ASX earnings call summary

Prepared Highlights

• Consolidated Q2 2025 revenue: NTD 150.8 billion, +2% QoQ, +7% YoY (prepared). On a USD basis, sales +7% QoQ, +11% YoY (prepared).
• Consolidated gross margin: 17.0%, +0.2pp QoQ, +0.6pp YoY; FX had a negative 1.5pp sequential and 1.0pp annual impact (prepared).
• Consolidated operating margin: 6.8%, +0.3pp QoQ, +0.4pp YoY (prepared).
• ATM Q2 2025 revenue: NTD 92.6 billion, +7% QoQ, +19% YoY; on a USD basis +13% QoQ, +23% YoY (prepared).
• ATM gross margin: 21.9%, -0.7pp QoQ, -0.2pp YoY; FX had a negative 2.2pp sequential and 1.5pp annual impact (prepared).
• ATM operating margin: 9.5%, -0.1pp QoQ, +0.2pp YoY (prepared).
• EMS Q2 2025 revenue: NTD 58.8 billion, -6% QoQ, -7% YoY (prepared).
• EMS operating margin: 2.6%, flat QoQ, -0.5pp YoY (prepared).
• CapEx (machinery & equipment): Q2 2025 USD 992 million (packaging $690M, testing $251M, EMS $49M, interconnect $2M); plus facilities spending of USD 531 million (prepared).
• First half 2025 unconsolidated revenue: +9% YoY in USD terms; ATM revenues +18% YoY (CEO).
• Leading-edge advanced packaging & testing: >10% of ATM revenues in H1 2025 vs. 6% for full-year 2024; testing business +31% YoY in H1 (CEO).
• Balance sheet: Cash & equivalents NTD 76.9 billion; total interest-bearing debt NTD 240.1 billion; net debt-to-equity 52% (prepared).
• Official guidance (Q3 2025):
  • Consolidated revenue (USD): +12% to +14% QoQ; (NTD): +6% to +8% QoQ (CFO).
  • Consolidated gross margin: -1.0 to -1.2pp QoQ (CFO).
  • Consolidated operating margin: -0.1 to -0.3pp QoQ (CFO).
  • ATM revenue (USD): +9% to +11% QoQ; (NTD): +3% to +5% QoQ (CFO).
  • ATM gross margin: -0.9 to -1.1pp QoQ (CFO).
  • EMS revenue (USD): +18% to +20% QoQ; (NTD): +12% to +14% QoQ (CFO).
  • EMS operating margin: +0.3 to +0.5pp QoQ (CFO).
• 2025 outlook maintained: Leading-edge advanced packaging & testing revenue target to increase by USD 1 billion; general segment to grow mid- to high single-digit YoY (CEO).
• CapEx note: Potential bump-up in 2025 equipment CapEx by a few hundred million USD due to acceleration from 2026 into Q4 2025 (prepared).

Mgmt Quotes

• "The leading-edge advanced packaging and testing revenue were over 10% of ATM revenues in the first half of 2025 comparing to 6% for the full year of 2024." (CEO)
• "We expect revenue uptrend continuing into 2026 and beyond, driven by leading-edge solutions and broad-based semiconductor demand related to AI proliferation." (CEO)
• "On a constant currency assumption, we estimate our gross margin would be roughly 2.2 percentage points higher during the quarter, within our original margin expectations for the second quarter." (prepared)
• "If excluding such currency impact, our ATM gross margin should be around 26%. We're near the midpoint of our structural gross margin as originally targeted during our last earnings call." (CFO)
• "We are very confident that we will get back to our structural margin range in 2026." (CFO)

Prepared Metrics

Q&A Batch (1-4 of 4)

Q1 — Kenneth Hsiang

• Topic: Strategic initiatives, AI business mix (testing vs. packaging), and 2026 revenue/CapEx guidance
• Key points:
  • Strategic recalibration includes: SiP project, floor space/cash flow optimization, pricing strategy (varies by customer/product/RFQ timing), overseas expansion (focus on 1–2 areas with larger investment, not multiple places).
  • AI business: testing growth rate 31% in H1, expected to improve in H2; leading-edge packaging growth rate is much higher but base is smaller; ASE intends to invest in both packaging and testing for AI (chiplet, silicon photonics, HPC).
  • For 2025, CapEx is being increased by $300M–$400M (machinery), ~90% for leading edge, split between packaging and testing; no 2026 revenue guidance provided.
• Mgmt stance: Neutral — management declines to extrapolate 2026 revenue from 2025 CapEx, but notes testing is margin-accretive and will approach 20% of ATM revenue by Q4 2025.

Q2 — Gokul Hariharan

• Topic: Margin recovery levers for 2026, pricing power in LEAP, and LEAP applications beyond AI accelerators
• Key points:
  • Margin recovery to structural range in 2026 driven by: efficiency/automation, easing of early-stage ramp-up costs, R&D expense control (leveling off), and margin-accretive leading-edge/test businesses; assumption: TWD does not further appreciate from ~29.2–29.
  • Pricing power: ASE prefers technical strength and long-term trust over pricing; recalibration and resource optimization are themselves a pricing strategy.
  • LEAP applications: first wave = AI accelerators; second wave = infrastructure/ASIC/CPU; future = AI edge devices with multifunctional heterogeneous integration; volume expected to increase over time.
• Mgmt stance: Bullish on margin recovery — high confidence in returning to structural margin range in 2026, contingent on stable currency.

Q3 — Sunny Lin

• Topic: LEAP customer segments, full-process advanced packaging revenue in 2026, and AI final test competition
• Key points:
  • LEAP customers: foundry outsourcing (ongoing), ASIC players (will choose routes), CPU players; ASE is building flexible infrastructure (300x300 fully automated line by end of 2025, 600x600 line by Q4 2025, silicon photonics, VRM solutions).
  • Full-process advanced packaging: in full production with a couple of customers; meaningful business expected in 2026, mostly from ASIC customers.
  • AI final test: first final test revenue expected in Q4 2025; ASE has a goal and plan to gain meaningful market share; no comment on competitor.
• Mgmt stance: Bullish on LEAP — management is accelerating investment despite risk, citing long-term customer loyalty and paradigm shift; confident in final test progress.

Q4 — Laura (Chia Yi Chen)

• Topic: Wirebond recovery drivers, LEAP capacity/CapEx planning, final test scope, overseas investment (U.S.), and 2025 CapEx update
• Key points:
  • Wirebond recovery in Taiwan: driven by AI systems (some chips use wirebond) and automotive demand; overseas wirebond remains idled; BIS-related migration from China to Taiwan is not a major variable.
  • LEAP capacity planning: equipment has intrinsic fungibility; investments target 5–10 year utilization; final test revenue will include burn-in and system-level test (no percentage given).
  • Overseas investment: ASE has announced support for one large customer in the U.S. (refer to press release); no further details.
  • 2025 CapEx: machinery CapEx increased by $300M–$400M, ~90% for leading edge (both packaging and testing), mostly in Q4.
• Mgmt stance: Neutral on wirebond — recovery is real but regional (Taiwan vs. overseas); bullish on LEAP CapEx — management decided to “bite the bullet” to secure long-term customer trust and execution speed.