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Record Q1 revenue growth of 27% year-on-year was driven by broad-based demand across all end markets, particularly in communications and advanced automotive applications.

Management attributes margin expansion to disciplined cost management, increased utilization in advanced sites, and a sustained mix shift toward high-value advanced packaging.

The company is navigating a dynamic supply environment where delays in advanced silicon and memory are causing nonlinear loading, though production is being prioritized where materials are available.

Strategic positioning is centered on three pillars: elevating technology leadership in AI/HPC platforms, expanding the geographic footprint in Arizona and Korea, and deepening ecosystem partnerships.

Utilization improved significantly to the low 70s from the 50s a year ago, with advanced lines nearing full capacity while mainstream factories show steady recovery.

Geopolitical tensions in the Middle East have not caused supply disruptions but are exerting upward pressure on material pricing, which management is working to offset through customer pricing adjustments.

Q2 revenue guidance assumes a 7% sequential increase, supported by stronger-than-seasonal growth in the iOS ecosystem and the initial ramp of a new HDFO data center CPU program.

The advanced packaging portfolio for AI is expected to triple in 2026, with meaningful revenue contributions from new compute programs accelerating in the second half of the year.

Management anticipates gross margins will rise to the mid- to high teens in the second half of 2026, driven by higher utilization and favorable product mix from data center ramps.

The Arizona facility construction remains a multiyear priority, with Phase 1 completion targeted for 2027 and a transition to high-volume production and meaningful revenue by 2029.

Full-year 2026 CapEx of $2.5 billion to $3 billion is heavily weighted toward the second half (70%) to support facility expansions and advanced packaging capacity.

Arizona start-up costs are projected to dilute operating income margin by 1% to 2% beginning in 2027 as expenses transition from OpEx to COGS during the qualification phase.

A $20 million gain on the sale of real estate is included in the Q2 operating expense guidance of approximately $120 million.

Material supply constraints for advanced silicon and memory are estimated to have a $50 million to $100 million impact on revenue timing, representing a pushout rather than a loss of demand.

The company is utilizing a $2.8 billion incentive package, including CHIPS Act grants and investment tax credits, to fund the $7 billion Arizona expansion project.

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Management expects margins to reach mid- to high teens due to a 'constructive pricing environment' where customers are willing to help offset rising material costs.

Margin lift will be supported by three primary levers: increased utilization, favorable pricing adjustments, and a shift toward high-value advanced packaging mix.

The 1% to 2% operating margin dilution in 2027 is a full-year estimate based on the timing of equipment delivery and the start of the qualification process.

Meaningful revenue from Arizona is expected by 2029, with the facility eventually becoming a significant driver of margin expansion due to high automation and advanced technology focus.

Engagement is broadening with over five customers currently in various stages of qualification for HDFO platforms like SWIFT and S-Connect.

While the legacy 2.5D volume customer is ramping down, the customer base for silicon interposer technology has expanded to over half a dozen clients.

Management raised the full-year outlook for communications to high single-digit or low double-digit growth due to a stronger-than-expected first half.

The typical second-half seasonal 'boost' may be less pronounced this year because the first half was unseasonably strong following a successful fall launch cycle.

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