What happened

Shares of Amkor Technology (AMKR -2.59%) surged as much as 33.7% higher on Tuesday morning, following the release of surprisingly strong third-quarter results. At 11:25 a.m. EDT, the semiconductor chip packaging and testing specialist's stock had cooled down slightly to a 31.4% gain.

So what

Amkor's sales fell 5% year over year to $1.08 billion. Earnings decreased by 4%, landing at $0.23 per share. Your average analyst would have settled for earnings near $0.08 per share on sales in the neighborhood of $1.03 billion. The company saw strong demand for its advanced chip packaging technologies, including one very large order for an upcoming device launch in the consumer electronics industry. Management did not disclose the identity of that game-changing customer, nor do we know exactly what type of device these Amkor-packaged chips will power.

Digital rendering of a green charting arrow rising upward and crashing through the ceiling.

Image source: Getty Images.

Now what

Looking ahead, Amkor's management also set fourth-quarter revenue and earnings targets comfortably ahead of the current Wall Street view. A handful of analysts followed up with raised price targets and upgrades on Amkor shares.

The stock also rose 20% on solid second-quarter results in July. All told, Amkor's stock has delivered gains of 84% over the last 52 weeks. Even so, it's trading at a fairly reasonable 14 times free cash flow and 26 times forward earnings. Investors are assuming that the current string of calmly solid reports will turn into respectable growth as demand builds for underlying devices in key sectors such as the Internet of Things, 5G wireless networking, and the next generation of flagship smartphones. Amkor has a finger in all of these pies because their chips often require advanced packaging in order to fit into very tight spaces.