Gross margin in the range of 24% to 25%
  • Net income in the range of $0.23 to $0.27 per diluted share

The Company also announced today that its Board of Directors has formed a special committee of independent directors to undertake a voluntary review of Amkor's historical stock option practices. The committee will be assisted by independent counsel.

Amkor will conduct a conference call on July 26, 2006 at 5:00 p.m. eastern time. The call can be accessed by dialing 303-205-0033 or by visiting the investor relations page of our web site: or CCBN's website, An archive of the webcast can be accessed through the same links and will be available until our next quarterly earnings conference call. An audio replay of the call will be available for 48 hours following the conference call by dialing 303-590-3000 passcode: 11061882.

About Amkor

Amkor is a leading provider of advanced semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. More information on Amkor is available from the company's SEC filings and on Amkor's web site:

Forward Looking Statement Disclaimer

This press release contains forward-looking statements within the meaning of federal securities laws, including, without limitation, statements regarding the following: expectations regarding year-over-year growth rates; anticipated growth rates of the U.S. and global economies; expectations with respect to level of overall demand; expectations regarding the reduction of remaining debt from free cash flow; expectations regarding sufficiency of cash resources to satisfy the $142 million of 5% convertible notes due March 2007; expectations regarding impact of depreciation expense and other costs associated with new factories on gross margin; expectations regarding the level and focus of additional capital expenditures for 2006; expectations regarding the achievement of positive free cash flow for the rest of 2006; expectations regarding the effective tax rate for full year 2006 and the statements regarding sales, gross margin and net income contained under Business Outlook. These forward-looking statements are subject to a number of risks and uncertainties that could affect future results and cause actual results and events to differ materially from historical and expected results, including, but not limited to, the following: the highly unpredictable nature of the semiconductor industry; 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 high leverage and restrictive covenants; failure to realize sufficient cash flow to fund capital expenditures; deterioration of the U.S. or other economies; the highly unpredictable nature and costs of litigation and other legal activities and the risk of adverse results of such matters; worldwide economic effects of terrorist attacks, natural disasters and military conflict; competitive pricing and declines in average selling prices; timing and volume of orders relative to the production capacity; fluctuations in manufacturing yields; competition; dependence on international operations and sales; dependence on raw material and equipment suppliers; exchange rate fluctuations; dependence on key personnel; difficulties in managing growth; enforcement of intellectual property rights; environmental regulations; and technological challenges.

Further information on risk factors that could affect the outcome of the events set forth in these statements and that could affect the company's operating results and financial condition is detailed in the company's filings with the Securities and Exchange Commission, including Form 10-K for the year ended December 31, 2005, and Form 10-Q for the quarter ended March 31, 2006, and current reports on Form 8-K. Amkor undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this document.

Selected operating data for the second quarter and six month 2006

                                        2nd Quarter      Six Months

-- Capital additions                   $ 93 million     $196 million
   Net decrease in related accounts
    payable and deposits               ($ 2 million)   ($ 26 million)
                                       -------------   --------------
   Payments for property, plant &
    equipment                          $ 91 million    $ 170 million
                                       ============    ==============

--  Depreciation and amortization      $ 67 million    $ 134 million

--  Free cash flow (1)                 $ 30 million    $  70 million

   (1) Reconciliation of free cash flow to the most directly
        comparable GAAP measure:

       Net cash provided by
        operating activities          $ 121 million    $ 240 million
       Less payments for property,
        plant and equipment          ($  91 million)  ($ 170 million)
                                      -------------   --------------
       Free cash flow from
        continuing operations          $ 30 million     $ 70 million
                                       ============   ==============

    We define free cash flow as net cash provided by operating
    activities less payments for property, plant and equipment.
    Free cash flow is not defined by generally accepted accounting
    principles.  However, we believe free cash flow to be relevant and
    useful information to our investors because it provides them with
    additional information in assessing our liquidity, capital
    resources and financial operating results.  Our management uses
    free cash flow in evaluating our liquidity, our ability to service
    debt and our ability to fund capital expenditures.  However, this
    measure should be considered in addition to, and not as a
    substitute, or superior to, cash flows or other measures of
    financial performance prepared in accordance with generally
    accepted accounting principles, and our definition of free cash
    flow may not be comparable to similarly titled measures reported
    by other companies.

--  Second quarter capacity utilization was approximately 84%.

--  Assembly unit shipments for Q2 2006 were 2.2 billion, up 2%
    from Q1 2006.

--  For Q2 2006, our top ten customers accounted for 46% of net sales.

--  Q2 2006 end market distribution (an approximation based on a
    sampling of programs with some of our largest customers):

              Communications          35%
              Computing               20%
              Consumer                34%
              Other                   11%

--  Q2 2006 percentage of net sales:

              Leadframe packages      39%
              Laminate packages       47%
              Other                    4%
              Test                    10%
                        AMKOR TECHNOLOGY, INC.
        (in thousands, except net income (loss) per share data)

                               For the Three         For the Six
                                Months Ended         Months Ended
                                  June 30,             June 30,
                            ------------------- ----------------------
                              2006      2005        2006       2005
                            --------- --------- ----------- ----------
                              (In thousands, except per share data)

Net sales                   $686,631  $489,335  $1,331,720   $906,816
Cost of sales                516,950   422,837   1,007,021    796,923
                            --------- --------- ----------- ----------
Gross profit                 169,681    66,498     324,699    109,893
                            --------- --------- ----------- ----------

Operating expenses:
  Selling, general and
   administrative             59,155    66,865     119,406    127,331
  Research and development    10,315     9,924      19,745     18,824
  Provision for legal
   settlements and
   contingencies                   -         -       1,000     50,000
                            --------- --------- ----------- ----------
    Total operating 
     expenses                 69,470    76,789     140,151    196,155
                            --------- --------- ----------- ----------
Operating income (loss)      100,211   (10,291)    184,548    (86,262)
                            --------- --------- ----------- ----------
Other (income) expense:
  Interest expense, net       40,600    41,395      81,757     81,908
  Interest expense, related
   party                       1,563         -       3,351          -
  Foreign currency loss
   (income)                    1,079    (1,773)      5,007        459
  Debt retirement costs,
   net                        27,860         -      27,389          -
  Other (income) expense,
   net                         2,840     2,063       2,375      2,241
                            --------- --------- ----------- ----------
    Total other expense,
     net                      73,942    41,685     119,879     84,608
                            --------- --------- ----------- ----------
Income (loss) before income
 taxes and minority
 interests                    26,269   (51,976)     64,669   (170,870)
Income tax expense             1,867     1,353       5,479      2,540
                            --------- --------- ----------- ----------
Income (loss) before
 minority interest income
 (expense)                    24,402   (53,329)     59,190   (173,410)

Minority interest income
 (expense), net of tax          (340)      926        (455)     1,937
                            --------- --------- ----------- ----------
Net income (loss)            $24,062  $(52,403)    $58,735  $(171,473)
                            ========= ========= =========== ==========

Net income (loss) per
 common share:
  Basic                        $0.14    $(0.30)      $0.33     $(0.97)
                            ========= ========= =========== ==========
  Diluted                      $0.13    $(0.30)      $0.32     $(0.97)
                            ========= ========= =========== ==========

Shares used in computing
 net income (loss) per
 common share:

  Basic                      177,689   176,371     177,245    176,045
                            ========= ========= =========== ==========
  Diluted                    197,175   176,371     193,839    176,045
                            ========= ========= =========== ==========
                        AMKOR TECHNOLOGY, INC.
                            (in thousands)

                                              June 30,    December 31,
                                                2006         2005
                                             -----------  ------------
                                                  (In thousands)
Current assets:
  Cash and cash equivalents                    $143,507      $206,575
  Restricted cash                                 2,413             -
  Accounts receivable:
    Trade, net of allowance for doubtful
     accounts of $4,764 and $4,947              402,773       381,495
    Other                                         8,038         5,089
  Inventories, net                              163,982       138,109
  Other current assets                           32,305        35,222
                                             -----------  ------------
      Total current assets                      753,018       766,490

  Property, plant and equipment, net          1,482,365     1,419,472
  Goodwill                                      672,069       653,717
  Intangibles, net                               34,317        38,391
  Investments                                     5,829         9,668
  Other assets                                   52,818        67,353
                                             -----------  ------------
      Total assets                           $3,000,416    $2,955,091
                                             ===========  ============

Current liabilities:
  Short-term borrowings and current portion
   of long-term debt                           $208,230      $184,389
  Trade accounts payable                        356,558       326,712
  Accrued expenses                              132,641       123,631
                                             -----------  ------------
      Total current liabilities                 697,429       634,732

  Long-term debt                              1,729,750     1,856,247
  Long-term debt, related party                 100,000       100,000
  Other non-current liabilities                 177,162       135,861
                                             -----------  ------------
      Total liabilities                       2,704,341     2,726,840
                                             -----------  ------------

Minority interests                                3,879         3,950
                                             -----------  ------------

Stockholders' equity:
  Common stock                                      178           178
  Additional paid-in capital                  1,333,303     1,326,426
  Accumulated deficit                        (1,047,226)   (1,105,961)
  Accumulated other comprehensive income          5,941         3,658
                                             -----------  ------------
      Total stockholders' equity                292,196       224,301
                                             -----------  ------------
      Total liabilities and stockholders'
       equity                                $3,000,416    $2,955,091
                                             ===========  ============
                        AMKOR TECHNOLOGY, INC.
                            (in thousands)

                                              For the Six Months Ended
                                                      June 30,
                                                 2006          2005
                                              -----------   ----------
                                                   (In thousands)
Cash flows from operating activities:
  Net income (loss)                              $58,735    $(171,473)
  Depreciation and amortization                  133,525      122,044
  Other operating activities and non-cash
   items                                          50,381        6,398
  Changes in assets and liabilities               (2,835)      25,318
                                              -----------   ----------
      Net cash provided by (used in)
       operating activities                      239,806      (17,713)
                                              -----------   ----------

Cash flows from investing activities:
  Payments for property, plant and
   equipment                                    (169,469)    (124,397)
  Proceeds from the sale of property, plant
   and equipment                                   1,333          443
                                              -----------   ----------
      Net cash used in investing activities     (168,136)    (123,954)
                                              -----------   ----------

Cash flows from financing activities:
  Net change in bank overdrafts                        -         (102)
  Borrowings under revolving credit
   facilities                                    111,185      111,760
  Payments under revolving credit
   facilities                                    (95,462)    (111,488)
  Proceeds from issuance of long-term debt       590,000       12,722
  Payments for debt issuance costs               (14,852)           -
  Payments on long-term debt                    (731,634)     (17,619)
  Proceeds from issuance of stock through
   stock compensation plans                        4,959        2,733
                                              -----------   ----------
      Net cash used in financing activities     (135,804)      (1,994)
                                              -----------   ----------

Effect of exchange rate fluctuations on
 cash and cash equivalents                         1,066         (419)
                                              -----------   ----------

Net decrease in cash and cash equivalents        (63,068)    (144,080)
Cash and cash equivalents, beginning of
 period                                          206,575      372,284
                                              -----------   ----------
Cash and cash equivalents, end of period        $143,507     $228,204
                                              ===========   ==========

Supplemental disclosures of cash flow
  Cash paid during the period for:
    Interest                                     $94,469      $82,957
    Income taxes                                  $3,216       $1,916

Non cash investing and financing
  Application of deposit upon closing of
   acquisition of minority interest              $17,822           $-

Amkor Technology, Inc.
Jeffrey Luth
VP Corporate Communications
480-821-5000, ext. 5130