Amkor Technology, Inc. AMKR recently completed the acquisition of Europe's largest OSATS (Outsourced Semiconductor Assembly and Test Services) company, Nanium S.A. The terms of the deal have not been disclosed.

In the last one year, shares of Amkor have outperformed the Zacks characterized Electronics Semiconductors industry. The stock has returned 78.9% compared with the industry’s gain of 52.4%.

Benefits of the Deal

Portugal-based Nanium provides semiconductor assembly, packaging, test, engineering and manufacturing services. Its solutions include package designing, wafer-level packaging (WLP), wafer probe, assembly and test, supply-chain management and drop shipping.

As per Amkor, Nanium has created a reliable wafer-level fan-out (WLFO) technology that is high-yielding and has taken production level to high volume. Nanium employs approximately 550 people. It recorded annual sales of $40 million for fiscal ended September 30, 2016.

The deal is a step on Nanium’s part to enhance the use of WLFO technology to expand its market share in the packaging market. By leveraging Nanium’s technology, Amkor will be able to strengthen its foothold in the fast-growing market of wafer-level packaging for smartphones, tablets and other applications. Management believes that the deal could expand Nanium’s scale of manufacturing, thereby increasing the company’s customer base.

Steve Kelley, Amkor president and CEO, said, “This strategic acquisition will enhance Amkor’s position as one of the leading providers of WLP and WLFO packaging solutions.

Our Take

Amkor Technology is one of the largest providers of semiconductor packaging and test services. It packages and tests integrated circuits (ICs) for chip manufacturers, fabless semiconductor companies and contract foundries.

The company has been supplementing organizational growth with strategic acquisitions. In the past, its acquisitions were always small and well-managed, and integration issues were negligible. In Feb 2016, Amkor fully acquired J-Devices Corp., the largest outsourced semiconductor assembly and test provider in Japan. The deal is intended to strengthen Amkor’s position in Japan. It complements Amkor’s own sales efforts and will help in offering better services to its customers

We believe acquisitions will continue to remain a part of Amkor’s growth strategy to supplement the top line.

Amkor Technology, Inc. Price and Consensus

Amkor Technology, Inc. Price and Consensus | Amkor Technology, Inc. Quote

Other Stocks to Consider

Currently, Amkor has a Zacks Rank #2 (Buy). Some other stocks worth considering in the broader technology sector include KLA-Tencor KLAC and Applied Materials AMAT, each sporting a Zacks Rank #1 (Strong Buy), while Advanced Energy Industries, Inc. AEIS, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

Advanced Energy Industries, Inc. delivered a positive earnings surprise of 10.46%, on average, in the trailing four quarters.

Looking for Stocks with Skyrocketing Upside?  

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.  See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Click for Free Amkor Technology, Inc. (AMKR) Stock Analysis Report >>
 
Click for Free KLA-Tencor Corporation (KLAC) Stock Analysis Report >>
 
Click for Free Applied Materials, Inc. (AMAT) Stock Analysis Report >>
 
Click for Free Advanced Energy Industries, Inc. (AEIS) Stock Analysis Report >>
 
To read this article on Zacks.com click here.