Ah, so he is experiencing a hot love for her, but she is only returning it with a lukewarm interest in him.
As far as I know, the best you can do is tell him that you wish she would show more interest in him. It might be the right thing for him to do to break up with her, but he kind of needs to come to this realization for himself; it's not something that can be done for him.
On the other hand, does he say that he is content with the situation with her as-is, or does he say he wishes she would show more interest in him? Who knows, maybe he is okay with this situation. Not all relationships have to come to the same level of involvement/intensity.
But as long as you are letting him know of your concerns, and if you wanted you could certainly suggest to him that he break up with her, but there's no guarantee he'll want to do that. Perhaps he needs more time to figure out what he wants?
"He says he cares for her a lot but just doesn't know how to deal with the situation."
Now that I can appreciate. He may have to learn on his own how to deal with the situation, but you are fine to make suggestions to him if you want to, just keeping in mind he is still his own person, and needs to make his own decisions.
It would be great if Amy would talk, connect, and participate more, but that doesn't seem likely to happen anytime soon. Sometimes a relationship is entirely in sync, sometimes not. When it's out of sync, you have to hope for some kind of compromise or resolution.
I hope each of you find your needed resolution soon.