Q2 2025 ASE Technology Holding Co Ltd Earnings Call
Joseph Tung: This meeting is being recorded.
This meeting is being recorded.
Ken Hsiang: Hello. I am Ken Hsiang, the Head of Investor Relations for ASE Technology Holding Co., Ltd. Welcome to our Q2 2025 earnings release. Thank you for attending our earnings release today. Please refer to our safe harbor notice on page 2. Thank you. All participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please do not ask questions or you may leave the session at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially. For the purposes of this presentation, dollar figures are generally stated in New Taiwan dollars unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS.
Hello. I am Ken Shang, the head of Investor Relations for ASE Technology Holdings. Welcome to our second quarter 2025 earnings release. Thank you for attending our earnings release today.
Please refer to our Safe Harbor. Notice on page 2.
2.
Thank you. Uh, all participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please do not ask questions or you may leave the session at this time.
I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially.
for the purposes of this presentation dollar figures are generally stated in New Taiwan dollars unless otherwise indicated
Ken Hsiang: Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiary using Chinese GAAP. I am joined today by Dr. Tien Wu, our COO, and Joseph Tung, our CFO. For today's presentation, Dr. Wu will go over our mid-year update. I then will go over the financial results, and Joseph will deliver the company's guidance and closing remarks. Afterwards, both Tien and Joseph will be available to take your questions during the Q&A session. I will be moderating the Q&A sessions that follow. We will start with some questions from the floor and then start alternating in some questions from virtual attendees. With that, I will hand the presentation over to Dr. Wu.
As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from those using other accounting standards, including those presented by our subsidiary using Chinese GAAP.
I'm joined today by Dr. Tien Wu, our COO, and Joseph Tung, our RC, for today's presentation. Dr. Wu will go over our midyear update; I will then cover the financial results, and Joseph will deliver the company's guidance and closing remarks. Afterwards, both Tien and Joseph will be available to take your questions during the Q&A session.
I will be moderating, moderating the Q&A sessions that follow uh we will start with some questions from the floor and then start alternating in some questions from virtual attendees with that. I'll hand the presentation over to Dr. Woo
Dr. Tien Wu: Good afternoon. We have not had a live one for quite a few years. Welcome back, and thank you for coming. To begin with, I would like to give you a recap for the first half of 2025. Everything will be U.S. dollar terms. The unconsolidated revenue grew 9% year-on-year in the first half of 2025, with ASE Technology Holding Co. revenues up 18% year-on-year. Leading-edge advanced packaging and overall testing outpaced growth, while the general segment saw some recovery. The leading-edge advanced packaging and testing revenue were over 10% of ASE Technology Holding Co. revenues in the first half of 2025, comparing to 6% for the full year of 2024. Our testing business grew 31% year-on-year in the first half. The momentum will continue into the second half, an increased turnkey and expanding leading-edge test. Machinery CapEx was $1.9 billion.
Good afternoon.
We have not had a Lifeline for quite a few years.
Welcome back.
And thank you for calling and for coming.
Uh, to begin with, I would like to give you a recap for the uh, first half of 2025.
Everything will be uh, US dollar terms.
The young Consolidated Revenue grew 9% year on year.
Your first half of 2025.
With ATM revenues up 18% year on year.
The leading edge of advanced packaging and overall testing all paste growth. While the general segment saw some recovery.
The Leading Edge advanced packaging and testing revenue was over 10% of ATM revenues in the first half of 2025.
Comparing to 6% for the full year of 2024.
Our testing business grew 31% year-on-year.
In the first half.
The momentum will continue into the second half.
On increased TurnKey and expanding Leading Edge test.
Dr. Tien Wu: Building factory facility automation was $0.9 billion in the first half of 2025, driven by advanced packaging and testing. That is the first half recap. It has been quite busy for ASE Technology Holding Co. The second half will be busier. Let me give you the outlook. For the ASE Technology Holding Co. business, we expect momentum to carry into Q3. As of now, we also believe Q4 will have a quarter-to-quarter growth compared to Q3. The leading-edge advanced packaging and testing revenue we target to increase by $1 billion. We made this statement at the early beginning of this year, contributing 10% of the whole year growth, while the general segment is to grow by mid to high single digit year-on-year in 2025. We maintain this view as of now. Even with all of the uncertainties that we have gone through, this view has not changed.
Machinery capax was US dollar 1.9 billion.
Building Factory.
Facility.
Automation, was 0.9 billion in the first half of 2025.
Driven by advanced packaging and testing.
So, that is the first half recap.
It has been quite busy for ASD.
Let me give you that all look.
For the ATM business.
We expect momentum to carry into Q3.
As of now, we also believe Q4.
We will have a quarter-to-quarter growth, comparing to Q3.
The Leading Edge Advanced Packaging and Testing revenue.
We target to increase by US1 billion. We made this statement.
Uh, the, um, early beginning of this year.
Contributing 10% of the whole year's growth.
Well, the general segments are expected to grow by mid to high single digits year on year in 2025.
We maintain this View.
as of now, even with all of the uncertainties that we have gone through,
this view has not changed.
Dr. Tien Wu: We expect revenue uptrend to continue into 2026 and beyond, driven by leading-edge solutions and broad-based semiconductor demand related to AI proliferation, and also general recovery that we believe will happen in 2026. Investment in R&D, human capital, advanced capacity, and small factory infrastructures are key to support the multi-year growth. This is putting a lot of pressure on ASE Technology Holding Co. However, with detailed conversation and discussion with our key partners and all of our key customers, we believe this is the best thing that we can do for ASE Technology Holding Co., for the Taiwan ecosystem, as well as for the industry. With that, let me go over to the third page. The third page, I only have bullet form. I would like to talk about three items: market dynamics, operations, and also the challenge.
We expect Revenue uptrend.
Continued into 2026 and Beyond.
Driven by Leading Edge Solutions and broad-based. Semiconductor demand related to AI proliferation.
Also, general recovery that we believe will happen in 2026.
Investment in R&D human capital.
Advanced capacity and smart factory infrastructures are key to solving the challenges that support our multi-year growth.
This is putting a lot of pressure on ASC.
However, with detailed conversation discussions with our key partners and all of our key customers,
We believe this is the best thing that we can do for ASC for the Taiwan ecosystem, as well as for the industry with that. Let me go over to the third page.
The third page, I only have bully form.
I would like to talk about the 3-items market dynamics.
Dr. Tien Wu: I might not go over things in the right order, but these are the bullet points I would like to cover. To begin with, I want to talk about how do we see the market heading and what is the current dynamics and also the future opportunities for ASE Technology Holding Co., Ltd., as well as for many players in our industry. I want to touch on the technology focus because that is related to the market trend, also related to the ASE Technology Holding Co., Ltd. position. Then I will cover the operation where the leading-edge capacity and all capacity in general in Taiwan is very full now. That is why we have to continue to expand into the second half. The overseas, we still have some idle capacity. Therefore, how do we manage the expansion in Taiwan, as well as outside of Taiwan? The resource optimization becomes key.
Operations, and also the challenge.
I might not go over things in the right order, but these are the bullet points. I would like to cover
Uh, to begin with, I want to talk about the, uh, how do we see the market heading and what is the current Dynamics, and also, the future opportunities for ASC? As was for many players in our industry?
I want to touch on the technology focus because that is related to the market. Trend is also related to the ASC position.
Then I'll cover the operation where the Leading Edge capacity and all capacity in general in Taiwan.
It's very full now.
That's why we have to continue to expand into the second half. The overseas will still have some idle capacity.
Therefore, how do we manage the expansion?
Dr. Tien Wu: Lastly, all of the challenges, I will touch base on that. With that, let me just go over the megatrend. Everybody talks about AI, hyperscaler, data center. We are well into, I would say, the second or the third year of this trend. The recent announcement outside of the U.S., you are seeing the announcement of mega data center worldwide. We believe the two things are happening. The first is the expansion of hyperscaler data centers worldwide. The second thing is, in the middle of that expansion, the upgrade cycles are ongoing right now with the technology provider as well as the infrastructure provider. We have not touched base on the AI edge applications yet, but we believe there will be multiple waves in the next 10 years, starting with the hyperscaler data center and then go through the inference and then go through the AI edge applications.
In Taiwan, as well as outside of Taiwan, resource optimization becomes key.
And lastly, all of the challenges that will touch base on that, okay? With that, let me just go over the, uh, the mega trend.
Um, everybody talks about AI hyperscaler data centers.
Uh, we're well into, I would say, the second or the third year of this trend.
The reason announcement.
Outside of the US.
You're seeing the announcement of the Mega Data Center.
Worldwide.
We believe the 2 things are happening. The first is expansion of hyperscaler data centers worldwide.
The second thing is in the middle of that expansion.
The upgrade cycle.
Our ongoing right now.
With the technology provider as well as the infrastructure provider.
We have not touched base on the AI Edge applications yet.
But we believe there will be multiple ways in the next 10 years.
Starting with the hyperscaler data center.
And then go through the inference, and then go through the AI Edge application.
Dr. Tien Wu: What is important is, in this AI paradigm shift, what has become clear to us by talking to our foundry partner and also talking to our key customers, some of the foundational technology requirements are identical. I am going to give you four. The first one is integration. I think the 3D packaging, the density, that is an example of the heterogeneous integration that we have been working on this for a long time. The focus offered by ASE Technology Holding Co., Ltd., the co-ops offered by TSMC are examples of that integration. That trend will continue with the expansion as well as with the upgrade cycle. The second thing is the power management. We have not touched base on the power management. We believe power management is going to be a key hurdle that the industry needs to address. The third one is the silicon photonics.
What are the important aspects in this AI paradigm shift?
what has become clear To Us by talking to our Foundry partner and also talking to our key customers
Some of the foundational technology requirements are identical.
I'm going to give you 4 the first. 1 is integration.
I think the 3D IC packaging the density.
That is an example of the hydrogenous integration.
We've been working on this for a long time.
Focus offered by ASC the coas.
Offered by TSMC are examples of that integration.
That Trend will continue.
With the expansion as well with the upgrade cycle.
The second thing is, the power management we have not touched base on the power management. We Believe power management is going to be a key hurdle that the industry needs to address.
Dr. Tien Wu: I think we have been talking about very vocal on the importance of silicon photonics. We have not seen the revenue uptick yet, but this is a foundational technology that will provide the bandwidth, the speed, latency, and the efficiency. It needs to happen in order to trigger even more applications such as humanoid. Lastly, it will be the cost. In the cost, not only do we need to think about capacity, we need to think about the material configuration. More importantly, we have to think about throughput and also the flexibility in designing the footprint. That's where the large panel comes in. If we have gone through all of the foundational requirements, then we are going back to the ASE position. There are three things I want to share with you on how I view the ASE positions, how I articulate ASE's position to our key partner and clients.
The third 1 is the flick of atonix.
I think we've been talking about very vocal, uh, the importance of certain phenomenons.
We have not seen the revenue optic yet.
But this is a foundational technology that will provide the bandwidth and the speed.
Latency and efficiency need to be improved to trigger even more applications, such as humanoid.
And lastly, will be the cost.
In the cost, not only when you think about capacity.
What do you think about the material configuration more? Importantly, we have to think about throughput and also the flexibility in designing the footprint.
And that's where the large panel comes in.
If we have gone through all of the foundational requirements,
Then we're going back to the ASC position.
Dr. Tien Wu: The first one is the scale. I think from the news report, you can look at the ASE scale, margin model, as well as our cash flow, and also the amount of CapEx investment we are making on behalf of the industry. The second item is speed. Because ASE is well positioned within the Taiwan ecosystems, that we will execute expansion; it is second to none. In other words, it's very difficult to imagine in 2025 alone how much CapEx we have put in and how much more revenue we are going to introduce. The third one will be the synergy. So between scale, speed, and synergy, that pretty much outlines the ASE position in this new paradigm AI shift. We are at the beginning of the data center hyperscaler. In the future, there will be multiple cycles of expansion, upgrade, inference, as well as the AI edge.
And the three things I want to share with you are how I view the ASC positions and how I articulate ASC's position to our key partners and clients.
The first 1 is to scale.
I think from the news report you can look at the AC scale
margin model.
As well as our cash flow.
And also the amount of capex investments we are making on behalf of the industry.
The second item is speed.
Because ASC is well positioned within the Taiwan ecosystems.
That we will execute expansion.
It is second to none.
In other words, it's very difficult to imagine.
In 2025 alone, how much capacity we have put in?
How much more Revenue we are going to introduce?
The second, the third 1 will be the synergy.
So between scale, speed, and synergy.
That pretty much outlined the ASE position in this new paradigm, the AI shift.
We're at the beginning of the data center, hyperscaler.
In the future, there will be multiple cycles of expansion upgrades.
Inference.
Dr. Tien Wu: That's where the real volume and the real application is going to emerge. Because all of these future opportunities, we are seeing the leading-edge capacities in Taiwan are very, very full right now. We do see the disparity between AI as well as the other general sectors, and that pretty much outlines the 2025 first half scenario. In the second half, the disparity will improve. In 2026 and beyond, we believe that cycle will start showing less of a disparity. That is why it is putting a lot of pressure on ASE to accelerate on the capacity growth in Taiwan, especially in the leading-edge packaging and testing. At the same time, it prompts us to look at resource optimization between Taiwan and overseas. We have planned to look at expansions in other countries of the world.
As well as the AI Edge, that's where the real volume and the real application is going to emerge.
Because all of this future opportunities.
We're seeing the Leading Edge.
Capacities in Taiwan.
It's very, very full right now.
We do see the disparity between AI as well as the other general sectors, and that is primarily online. The 2025 first-half scenario indicates that in the second half, the disparity will improve.
in 2026.
And beyond will believe that cycle.
Will start showing less of a disparity.
That is why it is putting a lot of pressure on ASC to accelerate on the capacity growth in Taiwan, especially in the Leading Edge, packaging and testing.
At the same time, it prompted us to look at resource optimization between Taiwan and overseas.
We have.
Dr. Tien Wu: With all of the recent updates and changes, it prompts us to start looking at the business opportunities versus how do we deploy our capital and resources based on the new paradigm, as well as all the new variables. Lastly, foreign exchange. Foreign exchange, I think Ken Hsiang and Joseph Tung will give you much, much more detail on the impact of foreign exchange on ASE Technology Holding Co.'s performance for last quarter and maybe for Q3. However, I want all of you to keep in mind we are here for the long term. In the long term, we will have execution issues. We will have regulatory control issues. We will have product mix issues. We have customers changing order issues. Of course, we will also have machine delivery issues and our own execution issues.
Planned the looking at expansions in other countries of the world.
With all the recent updates and changes,
It prompt us to start looking at the business opportunities versus how do we deploy our capital and resources based on the new paradigm as well as all the new variables.
and lastly,
foreign exchange.
Foreign exchange, I think Ken Hsiang and Joseph will give you a much, much more detailed explanation on the impact of foreign exchange on ASE's performance.
For last quarter.
Have a regulatory control issues.
We will have a
Product mix issues. We have customer changing order issues. Of course, we will also have machine delivery issues and our own execution issues.
Dr. Tien Wu: When the management team is busy worrying about all of the detailed operational issues, let's not forget the future opportunities here and the speed execution. We would like to take all of the ASE Technology Holding Co. partners and our customers to a much higher ground for this uptick, 10 years of AI cycles. With that, thank you.
When the management team is busy worrying about all the detailed operational issues. Let's not forget.
The future opportunities here and the speed of execution; we would like to take all of the ASC partners and our customers to a much higher ground for this uptick in 10 years of AI cycles. Thank you.
Ken Hsiang: Thank you, Dr. Wu. Now I will go over our prepared remarks in regards to our financial results for the second quarter. We are trying to be more environmentally friendly. We are no longer providing printed copies of our slides. If you have not done so, we have a QR code. The QR code, please, here for the attendees to scan. After scanning, you will be forwarded to our investor relations landing page, where you can download materials related to the presentation today. The slide deck currently does not include our guidance section. After the presentation has concluded, the slide deck will be updated to include our guidance section. During the quarter, we saw a material move in the NT dollar to U.S. dollar exchange rate. The NT dollar moved from an average exchange rate of 32.8 to 31.2 NT dollar per U.S. dollar, strengthening by 4.9%.
Thank you, Dr. Will uh now I will go over our prepared remarks in regards to our financial results for the second quarter.
Uh, we are trying to be more environmentally friendly. Uh, we are no longer providing printed copies of our slides.
If you have not done, so we have a QR code.
The QR code, please.
Uh, here for the attendees to scan. After scanning, you'll be forwarded to our Investor Relations landing page.
Uh, where can you download materials related to the presentation today.
Uh, the slide deck currently does not include our guidance section after the presentation has concluded. The slide deck will be updated to include our guidance section.
Ken Hsiang: With our revenues generally based in U.S. dollars and a large percentage of our ATM expenses being NT dollar based, the foreign exchange fluctuation was detrimental to our financial performance. The impact of currency fluctuation will differ each quarter. However, on a simplified basis, we estimate that for every percentage point appreciation of the NT dollar relative to the U.S. dollar, we see a corresponding 0.3 percentage point negative impact to our gross and operating margins at the holding company level and a 0.45 percentage point negative impact to margins at the ATM level. Using this simplified approach, we can estimate that on a sequential basis, foreign exchange had impacts to our holding company and ATM margins of 1.5 and 2.2 percentage points, respectively. On an annual basis, we estimate impacts to our holding company and ATM margins of 1.0 and 1.5 percentage points, respectively. As Dr.
During the quarter, we saw a material move and the NT dollar to US Dollar exchange rate. The NT dollar moved from an average exchange rate of 32.8 to 31.2 NT dollar per US dollar strengthening by 4.9% with our revenues generally based in US Dollars and a large percentage of our ATM expenses being NT dollar based
For the foreign exchange, fluctuation was detrimental to our financial performance.
The impact of currency fluctuations will differ each quarter. However, on a simplified basis, we estimate that for every percentage Point appreciation of the NT dollar relative to the US dollar.
We see a corresponding 0.3 percentage Point negative impact, to our gross. And operating margins at the holding company level and a 0.45 percentage Point negative impact to margins at the ATM level. Using this simplified approach, we can estimate that on a sequential basis.
Ken Hsiang: Wu stressed, our businesses are healthy and are generally on track to hitting most of our targets stated at the beginning of the year. However, foreign exchange movements have created a temporary misalignment between our costs and revenues, and as a result, we believe that our current financial results may not fully portray our underlying accomplishments. From a strategic perspective, we believe the current negative currency impact to be a near to midterm phenomenon financially. We fundamentally believe our businesses support a certain level of financial return. Such return expectations are intrinsic within our business evaluation and capital investment processes. The exchange rates we encounter are variables used within these calculations. As such, in time, we believe our margin structure can and will return to previously stated structural levels. With that said, we are examining and considering the timing of a number of strategic initiatives.
Foreign exchange had impacts to our holding company and ATM. Margins of 1.5 and 2.2 percentage points respectively, on an annual basis. We estimate impacts to our holding company and ATM margins of 1.0 and 1.5 percentage points respectively.
As Dr. Wu stressed, our businesses are healthy and are generally on track to hitting most of our targets set at the beginning of the year. However, foreign exchange movements have created a temporary misalignment between our costs and revenues. As a result, we believe that our current financial results may not fully portray our underlying accomplishments.
From a strategic perspective, we believe the current negative currency impact to be a near- to mid-term phenomenon financially. We fundamentally believe our businesses support a certain level of financial return.
Such return expectations are intrinsic within our business evaluation and capital investment processes.
The exchange rates, we encounter are variables used within these calculations. As such in time, we believe our margin structure can and will return to previously stated structural levels.
Ken Hsiang: We are also reconsidering whether future business opportunities still align with our return goals. There is much to accomplish, but it does present an opportunity to reexamine our businesses in more detail. With that, let's go through the financial results. Please turn to page seven, where you will find our second quarter consolidated results. For the second quarter, we recorded fully diluted EPS of $1.70 and basic EPS of $1.74. Consolidated net revenues were $150.8 billion, representing an increase of 2% sequentially and 7% year-over-year. On a U.S. dollar basis, our sales increased by 7% sequentially and 11% year-over-year. We had a gross profit of $25.7 billion with a gross margin of 17%. Our gross margin improved by 0.2 percentage points sequentially and improved by 0.6 percentage points year-over-year.
With that said we are examining and considering the timing of a number of strategic initiatives.
We are also reconsidering whether future business opportunities, still aligned with our return goals. There is much to accomplish but it does present an opportunity to reexamine our businesses in more detail.
With that, let's go through the financial results.
Please turn to page 7, where you will find our second quarter Consolidated results.
And 7% year-over-year on a US dollar basis, our sales, increased by 7% sequentially, and 11% year-over-year.
Ken Hsiang: The sequential improvement in margin is primarily due to higher loading efficiency in our ATM business, offset in large part by foreign exchange. The annual improvement is primarily due to higher utilization and beneficial product mix offset by foreign exchange. We estimate that foreign exchange fluctuation had a negative 1.5 and 1.0 percentage point impact on gross margins on a sequential and annual basis, respectively. Our operating expenses increased by $0.3 billion sequentially and $1.5 billion annually to $15.5 billion. The sequential increase in operating expenses is primarily due to higher consumption of factory supplies as our R&D activities ramp. The year-over-year increase in operating expenses is primarily attributable to increases in R&D staffing, factory supply consumption, and other labor-related costs. Our operating expense percentage stayed flat sequentially at 10.3% and increased annually by 0.3 percentage points. Operating profit was $10.2 billion, up $0.5 billion sequentially, and $1.2 billion year-over-year.
We had a gross profit of 25.7 billion. With a gross margin of 17%, our gross margin improved by 0.2, percentage points, sequentially and improved by 0.6 percentage points year-over-year
to sequential Improvement in margin is primarily due to higher loading, efficiency in our ATM business offset and large part by Foreign Exchange.
The annual improvement is primarily due to higher utilization and a beneficial product mix, offset by foreign exchange. We estimate that foreign exchange fluctuations had a negative 1.5 and 1.0 percentage point impact on gross margins on a sequential and annual basis, respectively.
Our operating expenses increased by $0.3 billion sequentially and $1.5 billion annually to $15.5 billion.
The sequential increase in operating expenses is primarily due to higher consumption of factory supplies as our R&D activities ramp up.
The year-over-year increase in operating expenses is primarily attributable to increases in R&D staffing, factory supply consumption, and other labor-related costs.
Our operating expense percentage stayed flat sequentially at 10.3% and increased annually by 0.3 percentage points.
Ken Hsiang: Operating margin was 6.8%, up 0.3 percentage points sequentially, and improved 0.4 percentage points year-over-year. During the quarter, we had a net non-operating loss of $0.9 billion. Our non-operating loss for the quarter primarily consists of net interest expense and net foreign exchange hedging activities, offset in part by profits from associates and other non-operating income. Net interest expense for the quarter was $1.2 billion. Tax expense for the quarter was $1.6 billion. Our effective tax rate for the quarter was 17%. Net income for the quarter was $7.5 billion, representing a decrease of $0.1 billion sequentially and a decrease of $0.3 billion year-over-year. On the bottom of the page, we provide key P&L line items without the inclusion of PPA-related expenses. Consolidated gross profit, excluding PPA expenses, would be $26.2 billion with a 17.4% gross margin. Operating profit would be $11 billion with an operating margin of 7.3%.
Operating profit was $10.2 billion, up $0.5 billion sequentially and $1.2 billion year-over-year. The operating margin was 6.8%, an increase of 0.3 percentage points sequentially and an improvement of 0.4 percentage points year-over-year during the quarter. We had a net non-operating loss of $0.9 billion; our non-operating loss for the quarter primarily consists of net interest expense and net foreign exchange hedging activities, offset in part by profits from associates and other non-operating income. Net interest expense for the quarter was $1.2 billion.
Tax expense for the quarter was $1.6 billion. Our effective tax rate for the quarter was 17%. Net income for the quarter was $7.5 billion, representing a decrease of $0.1 billion sequentially and a decrease of $0.3 billion year-over-year.
Ken Hsiang: Net profit would be $8.3 billion with a net margin of 5.5%. Basic EPS, excluding PPA expenses, would be $1.91. On page eight is a graphical presentation of our consolidated quarterly financial performance. On page nine is our ATM P&L. The ATM revenue reported here contains revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses. For the second quarter 2025, revenues for our ATM business were $92.6 billion, up $5.9 billion from the previous quarter, and up $14.8 billion from the same period last year. This represents a 7% increase sequentially and a 19% increase annually. On a U.S. dollar basis, our ATM revenues were up 13% sequentially and 23% annually. Gross profit for our ATM business was $20.2 billion, up $0.6 billion sequentially, and up $3 billion year-over-year.
On the bottom of the page, we provide key P&L items without the inclusion of PPA-related expenses. Consolidated gross profit, excluding PPA expenses, would be $26.2 billion with a 17.4% gross margin. Operating profit would be $11 billion with an operating margin of 7.3%. Net profit would be $8.3 billion with a net margin of 5.5%.
Basic EPS excluding PPA expenses would be 1.91.
On page 8 is a graphical presentation of our consolidated quarterly financial performance.
On page 9 is our ATM P&L. The ATM revenue reported here contains revenues eliminated at the holding company level related to intercompany transactions between our ATM and EMS businesses.
For the second quarter, 2025 revenues for our ATM business were, 92.6 billion up 5.9 billion from the previous quarter and up 14.8 billion from the same period last year.
This represents a 7% increase sequentially and a 19% increase annually.
On a U.S. dollar basis, our ATM revenues were up 13% sequentially and 23% annually.
Ken Hsiang: Gross profit margin for our ATM business was 21.9%, down 0.7 percentage points sequentially, and down 0.2 percentage points year-over-year. The sequential and annual margin declines were primarily due to NT dollar to U.S. dollar appreciation and to a lesser extent, higher utility rates offset in part by efficiency from higher loading. 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. During the second quarter, operating expenses were $11.4 billion, up $0.1 billion sequentially, and $1.5 billion year-over-year. The sequential increase in operating expenses was related to slightly higher labor costs from workdays. The annual increase is primarily the result of R&D ramp-up and labor-related expenses. Our operating expense percentage for the quarter was 12.3%, decreasing 0.7 percentage points sequentially and down 0.5 percentage points annually.
Gross profit for our ATM business was $20.2 billion, up $0.6 billion sequentially and up $3 billion year-over-year.
For our ATM. Business was 21.9% down 0.7% to point, sequentially and down 0.2 percentage points year-over-year, the sequential and annual margin. Declines were primarily due to NT dollar to US dollar appreciation and to a lesser extent higher utility rates offset and part by efficiency from higher loading.
A 2.2 percentage points higher during the quarter.
Within our original margin, expectations for the second quarter.
During the second quarter.
Operating expenses were $11.4 billion, up $0.1 billion sequentially and $1.5 billion year-over-year.
Increase in operating expenses was related to slightly higher labor costs from work days.
The annual increase is primarily the result of R&D ramp up and labor related expenses.
Ken Hsiang: The sequential decrease was primarily related to higher revenues on relatively stable operating expenses. We continue to target to lower our operating expense percentage. However, given the foreign exchange environment, the level of anticipated decline in percentage may be somewhat impacted. During Q2, operating profit was $8.8 billion, representing a sequential increase of $0.5 billion and an annual increase of $1.6 billion. Operating margin was 9.5%, down 0.1 percentage points sequentially, while up 0.2 percentage points year-over-year. Without the impact of PPA-related depreciation and amortization, ASE Technology Holding Co., Ltd. gross profit margin would be 22.4%, and operating profit margin would be 10.3%. On page 10, you'll find a graphical representation of our ASE Technology Holding Co., Ltd. P&L. On page 11 is our ASE Technology Holding Co., Ltd. revenue by three key market segments.
Our operating expense percentage for the quarter was 12.3%, decreasing 0.7, percentage points sequentially and down. 0.5 percentage points annually.
The sequential decrease was primarily related to higher revenues on relatively stable operating expenses.
We continue to target lowering our operating expense percentage. However, given the foreign exchange environment, the level of anticipated decline in percentage may be somewhat impacted.
During the second quarter, operating profit was $8.8 billion, representing a sequential increase of $0.5 billion and an annual increase of $1.6 billion.
Operating margin was 9.5%, down 0.1 percentage point sequentially, while up 0.2 percentage points year-over-year.
And amortization, ATM. Gross profit margin would be 22.4%, and operating profit margin would be 10.3%.
On page 10, you'll find a graphical representation of our ATM P&L.
Ken Hsiang: You can see here that the computing segment continues to become a relatively larger component of our business. This was largely driven by a higher percentage of LEAP-based revenues. From a wider perspective, it is representative of AI's growing share of the electronics market. On page 12, you'll find our ASE Technology Holding Co., Ltd. revenue by service type. Here you can see the two service types containing LEAP services: bump and flip chip and testing. Both are becoming a larger component of our overall business. We continue to expect growth in these areas. It should be noted that we are starting to see a more visible pickup in our wire bond business. There are signs that this is related to a more general market recovery. On an absolute dollar basis, our wire bond business grew on a U.S. dollar basis but was outpaced by LEAP and testing.
On page 11 is our ATM revenue by 3C market segments. You can see here that the computing segment continues to become a relatively larger component of our business. This was largely driven by a higher percentage of leap-based revenues. From a wider perspective, it is representative of AI's growing share of the electronics market. On page 12, you will find our ATM revenue by service type.
Here you can see the two service types: Leap Services, bump and flip chip, and testing.
Both are becoming a larger component of our overall business. We continue to expect growth in these areas.
It should be noted that we are starting to see a more visible pickup in our wire bond business.
Ken Hsiang: On page 13, you can see the Q2 results of our EMS business. The annual seasonality of our EMS business has been inconsistent over the last couple of years due to differing device ramp schedules. As such, we believe the annual comparability of our Q2 results may be impacted. During the quarter, EMS revenues were $58.8 billion, declining 6% sequentially and 7% year-over-year. The sequential decline was primarily the result of underlying device seasonality. Sequentially, our EMS business's gross margin improved 0.5 percentage points to 9.4%. This change was principally the result of product mix. Operating expenses within our EMS business increased slightly by $0.1 billion sequentially and declined $0.1 billion annually. Our Q2 operating expense percentage of 6.9% was up 0.6 percentage points. Annually, our EMS operating expense percentage was up 0.4 percentage points on lower revenues.
There are signs that this is related to a more general market recovery on an absolute dollar basis. Our wire bond business grew on a U.S. dollar basis but was outpaced by leap and testing. On page 13, you can see the second quarter results of our EMS business. The annual seasonality of our EMS business has been inconsistent over the last couple of years due to differing device ramp schedules.
As such, we believe the annual comparability of our second quarter results may be impacted. During the quarter, EMS revenues were $58.8 billion, declining 6% sequentially and 7% year-over-year.
Decline was primarily the result of underlying device seasonality.
Sequentially, our EMS business's gross margin improved 0.5 percentage points to 9.4%.
This change was principally the result of product mix.
Operating expenses within our EMS business increased slightly by $0.1 billion sequentially and declined $0.1 billion annually.
Our second quarter operating expense percentage of 6.9% was up 0.6 percentage points.
Ken Hsiang: Operating margin for the second quarter was 2.6% flat sequentially and down 0.5 percentage points year-over-year. The annual decline was primarily due to lower revenues. Our EMS second quarter operating profit was $1.5 billion, down $0.1 billion sequentially and $0.4 billion annually. On the bottom of the page, you will find a graphical representation of our EMS revenue by application. As you can see, the second quarter mix of application revenue was relatively steady sequentially. On page 14, you will find key line items from our balance sheet. At the end of the year, we had cash, cash equivalents, and current financial assets of $76.9 billion. Our total interest-bearing debt increased by $8.5 billion to $240.1 billion. We continue to anticipate increasing our debt outstanding throughout the year. Total unused credit lines amounted to $355.3 billion. Our EBITDA for the quarter was $27.4 billion.
Annually, our EMF Auburn expense percentage was up 0.4 percentage points on lower revenues.
Operating margin for the second quarter was 2.6%, flat sequentially and down 0.5 percentage points year-over-year. The annual decline was primarily due to lower revenues. Our EMS second quarter operating profit was $1.5 billion, down $0.1 billion sequentially and $0.4 billion annually. At the bottom of the page, you will find a graphical representation of our EMS revenue by application.
As you can see, the second-quarter mix of application revenue was relatively steady sequentially.
That increased by 8.5 billion to 240.1 billion.
We continue to anticipate increasing our debt outstanding throughout the year.
Ken Hsiang: Our net debt to equity this quarter was 52%. As a reminder, we anticipate that our net debt to equity will be peaking this year during the third quarter. On page 15, you will find our equipment capital expenditures relative to our EBITDA. Machinery and equipment capital expenditures for the second quarter in U.S. dollars totaled $992 million, of which $690 million were used in packaging operations, $251 million in testing operations, $49 million in EMS operations, and $2 million in interconnect material operations and others. In addition to spending on machinery and equipment, during the quarter, we also spent $531 million on facilities, which includes land and buildings. We continue to see the complexities of semiconductor design requiring step-ups in our LEAP offerings. Progressing device memory, thermal, and power requirements, in addition to traditional bandwidth expansion, continue to necessitate advancements in our capabilities, equipment, and facilities.
Total unused credit lines amounted to $355.3 billion. Our iPad revenue for the quarter was $27.4 billion. Our net debt-to-equity this quarter was 52%. As a reminder, we anticipate that our net debt-to-equity will be peaking this year during the third quarter.
On page 15, you will find our equipment capital expenditures relative to our EBIT DOT.
Machinery and equipment capital expenditures for the second quarter totaled $999.2 million, of which $690 million...
$251 million in packaging operations, $49 million in testing operations, $49 million in EMS operations, and $2 million in interconnect material operations and others.
In addition to spending on machinery and equipment during the quarter, we also spent $531 million on facilities, which includes land and buildings.
We continue to see the complexities of semiconductor design, requiring step-ups in our leap offerings.
Ken Hsiang: Our packaging products are now more than ever on the critical path of chip design. As we get closer to 2026, we are seeing a number of initiatives starting to activate. Aligning with customer requests, we are trying to be more aggressive with timelines, and as a result, we are potentially seeing some of the capital expenditures slated for 2026 being accelerated into the fourth quarter of 2025. At this point, the delivery and installation schedules are still fairly dynamic, but we are potentially looking at a bump up in 2025 CapEx by a few hundred million dollars. With that, I will hand the presentation over to Joseph to give the outlook for the coming quarter.
Progressing device memory, thermal, and power requirements, in addition to traditional bandwidth expansion, continued to necessitate advancements in our capabilities, equipment, and facilities.
Our packaging products are now, more than ever, on the critical path of chip design.
As we get closer to 2026, we are seeing a number of initiatives starting to activate.
Aligning with customer requests, we are trying to be more aggressive with timelines. As a result, we are potentially seeing some of the capital expenditures slated for 2026 being accelerated into the fourth quarter of 2025.
At this point, the delivery and installation schedules are still fairly dynamic.
But we are a potentially looking at a bump up in 2025, Capital Equipment expenditures by a few hundred million dollars.
With that, I'll hand the presentation over to Joseph, to give the outlook for the coming quarter.
Dr. Tien Wu: Thank you, Ken. Let me give you the guidance for the third quarter. Based on our current business outlook and the exchange rate assumption of a U.S. dollar, one U.S. dollar to 29.2 NT, the management projects overall performance for the third quarter of 2025 to be as follows. This time, the guidance will be given in both U.S. dollar terms as well as in NT, so it is a little bit more complicated, so please bear with me. At the whole code consolidated level, in U.S. dollar terms, consolidated third quarter revenue should grow by 12% to 14% quarter over quarter. Whereas in NT dollar terms, our consolidated third quarter revenue should grow by 6% to 8% quarter over quarter. Consolidated third quarter 2025 gross margin should decrease by 1% to 1.2 percentage points quarter over quarter.
Uh, thank you again. Uh, let me give you the guidance for the third quarter.
Uh, based on our current business Outlook, and the exchange rate, Assumption of a US dollar 1 US dollar to 29.2 NT.
Uh, the management projects overall performance for the third quarter of 2025 to be as follows.
Uh, this time the guidance will be given in both US dollar terms, as well as in NT, so it's a little bit more complicated, so please bear with me.
At the uh consolidated, the whole code Consolidated. Level in US dollar terms Consolidated, the third quarter Revenue should grow by 12 to 14% quarter over quarter.
Whereas in NT dollar terms.
Our consolidated third-quarter revenue should grow by 6% to 8% quarter over quarter.
Dr. Tien Wu: Consolidated third quarter 2025 operating margin should decrease by 0.1% to 0.3 percentage points quarter over quarter. Now, coming down to ATM. In U.S. dollar terms, our ATM third quarter 2025 revenue should grow by 9% to 11% quarter over quarter, while in NT dollar terms, our ATM third quarter revenue should grow by 3% to 5% quarter over quarter. Our ATM third quarter gross margin should decrease by 0.9% to 1.1 percentage points quarter over quarter. EMS. In U.S. dollar terms, our EMS third quarter 2025 revenue should grow by 18% to 20% quarter over quarter. In NT dollar terms, our EMS third quarter revenue should grow by 12% to 14% quarter over quarter. Our EMS third quarter 2025 operating margin should increase by 0.3% to 0.5 percentage point quarter over quarter. That is the overall guidance for the third quarter.
A consolidated third quarter of 2025 gross margin should decrease by 1 to 1.2 percentage points quarter over quarter.
A Consolidated, the third quarter, 2025 operating margin should decrease by 0.1 to 0.3 percentage points quarter over quarter.
Now, coming down to, uh, ATM.
In US dollar terms.
ATM. Third quarter 2025 revenue should grow by 9% to 11% quarter over quarter.
Well, in NT dollar terms, our ATM, third quarter Revenue should grow by 3 to 5% quarter over quarter.
Our ATM third quarter growth margin should decrease by 0.9% to 1.1% each quarter over quarter.
E EMS.
In US dollar terms.
Our EMS third quarter 2025 Revenue to grow by 18 to 20% quarter over quarter.
The NT dollar terms.
Our EMS third-quarter revenue should grow by 12% to 14% quarter over quarter.
Uh, EMS third quarter 2025 operating margin should increase by 3 to 5 percentage Point quarter over quarter.
Dr. Tien Wu: I would like to also make a very short comment on the margin. On top of the overall higher cost environment that we are working in today, the NT dollar appreciation since early May put further pressure on our margin and will have a 5 percentage point negative impact on ATM third quarter 2025 gross margin. If excluding such currency impact, our ATM gross margin should be around 26% or near the midpoint of our structural gross margin as originally targeted during our last earnings call. Now, looking forward, as we continue to improve our costs through efficiency improvement, leveraging our scale and capabilities to align our pricing and investment strategies with our value proposition, and to aggressively expand our leading-edge packaging and testing business and start easing up on our early-stage ramp-up costs, we are very confident that we will get back to our structural margin range in 2026.
That is the overall guidance for the third quarter.
And with that, I would like to also, uh, making a very short comments on our margin.
Well, on top of the overall higher cost environment that we're working in today.
The NT dollar appreciation since early May.
But further pressure on our margin and we'll have a 5 percentage point negative impact on ATM, third quarter 2025 gross margin.
If?
Excluding the currency impact, our ATM gross margin should be around 26%.
For near the midpoint of our structural margin gross margin as originally targeted during our last earnings call.
Now, looking forward.
As we continue to improve our costs through efficiency Improvement.
Leveraging our scale and capabilities to allow line, our pricing and investment strategies.
With our value proposition.
And to aggressive to expand, our Leading Edge, packaging and testing business, and start easing up on our early stage ramp up costs.
Dr. Tien Wu: With that, thank you very much.
Ken Hsiang: Thank you, Joseph. During the Q&A session that follows, we would appreciate it if questions can be kept concise and asked one at a time. I will be receiving each question and repeating the asked question to Joseph and Tien. Again, we will be limiting the number of questions asked to two per turn, but asked one at a time. We will start off by taking questions from the attendees on the floor. After some of those, we will look to the virtual queue to see if we have some questions online. Thank you. I want to go with one to Charlie.
We are very confident that we will get back to our structural margin range in 2026 with that. Thank you very much.
Thank you Joseph. Uh, during the Q&A session, that follows we would appreciate if questions can be kept concise.
And asked 1 at a time.
I will be receiving each question and repeating. The asked, question to Joseph and tan.
Again, we will be limiting the number of questions asked to 2 per turn, but asked 1 at a time.
Uh, we will start off by taking questions from the attendees on the floor.
After some of those uh we will look to the virtual queue to see if we have some uh questions online. Thank you.
want to go with, uh,
Want to Charlie.
Charlie Chan: Hi, Dr. Tien and Joseph. I am glad to see you and thanks for hosting a physical meeting. I believe it is going to be much more interactive. My first question is about Dr. Tien, your comments about your fab is going to be very busy in the second half. Actually, your ASE guidance is pretty good, right? How do we kind of reconcile with the sort of comments about PC, smartphone, automotive rooms to be very slow? Is that because of ASE's share again or any other factors that we do not consider? Thanks.
All right, does he? And, and Joseph great to see you and thanks for hosting the physical meeting. I believe it's going to be much more interactive. Uh, so my first question is about, uh, that can your comments? Uh, your family is going to be very busy.
Ken Hsiang: Charlie, you're asking about the general dynamics of variable markets or?
In second half and actually your ATM guidance is, uh, pretty, pretty good, right? Uh, how do we, uh, kind of reconcile with the, uh, sort of, uh, comments about PC smartphone, Automotive rooms to be very slow? Uh, is that? Because a is a share again or any other factors that we we, uh, we don't consider, thanks,
Uh, Charlie, you're asking about the General Dynamics of...
Charlie Chan: The end market seems to be pretty slow, excluding the AI. Your guidance and also the comments about your fab utilization seem to be very busy. I just want to get a sense of how we reconcile your performance and also the end market weakness.
Uh, variable markets or, yeah? So in the market seems to be pretty slow. Uh, I mean it's good in the AI, right? But your guidance and also the comments about your Fab.
Utilization, you know, seems to be very busy. I just want to get a sense.
Uh, how do we reconcile the
Ken Hsiang: You want some consolidation or some reconciliation between what people believe and what we're experiencing?
Your performance and also the marketing weakness. Yeah. You want some consolidation or some reconciliation between what people believe and how what we're experiencing.
Dr. Tien Wu: are in a much better position to look at our forecast with our customers. We are providing the guidance based on the customer's input. Those orders are firm. It covers the AI. It also covers other areas, for example, the wireless, also the industrial and automotive. I am not going to go to the second half forecast on the segments, and I don't think we are in the position to do that. But right now, based on the forecast committed order, we do see a very strong, I wouldn't use the word very strong, we do see a word strong or as strong as Q2 outlook.
Well, we're in a much better position to look at our forecast.
With our customers.
We're providing the guidance based on the customer's input.
Uh, those orders are firm.
It covers the uh AI it also covers other area.
for example, the uh, Wireless also the industrial and Automotive
So, I'm not going to go to the second half forecast.
On the segments and I don't think we're in the position to do that.
but the, uh, but right now based on the, uh,
the forecast committed order.
And, uh, we do see a very strong
I wouldn't use the word "very strong" with UCL, or "strong," or "as strong as Q2." Oh, look.
Right.
Ken Hsiang: Charlie, your second question?
Earlier, second question.
Charlie Chan: Actually, if I may add, I think we are seeing a very strong demand for HPC and AI, of course. On the general market, we are also seeing a healthy recovery since the second quarter. Actually, in all sectors, we are seeing double-digit kind of growth quarter on quarter on each different segment. So we are seeing a recovery in the general market as well, along with the hypergrowth in terms of the leading edge. Thank you. Thanks, Dr. Tien and Joseph. My second question is more focused on your advanced packaging testing business because foundry TSMC revised that full year, and they kind of attribute that hardware revision to the strengths in AI and HPC. Why the company does not revise up your kind of additional $1 billion revenue guidance?
Actually, if I may add, I think we are seeing a very strong um,
Demand for HPC and AI, of course.
Uh, but on the other hand, in the general market, we're also seeing, uh, uh,
Order. Actually, you know, at sectors, uh, we're seeing actually double digits, uh, kind of growth quarter on quarter, uh, each, uh, different segments. So we are seeing a, uh,
Recovery in the general market, as well as the...
Um, the hypergrowth in terms of the, uh, leading edge.
Thank you. Since speaking with Joseph, my second question is more focused on your...
uh,
Advanced page and testing business. Because Foundry KSN C revised out of 4-year.
and they kind of, uh,
uh, attribute that. Uh,
Hardware revision to the strength in AI and HPC.
Uh, so why company?
uh, doesn't revised of your
Uh, kind of additional 1 billion Revenue.
Guidance.
Ken Hsiang: Charlie, you are asking for, actually, I do not understand what you are asking for. Can you rephrase this question?
Charlie, you're asking for.
Charlie Chan: Yeah, TSMC revised that full year, right?
Ken Hsiang: Yeah.
Charlie Chan: But you maintain your kind of revenue increase from the advanced packaging remains to be at a $1 billion U.S. dollars. So is that because of any conservatism or why TSMC revised that and you don't?
I actually don't understand what you're asking for. Can you rephrase this question? Yeah, it's a TNC revised at a full year, right? Yeah. And attribute it to AI strength.
Uh that you maintain your uh kind of Revenue increase from the advanced packages remains to be at as a 1 billion usrs. So is that because of Any conservatism or
Ken Hsiang: Charlie Chan is asking about whether we can comment on a leading-edge advanced packaging outlook for the year.
Dr. Tien Wu: We are in a very interesting position because our capacities are full. The incremental capacities are new capacity that we put in. I hope to answer your questions. It is capacity constrained right now.
Why, why did TNC revise up? And you don't? Charlie's asking about whether we can comment on a Leading Edge Advanced Packaging outlook for the year.
And we're in a very interesting position because the our capacities are full.
The incremental capacity are new capacity that we put it in.
I hope to answer your questions.
Charlie Chan: Why don't you revise up the CapEx then?
if capacity, constrained right now,
So, so why don't you revise the CAPEX in?
Dr. Tien Wu: There's a little thing called execution, operation, human talent, land, space, facility, and machine delivery. We're doing the best we can.
Uh, there's a little thing called execution, operation, human talent, land, space, facility, and machine delivery.
Charlie Chan: I see.
Dr. Tien Wu: Right. I think I already made a comment that the Q4, well into 2026, many of the customer pipeline require similar foundational technology capacity. It's not a matter of we are reluctant to put in more CapEx, but we also be mindful, like any machines, you don't want to overstress it on top of the, you know, we do have to put in some buffer for typhoon, for all of this. All right. Hopefully we can do a better job, but we're very, very busy. Next question, Bruce.
We're doing the best we can.
I see, right.
I think I already made a comment that the Q4 well into 2026.
Many of the customer pipeline require similar foundational, technology capacity.
so it's not a matter of
Uh, we are reluctant to put in more care packs.
But we also need to be mindful that, like any machines, you don't want to overstress it.
on top of the, uh,
And we do have to put in some buffer for.
Typhoon for all of this. All right, so hopefully we can do a better job, but we're very, very busy.
Uh, next question. Uh, Bruce
Ken Hsiang: Lu, raise your hand.
Raise your hand.
Dr. Tien Wu: Name and company, please.
Uh, name and Company please.
Charlie Chan: Bruce Lu, Goldman Sachs. I think I want to, the first question I want to clarify is something that, Ken, when you do the prepared remark, you were talking about certain, like, prioritize initiative, talk with the customer. Last time when I remember when ASE Technology Holding Co., Ltd. was talking about this, it was all about the system in package project. By then, try to prioritize those projects. Given the current currency environment, given a, do we expect a new pricing strategy, or do we expect to get a different, set a different bar for the future project? For the future business discussion, does that only go to, like, new system in package business or the existing business with the foundry partner or the existing new business when we need a better pricing? Otherwise, you might not want to do the business.
Bruce X: Uh, I think I want the first question. I want to clear about something that you know. Can, when you do the prepare remark, you were talking about certain, like, you know, prioritize initiatives, you know, talk with the customer. You know, last time when I remember, when AS was talking about this, it's all about the SIP project. By then, you know, try to prioritize those projects. Even the current currency environment, given a, you know, do we expect a new pricing strategy or do we expect to, you know, get a different...
Set a different bar for the future project.
for the future business discussion is, does that only goes to like, you know, sip new sip business or the existing business with The Foundry partner or the existing new, uh, uh, uh business when you know, we need a better pricing otherwise, you know,
Charlie Chan: So can we expect the margin upside all moving forward though?
Dr. Tien Wu: Bruce, you are asking for us to elaborate on our strategic initiatives.
You might want to, you might not want to do the business, so can we expect the margin upside moving forward?
Charlie Chan: Yeah.
So, uh, Bruce, you're asking for us to elaborate on our, uh, strategic initiatives.
Yes.
Dr. Tien Wu: There are many aspects on the strategic initiative. Some of the items I cannot go over in detail because once I said it, you understand exactly what I am talking about.
There are many.
Aspects on the Strategic initiative.
Charlie Chan: That's what I want to know.
Dr. Tien Wu: I think the system in package project, as well as many, becomes a resource recalibration. We are looking at the floor space. We are looking at the cash flow capacity investment. Most important, we are looking for the resource deployment. In the resource recalibration, obviously, will come in the optimization. The optimization by default will improve the end results, which will be a margin improvement. That is one aspect. The second thing, the pricing strategy that has always been on the table. It really depends on the customers, also the future product, as well as the timing. For example, for the RFQ, new product, old product, investment requirement, each one will be different. The third large item will be the overseas expansion.
The, um, some of the items I cannot go over in detail because the once I said it, you understand exactly what I'm talking about. That's what I want to know. I think the uh,
The s project.
uh, as well as many
As the investment.
And most important, we're looking for the uh, the resource deployment.
now in the resource recalibration obviously will come in the
Optimization.
And the optimization by default will improve the, uh,
The end results, which will be a margin Improvement.
So that's one aspect. The second thing is the pricing strategy that has always been on the table.
It really depends on the customer's requirements, as well as the future product and the timing. For example, for the RFQ, new product, or product investment requirements, each one will be different.
Dr. Tien Wu: We were thinking about expanding in many strategic areas, but given the dynamics on the tariff, as well as the exchange rate, we have to rethink priority and also the dollar amount. Our approach is going to be, instead of going to multiple places, we will focus on one or two overseas areas and make a much, much bigger investment just to make sure whatever we do counts. Those are the recalibrations that we are going through right now. While we are very, very busy investing in Taiwan and trying to build up with speed, scale, as well as synergy with the Taiwan ecosystems. The important thing is whatever we put in, we understand the fluctuation of the market, but we tend to look at the basic characteristics. What are the foundational requirements? We would like to put in capacity that we believe will run for 7 to 10 years.
The third large item will be the overseas expansion.
We were thinking about expanding in many strategic areas.
But given the Dynamics on a tariff as well as the exchange rate, we have to rethink priority and also the dollar amount. So our approach is going to be instead of going to multiple places.
Uh, we will focus on 1 or 2 overseas areas and make a much, much bigger investment.
Just to make sure whatever we do.
Those are those are the recalibration that we're going through right now, why while we're very, very busy investing in Taiwan and trying to build up with speed scale as with Synergy with the Taiwan ecosystems.
But the important thing is whatever we put in
We understand the fluctuation.
Of the market.
But we tend to look at the basic characteristics. What are the foundational requirements? We, we would like to put in capacity that we believe will run for
Dr. Tien Wu: That is what we are building on now.
7 to 10 years, and that's what we're building on now.
Charlie Chan: My second question. The second question is for your AI-related business, which is highly skewed to testing business for this year. Do we expect packaging accounts for a larger portion of the business in 2026 and onwards? If that would be the case, can the margin maintain a similar level with both packaging and testing for the advanced AI business?
Okay, uh, my second question. Yeah, the second question is for your AI-related business, which is highly skilled in testing business for this year. Do we expect packaging or accounts to account for a larger portion of the business in 2026 and onwards?
Ken Hsiang: Bruce, you are asking about our LEAP services heading into 2026.
Uh, if that would be the case, can the module maintain a similar level with both packaging and testing for, you know, for the other AI businesses?
First, you're asking about our leap services heading into 2026.
Dr. Tien Wu: The concept is to grow our turnkey business that covers the AI-related leading edge. If you only look at the growth rate, it tends to be very misleading because the testing business has a larger base. We talk about the 31% first half, and it will probably be a better number in the second half. That will be the overall testing growth rate. If you just look at the leading edge packaging, then the growth rate is much higher. The concept is to grow this in tandem. However, you cannot look at it because the base is different. Just to answer you briefly, we do intend to make investment on packaging as well as testing because the requirements tend to go in tandem.
The concept is to grow our TurnKey business.
That covers the uh the AI related Leading Edge.
If you only look at the uh, the growth rate, it, it tends to be very misleading because the testing business has a larger base.
We talk about the 31% first half.
And we'll probably be a better number in the second half. That would be the overall testing growth rate. If you just look at the Leading Edge,
Packaging. Then the growth rate is much higher.
But the concept is to grow this intended, however, you cannot look at it because the base is different. Just to answer you briefly, we do intend to make investments in packaging, as well as testing.
Dr. Tien Wu: For example, once you go to chiplet, silicon photonics, or any kind of HPC or AI-related, then the thermal fluctuation, then you have to deal with a whole lot more variables for the testing arena. The lead time tends to be multiple cycles, much longer. You also have to deal with the interim testing to guarantee yield. With all of this practical concern, I think ASE Technology Holding Co., Ltd. has a very good position to run the leading edge semiconductor assembly as well as testing, just the nature of logistics and also the technology and the cash flow.
Because the requirements tend to go intended.
For example, once you go to chiplet,
Silicon, photonics, or any kind of HPs, your AI related.
Then the thermal.
Fluctuation. The uh, then you have to deal with a whole lot more variables for for the testing Arena, and the, uh, the the the the lead time tend to be multiple Cycles much longer. You also have to deal with the interim testing to guarantee yield with all of this practical concern,
I think as has a very good position.
To run the uh, Leading Edge.
Charlie Chan: Can I have a very quick follow-up? Because we were guiding for $1 billion additional business for this year. Given the huge CapEx we invest this year, the incremental revenue will be a lot bigger than $1 billion for next year. Is that right? You are jumping way ahead of me.
Assembly packaging, as well as testing, is just the nature of logistics, along with the technology and the cash flow.
Can I have a very quick follow up because we uh, we were guiding for 1 billion additional business for this year. Given the huge capacity, we invest this year. The incremental Revenue will be a lot bigger than 1 billion for next year.
Ken Hsiang: I don't think we're, I don't think we have any comments out on 26 yet.
Charlie Chan: But, you know, Joseph Tung used to comment about, like, you know, capital to CapEx per revenue, right? You know, if you use the similar terminology or a similar methodology, you can provide some color. You're nodding their heads, which means yes. I'm not sure I understand what you're asking there. I'm nodding my head just to show my appreciation to your question. Anyways, I think, you know, we do have, we have been pretty aggressive in terms of investing into testing. The growth rate that testing is showing actually shows or demonstrates the progress that we're making. For this year, we're still expecting growth of testing to be twice the pace of packaging. In terms of testing overall to ASE Technology Holding Co., Ltd., we will be approaching 20% of ASE Technology Holding Co., Ltd. revenue being tested by Q4 this year.
Is that right? You're jumping way ahead of me? Yeah, I I I don't think we're I don't think we have any comments out on 26, yet.
But you know, Joseph used to comment about, like, you know, capital to, you know, campus per revenue, right? You know, if you use a similar terminology or a similar methodology, you can.
Provide.
Some color.
Have links. Yes.
Uh,
I'm not sure, I understand what your question, what you're asking now.
I'm nodding my head just to show my appreciation for your question.
uh, anyways, I think, uh, you know, we do have, uh,
We, we have been pretty aggressive in terms of investing into the test. And the growth rate that has is showing is, uh, uh, actually shows the, uh, or demonstrates the the progress that we're making. Uh, for this year, we're still expecting, uh, growth of tests, uh, to be twice the the pace of, uh, Packaging.
and and in terms of tests overall uh to ATM uh we will be approaching 20% of ATM Revenue being tested
Charlie Chan: Going forward, I think aside from the, right now, the leading edge part of the testing is about over 20% of the overall leading edge revenue. I think that ratio will continue to grow because right now we're expanding our testing mostly for leading edge at the wafer sort level. In the later part of the year, we will be starting getting into final testing, burn-in included. So I think there's still a lot of potential for us to grab going forward, particularly in the testing, which overall will bring up our margin as well. So it's a very creative business for us to further penetrate.
by fourth quarter this year.
And going forward, I think, uh, aside from the, uh, right now, the Leading Edge part of the test, uh, it's about over 20% of the overall Leading Edge. Uh,
Uh, uh revenue and uh, I think that, uh, ratio will continue to grow, uh, because right now, we are, uh, we're expanding our tests mostly for Leading Edge at the Wafers World level and in the later, part of the year, we will be starting getting into final test uh burning included. So I think there's a still a lot of potential for us to grab going forward and particularly in the test which overall
Ken Hsiang: Does that answer your question, Bruce?
We will bring up our margin as well, so it's a, it's a very, uh, creative business for us to penetrate further penetrate.
Does that answer your question Bruce?
Charlie Chan: Oh, I got to say yes, right?
Ken Hsiang: Thank you. If we could switch it up and maybe take a question from virtual.
Oh, I’ve got to say yes right. Yeah.
Gokul Hariharan: Yes, we have a question from Mr. Gokul Hariharan.
um, if if we could switch it up and maybe take a question from virtual,
Charlie Chan: Yeah, hi. Thanks, Dr. Wu, Joseph, and Ken. Sorry, I couldn't be there in person. First question is on gross margins. You mentioned that gross margin can get back to the structural gross margin level mid to high 20s next year. Is that assuming that currency stays at this level? If so, what are the variables that are contributing to that? Do you assume that there is a big increase in non-leading edge utilization, or is it just a function of a better mix of LEAP, better testing, and potentially better pricing?
Yeah. Hi, uh, thanks, uh, Dr. Abu Joseph, and, uh, sorry I can't be there in person. Uh, first question is on gross margins. So, um, you mentioned that gross margin can get back to the structural gross margin levels, mid to high 20s, uh, next year. Um, is that assuming that currency stays at this level? Um, if so, what are the variables uh, that are contributing to that? Do you assume that there is a big increase in?
Ken Hsiang: you are asking what levers are available to get back to our structural margin level. Is that correct?
Non-leading edge utilization, or is it just a function of better mix of leap better testing and potentially better pricing?
Charlie Chan: Especially for next year. I think Joseph mentioned, I think it is for next year, we can hope to get back there, right?
Goku, you're asking, uh, what levers are available to get back to our structural margin levels? Is that correct? Yeah.
Ken Hsiang: Okay.
Charlie Chan: I was talking about our margin for next year, and we are very confident about coming back to our structural margin range in 2026, I think through several different directions. One is, of course, we will continue our effort in improving our efficiency. That includes further automation of our overall operation to bring down our cost. I think a lot of the early-stage ramp-up costs will start to see that easing up. We're actually saying last time that our operating expense ratio will start to level off because initially, we put in a lot of R&D dollars into our investment. As we continue to grow or expand our leading edge, I think, and we're going out of the ramp-up stage, I think that part of the expense can be more controlled. Of course, all the leading edge businesses, including tests, are margin accretive.
Ready for next year. I think Joseph mentioned, I think it's a for next year. We could hope to get back there, right.
Okay. Yeah, I was talking about our margin for next year and we are very confident about
Coming back to our structural margin range in 2026, I think through several...
Different directions: we will, of course, continue our efforts in improving our efficiency, which includes further automation of our overall operations to bring down our costs.
And I think a lot of the, uh, early-stage ramp-up costs.
Uh, we will start to see that uh easing up and uh uh we're we're actually seeing last time that our operating expense ratio will start to level off.
Because initially we have, we put in a lot of uh R&D dollars into our investment.
Charlie Chan: All these put together, I think it gives us a high confidence level that going into next year, we will be able to get back to our structural margin range. Of course, that's based on the assumption that the currency doesn't further appreciate from the 29.2 or 29 level at this point.
So as we continue to grow or expand our Leading Edge, I think, and we're going out of the, uh, ramp up stage. I think that, uh, part of the, uh, experience that it can be more controlled. And, of course, the, uh, all the Leading Edge, uh, businesses including tests are marginalized.
So, all these put together, I think, uh, it gave us a high confidence level that uh uh, going into next year.
Uh, we will be uh able to get back to our structural margin range. And the uh uh of course that's based on the assumption that uh the currency doesn't uh further appreciate from the 29.2 or 29 level at this point.
Ken Hsiang: How much of a lever can be pricing given for fan-out wafer-level packaging? You are pretty much the only vendor out there spending so much money. Your competitor does not really seem to be spending much CapEx. Your foundry partner seems to be a lot more aggressive about selling their value as well. I just wanted to understand how you were thinking about this, given your market position today seems to be a lot better than maybe five years back. Gokul Hariharan, you are asking about what we perceive as our market position within fan-out wafer-level packaging. Is that correct?
And uh, just follow up uh how much of a lever can be pricing? Given for leap? You are pretty much the only vendor out there, spending so much money. Your competitor doesn't really seem to be spending much gappx, your Foundry partner seems to be a lot more aggressive about selling their value as well. So just wanted to understand how you were thinking about this, given your Market position today, seems to be a lot better than maybe 5 years back.
Charlie Chan: And leverage on pricing as a result of that market position. Thank you.
About our, uh, what we perceive as our market position, uh, within Leap. Is that correct? And leverage on pricing as a result of that market position. Thank you.
Dr. Tien Wu: The pricing power is what every company wants to have. The pricing power includes your design attachment rate, long-term loyalty, trust, as well as your technology and overall solutions. I think a talk about the current scale and the speed and synergy of ASE being in Taiwan, as well as being supported by many ecosystem players and foundry partners. I think we need to clearly demonstrate our trust and also the overall solution support to our key customers. Pricing is always an option. However, we prefer to use technical strength, buffer, long-term growth prospect, which I think is much, much longer lasting. However, everything is being considered. By recalibration and resource optimization, that by itself is one pricing strategy.
The pricing power is what every company wants to have.
The pricing power includes your designed attachment rates, long-term loyalty, and trust.
As well as your technology and overall Solutions.
I think a talk about the current scale and the speed and synergy.
of ASC B in Taiwan, as well as being
Supported by many ecosystem players in The Foundry partners.
Uh, I think we need to clearly demonstrate.
Our trust.
And also the overall solution support, turkey customers.
Pricing is always an option.
However, we prefer to use technical.
Strength.
Offer.
Long-term growth Prospect.
Which I think is much, much longer lasting.
However, um, everything is being considered.
and by recalibration,
And resource the, uh, optimization that by itself.
Is 1. 1 pricing strategy?
Ken Hsiang: Hariharan claims that that is a follow-up question. Do you want to let him on for his second question?
Uh, Goku claims that, that's a uh,
That's a follow-up question.
Um, do you want to let them on for for a second question?
Charlie Chan: Thanks for being generous, Ken. Thank you. The second question is on the LEAP platform. Dr. Wu, can you talk a little bit about the application of 2.5D packaging, 3D packaging, whether it is cobalt-like, POCOS, POCOS bridge, etc., for applications beyond AI accelerator? It definitely looks like 2026, 2027, you start to see a lot more of these applications coming to you for CPU or other HPC applications. Could you talk a little bit about what you are seeing and how important these are going to be in terms of the growth going into 2026 and 2027, given this year mostly it seems for AI accelerators only?
Thanks for being generous again. Thank you. Um, second question is on the leap platform. Um uh Dr. V. Can you talk a little bit about uh application of 2.5? D3d uh packaging whether it is co was like book or book of bridge etc for um applications Beyond AI accelerator. Uh it definitely looks like 26/27, you start to see a lot more of these applications coming to you for CPU or other HPC applications. Uh, could you talk a little bit about uh what you are seeing and uh how important these are going to be in terms of the growth, uh, going into 26 and 27 given this year. Mostly it seems
Or accelerators only.
Ken Hsiang: Gokul, you're asking for Dr. Wu to expand upon our LEAP offerings, right?
Charlie Chan: Yeah, beyond AI accelerator, yes.
Uh, Goku, you're asking for Dr. Wu to expand upon our leap offerings, right?
Ken Hsiang: Great. Thank you.
Yeah, Beyond AI accelerator. Yes.
Dr. Tien Wu: I talk about the first wave is the AI accelerator. I think the second wave, you will see more infrastructure people. You will also see the ASIC people start coming in. However, they all share the same characteristics. They would like to have a very, very tight configuration and very, very large design footprint and also very efficient power delivery systems and also the transmission, high bandwidth, low latency. I do see this round of AI accelerator that will cascade to the CPU, yes. We will go to the ASIC, yes. In the future, for the AI edge applications, I believe most of the devices will share the similar multifunctional heterogeneous integration that will demand much of the characteristic I just talked about. I believe the volume, we obviously are optimistic that the volume will be increasing over time. All right. Question from the floor. Sunny?
Great. Thank you. Well, I talked about the first wave is the axelerator the uh, the I think the second wave
You will see more infrastructure people. You'll always see the uh, the Asic people start coming in.
But however, they all share the same characteristics. They would like to have, uh,
Very, very tight configuration.
And a very, very large design footprint.
And also very efficient power Delivery Systems.
And also the transmission is high bandwidth with low latency.
I do see this round.
Of AI accelerator.
That will Cascade it to the CPU. Yes.
And we'll go to the A6. Yes.
And in the future for the AI Edge.
Applications.
I believe most of the devices will share the similar multi-functional.
Hydrogenous integration.
Uh, that will demand much of the characteristic I just talked about it.
So, I believe the volume. We obviously are optimistic.
That the volume will be.
Increasing.
Over time.
Right. Uh, question from the floor.
Sunny.
Gokul Hariharan: Sunny Lin from UBS. Thank you for taking my questions. My first question is on advanced packaging, especially on the leading edge. I just want to learn your strategy on how to scale the business into 2026 and 2027. I believe for 2025, most of your sales supply for packaging may be solely outsourcing from foundry. Going to 2026, where are you in terms of the progress to run full process cobalt or POCOS? How should we think about the further upside from the foundry outsourcing?
Sunny lane from UPS. Uh, thank you for taking my questions. Uh, so my first question is on uh Advanced packaging as a Leading Edge, just want to uh learn uh your strategy on how to scale the business uh, into 2026 and 2027. Uh I believe for 2025 most of your sales, apply uh, for packaging, maybe through the Outsourcing uh from Foundry. Uh and so uh, going to 2026, uh, where are you? Uh, in terms of the progress to run full process, call us or Focus? Uh, and how should you think about the further upside uh, from The Foundry Outsourcing
Ken Hsiang: Sunny wants us to describe in a little bit more detail what we're
Dr. Tien Wu: going to do with our leap. For the foundry outsourcing, we will continue pending on the foundry partner, as well as our end customers' requirements overall. That is ongoing. The second layer is going to be the ASIC players. The ASIC players will make their choice, and they can either go through different routes. Also, there will be a peripheral packaging and testing requirements on the other devices that will also go into the same infrastructure. Then there will be the CPU guys. I do not think I can go even more details, but if you really believe that the AI is a new paradigm shift, you look at how many players are really embracing the AI and how many other people are jumping on it. You can pretty much figure out we are still seeing the first wave, even the CPU, the ASICs.
Describe in a little bit more detail.
What we're going to do with our leap, but the funds are also working. We'll continue pending on The Foundry partner as well as our end customers requirements on overall. So that is ongoing
The second layer is going to be the, uh, the ASIC players. The ASIC players will make their choice.
And they can either go through different routes.
and also, there will be a peripheral
packaging and testing requirements on the other devices that will also go into the same infrastructure.
And then there will be the, uh, CPU guys.
Uh, the, uh, I don’t think I can go into more details. Um, but the, uh, if you really believe that the, uh, the AI is a new paradigm shift.
Do you look at how many players are really embracing the AI?
How many other people are jumping on it?
You can pretty much figure out.
Dr. Tien Wu: Whatever we can name today, it will be the first wave. The real definition of the paradigm shift is there will be others that we cannot see. That is the definition of paradigm shift. I think for that, building an efficient, viable, and flexible infrastructure today at a speed is extremely critical, which is why ASE Management can choose the hard route that we want to accelerate the investment and then just take the heat, even with the risk. You know we might miscute, also put a lot of stress on the supply chain. But we believe in this round, gaining customers' confidence will dramatically improve the long-term royalty, as well as explaining to our customers, not just the first wave.
We are still seeing the first wave even the CPU, the A6, whatever we can name today, it will be the first wave.
The real definition of the paradigm shift is it will be others that we cannot see. That's the definition of paradigm shift.
so I think the, uh, for that building an efficient,
Viable and flexible infrastructure today.
At a speed.
Is extremely critical.
Which is why ASC management can choose the heart route that we want to accelerate investment.
And then the uh, just take the uh, take the Heat.
Even with the risk, you know, we might misuse, uh, also put a lot of stress on the supply chain.
But we believe in this round, gaining customers confidence.
Dr. Tien Wu: In the second wave and the third wave, you will need to have a footprint flexibility. That is where the large panel, the 300 by 300 fully automated line, will be put in by the end of this year. The 600 by 600 fully automated line will be also delivered by Q4. Speaking of photonics, we have been extremely vocal. Also on the new power management, the VRM solutions, we are working with many of our key customers, trying to define at the IP level, at the technology level, also at the capacity level to the next generation. I think this campaign is not just coauthor focused. It is really an overall solution. I think once in a lifetime, you will encounter something like this. So I am personally very excited.
Will dramatically improve the long-term royalty, as well as explaining to our customers, not just the first wave in the second. Wave in the third wave.
You will need to have a footprint flexibility, that's where the large panel.
The 300 by 300 fully automated line will be put in by the end of this year. The 600 by 600 fully automated line will also be delivered by Q4.
And then silicon photonics, we have been extremely vocal.
And also on the new power management. The vrm solutions were working with many of our key customers, trying to Define an IP level at the, uh, technology level also at a capacity level to the Next Generation. So I can this campaign is not just colossal, Focus.
It's really in the overall.
The um, solution.
Sunny Lin: For sure. So maybe let me try to ask the question in a different way as a follow-up, if I may. For us to think about 2026 for your advanced packaging sales, is it fair to assume that your full process advanced packaging could account for a meaningful portion of the opportunity given your current customer engagements?
And I think once in the lifetime you will encounter something like this. So I'm personally very excited.
For sure. Uh, so maybe let me try to ask the question, maybe in a different way as a follow-up if I may. Uh, and so for us to think about 2026 for your events packaging cells. Uh, is it fair to assume, uh, that your full process, uh, Advanced packaging, uh, could count for a meaningful portion of the opportunity, uh, given your current, uh, customer engagements.
Dr. Tien Wu: That would be the aspiration. But of course, you have to understand the customer loyalty means it's a trusting partner. Whatever people ask us to do, we will try to fulfill it. But the different customers will have different choices, and the market will take us to the rightful place. We should not look at just 2026. We should really look at the multiple years. I think that statement is very true. Sometime. All right.
That, that would be the aspiration, but of course you have to understand that customer loyalty means trusting partners. Whatever people ask us to do, we will try to fulfill it.
But the different customer will have different choices and the market will take us to the rightful place and we should not look at just 2026. You should really look at the multiple years. I think that statement is very true.
Sometime.
Sunny Lin: Well.
Joseph Tung: I think, just to give you a short answer, we are in full production in terms of full process. We do have a couple of customers that are using our capacity, and we are investing for making further investment into full process. We do expect to have some meaningful business coming in next year, mostly from ASIC customers.
All right. Yeah, well, so I think just to give you a short answer. I think we are in um,
Full production in terms of uh, full process.
Uh, we do have uh, couple of customers that are using a capacity and we are uh investing uh for making further investment into full process.
we do expect to have some meaningful business coming in, uh,
Sunny Lin: Thank you very much. My very quick second question is on testing for AI. I just want to learn more on how you think about the competitions. Obviously, the key competitors continue to be very aggressive in their in-house solution, whereas you may lean more toward the third-party platform with event test. How should you think about the progress of you with the clients? I am sure at some point, ASE will be a very important supplier for final test for AI. How should we think about the timing for you to gain meaningful market share?
next year. Uh, mostly from AC customers.
Dr. Tien Wu: I know you are asking about our test position related to final test on AI.
Clients. Uh, I'm sure at some point is it will be a very important supplier for final test, uh, for AI. Uh, but how should we think about the timing? Uh, for you, to again, meaningful market share? So you're asking about, uh, our test position related to final test on AI.
Joseph Tung: I think we have been talking about this for a long time, and we are expecting to have some final test revenue coming in by maybe Q4. We will continue to expand that part of the business going forward into next year. I am sure we will have a, we will gain a meaningful market share in this aspect as well.
Um, I think we have been uh, talking about this for a long time and uh, we uh, we are uh, expecting to have some uh, final test Revenue coming in uh by maybe the fourth quarter.
And we'll continue to expand that part of the business going forward into next year.
And, uh, I'm sure we will have a, we will gain a meaningful market share in this aspect as well.
Sunny Lin: Thank you.
Joseph Tung: I think what everybody saw some short reports saying whatever about our competitors. I am not going to comment on a competitor. I am just saying that what we are doing ourselves, we do have a goal. We do have a plan. We are making progress. We believe that whatever we invested is going to be fruitful for us.
I think, uh, what you everybody saw.
Some short.
Reporting, whatever about our competitors. So I'm not going to comment on on competitor. I'm just saying that what we're doing, uh, ourselves and we do have a goal. We do have a plan, and we are making progress, and we believe that whatever we invested, it's going to be fruitful for us.
Dr. Tien Wu: We have another question on the floor. Brad?
We have another question on the floor.
Ken Hsiang: Hi. Thank you for taking my question. I am Brad Lin from Bank of America. I got two questions. One is that, Tien Wu, you just mentioned the heterogeneous integration. I think ASE Technology Holding Co., Ltd. has a very unique position. It has ASE, SPO, and also USI. How would that help you maintain a competitive advantage in the multiple potential applications in the future in AI, including humanoid robots, AGI? If available, may you share any initial view on the timeline for those to happen? Thank you.
Brad.
Dr. Tien Wu: Brad is asking about the positioning of our brands, including our EMS side of the business, in terms of whether this allows us to tackle incremental AI opportunities. You probably know that the SPO and ASE ATM business, we are running independent. One of the advantages of that is we are free to choose our own customers. What is going to happen is, right now, the AI initial set of customers are extremely happy because we each want to have our different focus group with a very independent firewall in between, if we may call that advantage. The second one is, on the USI, I think with the system in package, we clearly demonstrate the synergy and also the vertical capability for our design, as well as manufacturing, also logistics perspective. For the AI, I think we are waiting for that opportunity.
Hi. Uh, thank you for taking my question. Uh, um, I'm Brad Lane from Bank of America. Yeah, so I got two questions. One is that, uh, well, can you just mention the Genius integration? So basically, I think, uh, ASE has a very unique position; it has ASC, SPO, and also USI. So, how would that help you maintain a competitive advantage in the well across multiple potential applications in the future in AI, including humanoid robots? Aji. And then, if available, may you share any initial feel on the timeline for those to happen? Thank you.
Brad is asking about, uh, the positioning of Our Brands.
Uh, including our, uh, EMS side of the business in terms of, uh, whether this allows us to tackle incremental.
AI opportunities.
you probably know that, uh, spill
An ASC ATM business. We're running independent.
And one of the advantages of that is, uh, we're free to choose our own customers.
And what's so happen is right now. The AI initial set of customers are extremely happy.
Because we each want to have our different focus group.
with a very independent firewall in between,
People may call that advantage.
the second 1 is the, um,
On the US side.
I think with the Sip, we clearly demonstrate the synergy.
And also the vertical capability.
For our designing, as well as manufacturing, and also logistics perspective.
Dr. Tien Wu: For example, power management is a key area because the power management, you go through 2,000 volts all the way to the 0.1. The assembly people have their sweet spot. The EMS team will also have their sweet spot. If you take this kind of a hierarchical approach into the PCB, into a different kind of architecture, you can derive a similar thesis. So over time, it is the value between ASE, SPO, and USI. Pending on the market demand, I think we have demonstrated this a few times. I do believe in the AI, you will see more optical, you will see more power management that will bring the synergy back again. On top of that, you have the China. You also have the other part of the world. You have the U.S. You have the China alliance.
For the AI. I think we're waiting for that opportunity, for example, power management.
Is a key area.
Because the power management you go through 2,000 volt all the way to the 0.1.
And then the uh, assembly people, you know, have their sweet spot.
And then the EMS team will also have their sweet spot.
if you take this kind of a
Hierarchical approach into the PCB.
Into a different kind of architecture, you can derive the similar thesis.
so, over time, it is the value between ASC spell,
And USI.
And painting on the market demand.
I think we have demonstrated this a few times.
And I do believe in the AI.
You will see more Optical. You will see more power management that will bring the Synergy back again.
on top of that, you have the
China.
you also have the
other part of the world.
Dr. Tien Wu: I think that presents another competitive advantage now if we decided to go that route. Just one comment on the testing portion. There is one thing I want to articulate is testing is not about wafer sort and final test. If we only fixate on the wafer sort and the final test, I think we are missing the point. The point is, in the future architecture, the testing needs to be an integral part of the processes. The question is, how do you do this on the discrete format or in an integrated in-situ format? I am giving you a 10-year outlook on the overall manufacturing strategy for a very, very highly evolved, automated, complicated assembly and testing process.
You have the US, you have the China Alliance. I think that presents another
competitive advantage.
Now, if we decided to go that route,
Um, just 1 comment on the uh, testing portion.
Um, the uh there's 1 thing I want to articulate is testing is not about wafer sword and final test.
If we only fixated on the wafer Sword and the final test, I think we're missing the point.
The point is, in the future architecture.
The testing needs to be an integral part of the processes.
And the question is, how do you do this on the discrete format?
Or an integrated initial format.
I am giving you a 10 years Outlook.
On the overall manufacturing strategy.
For very, very highly, evolved automated complicated assembly and testing process.
Ken Hsiang: Thank you for the explanation. With that commitment, we assume that actually advanced testing will greatly outpace the so-called advanced packaging in that view because that will be integrated into the, well, a lot of the new process.
Thank you for the explanation. So,
With that come and may. We assume that actually Advanced testing will greatly outpace, the so-called Advanced Packaging
Dr. Tien Wu: All right. Don't take my 10-year comment back to one year. I'm always struggling with people, right? The technology direction is correct. The testing has a larger revenue base. If you really want to compare a niche initial, of course, you can make that statement. However, you have to look at the overall testing business percentage, as well as the nature and how do you define the segments. It's very difficult to make that comment. On the overall trend, yes. I mean, the heterogeneous integration, a very, very long cycle time on the focus and the co-op process, and also the value of the components, and also the yield impact and the module level. These are the issues that define and segregate the people who can play in this market versus people who cannot afford it. This all becomes competitive advantages in any kind of business.
In that video because that will be integrated into the well, a lot of the new process.
All right, don't don't. Don't take my 10 years, comment, back to 1 year. I'm always struggling with people.
Right. The uh um the technology direction is correct.
Uh, the testing has a larger Revenue base.
If you really want to compare a niche initial, of course you can make a statement. However you have to look at the overall testing business percentage, uh, as well as the the nature and how do you
Define the segments, and it's very difficult to to make that comment. But the, uh, on the overall trend. Yes.
I mean, the hydrogen integration a very, very long cycle time.
On the focus and the Coos process.
And also, the value of the components.
And also, the yield impact and the module level.
And these are the issues that defines and segregates, the people who can play in this market versus people who cannot afford it.
But this all becomes competitive advantages.
Dr. Tien Wu: My point is, when we evaluate the overall ecosystem at a worldwide level, at a geographical level, you have to put all of this into consideration. The AI has initiated a paradigm shift in terms of algorithm and application. Accordingly, each country, each geography, each company needs to evaluate their own paradigm shift in accordance to this macro paradigm shift. Maybe I'm overstretching, but I think this is the kind of thing I'm very excited to see in the next 10 years what will play out.
In any kind of business. So my point is, when we evaluate the overall ecosystem at worldwide level and the geographical level
You have to put all of this into consideration.
The AI has initiated a paradigm shift.
In terms of algorithm and application.
Accordingly.
Each country each geography. Each company needs to evaluate their own paradigm shift in accordance to this macro Paradigm Shift, right? Maybe I'm over stretching but I think this is the kind of thing. I'm very excited to see in the next 10 years. What will play out?
Ken Hsiang: Thank you. My second question would be a little bit on the financials. Basically, we know we are putting a lot of the CapEx in the LEAP business. I believe that will not be a problem for gross margin because it is margin equative. If available, can you kind of share some of the initial thoughts about how the growth rate of the depreciation that we are looking at in this year and maybe next year?
Uh, thank you. So my second question will be on a little bit on the financials. So basically, we know we are putting a lot of the capex in the well, uh, leap, uh, business. And
Dr. Tien Wu: Brad, you are looking for some guidance on what depreciation looks like, right? All right. Great.
I believe, well, that will not be a problem for gross margin because it's a margin Equity. But, uh, well, if available. Can you, uh, kind of share some of the initial thought, about how the growth rate of the depreciation that we are looking at, in this year and maybe next year, Brian, you're looking, you're looking for some guidance on would depreciation looks like, right?
Joseph Tung: I think for this year, given the heavy investment in our CapEx, I think the depreciation percentage is going to, depreciation is going to grow about 14% from last year. At the holding, I think at the ASE Technology Holding Co., Ltd. level, it will reach about 69 billion NT for the year. That is holding level, right? At the ASE Technology Holding Co., Ltd. level, it is about 59 billion. I think financially, we will see this heavy investment for some time. We are currently funding our investment through additional debt. As you can see, in Q2 already, we are seeing our net debt to equity ratio has come up quite a bit. We expect this to peak, actually, in Q3 as we put in additional debt to our balance sheet. In Q3, we should see a ratio roughly below 70%. Then it will start to come down.
Uh, I think that for this year, uh, I think given the heavy investment in our capacity. I think the appreciation, uh, percentage is going to
Oh, depreciation is going to grow about 14%.
uh, from last year and
Uh, at the holding, I think at the ATM level it will reach about 69.
Billion, uh, NT for the year.
Um,
That's, uh, that's holding level right at the, uh, ATM level is ball.
59 billion.
we I think a financially, I think the uh we will see this uh heavy investment for sometime and uh we are currently uh funding our investment through uh
Additional debt. So you can see in the second quarter already that our net debt-to-equity ratio has come up quite a bit. We expect this to peak, actually, in the third quarter.
As we put in, uh, additional debt, uh, to our balance sheet and, uh, in third quarter, we should see, uh, a ratio roughly below 70%.
And then it was start to come down. Um, as as
Joseph Tung: Our target level remains to be 60% to 65%, which is the level that we feel comfortable with. We are seeing that peak at Q3 and start coming down on a quarterly basis back to our more comfortable level of around 60% to 65%.
Our.
Uh, our target level remains to be 60% to 65%, which is.
Ken Hsiang: Thank you very much.
with and uh, we were seeing that uh, Peak at third quarter and start coming down on a quarterly basis, uh, back to our our more comfortable level around 60 to 65%,
Dr. Tien Wu: The next question we are taking from the virtual queue.
Thank you very much. Um, the next question we are taking from the virtual queue
Dr. Tien Wu: We have an online question from Laura Chen of Citigroup.
Um, we have an online question from Laura Chen of City Group.
Charlie Chan: Hi. Yes. Good afternoon. Thank you for taking my questions. I have a question on the broad-based recovery on the copper wire bonding. What would be the key driver behind? Just curious. Especially we see some of the pulling happening in the first half already. Just wondering that you mentioned there are some power management IC demand. Is that also related to AI, or do we see any market share again, or AI device, or just simply the demand gradually recovery? That is my first question.
Dr. Tien Wu: Laura is looking for a rationale as to why we are seeing or potentially seeing a wire bond recovery within our businesses. The wire bond capacity is tight in Taiwan, mainly due to two markets. The first one, it could be related to AI. As AI, our building AI systems, it does require some of the chips that are using wire bond to support those AI systems. We believe the larger percentage of the demand actually comes from the automotives based on customers that we are serving. Maybe they are using the ASE capacity because the ASE wire bonds are highly automated, and we have the 100% fully automated line. Therefore, it gives you a better throughput and quality that could be. Our overseas wire bond remains to be somehow idled. We do see a disparity between the Taiwan wire bond as well as the overseas wire bond.
Hi. Hi, yes, hi. Good afternoon, thank you for taking my questions. Uh, I have a question on the broad-based recovery on The Wire, bonding on. What would be the key, uh, driver behind, just curious. Uh, especially we see some of the pulling happening in the first half already. Um, so just wondering that, um, you mentioned, uh, there are some, uh, power management. IC demand is also, is that also related to AI or do we see any, uh, like market share again, or H AI device or just, simply the demand graduate recovery. That's my first question.
uh, Laura is looking for a, uh,
Uh, rationale as to why we're seeing or potentially seeing a wire Bond recovery within our businesses.
The, the wire Bond.
capacity is tight in Taiwan uh, mainly due to uh,
2 markets.
Uh the first 1, it could be related to AI as AI are building AI systems. It does require some of the chips that are using wire bond to support those AI systems.
But we believe the, uh, larger percentage of the demand actually comes from the automotive.
Uh, based on customers that we are serving.
and maybe they are using the, uh,
the ASC capacity because the ASU wire Bond are highly automated and we have the 100% fully automated line.
uh therefore it gives you a better throughput and quality that could be
A overseas wire binder remains to be somehow Idols. So we do see a disparity between the uh, Taiwan wire Bond.
As well as the overseas wire Bond.
Charlie Chan: Thank you. Is this also.
Dr. Tien Wu: Yes.
Charlie Chan: Yeah. Thank you. Just wondering, is that also kind of because of China or non-China, that kind of a decoupling trend, or the reason that customers prefer to place more orders in our Taiwan fab along with their probably mention for AI or something like that?
Thank you. Is this also? Yeah, thank you. Um, just wondering, is that also kind of a because of uh, try China or non-china, that kind of a decoupling Trend or uh the reason I customers are preferred to place more orders in our Taiwan Fab alone.
Dr. Tien Wu: are looking at the due to the BIS regulatory control, some of the loading are migrating from China to Taiwan. We see some of that, but that is not a major variable in our report.
Always there, probably manship for AI or something like that.
You're looking at the, uh, due to the, uh, DBIS regular control, the, uh, some of the loading are migrating for.
Uh, China to Taiwan, we see some of that, but that is not a major variable in our report.
Charlie Chan: Sure. Thank you. And also.
Joseph Tung: I think most of the, if it is BIS, I think most of the packages are more advanced rather than wire bond.
Sure, thank you. And also, um, I think most of the, uh, if it's bis, I think most of the, uh,
Packages are more advanced rather than water bound.
Charlie Chan: Okay. Sure. Also, I think Ken Hsiang and Joseph Tung, you probably already talked a little bit about that. As we see a lot of leading-edge advanced packaging happening for different types of the design, like co-ops or panel base or CPO, what would be the key consideration on your capacity preparation? Particularly, everything seems to be quite tight, and the AI chip development is very fast. Just wondering how you would plan your capacity and the CapEx priority. Also, for the final testing starting from Q4 this year, I am just wondering, is that also including the burning and also the system level testing?
Dr. Tien Wu: Laura, you are asking about our LEAP services and how we prioritize funding those LEAP services, including, to some extent, the final testing services provided for leading edge.
Okay, sure. Uh, also, I think, uh, Ken and Joseph. You probably already, uh, talk a little bit, uh, about that. But, uh, if we see a lot of Leading Age, Advanced packages, uh happening, um, for different type of the, uh, design like uh, uh, cos or panel base or CPO. Uh, what would be the key consideration On Your Capacity? Preparation in particularly everything seems to be quite tight, and the AI chips development is very fast. Um, so, uh, just wondering how you, uh, would plan Your Capacity and Care Pack priority and also, uh, for the, uh, final testing starting from Q4 this year. I'm just wondering is that also including the burning and, and also, the assistant level testing
so Laura you're asking about our leap services and how we prioritize uh funding those leap Services uh including uh
Charlie Chan: Thank you.
To some extent the uh, the final test Services provided for uh Leading Edge.
Dr. Tien Wu: The investment of factory facility is very flexible. That is the nature of OSAT, and that is what we do. A large portion of the equipment does have some intrinsic fungibility. In other words, why are we going through different code names? I think you know the code names better than I do. Intrinsically, we are doing this every day, not just this year. Even for the advanced packaging, there is still intrinsic fungibility that any company needs to master, although more complicated. The investment that we put in, we want to make sure our capacity has the fungibility and flexibility, which can guarantee 5 to 10 years of utilization. That is one question. In terms of the testing, I am pretty sure our testing revenue will include burn-in as well as system-level test. I will not be able to give you a percentage of that in detail.
Yeah, thank you.
For the investment on Factory of facility, uh, that is very flexible. I mean, that's the nature of osat and that's what we do.
A large portion of the equipment.
They do have some intrinsic fungibility.
The code is better than I do.
The uh, intrinsically we are doing this every day. Not just this year.
so, even for the advanced,
Packaging. There's still intrinsic fundability that any company needs to master.
Although more complicated. So the investment that we put in
We want to make sure our capacity has the fundability and flexibility which you can garnish 5 to 10 years of utilization.
Right? So that 1 questions.
in terms of the, uh, testing
I'm pretty sure our testing revenue will include.
burning as well system level test.
I won't be able to give you a percentage.
Dr. Tien Wu: As customers require more ATC as well as thermal variation, I think that becomes one area included in the power management as well as the testing solution. I think that is part of the technology development that we are going through. In the right time, we will come out and announce the overall power management solution, including assembly and testing, as well as some of the IP innovation. Hopefully, we can schedule this sometime next year. We have more questions from the floor. We have one additional question from Laura. We have one additional question. Someone put down their hand. Are there any more questions on the floor? Bruce has a question.
The uh, of that in detail. So as customers are required more ATC, as well as thermal variation. Uh, I think that becomes 1 area,
Included in the power management, as well as the testing solution.
I think that's part of the technology development that we're going through uh in the right time.
We will come out and announce the overall power management solution including assembly and testing as well. Some of the IP innovation
Hopefully, we can schedule this, you know, sometime. Uh, next year,
We have more questions from the floor.
Uh, we have 1 additional question from Laura know.
We have 1 additional question.
Someone put down their hand.
Are there any more questions on the floor?
Going on.
Oh no. Bruce has a question.
Gokul Hariharan: I just want to clarify a couple of things. Number one is that when we talk about the overseas investment, U.S. is not in the shortlist. Is that right?
I just want to clarify a couple of things. Number one is when we talk about the overseas investment.
us is not in the shortest.
Is that right?
Dr. Tien Wu: am going to be very careful answering these questions. Please go read our announcement. We have made a clear announcement that we are supporting one of the large customers going into the United States. I am not going to say anything other than that. Anything related to U.S. investment, please read our press release.
I'm going to be very careful answering this question.
Please go read our announcement.
We have made clear announcement that we are supporting 1 of the large customers. Going into United States.
I'm not going to say anything other than that.
Anything related to U.S. investment, please read our press release.
Gokul Hariharan: Okay. The second thing is, can I double-check what is the latest CapEx forecast for the full year in 2025 for equipment and total CapEx?
Okay. Uh, the second thing is that can we can I double check that? What is the latest? Uh, uh, care packs, forecast, for the 4 year in 25.
Dr. Tien Wu: Bruce, you are looking for an update on the CapEx.
Or equipment and total, uh, capex.
or if you're looking for the full, an update on the capex,
Joseph Tung: For this year?
Dr. Tien Wu: This year.
For this year.
Sure.
uh,
Joseph Tung: I think Ken just mentioned that we are upping because the capacity right now is very tight and the demand is very high. So we are upping our CapEx missionary CapEx for a few hundred million dollars. By a few hundred million, I mean $300 million to $400 million. Out of this, the bulk of the, I would think, almost 90% of this increase is really for leading edge. As we see, demand continues to be very strong, particularly going into 2026. So I think the increase of CapEx is really trickling into the fourth quarter.
I said I think uh can you just mentioned that we are upping because the capacity right now is very tight and that the demand is very high. So we are upping our capex missionary
Capex for uh, few hundred.
Million dollars.
By a few hundred billion, that means $3 to $400 million.
and um,
out of this, uh,
Dr. Tien Wu: Is more geared to packaging or testing?
In the bulk of the, uh, I I would say almost 90% of this increase is really for Leading Edge. As we see, uh, demand, uh, continues to be very strong, particularly going into 2026. So I think the, uh, increase of capacity is really trickling into the fourth quarter.
Joseph Tung: Both.
It's more geared to packaging, or testing.
Uh, both.
Dr. Tien Wu: Joseph and I had a long debate on this. As a CFO, he tends to be very concerned about the operation guys are spending money like crazy. My advice to him is everybody wants to spend CapEx. The only people who have orders can spend the CapEx. The question now is that puts a lot of burden on execution. If the operation team cannot fulfill the things online, it becomes a problem. We understand that. The CFO concern is legitimate and right on. The team collectively decided we are going to go through this CapEx ramp mainly because our partner, as well as our key client for the next 10 years, they would like to have a trusted partner that can execute. The speed of that will define how are we going to invest further in Taiwan as well as outside of Taiwan. This goes to a long way.
The uh, Joseph and I had a long debate.
On this.
Um, as a as a CFO, it tends to be very concerned about the operation guys are spending money like crazy.
Uh, my advice to him is.
everybody wants to spend cat packs.
The only people who has order can spend the capex.
The question now is the uh, that put a lot of burden on our execution.
If the operation team cannot fulfill.
The things online, it becomes a problem. We understand that.
So, the CFO concern is legitimate and right on.
Collectively decided.
we're going to go through this capex ramp
Mainly, because our partner.
As well as our key client for the next 10 years.
They would like to.
have a trusted partner that can execute
the speed of that.
Would be fine. How are we going to invest further in Taiwan, as well as outside of Taiwan.
Dr. Tien Wu: Therefore, we decided to bite the bullet and just go through that. Thank you.
So this goes a long way.
Joseph Tung: To give you a little bit of color, for this year's machinery CapEx, roughly 60% will be for assembly and 30% for testing and 10% for others and material. That includes material and EMS. Also, on this machinery CapEx, about 60% is for leading edge.
Therefore, we decided to bite the bullet and just go through that. Okay, thank you.
Thank you. Uh, to give you a little bit of color, I think for this year's Machinery CapEx, roughly 60% will be for assembly and about 30% will be for tests.
And 10% for others and material.
Um, that includes material and EMS, right? Um,
And also, on this machinery and CapEx, I think more, uh.
about 60% is for Leading Edge.
Dr. Tien Wu: Don't look at the numbers too much because the machine delivery, it can change. The execution, including building new buildings, hiring new people, there's a lot of variables. But right now, we do have a high aspiration to do this. Okay, thank you. I believe we have one more question from virtual.
Um, don't look at the numbers too much because the machine delivery.
Uh, it can change.
Dr. Tien Wu: We have a question from Gokul Hariharan of JPMorgan.
The execution, the uh, including building new buildings, hiring new people. I mean, there's a lot of variable, but right now the, uh, we do have a high aspiration to, to do this. Okay. Thank you. I believe we have 1 more question from virtual.
We have a question from Goku Hariharan of JP Morgan.
Brad Lin: Hi. Thanks for taking my question. So, Tien, just wanted to zoom out and think about this. This is the first time I've seen ASE enter this massive CapEx investment and hypergrowth kind of stage. If we, and I think as you discussed earlier, I think it's a very careful consideration that the management team has placed. Where do you want to be, let's say, in three to five years' time? I think ASE is a, I think if I just look at ASE, it's a $12 billion revenue company, $12 billion revenue operation, maybe mid-30s market share in OSAT. What constitutes success of this plan? Let's say if we roll out maybe three to five years, what does a successful ASE look like at the kind of culmination of this hyperinvestment phase?
Hi. Uh, thanks for taking my question. Um so again just wanted to zoom out and think about this uh this is the first time I've seen uh a enter this like uh massive um capex investment and Hyper growth kind of stage. Uh if we and I think as you discuss as you discussed earlier, I think it's very careful consideration. Uh, that uh, the management team has placed.
Um, where do you want to be? Let's say in 3 to 5 years' time. I think, as it is, I think if I just look at ATM, it's a $12 billion revenue company, a $12 million revenue operation, maybe mid-30s market share and knows that.
uh, what what constitutes success of this plan, let's say, uh, if we, uh, roll out maybe 3 to 5 years, like
Dr. Tien Wu: Gokul, you're looking to see how we define our own successes within the company?
Uh what what does the successful ASC look like at the kind of culmination of this, um, hyper investment phase?
Brad Lin: I am sure you are spending billions of dollars. You do have some targets in mind. I just wanted to understand what do you define success as at the culmination of this heavy investment phase?
Okay, you're, you're looking to see how we Define our own successes within, uh, within the company. Yeah, I'm sure you are spending billions of dollars. If you do have some, some Targets in mind. Um, so just wanted to understand what, what, what, what do you define success as, uh, at the culmination of this? Uh, uh, heavy investment phase?
Dr. Tien Wu: I think this is the exercise we are going through. For example, if you look at a traditional OSAT, you can define the revenue, the margin, and the CapEx. You have some ratio. If you look at the key foundry supplier, their CapEx on their assembly and test will have a different ratio. So what we are going through is to take this from the traditional OSAT ratio to the foundry ratio, and we are climbing stairs. The question is, why are we doing this? Because the foundry partner wants you to do this, because their end customer wants both of us to do this. The question now is, who has the capability to execute this to the scale that becomes a competitive advantage over time? This includes not only the key players, but also includes the whole ecosystem supporters that we enable you to do this.
I think this is the exercise we're going through, for example, if we look at a traditional osat,
You can define a revenue, the margin and the capex. You have some ratio.
If you look at the key.
Foundry supplier.
Their capex on their assembly and test.
Uh, we'll have a different ratio.
So we're going through is to take this from the traditional OSAP ratio to The Foundry ratio.
And we're climbing stairs.
Then the question is. Why are we doing this?
Well, because The Foundry partner wants you to do this because their end customer wants both of us to do this.
The question now is who has the capability to execute this to the scale that becomes the competitive advantages over time.
This includes not only the key players.
Dr. Tien Wu: In terms of the margin model, I think you can apply equally. How do we define success? Going through the execution without issue and earn the larger clientele base on the longer-term basis, that will be the success. Thank you.
Also includes the whole ecosystem supporters that we enable you to do this.
In terms of the margin model, I think you can apply equally.
How do we define success going through the execution?
Without issue and earn.
The larger clientele base on a longer-term basis would signify success.
Brad Lin: All right. Gokul, do you have any more questions there? Since you referred to your foundry partner, in that process, their own margins have gone up maybe 10% or more. Their growth rate has escalated quite a bit. So how do we think about our margins? I think we've talked about structural margins heading to mid-20s to high 20s. Is that where we get to? Is there any expectations on growth? Does $12 billion become $20 billion in five years? Is that our definition of success in terms of ASE Technology Holding Co., Ltd. revenue growth?
Thank you.
Goku, do you have any more questions there?
These, um, is that, is that where we, where we get to? And, um, is there any expectations on growth like, um, like
there's 12 billion become 20 billion in 5 years is that our definition of success in terms of ATM Revenue growth
Joseph Tung: I am sure everybody knows that there is still a lot of moving parts and uncertainties in front of us. The world is changing very fast. Right now, we are not trying to reinvent the wheel. I think from what we learn, from what we know our own business, we are keeping our structural margin range as it is for now. We will just go, we will see how the situation changes. If we need to make a change, we will make a change. At this point, there is nothing structurally different from what we originally expected.
Well, I'm sure everybody knows that there's a still a lot of moving Parts in uncertainties in front of us uh into the world is changing very fast. Uh right now we're not.
Uh, we're now trying to uh, reinvent the wheel, I think, uh, from what we learned, uh, from what we know our our own business. Uh, we we are keeping our structural margin range as it is for now and we'll just go, uh, we'll see how the situation changes and, uh, uh, if we need to make a change, we'll make a change. But, uh, at this point, uh, there's nothing structurally different, uh, from what we originally expected.
Dr. Tien Wu: I think we've hit our hard cutoff timeframe. It's 4:30 P.M. over here. Thank you very much for attending our earnings release. See you next time.
Brad Lin: Thank you.
I think we've hit our, uh, hard cutoff time frame. Uh, it's 4:30 over here. Uh, thank you very much for attending our earnings release. Uh, see you next time.
Thank you.
Dr. Tien Wu: Goodbye.