Q2 2026 ASE Technology Holding Co Ltd Earnings Call

July 30, 2026

Speaker #1: This meeting is being recorded.

Speaker #2: Hello. Hi, I'm Kenneth Hsiang, the Head of Investor Relations at ASE Technology Holdings. Welcome to our second quarter 2026 earnings release. I'm joined today by Dr. Tien Wu, our COO, and Joseph Tung, our CFO.

Ken Hsiang: Hello, I am Ken Hsiang, the Head of Investor Relations at ASE Technology Holding. Welcome to our Q2 2026 earnings release. I am joined today by Dr. Tien Wu, our COO, and Joseph Tung, our CFO. Thank you for joining us today. Please refer to our safe harbor notice on page two. All participants consent to having their voices and questions broadcast via participation in this event. If you do not consent, please refrain from asking questions or leave the session now. 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 TWD unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS.

Speaker #2: Thank you for joining us today. Please refer to our Safe Harbor notice on page 2. All participants consent to having their voices and questions broadcast via participation in this event.

Speaker #2: If you do not consent, please refrain from asking questions or leave the session now. I would like to remind everyone that the presentation that follows may contain forward-looking statements.

Speaker #2: 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.

Speaker #2: Unless otherwise indicated, as a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those separately presented by our subsidiaries.

Ken Hsiang: Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those separately presented by our subsidiaries. For today's presentation, Dr. Tien Wu will begin with a mid-year business update. I will then walk through the Q2 results. Joseph will close with our Q3 outlook. With that, let me hand the presentation over to Dr. Tien Wu.

Speaker #2: For today's presentation, Dr. Tien Wu will begin with a mid-year business update. I will then walk through the Q2 results, and Joseph will close with our third quarter outlook.

Speaker #2: With that, let me hand the presentation over to Dr. Tien Wu.

Speaker #3: Good afternoon. I would like to give you the first half of 2026 recap and also the full-year outlook. For my presentation, everything will be in US dollar terms.

Tien Wu: Good afternoon. I would like to give you the H1 2026 recap, and also the full-year outlook, for my presentation will be all in US dollar terms. Consolidated revenue grew 24% year on year in the H1 2026, with ATM revenues up 35% year on year for the H1. Leading Edge Advanced Packaging and overall testing outpaced growth. For ATM business, we expect to maintain the same growth momentum into the H2. For full year, LEAP Services revenue is tracking ahead of prior guidance of $3.5 billion. General segment expected to grow by 30% year on year versus previous guidance of 13%. For the full year, we expect the ATM business revenue to grow by 35%. Machinery CapEx was $2.7 billion. Building, facility, automation, was $1.4 billion in the H1.

Speaker #3: Consolidated revenue grew 24% year on year in the first half of 2026, with ATM revenues up 35% year on year for the first half. Leading-edge advanced packaging and overall testing outpaced growth.

Speaker #3: For the ATM business, we expect to maintain the same growth momentum into the second half. For the full year, LEAP services revenue is tracking ahead of prior guidance of $3.5 billion.

Speaker #3: While the general segment is expected to grow by 30% year on year, versus previous guidance of 13%. So for the full year, we expect the ATM business revenue to grow by 35%.

Speaker #3: Machinery capex was $2.7 billion. Building facility automation was $1.4 billion in the first half. Joseph will give you more detail for the full year.

Tien Wu: Joseph will give you more detail for the full year. Stepping up investment in R&D, human capital, advanced capacity, and also automation and smart factory infrastructure to support a multi-year growth. On the second page, I would like to give you some highlight on market dynamics and positioning. There are many moving parts in the market today. You are reading the same newspaper, watching the same news as I do. What I am trying to present to you is the company view. We will try to present you the logic, why are we making particular decision in this particular junction of time? AI-enabled new applications with bigger scale and potentials. I am not going to articulate the detail. If you are interested, we can talk more in the Q&A. That is our current view.

Speaker #3: Stepping up investment in R&D, human capital, advanced capacity, as well as automation and smart factory infrastructure to support multi-year growth. On the second page, I would like to give you some highlights on market dynamics and positioning.

Speaker #3: There are many moving parts in the market today. You're reading the same newspapers and watching the same news as I am. What I'm trying to present to you is the company's view.

Speaker #3: We will try to present to you the logic: Why are we making particular decisions at this particular junction in time? AI is enabling new applications with greater scale and potential.

Speaker #3: I'm not going to articulate the details. If you're interested, we can talk more in the Q&A. That's our current view. I think very few of you will disagree with this statement: AI is a paradigm shift, and we do have the potential for bigger scale and multiple applications.

Tien Wu: I think very few of you will disagree with this statement, that AI is a paradigm shift, we do have potential bigger scale and multiple applications, that is our current view. In terms of when, how, we are monitoring the progress. I believe we are at the beginning of the AI paradigm shift. There will be multiple stages of transition. We can talk more in the Q&A. The second comment is how we feel. AI demands new hardware that does not exist previously in size, complexity, and integration. You can argue about the computation intensity, the memory, the power, the linkage, the bandwidth. All in all, what we are trying to develop right now is a brand-new platform to support the potential AI applications.

Speaker #3: And that's our current view. In terms of when and how we are monitoring the progress, I believe we are at the beginning of the AI paradigm shift.

Speaker #3: There will be multiple stages of transition. We can talk more in the Q&A. The second comment is how we feel: AI demands new hardware that did not exist previously, in terms of size, complexity, and integration.

Speaker #3: You can argue about the competition intensity, the memory, the power, the linkage, the bandwidth—all in all, what we're trying to develop right now is a brand-new platform to support the potential AI applications.

Speaker #3: The data center, the agentic, and the future in physical AI—humanoid—all of them will be different than what we have been producing so far.

Tien Wu: The data center, the agentic, and future in the physical AI, humanoid, all of the hardware will be different than what we have been producing so far. There is a growing need for industrial power, connectivity, and storage devices because of the AI transition, evolution, or paradigm shift. The company is seeing all three right now from all of our customers on the multi-year basis. Let me talk about ASE's strategic priorities. Again, this is the company view. We have to have a blueprint, a plan, a vision in order for the 100,000 employees to act on. Where I am trying to present to you is the highlight for that blueprint. Hardware infrastructure is a bottleneck. With AI, the hardware requirement is new, insatiable, and more complicated, more complex. Today, there are very few manufacturers capable of producing the hardware.

Speaker #3: There is a growing need for industrial power connectivity and storage devices because of the AI transition, evolution, or paradigm shift. The company is seeing all three right now from all of our customers on a multi-year basis.

Speaker #3: Let me talk about ASE's strategic priorities. Again, this is the company view. We have to have a blueprint, a plan, a vision in order for the 100,000 employees to act on.

Speaker #3: And what I’m trying to present to you is the highlight of that blueprint. Hardware infrastructure is a bottleneck. With AI, the hardware requirements are new, insatiable, more complicated, and more complex.

Speaker #3: And today, there are very few manufacturers capable of producing hardware. Therefore, it is the bottleneck today—for our capacity, for automation, and, more importantly, from an innovation perspective.

Tien Wu: Therefore, it is the bottleneck today for our capacity, for automation, and more importantly, from innovation perspective. We can talk a little bit more detail about the panel, about CoWoS, about glass substrate, about VRM, about silicon photonics. I can go on and on. All of these are tied to the infrastructure and your capability to ramp with the complexity, integration, and the design blueprint the customer asking to do. All in all, I call all of this to be hardware infrastructure, and that is the new bottleneck. We have not experienced this for the last 40 years. Packaging is moving up in system architecture value chain. For me, as a designer by training, the system architecture always is at the top of the value chain.

Speaker #3: We can talk a little bit more in detail about the panel, about co-ops, about glass upstream, about VRM, about silicon photonics. I can go on and on.

Speaker #3: But all of these are tied to the infrastructure and your capability to ramp with the complexity, integration, and the design blueprint that the customer is asking you to do.

Speaker #3: All in all, I call all of this the new hardware bottleneck. We have not experienced this for the last 40 years. Packaging is moving up in the system architecture value chain.

Speaker #3: For me, as a designer by training, the system architecture is always at the top of the value chain. Packaging is approaching the system architecture value by promoting and providing new complexity and integration capability.

Tien Wu: Packaging is approaching the system architecture value by providing the new complexity and integration capability with the variable that I just talked about it. If you believe hardware is the new bottleneck and the packaging is moving up in the value chain of the system architecture, ASE has a unique position to support the AI migration, evolution, or paradigm shift, and align with all customers' long-term objectives. Today, ASE's competitive position, I talk about this for many times. The ecosystem position, cluster or Taiwan cluster, scale or the AI data center, Taiwan scale, and other digital scale. The efficiency. I want to single out the pure-play. The pure-play enables you to have a seamless cooperation with all supply chain players.

Speaker #3: With the variable that I just talked about—now, if you believe hardware is the new bottleneck, and that packaging is moving up in the value chain of the system architecture, then ASE has a unique position to support the AI migration evolution or paradigm shift.

Speaker #3: And align with all customers' long-term objectives. Today, ASE's competitive position—I talk about this many times—the ecosystem position, cluster, or the Taiwan cluster.

Speaker #3: Scale, or the AI data center—Taiwan scale—and other digital scale. The efficiency, I want to single out the pure play. The pure play enables you to have a seamless cooperation with all supply chain players.

Speaker #3: In the future, this could be one of the competitive advantages for ASE as a pure-play OSAT—that we have no conflict with country and no conflict with substrate providers.

Tien Wu: In future, this could be one of the competitive advantages for ASE as a pure-play OSAT, that we have no conflict with foundry, with no conflict with substrate provider, we have no conflict with anybody. We have a good way, not only to collaborate with our customers long-term, also collaborate with all of the ecosystem players that will turn critical for the overall complex integrated nature for the AI transition or evolution. The first mover's advantage. I am very specific about the first mover's advantages: technology, speed, capacity, and most importantly, trust. Everything the company does circle around the long-term business objective, as well as the seamless integration with ecosystem players and give you the speed, the efficiency, and earn the customer trust. That's the highlight for me for the H2. Okay. Thank you.

Speaker #3: We have no conflict with anybody. Therefore, we have a good way not only to collaborate with our customers long-term, but also to collaborate with all of the ecosystem players that will become critical for the overall, complex, integrated nature of the AI transition or evolution.

Speaker #3: The first-mover's advantage—I'm very specific about the first-mover's advantages: technology, speed, capacity, and most importantly, trust. So everything the company does circles around the long-term business objectives as well as the seamless integration with the ecosystem players, and gives you the speed, the efficiency, and earns the customer trust.

Speaker #3: So, that's the highlight for me for the second half. Okay. Thank you.

Speaker #1: Thank you, Tien. As Dr. Wu highlighted, our business has performed extremely well throughout the first half of the year. For the quarter, we saw strong growth within both our LEAP and our general businesses.

Ken Hsiang: Thank you, Tien. As Dr. Wu highlighted, our businesses performed extremely well throughout the H1 of the year. For the quarter, we saw strong growth within both our LEAP and our general businesses. Non-LEAP capacities like wire bond and traditional advanced packaging were also tight. For test, our wafer sort and final test capacities were also running near full. Effectively, outside of equipment lines being placed into service, capacities were generally very close to being full. Our blended utilization rate for the quarter was between 80% and 85%. Our capability for near-term incremental growth is being gated by our abilities to install capital equipment and build out our buildings and facilities. From a financial perspective, Q2 ATM revenues came in ahead of our original expectations, driven by higher loading from both our LEAP and general services.

Speaker #1: Non-LEAP capacities, like wire bond and traditional advanced packaging, were also tight. For test, our wafer sort and final test capacities were also running near full.

Speaker #1: Effectively, outside of equipment lines being placed into service, capacities were generally very close to being full. Our blended utilization rate for the quarter was between 80% to 85%.

Speaker #1: Our capability for near-term incremental growth is being gated by our ability to install capital equipment and build out our buildings and facilities. From a financial perspective, second-quarter ATM revenues came in ahead of our original expectations, driven by higher loading from both our LEAP and general services.

Speaker #1: From the profitability perspective, we also saw our gross margin outpacing our original expectations driven by higher loading resulting in more operating leverage. Revenues for our EMS business were generally in line with our expectations.

Ken Hsiang: From the profitability perspective, we also saw our gross margin outpacing our original expectations, driven by higher loading, resulting in more operating leverage. Revenues for our EMS business were generally in line with our expectations. EMS profitability was slightly below our expectations due to product mix and higher component prices. Please turn to page five, where you will find our Q2 consolidated results. For Q2, fully diluted EPS was TWD 4.61, and basic EPS came in TWD 4.80. We believe our earnings reflect strong core profitability and a few non-operating items we will outline shortly. Consolidated net revenues reached TWD 191.1 billion, up 10% sequentially and 27% year over year. Gross profit was TWD 40.2 billion with a gross margin of 21.0%, up one percentage point sequentially and four percentage points year over year. The sequential improvement stems from higher operating leverage in our ATM business.

Speaker #1: EMS profitability was slightly below our expectations due to product mix and higher component prices. Please turn to page five where you will find our second quarter consolidated results.

Speaker #1: For Q2, fully diluted EPS was $4.61 and basic EPS came in at $4.80. We believe our earnings reflect strong core profitability, and there were a few non-operating items we will outline shortly.

Speaker #1: Consolidated net revenues were $191.1 billion, up 10% sequentially and 27% year over year. Gross profit was $40.2 billion, with a gross margin of 21.0%, up 1 percentage point sequentially and 4 percentage points year over year.

Speaker #1: The sequential improvements stem from higher operating leverage in our ATM business. The annual improvement reflects both structural efficiency gains and a more favorable NT dollar environment.

Ken Hsiang: The annual improvement reflects both structural efficiency gains and a more favorable TWD environment. Operating expenses totaled TWD 19 billion, up TWD 3.5 billion year over year, primarily driven by higher labor costs and further R&D spend to support LEAP initiatives. As a percentage of revenue, operating expenses remained flat at 10% and declined 0.3 percentage points annually. This delivered an operating profit of TWD 21.1 billion, up 21% quarter over quarter and 107% year over year, with an operating margin of 11.1%, expanding 1 percentage point sequentially and 4.3 percentage points annually. Non-operating income totaled TWD 4.6 billion compared to TWD 0.7 billion in the prior quarter. While this amount appears relatively elevated versus prior quarters, the increase primarily reflects some potentially non-recurring gains.

Speaker #1: Operating expenses totaled $19 billion, up $3.5 billion year over year, primarily driven by higher labor costs and further R&D spend to support LEAP initiatives.

Speaker #1: As a percentage of revenue, operating expenses remained flat at 10% and declined 0.3 percentage points annually. This delivered an operating profit of $21.1 billion, up 21% quarter over quarter and 107% year over year, with an operating margin of 11.1%, expanding 1 percentage point sequentially and 4.3 percentage points annually.

Speaker #1: Non-operating income totaled $4.6 billion, compared to $0.7 billion in the prior quarter. While this amount appears relatively elevated versus prior quarters, the increase primarily reflects some potentially non-recurring gains.

Speaker #1: Our net non-operating income includes mark-to-market equity gains related to our corporate investments of $4.2 billion, foreign currency hedging gains of $1.5 billion, and other items including equity method investment income.

Ken Hsiang: Our net non-operating income includes mark-to-market equity gains related to our corporate investments of TWD 4.2 billion, foreign currency hedging gains of TWD 1.5 billion, and other items, including equity method investment income, government grants, rent income, and dividends totaling TWD 0.8 billion. These gains were partially offset by TWD 1.9 billion in net interest expenses. Tax expense was TWD 4.2 billion. Our effective tax rate came in at 16.4%. We saw a lower effective tax rate due to higher R&D credits generated during the quarter. We continue to expect an effective tax rate of 18% for the year. Net income for the quarter was TWD 21.1 billion, up 49% sequentially and 180% year over year. On page six is a graphical view of our consolidated quarterly performance. For Q2 2026, our ATM business represented 66% of our consolidated holding company revenue while representing 94% of our operating profit.

Speaker #1: Government grants, rent income, and dividends totaled $0.8 billion. These gains were partially offset by $1.9 billion in net interest expenses. Tax expense was $4.2 billion.

Speaker #1: Our effective tax rate came in at 16.4%. We saw a lower effective tax rate due to higher R&D credits generated during the quarter. We continue to expect an effective tax rate of 18% for the year.

Speaker #1: Net income for the quarter was $21.1 billion, up 49% sequentially and 180% year over year. On page six is a graphical view of our consolidated quarterly performance.

Speaker #1: For the second quarter 2026, our ATM business represented 66% of our consolidated holding company revenue while representing 94% of our operating profit. This is compared to 61% of consolidated holding company revenue.

Ken Hsiang: This is compared to 61% of consolidated holding company revenue while representing 87% of operating profit in Q2 last year. We see this being primarily driven by the growth of our ATM LEAP services over the last few years. On page seven 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 Q2 2026, we recorded record revenues for our ATM business of TWD 126.1 billion, up TWD 13.7 billion sequentially and TWD 33.6 billion annually, representing an increase of 12% sequential and 36% annual growth. Gross profit for our ATM business was TWD 34.5 billion, up TWD 5.3 billion sequentially and up TWD 14.2 billion year over year.

Speaker #1: While representing 87% of operating profit in the second quarter last year, we see this being primarily driven by the growth of our ATM LEAP services over the last few years.

Speaker #1: On page seven 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.

Speaker #1: For the second quarter of 2026, we recorded record revenues for our ATM business of $126.1 billion, up $13.7 billion sequentially and $33.6 billion annually, representing an increase of 12% sequential and 36% annual growth.

Speaker #1: Gross profit for our ATM business was $34.5 billion, up $5.3 billion sequentially and up $14.2 billion year over year. ATM gross profit margin was 27.3%, up 1.3 percentage points sequentially and 5.4 percentage points annually, driven by higher operating leverage and a more favorable revenue mix, particularly a higher mix of LEAP.

Ken Hsiang: ATM gross profit margin was 27.3%, up 1.3 percentage points sequentially and 5.4 percentage points annually, driven by higher operating leverage and a more favorable revenue mix, particularly a higher mix of LEAP. During Q2, operating expenses were TWD 14.7 billion, up TWD 1.4 billion sequentially and TWD 3.3 billion year over year. The sequential and annual increases in operating expenses are primarily related to higher overall labor costs and general R&D expenses. Our operating expense ratio was 11.7%, down by 0.1 percentage point sequentially and 0.6 percentage points annually. We expect our ATM operating expense ratio should continue to improve during H2 2026. During Q2, operating profit was TWD 19.8 billion, representing a sequential 25% increase of TWD 3.9 billion and a 124% annual increase of TWD 11 billion. Operating margin was 15.7%, up 1.6 percentage points sequentially and up 6.2 percentage points year over year.

Speaker #1: During the second quarter, operating expenses were $14.7 billion, up $1.4 billion sequentially and $3.3 billion year over year. The sequential and annual increases in operating expenses are primarily related to higher overall labor costs and general R&D expenses.

Speaker #1: Our operating expense ratio was 11.7%, down by 0.1 percentage point sequentially and 0.6 percentage points annually. We expect our ATM operating expense ratio to continue to improve during the back half of 2026.

Speaker #1: During the second quarter, operating profit was $19.8 billion, representing a sequential 25% increase of $3.9 billion and a 124% annual increase of $11 billion.

Speaker #1: Operating margin was 15.7% up 1.6 percentage points sequentially and up 6.2 percentage points year over year. The NT dollar had a positive 0.1 sequential and a 0.6 annual percentage point impact to our gross and operating margins.

Ken Hsiang: The NT dollar had a positive 0.1 sequential and a 0.6 annual percentage point impact to our gross and operating margins. On page eight, you will find a graphical representation of our ATM P&L. The chart highlights the improvement in our gross profit margin. It should be noted here that our Q2 and Q3 2025 margins were heavily impacted by NT dollar strengthening. Over this time frame, our margin improvement has been largely driven by the recovery of our utilization rate related to our general manufacturing capacities and increasing LEAP product mix. On page nine is our ATM revenue by the three C market segments. LEAP services are primarily included within our computing applications, with a lesser amount being included in the communications applications. As can be seen here, the computing application percentage continues to grow steadily. At this time, we see this trend continuing into 2027 and 2028.

Speaker #1: On page eight, you'll find a graphical representation of our ATM P&L. The chart highlights the improvement in our gross profit margin. It should be noted here that our second and third quarter 2025 margins were heavily impacted by NT dollar strengthening.

Speaker #1: Over this timeframe, our margin improvement has been largely driven by the recovery of our utilization rate related to our general manufacturing capacities and an increasing LEAP product mix.

Speaker #1: On page nine is our ATM revenue by the 3C market segments. LEAP services are primarily included within our computing applications, with a lesser amount being included in the communications applications.

Speaker #1: As can be seen here, the computing application percentage continues to grow steadily. At this time, we see this trend continuing into 2027 and 2028.

Speaker #1: On page ten, you will find our ATM revenue by service type. Despite the overall growth in our business, we did not see substantial shifts in service types during the quarter.

Ken Hsiang: On page 10, you will find our ATM revenue by service type. Despite the overall growth in our business, we did not see substantial shifts in service types during the quarter. All business lines appear to be keeping pace outside of small adjustments between materials and others. At the beginning of the year, we believed that our test business, led by rapid expansion of our wafer sort business, would outpace growth in our assembly business. While our test business has shown the strong growth we initially expected, our assembly business has been showing even stronger than expected growth, especially as it relates to legacy wire bond services. We now believe that both our assembly and test businesses will grow at similar rates during the year. On page 11, you can see the Q2 results of our EMS business. EMS revenues grew 6% sequentially and 12% annually to TWD 65.8 billion.

Speaker #1: All business lines appear to be keeping pace, outside of small adjustments between materials and others. At the beginning of the year, we believed that our test business, led by the rapid expansion of our wafer sort business, would outpace growth in our assembly business.

Speaker #1: While our test business has shown the strong growth we initially expected, our assembly business has been showing even stronger-than-expected growth, especially as it relates to legacy wire bond services.

Speaker #1: We now believe that both our assembly and test businesses will grow at similar rates during the year. On page eleven, you can see the second quarter results of our EMS business.

Speaker #1: EMS revenues grew 6% sequentially and 12% annually to $65.8 billion. Sequentially, our EMS business's gross margin decreased by 0.6 percentage points to 8.9%. This change was principally the result of product mix differences.

Ken Hsiang: Sequentially, our EMS business' gross margin decreased by 0.6 percentage point to 8.9%. This change was principally the result of product mix differences. EMS operating expenses increased by TWD 0.3 billion sequentially and annually. Our Q2 EMS operating expense ratio of 6.5% was flat sequentially and down 0.4 percentage points annually. Operating margin came in at 2.4%, down 0.6 percentage points sequentially and 0.2 percentage points year over year. The sequential margin decline is the result of product mix and a higher component cost environment. Our Q2 EMS operating profit was TWD 1.6 billion, down TWD 0.3 billion sequentially and up TWD 0.1 billion annually. On the bottom of the page, you will find a graphical representation of our EMS revenue by application. Generally, the moves in the consumer and communication categories are related to the seasonality of the underlying products we service.

Speaker #1: EMS operating expenses increased by $0.3 billion both sequentially and annually. Our second quarter EMS operating expense ratio of 6.5% was flat sequentially and down 0.4 percentage points year over year.

Speaker #1: Operating margin came in at 2.4% down 0.6 percentage points sequentially and 0.2 percentage points year over year. The sequential margin decline is the result of product mix and a higher component cost environment.

Speaker #1: Our EMS second quarter operating profit was $1.6 billion, down $0.3 billion sequentially and up $0.1 billion annually. At the bottom of the page, you will find a graphical representation of our EMS revenue by application.

Speaker #1: Generally, the moves in the consumer and communication categories are related to the seasonality of the underlying products we service. The growth in the computing category is largely driven by business related to our AI accelerator products.

Ken Hsiang: The growth in the computing category is largely driven by business related to our AI accelerator products. From the holding company perspective, we continue to pursue synergies between our ATM and EMS businesses to co-develop system-level solutions, particularly in key areas such as optical interconnects, power delivery, and thermal management. By integrating critical EMS competencies with ATM technologies, we have the potential to optimize entire systems end to end, applying the same co-engineering disciplines that successfully scaled SiP architecture. On page 12, you will find key line items from our balance sheet. At the end of the quarter, we had cash equivalents, and current financial assets of TWD 107.4 billion. Our total interest-bearing debt increased by TWD 40.9 billion to TWD 306.2 billion. Total unused credit lines amounted to TWD 396.2 billion. Our EBITDA for the quarter was TWD 45.8 billion. Our net debt to equity this quarter was 47%.

Speaker #1: From the holding company perspective, we continue to pursue synergies between our ATM and EMS businesses to co-develop system-level solutions, particularly in key areas such as optical interconnects, power delivery, and thermal management.

Speaker #1: By integrating critical EMS competencies with ATM technologies, we have the potential to optimize entire systems end to end, applying the same co-engineering disciplines that successfully scaled SIP architecture.

Speaker #1: On page twelve, you will find key line items from our balance sheet. At the end of the quarter, we had cash, cash equivalents, and current financial assets of $107.4 billion.

Speaker #1: Our total interest-bearing debt increased by $40.9 billion to $306.2 billion. Total unused credit lines amounted to $396.2 billion. Our EBITDA for the quarter was $45.8 billion.

Speaker #1: Our net debt-to-equity this quarter was 47%. On page thirteen, you will find our equipment capital expenditures relative to our EBITDA. Machinery and equipment capital expenditures for the second quarter, in US dollars, totaled $1.7 billion.

Ken Hsiang: On page 13, you will find our equipment capital expenditures relative to our EBITDA. Machinery and equipment capital expenditures for Q2 in US dollars totaled $1.7 billion, of which $840 million was used in packaging operations, $804 million in testing operations, $49 million in EMS operations, and $2 million in interconnect materials operations and others. In addition to spending on machinery and equipment, during Q2, we also spent $658 million on facilities. It is worth reiterating what Dr. Tien Wu spoke of earlier. We are investing in capacities and facilities because what we do has immediate impacts on key bottlenecks in semiconductor supply, performance, and efficiency. The AI build-out, regardless of open or closed model weighting, will require unprecedented hardware capacity and capability expansion. At this point, we are just trying to keep up.

Speaker #1: Of which, $840 million was used in packaging operations, $804 million in testing operations, $49 million in EMS operations, and $2 million in interconnect materials operations and others.

Speaker #1: In addition to spending on machinery and equipment during the quarter, we also spent $658 million on facilities. It is worth reiterating what Dr. Wu spoke of earlier.

Speaker #1: We are investing in capacities and facilities because what we do has immediate impacts on key bottlenecks in semiconductor supply, performance, and efficiency. The AI build-out, regardless of open or closed model weighting, will require unprecedented hardware capacity and capability expansion.

Speaker #1: At this point, we are just trying to keep up. With that, I'll hand the presentation over to Joseph to walk through the company's outlook.

Ken Hsiang: With that, I'll hand the presentation over to Joseph to walk through the company's outlook.

Joseph Tung: Okay. For Q3 2026 outlook. Based on our current business outlook and exchange rate assumption of 1 US dollar to TWD 31.9 versus last quarter's TWD 31.6, management projects overall performance for Q3 2026 to be as follows. On consolidated basis, in TWD terms, our consolidated Q3 revenue should grow by 21% to 22% quarter-over-quarter. Our consolidated Q3 gross margin should be between 20.5% to 21.5%. Our consolidated Q3 operating margin should be between 11.5% to 12.5%. For ATM in TWD terms, our ATM Q3 revenue should grow by 11% to 13% quarter-over-quarter. Our ATM Q3 gross margin should be between 28% to 29%. Our EMS in TWD terms, our EMS Q3 revenue should grow by around 40% quarter-over-quarter.

Speaker #2: 2026 outlook: Based on our current business outlook and exchange rate assumption of one U.S. dollar to 31.9 NT dollars, versus last quarter at 31.6, management projects overall performance for the third quarter of 2026 to be as follows.

Speaker #2: On a consolidated basis, in NT dollar terms, consolidated third quarter revenue should grow by 21 to 22 percent quarter over quarter. Our consolidated third quarter gross margin should be between 20.5 percent and 21.5 percent.

Speaker #2: Our consolidated third quarter operating margin should be between 11.5% to 12.5%. For ATM, in NT dollar terms, our ATM third quarter revenue should grow by 11% to 13%.

Speaker #2: Quarter over quarter, our ATM third quarter gross margin should be between 28% to 29%. In NT dollar terms, our EMS third quarter revenue should grow by around 40% quarter over quarter.

Speaker #2: Our EMS third quarter operating margin should be between 3.2% to 3.4%. With that, this is the 2026 third-quarter outlook. Now, adding a bit of color for the full year and next.

Joseph Tung: Our EMS Q3 operating margin should be between 3.2% to 3.4%. With that is the 2026 Q3 outlook. Adding a bit of color for the full year and next. First, on CapEx. Given stronger demand for LEAP in 2026 and beyond, we will need to add another US $1 billion each this year for facilities and equipment. The total is adding another $2 billion for our CapEx. While the additional investment for facilities and most of the equipment are for LEAP, we also need to add capacity for mainstream advanced packaging and testing to support the general market demand. On LEAP. While this year's LEAP service revenue tracking ahead of our prior quarter guidance of US $3.5 billion, as business momentum continues to be very strong, we are aiming to double our LEAP revenue in 2027.

Speaker #2: First, on capex. Given stronger demand for LEAP in 2026 and beyond, we will need to add another US$1 billion each this year for facilities and equipment.

Speaker #2: So, the total is adding another $2 billion for our capex. While the additional investment for facilities and most of the equipment are for LEAP, we also need to add capacity for mainstream advanced packaging and testing to support the general market demand.

Speaker #2: On LEAP, while this year's LEAP service revenue is tracking ahead of our prior quarter guidance of US dollar $3.5 billion, as business momentum continues to be very strong, we are aiming to double our LEAP revenue in 2027.

Speaker #2: Lastly, on ATM profitability, with expanding margin-accretive LEAP and Test businesses, our second quarter ATM gross margin of 20.3% came in ahead of our guidance.

Joseph Tung: Lastly, on ATM profitability. With expanding margin-accretive LEAP and test businesses, our Q2 ATM gross margin of 20.3% came in ahead of our guidance. We continue to expect sequential margin improvement, with Q4 ATM gross margin likely to exceed our structural margin ceiling of 30%. At such point, we will start to review if we would adjust our structural margin range. With that, thank you.

Speaker #2: We continue to expect sequential margin improvement, with fourth-quarter ATM gross margin likely to exceed our structural margin ceiling of 30%. At such points, we will start to review if we should adjust our structural margin range.

Speaker #2: With that, thank you.

Speaker #3: During the Q&A session that follows, we would appreciate it if your questions could be as clear and concise as possible, and asked singularly.

Ken Hsiang: During the Q&A session that follows, we would appreciate if your questions could be as clear and concise as possible, and asked singularly. We will start by taking questions from live participants, and then alternate in questions from our online participants. I, as the moderator, will be receiving each question and repeating and directing each asked question. After an initial question, the participant may ask a follow-up question, clarifications of the earlier question, or another question entirely. We will move to the next participant. Participants may return to the queue for any additional questions and/or clarifications. Thank you.

Speaker #3: We will start by taking questions from live participants, and then alternate in questions from our online participants. I, as the moderator, will be receiving each question and repeating and directing each asked question.

Speaker #3: After an initial question, the participant may ask a follow-up question, request clarification on the earlier question, or ask another question entirely. Then we'll move to the next participant.

Speaker #3: Participants may return to the queue for any additional questions and/or clarifications. Thank you.

[Company Representative] (Morgan): Thank you. Dr. Wu, just to follow our conversation, your industry peer seems to be more aggressive in the US operation, not just Amkor, but also KYEC announced to do that, right? I want to ask you about your partnership with the US customers and also your operation in the US. I guess it's a little bit separate question, but can you also comment a little bit about the Intel EMIB-T involvement by ASE? Thank you.

Charlie Chan: Thank you. Dr. Wu, just to follow our conversation, your industry peer seems to be more aggressive in the US operation, not just Amkor, but also KYEC announced to do that, right? I want to ask you about your partnership with the US customers and also your operation in the US. I guess it's a little bit separate question, but can you also comment a little bit about the Intel EMIB-T involvement by ASE? Thank you.

Speaker #4: Dr. Wu, just to follow up on our conversation, your interview seems to be more aggressive in the US operation—not just Amkor, but also KYEC announced to do that, right?

Speaker #4: So I want to ask you about your partnership with US customers and also your operation in the US. I guess this is a slightly separate question, but can you also comment a little bit about the Intel eMIPT involvement by ASE?

Speaker #4: Thank you.

Speaker #3: Charlie, you're asking about the competitive landscape that we're facing, and secondly, eMIP.

Ken Hsiang: Charlie, you're asking about the competitive landscape that we're facing, and secondly, EMIB. Okay. Dr. Wu.

Speaker #4: Okay.

Speaker #3: Dr. Wu?

Speaker #4: Well, let me answer the US operation first. What I'm going to talk about, I have repeated several times for the last two years. We do have US operation, ISE test development, also services in California.

Tien Wu: Well, let me answer the US operation first. What I'm going to talk about, I have repeated several times for the last 2 years. We do have US operation, ISE test development, also services in California. We have 1 factory in Fremont, California. We have 1 factory in San Jose. We're in the process of expanding to number 3 and number 4 factories. These are particularly required by our customers during the, well, for the last 20 years in Bay Area for upfront chip design, test development, also technology development, and that is ongoing right now. The agreement that we have with our leading customer is the following: We will develop and build fully automated, efficient line in Taiwan. When we are comfortable with our resources and efficiency, in due time, we will migrate and move the operation to the other places in the world.

Speaker #4: Well, we have one factory in Fremont, California, and one factory in San Jose. We're in the process of expanding to number three and number four factories.

Speaker #4: These are particularly required by our customers during, well, for the last 20 years in the Bay Area for upfront chip design, test development, and also technology development.

Speaker #4: And that is ongoing right now. The agreement that we have with our leading customers is the following: we will develop and build a fully automated, efficient line in Taiwan.

Speaker #4: We are comfortable with our resources and efficiency in due time we will migrate and move the operation to the other places in the world.

Speaker #4: It could be the United States, could be somewhere else. That has always been the case. So it's not like we're not supporting—we are supporting development, R&D, and also architectural design.

Tien Wu: It could be United States, could be somewhere else. That has always been the case. It's not like we're not supporting. We are supporting development, R&D, also architectural design. In terms of manufacturing process development, for now, we are focusing on Taiwan. Until we build the appropriate scale, having the appropriate resources and know-how and efficiency, upon that time, we will work with our customers to move to the other part of the world for better logistics. Okay. The second comment is EMIB. EMIB, I'm going to repeat what TSMC has responded. Right now is really capacity constraint. If there's any other alternative technology that can offer the same yield to resolve the bottleneck that we have for the AI infrastructure, we're welcome to see that. For ASE, we're also collaborating the other customers also along the same line, including EMIB.

Speaker #4: In terms of manufacturing process development, for now, we are focusing on Taiwan. Until we build the appropriate scale, having the appropriate resources, know-how, and efficiency, at that time, we will work with our customers to move to other parts of the world for better logistics.

Speaker #4: Okay. The second comment is eMIP. eMIP, I'm going to repeat what TSMC has responded. Right now, it's really capacity constrained. If there's any other alternative technology that can offer the same yield to resolve the bottleneck that we have for the AI infrastructure, we're welcome to see that.

Speaker #4: For ASE, we're also collaborating with other customers, also along the same lines, including eMIP.

Speaker #3: Okay.

Speaker #4: The following if eMIP posting potential threat or competitive advantages over a co-op, right? That's always a possibility. I have been working in the packaging industry for 40 years.

Tien Wu: The following question is if EMIB posing potential threat or competitive advantages over CoWoS, right? That's always a possibility. I have been working in the packaging industry for 40 years. I've gone through about 1,000 different packaging design. At the end of the day, probably 20 will be here. There's always a competing technology, alternative materials. That's always been the focus of R&D. Right? For EMIB, we're happy to see if EMIB can ramp up. In terms of efficiency, performance, that's up to the system as well as the market to decide. We're not going to make a judgment call who has a superiority. Our focus is to support the CoWoS. We're trying to ramp up the CoWoS scale efficiency as fast as we can. If customer asks for other alternative technology, ASE will also include that in our roadmap. Right?

Speaker #4: I've gone through about 1,000 different packaging designs. At the end of the day, probably 20 will leave will be here. So there's always a competing technology alternative materials that's always been the focus of R&D.

Speaker #4: Right? For eMIP, we're happy to see if eMIP can ramp up. In terms of efficiency and performance, that's up to the system as well as the market to decide.

Speaker #4: We're not going to make a judgment call on who has superiority, but our focus is to support the co-ops. We're trying to ramp up the co-ops' scale and efficiency as fast as we can.

Speaker #4: If a customer asks for alternative technology, ASE will also include that in our roadmap. All right? I don't think there's a potential threat. Again, we are a pure play.

Tien Wu: I don't think there's a potential threat. Again, we are a pure-play. If the EMIB substrate becomes the right alternative, we just buy EMIB substrate and we do the assembly. There is no conflict. Anything is welcome. It is not like a zero-sum game, like you can only choose one. It's never been the case, right? The world is a big place.

Speaker #4: If the eMIP substrate becomes the right alternative, which is by eMIP substrate, and we do the assembly, there is no conflict. So anything is welcome.

Speaker #4: It is not like a zero-sum game, like you can only choose one. I mean, it's never been the case, right? The world is a big place.

Speaker #3: More question from the floor?

Ken Hsiang: More question from the floor?

Speaker #4: All right. Hi, Dr. Wu, and Joseph, Ken. Thank you for taking my question. My first question is, can you give us a little bit more detail guideline for your Q3 ATM demand driver for LEAP and also for general packaging and testing?

[Analyst] (Daiwa): Right. Hi, Dr. Wu and Joseph, Ken. Thank you for taking my question. My first question is, can you give us a little bit more detailed guideline for your Q3 ATM demand driver for LEAP and also for general packaging and testing, the more detailed demand driver across the key applications of products?

[Analyst 1]: Right. Hi, Dr. Wu and Joseph, Ken. Thank you for taking my question. My first question is, can you give us a little bit more detailed guideline for your Q3 ATM demand driver for LEAP and also for general packaging and testing, the more detailed demand driver across the key applications of products?

Speaker #4: The more detailed demand driver across the key applications of products.

Speaker #3: Rick, you're asking for maybe segmented drivers of what's helping the industry or our results pick up at this point. Is that correct?

Ken Hsiang: Rick, you're asking for maybe segmented drivers of what's helping the industry or our results pick up at this point. Is that correct?

Speaker #4: Yeah. Right. Demand driver.

[Analyst] (Daiwa): Yeah, right. Demand driver.

[Analyst 1]: Yeah, right. Demand driver.

Speaker #3: The question is, for the Q3 driver, again, we have a very awkward and peculiar position because we're capacity constrained. So, we talk about 12 to 13 percent growth.

Tien Wu: The question is the Q3 driver. Again, we have a very awkward and peculiar position because we're capacity constrained. We talk about 12% to 13% growth. That means we have to add 12% to 13% capacity. The demand, overall, is strong. I'm not going to comment about the memory pricing or any consumer devices, but overall, all of our customers are asking for more devices for Q3 and Q4.

Speaker #3: That means we have to add 12 to 13 percent capacity. The demand overall is strong. I'm not going to comment about the memory pricing, or any consumer devices, but overall, all of our customers are asking for more devices for Q3 and Q4.

Speaker #3: Rick, follow-up?

Ken Hsiang: Rick, follow up?

Speaker #4: No, not follow-up. The second question. Can you elaborate on your development of the full co-ops, and this year, roughly how much is still coming from outsourcing?

[Analyst] (Daiwa): No, not follow up. The second question. Can you elaborate your development of the full CoWoS-like, and this year, roughly about how much is still coming from outsourcing, and what's your development and progress into next year of your internal full CoWoS development?

[Analyst 1]: No, not follow up. The second question. Can you elaborate your development of the full CoWoS-like, and this year, roughly about how much is still coming from outsourcing, and what's your development and progress into next year of your internal full CoWoS development?

Speaker #4: And what's your development in progress into next year of your internal full co-ops development?

Speaker #3: Rick, you're looking for the composition of our LEAP services, between what is potentially OS-type services and full process and test.

Ken Hsiang: Rick, you're looking for the composition of our LEAP Services, between what is potentially OSAT type services and full process and test.

Speaker #2: I think basically, we are on track with our full process business development. But this year, we said that we're going to have about 300 million dollar worth of revenue coming from that space.

Tien Wu: I think basically, we are on track with our full process business development. This year, we said that we are going to have about TWD 300 million worth of revenue coming from that space, and things are on track. We are aggressively expanding that capacity, and by next year, I think we will have pretty substantial growth in that area as well. Again, this is something that under development. I think margin wise, has not fully reflected at this point, going forward, I think full process will also be another margin accretive business for us, and with pretty good substantial growth coming into next year.

Speaker #2: And things are on track. We are aggressively expanding that capacity. And by next year, I think we will have pretty substantial growth in that area as well.

Speaker #2: And again, this is something that is under development. We have not fully, I think, margin-wise, reflected it at this point. But going forward, I think the full process will also be another marginally accretive business for us.

Speaker #2: And with pretty much pretty good, substantial growth coming into next year.

Speaker #3: We have our next question coming from online.

Ken Hsiang: We have our next question coming from online.

Speaker #5: Next question is from Sunny Lan of UBS. Sunny?

[Company Representative] (ASE Technology Holding): Next question is from Sunny Lin of UBS. Sunny?

Operator: Next question is from Sunny Lin of UBS. Sunny?

Speaker #6: Hello. Could you hear me okay?

Sunny Lin: Hello, could you hear me okay?

Speaker #3: Yes, we can hear you.

Ken Hsiang: Yes, we can hear you.

Speaker #6: Thank you very much. Good afternoon. Congrats on the very strong outlook. Sorry for not being able to attend in person. So my first question is, maybe to follow up on 2027 LEAP outlook, and so maybe take a step back.

Sunny Lin: Thank you very much. Good afternoon. Congrats on the very strong outlook. Sorry for not being able to attend in person. My first question is maybe to follow up on 2027 LEAP outlook. Maybe take a step back. You are guiding for fiscal year LEAP to exceed TWD 3.5 billion. Should we be looking at maybe TWD 4 billion or maybe between TWD 3.5 to 4 billion? For 2027, for it to double, have we already had an idea in terms of breakdown by full process, outsourcing, for substrate, and also test?

Speaker #6: You are guiding for this year LEAP to exceed $3.5 billion. So should we be looking at maybe $4 billion, or maybe between $3.5 to $4 billion?

Speaker #6: And then for 2027, for it to double, have we already had an idea in terms of the breakdown by full process, outsourcing for substrate, and also test?

Speaker #3: Sunny, you're looking for an update on our LEAP guidance for this year, and then looking forward into 2027 to see whether we have any nuggets of information for you.

Ken Hsiang: Sunny, you are looking for an update on our LEAP guidance for this year, looking forward into 2027, whether we have any nuggets of information for you. Is that correct?

Speaker #3: Is that correct? Thank you. Currently.

Sunny Lin: Right. Thank you, Ken.

Ken Hsiang: Thank you.

Speaker #2: Well, I think Tim mentioned that we are ahead of our LEAP revenue this year. And by 'ahead,' I think we will be adding another couple of hundred million dollars' worth of revenue coming out of this year.

Tien Wu: Well, I think, Ken mentioned that we are ahead of our LEAP revenue this year. By ahead, I think we will be adding another couple of hundred million dollars worth of revenue coming out of this year. On top of that, for next year, we still see very strong momentum, and we believe at this point that we should be able to double the LEAP revenue next year. In terms of, we are going full speed ahead with both our assembly as well as test. As Ken mentioned, at this point, assembly is also catching up in terms of its growth momentum with test. By next year, I think the combination will be pretty much similar to what we're seeing this year.

Speaker #2: And on top of that, for next year, we still see very strong momentum. And we believe, at this point, that we should be able to double that—to double the revenue, or LEAP revenue, next year.

Speaker #2: We are going full speed ahead with both our assembly as well as test. And as Ken mentioned, at this point, assembly is also catching up in terms of its gross momentum with test.

Speaker #2: So by next year, I think the combination will be pretty much similar to what we're having seen this year.

Speaker #6: Well, but sorry, maybe let me clarify. If I may, so just want to get a bit more color in terms of LEAP breakdown going to 2027.

Sunny Lin: Well, sorry, maybe let me clarify, if I may. Just want to get a bit more color in terms of LEAP breakdown going to 2027. I do assume that full process should account for a much larger portion for 2027, any color will be very helpful.

Speaker #6: I do assume that full process should account for a much larger portion in 2027, so any color will be very helpful.

Speaker #4: Probably two-quarters from now will give you a better color. Thank you.

Tien Wu: Probably two quarters from now will give you a better color. Thank you.

Speaker #6: Sure. So maybe, if I may, second question, Dr. Wu, I want to double-click on your earlier comment regarding AI driving lots of new applications with different complexities and scope.

Sunny Lin: Sure. Maybe, if I may, second question, Dr. Wu, I want to double-click on your earlier comment regarding AI driving lots of new applications with different complexities and scope. If I may, maybe based on your current engagement with the clients, what type of devices you are seeing better visibility that, and then if we could see a more meaningful ramp in the coming few years?

Speaker #6: And so if I may, maybe based on your current engagement with the clients, what type of devices you are seeing better visibility that and then if we could see more meaningful rep in the coming few years.

Speaker #3: Sunny, you're looking for a little bit more color in terms of what potential applications and devices we may see coming in the future.

Tien Wu: Sunny, you're looking for a little bit more color in terms of what potential applications and devices that we may see coming in the future.

Speaker #6: Yeah. Due to AI.

Sunny Lin: Yeah. Due to AI.

Speaker #4: I would like to separate the technology statement versus business statement. Technology would take 15 to 20 years to develop. And the business statement typically, you're interested in four quarters, probably the longest lead time.

Tien Wu: I would like to separate the technology statement versus business statement. Technology would take 15 to 20 years to develop. The business statement, typically, you're interested in four quarters, probably the longest lead time. Let me comment on the CoWoS, for example, or EMIB and other alternative technology. The AI data center is driving computational intensity, therefore, the reticle size becomes bigger and bigger. That we know already. Everybody demands more bandwidth from logic, ASIC, as well as memory. Therefore, the immediate up-ramp will be the panel or more complicated CoWoS to accommodate a bigger chiplet or a reticle size. Okay. That's one dimension that we're dealing with. We also comment that somewhere along the line, towards the end of the year, the CPO will start launching. Initially, could be in small volume.

Speaker #4: So let me comment on the co-ops. For example, for EMIP and other alternative technology, the AI data center is driving computational intensity. Therefore, the rectal size becomes bigger and bigger.

Speaker #4: That we know already. Everybody demands more bandwidth—from logic, ASIC, as well as memory. Therefore, the immediate upfront will be the panel, or more complicated co-ops.

Speaker #4: To accommodate the bigger chiplet or reticle size. Okay, that's one dimension that we're dealing with. We also comment that somewhere along the line, towards the end of the year, the CPO will start launching.

Speaker #4: Initially, could be in small volume. However, we will have a critical benchmark information in terms of the bandwidth and the system performance and also the thermal dissipation that can resolve.

Tien Wu: However, we will have a critical benchmark information in terms of bandwidth and the system performance, and also the thermal dissipation that can resolve. Depending on the cost-performance ratio and also the yield, we will learn critical information. When the reticle size becomes bigger and the optics to come in at a different hierarchy, then the power delivery becomes the next immediate questions. This will be deployed in the next 2 to 3 years. On a much longer term, there are other things people are working on. For example, today, we're primarily dealing with digital and digital. There's a lot of activity going on to start accommodating sensor, analog, mixed signal with digital. If you think about the humanoid applications, other than the brain, the eyes, ears, fingers, they're all analog.

Speaker #4: Pending on the cost performance ratio and also the yield, we will learn critical information. When the rectal site becomes bigger, and the optics become in a different hierarchy, then the power delivery becomes the next immediate questions.

Speaker #4: This will be deployed in the next two to three years. On a much longer term, there are other things people are working on. For example, today we're primarily dealing with digital and digital.

Speaker #4: There's a lot of activity going on to start accommodating sensor analog, mixed signal, with digital. If you think about the humanoid applications, other than the brain, the eyes, ears, fingers, they're all analog.

Speaker #4: So what are the technology that can provide bandwidth, as well as the fully automated, high volume integrated digital analog mixed signal? These are the infrastructure pure play OSA supplier should work with the customer trying to develop the technology takes 15 to 20 years to develop.

Tien Wu: What are the technology that can provide the low power, the bandwidth, as well as the fully automated, high volume, integrated capability to do digital, analog, mixed signal? These are the infrastructure a pure-play OSAT supplier should work with the customer trying to develop. The technology takes 15 to 20 years to develop. All of the business we're taking are deploying now are the result for the past 15 years of effort. I would like to make that separation. If you're interested, I think the AI has a very long leg. You can listen to all the smart people about the infrastructure, AI data center, about agentic, and also the physical interface. I also would like to give you some color on how I see the AI. I'm not the best person to talk about it. I have a very simple view to look at AI.

Speaker #4: All of the business we're taking are deploying now are the results for the past 15 years of effort. So I would like to make that separation.

Speaker #4: But if you're interested, I think AI has a very long leg. You can listen to all the smart people talk about infrastructure, AI data centers, about agentic, and also the physical interface.

Speaker #4: I also would like to give you some color on how I see the AI. I'm not the best person to talk about it. I have a very simple view to look at AI.

Speaker #4: AI is for new pattern recognition. In the domain knowledge you're familiar with, that's straightforward. But when people start crossing domains—like IT versus pharmaceuticals, or IT versus medical—the new patterns get recognized.

Tien Wu: AI is for a new pattern recognition in the domain knowledge you're familiar with. When people start crossing domain, IT versus pharmaceutical, IT versus medical, the new pattern get recognized. When you recognize the pattern, that's the potential application. We're at the beginning of the knowledge collection and the early stage of a pattern recognition. That's what AI does. Today, we'll only talk about single field. Eventually, in the world, I do not know how many, it's got to be 100 domain. How do you bridge all of the domain knowledge and start creating something hybrid? The medicine, the surgical, humanoid, all of these are the potential application. All of the technology will use exactly the building block that we're developing today. What we're doing, not just for AI data center.

Speaker #4: When you recognize the pattern, that's the potential application. We're at the beginning of the knowledge collection. And the early stage of a pattern recognition.

Speaker #4: That's what AI does. But today, we're only talking about single fields. Eventually, in the world, I do not know how many. It's got to be a hundred domains.

Speaker #4: How do you bridge all of the domain knowledge and start creating something hybrid? The medicine, the surgical, humanoid, all of this are the potential application.

Speaker #4: All of the technology we use exactly the building block that we're developing today. So what we're doing not just for AI data center. If all we're thinking about is AI data center for a specific customer, then we really miss the point of our engineering does.

Tien Wu: If all we're thinking about is AI data center for a specific customer, then we really miss the point of what engineering does. Engineering is to build elegant solution for the future demand, regardless how difficult it is. It takes 15 to 20 years. This is not a stock trade. What you're seeing is we are the first mover. We already have the cluster efficiency in the early stage of this AI transition. I think that means a lot, if you really understand what I'm trying to tell you.

Speaker #4: Engineering is to build elegant solutions for future demand, regardless of how difficult it is. It takes 15 to 20 years. This is not a stock trade.

Speaker #4: But what you’re seeing is, we are the first mover. We already have the cluster efficiency in the early stage of this AI transition. I think that means a lot, if you really understand what I’m trying to tell you.

Speaker #6: No problem. Sounds good. Thank you very much for sharing, Dr. Tien.

Sunny Lin: No problem. Sounds good. Thank you very much for sharing, Dr. Tien.

Speaker #3: Thank you, Sunny.

Tien Wu: Thank you, Sunny.

Speaker #7: Next online question is from Goku Hariharan.

[Company Representative] (ASE Technology Holding): Next online question is from Gokul Hariharan.

Operator: Next online question is from Gokul Hariharan.

Speaker #5: Okay. Good afternoon. Thanks, Dr. Wu, Joseph, Ken. Let me first question, just to Dr. Wu. You have been working in very close partnership with the lead foundry customer.

Gokul Hariharan: Okay, good afternoon. Thanks, Dr. Wu, Joseph, again. Maybe first question, just to Dr. Wu. You have been working in very close partnership with the lead foundry customer, sorry, lead foundry partner for the last few years, which has been helping the LEAP revenue growth quite nicely. They seem to be transitioning a little bit towards 3D panel level, kind of future technologies, at least pretty aggressively it looks like in the next two, three years, compared to the last three, four years have been largely been about CoWoS and various forms of CoWoS. As they are embarking on that kind of transition, Dr. Wu, could you help us understand what is ASE's role? Is it getting elevated further in that partnership? Obviously, some of the full process CoWoS is also a result of them leaving some of the older areas to you as well.

Speaker #5: Sorry, lead foundry partner for the last few years, which has been helping the lead revenue growth quite nicely. They seem to be transitioning a little bit towards 3D panel-level, kind of future technologies.

Speaker #5: At least pretty aggressively. It looks like in the next two to three years—compared to the last three to four years, which have largely been about co-ops and various forms of co-ops.

Speaker #5: So as they are embarking on that partnership and that kind of transition, Dr. Wu, could you help us—will our role be getting elevated further in that partnership?

Speaker #5: And obviously, some of the full-process co-ops are also a result of them leaving some of the older areas to you as well. So, could you just outline what you talked about on the technology side in relation to how this partnership with the lead foundry is going to work out in the next maybe two or three years, first?

Gokul Hariharan: Just could you outline what you talked about on the technology side, in relationship to how this partnership with the lead foundry is going to work out in the next maybe two, three years first.

Speaker #3: Goku, you're asking about as our foundry partner progresses into their further down their technology roadmaps, how our plan what our plans are to intermix and/or interlink with them in this process.

Tien Wu: Gokul, you're asking about, as our foundry partner progresses further down their technology roadmaps, what our plans are to intermix and/or interlink with them in this process. Is that correct?

Ken Hsiang: Gokul, you're asking about, as our foundry partner progresses further down their technology roadmaps, what our plans are to intermix and/or interlink with them in this process. Is that correct?

Speaker #3: Is that correct?

Speaker #5: Yeah. And do you get more value add out of it as they kind of migrate out to more complicated packaging?

Gokul Hariharan: Yeah. Do you get more value add out of it as they kind of migrate out to more complicated packaging?

Speaker #4: The collaboration is long-term. Once again, I want to focus on the pure play. The foundry ideally is a pure play for wafer. Testing, bumping, packaging, are enabler to support wafer to the correct customer in the correct timing also with the correct efficiency.

Gokul Hariharan: The collaboration is long-term. Once again, I want to focus on the pure-play.

Tien Wu: The collaboration is long-term. Once again, I want to focus on the pure-play. The foundry ideally is a pure-play for wafer. Testing, bumping, packaging are enabler to support the delivery of the wafer to the correct customer in the correct timing, also with the correct efficiency. Packaging pure-play is to develop a packaging architecture, all the LEGO pieces to facilitate that. When the pure-play foundry with the pure-play packaging collaborate, that boundary is very clear. Today, there are packaging that needs to be taken by the foundry people, because access to the leading-edge wafer is just simply not available to the others. Some architectural requirement that has strict IP that would like to honor and respect the customer as well as the foundry. That is a domain that the pure-play wafer people needs to decide. Preclude from that, the collaboration will cover all aspects in the packaging arena.

Tien Wu: The foundry ideally is a pure-play for wafer. Testing, bumping, packaging are enabler to support the delivery of the wafer to the correct customer in the correct timing, also with the correct efficiency. Packaging pure-play is to develop a packaging architecture, all the LEGO pieces to facilitate that. When the pure-play foundry with the pure-play packaging collaborate, that boundary is very clear. Today, there are packaging that needs to be taken by the foundry people, because access to the leading-edge wafer is just simply not available to the others. Some architectural requirement that has strict IP that would like to honor and respect the customer as well as the foundry. That is a domain that the pure-play wafer people needs to decide. Preclude from that, the collaboration will cover all aspects in the packaging arena.

Speaker #4: Packaging pure play is to develop a packaging architecture. All the LEGO pieces to facilitate that. When the pure play foundry with the pure play packaging collaborate, that boundary is very clear.

Speaker #4: So today, there are packaging needs that have to be met by the foundry people because access to the leading-edge wafer is just simply not available to others.

Speaker #4: Or some architecture requirement that has strict IP that would like to honor and respect the customer as well as the foundry. That is a domain that the pure play wafer people needs to decide.

Speaker #4: But precluding that, the collaboration will cover all aspects in the packaging arena. In terms of where do we stop the line? When do we start the line?

Tien Wu: In terms of where do we stop the line, when do we start the line, that depends on the wisdom of the management team of the ecosystem collaborator. Right? I am not sure how to give you a better answer. As you can see, the OS, the full process, all of the collaboration are the full spectrum. In terms of future, we do not know. It really depends on the pure-play IP as well as the customer's requirement. We will try to navigate through all of the complexity. The important thing is, we all understand we would like to provide speedy, the most elegant solution in the quickest amount of time to our customers collectively. That understanding is very clear, and it is very obvious for the next three years as well as the ramp-up in the next few years.

Speaker #4: That depends on the wisdom of the management team of the ecosystem collaborator. I'm not sure how to give you a better answer. But as you can see, the OS, the full process, all of the collaboration, are the full spectrum.

Speaker #4: In terms of the future, we do not know. But it really depends on the pure-play IP, as well as the customers' requirements. But we will try to navigate through all of the complexity.

Speaker #4: But the important thing is we all understand we would like to provide speedy the most elegant solution in the quickest amount of time to our customers collectively.

Speaker #4: That understanding is very clear. And it's very obvious for the next three years as well as the ramp-up in the next few years.

Speaker #5: Got it. That's very clear. Thank you, Dr. Wu. My next question is just on a couple of the guidance increases that you have one is on LEAP for 2027.

Gokul Hariharan: Got it. That is very clear. Thank you, Dr. Wu. My next question is just on a couple of the guidance increases that you have. One is on LEAP for 2027. I think previously we were expecting, I think, $1.9 billion or so additional. Now we are expecting doubling of the revenue. Is that primarily coming from having more line of sight into capacity availability? Because I think demand is probably still much higher than what you can really support even next year. Secondly, mainstream, as expecting the growth to be close to 20% this year from the, I think, 13% previously. Where is that upside coming from on the mainstream growth?

Speaker #5: I think previously we were expecting, I think, 1.9 billion or so additional. Now we're expecting doubling of the revenue. Is that primarily coming from having more line of sight into capacity availability?

Speaker #5: Because I think demand is probably still much higher than what you can really support even next year. And secondly, mainstream is expecting the growth to be close to 20% this year, from, I think, 13% previously.

Speaker #5: Where is that upside coming from on the mainstream growth?

Speaker #3: Goku, you're looking for incremental explanation related to what is driving our LEAP 2027 outlook. And also, what has helped us drive our mainstream expectations up this year?

Tien Wu: Gokul, you are looking for incremental explanation related to what is driving our LEAP 2027 outlook, and also what has helped us drive our mainstream expectations up this year. Is that correct?

Ken Hsiang: Gokul, you are looking for incremental explanation related to what is driving our LEAP 2027 outlook, and also what has helped us drive our mainstream expectations up this year. Is that correct?

Speaker #3: Is that correct?

Speaker #5: That's right. Yeah.

Gokul Hariharan: That's right. Yeah.

Speaker #4: We have a clear line of sight in terms of who needs what. We also have a clear line of sight on the building—the facility that we're constructing today.

Joseph Tung: We have clear line of sight in terms of who needs what.

Tien Wu: We have clear line of sight in terms of who needs what. We also have a clear line of sight on the building, the facility that we're building today. When we make a comment that this year, by year-end, we're tracking ahead of the 3.5 billion, that comment is made because we see our yield and execution.

Joseph Tung: We also have a clear line of sight on the building, the facility that we're building today. When we make a comment that this year, by year-end, we're tracking ahead of the 3.5 billion, that comment is made because we see our yield and execution.

Speaker #4: When we make a comment that this year, by year-end, we're tracking ahead of the $3.5 billion, that comment is made because we see our yield and execution that gave us the confidence to tell you that by year-end we will achieve that target.

Joseph Tung: That gave us the confidence to tell you that by year-end, we will achieve that target. By the same token, we also give you a comment that whatever that target has been achieved by year-end, with the next 12 months building new facility and adding new machines, we will be able to double that. That line of sight is there. The uncertainty exists in terms of how can we execute. The business demand is not a concern. It's our own capability to execute the two line of sight, which is clear in front of us. In terms of the general devices, we see very strong demand in industrial, power, connectivity, and storage devices. I do not know what the general market for semiconductor this year. I don't have that number. Right?

Tien Wu: That gave us the confidence to tell you that by year-end, we will achieve that target. By the same token, we also give you a comment that whatever that target has been achieved by year-end, with the next 12 months building new facility and adding new machines, we will be able to double that. That line of sight is there. The uncertainty exists in terms of how can we execute. The business demand is not a concern. It's our own capability to execute the two line of sight, which is clear in front of us. In terms of the general devices, we see very strong demand in industrial, power, connectivity, and storage devices. I do not know what the general market for semiconductor this year. I don't have that number. Right?

Speaker #4: But at the same time, we also gave you a comment that whatever target has been achieved by year-end, within the next 12 months—by building a new facility and adding new machines—we will be able to double that.

Speaker #4: That line of sight is there. The uncertainty exists in terms of how can we execute. So the business demand is not a concern. It's our own capability to execute the two line of sight, which is clear in front of us.

Speaker #4: In terms of the general devices, we see very strong demand in industrial power connectivity and storage devices. I do not know what the general market from semiconductor this year I don't have that number.

Speaker #4: Right? I believe we will outperform the general market simply because of our association with stronger AI infrastructure development and also our superior capability to have fully automated lines for most of the general devices.

Tien Wu: I believe we will outperform the general market simply because our association with a stronger AI infrastructure development, also our superior capability to have fully automated lines for most of the general devices. People want to build devices to go into electric vehicle, AI data center, or any high impact, high risk applications. Chances are they will use our fully automated line. That's why we're having very good attraction. In terms of capacity expansion, not only we need to expand the LEAP, we also need to expand the general market. That's putting tremendous amount of pressure on ASE. Which is why I think during the shareholders meeting, I complained that ASE is building 13 new facilities simultaneously this year.

Speaker #4: So if people wants to build devices to go into electrical vehicle, AI data center, or any high-impact, high-risk applications, chances are they will use our fully automated line.

Speaker #4: That's why we're having very good traction. So, in terms of capacity expansion, not only do we need to expand the LEAP, we also need to expand the general market.

Speaker #4: That's putting a tremendous amount of pressure on ASE, which is why I think, during the shareholders meeting, I complained that ASE is building 13 new facilities simultaneously this year.

Speaker #4: And we just bought another seven brownfields, so we’re building, we’re buying, and we’re spending capex. We’re not happy about it. But the question now is, that is our obligation—this is why we’re here.

Tien Wu: We just bought another seven brownfields. We're building, we're buying, and we're spending CapEx. We're not happy about it, the question now is, that is our obligation. This is why we're here. We want to make sure we are providing the critical capacity to the best of our capability to satisfy the long-term objective for all of our customers.

Speaker #4: We want to make sure we are providing the critical capacity to the best of our capability to satisfy the long-term objectives of all of our customers.

Speaker #5: Got it. Yeah, that's very clear. Thanks. Thank you very much, Dr. Wu. Thank you.

Gokul Hariharan: Got it. That's very clear. Thanks. Thanks very much, Dr. Wu. Thank you.

Speaker #3: Charlie, do you want to shot at a another round of questions there? Yeah? Go ahead. Microphone.

Ken Hsiang: Charlie, do you want a shot at another round of questions there? Go ahead on microphone.

[Company Representative] (Morgan): Thanks again. I do have two questions, can I make a clarification on the previous Q&A?

Charlie Chan: Thanks again. I do have two questions, can I make a clarification on the previous Q&A?

Speaker #6: Since, again, I do have two questions, but may I first make a clarification on the previous Q&A, please?

Ken Hsiang: Please, go ahead.

Speaker #3: Go ahead.

Speaker #6: So, about the LEAP revenue next year, right? So, just to confirm, you're saying the mix will be very similar to this year—next year's LEAP revenue mix, right?

[Company Representative] (Morgan): Yeah. About the LEAP revenue next year, right? Joseph, you talked about the mix would be very similar to this year, next year's LEAP revenue mix, right? According to our analysis, it seems like your full kind of a 2.5D, the end customer is x86 CPU. Their part is growing 3x, right? I assume your testing business is also growing more than double. How come the rest of the kind of substrate, kind of outsourcing can also double next year? Nvidia, I think the street consensus is next year is growing 50%, TSMC capacity extension is like 70%.

Charlie Chan: Yeah. About the LEAP revenue next year, right? Joseph, you talked about the mix would be very similar to this year, next year's LEAP revenue mix, right? According to our analysis, it seems like your full kind of a 2.5D, the end customer is x86 CPU. Their part is growing 3x, right? I assume your testing business is also growing more than double. How come the rest of the kind of substrate, kind of outsourcing can also double next year? Nvidia, I think the street consensus is next year is growing 50%, TSMC capacity extension is like 70%.

Speaker #6: But according to our analysis, it seems like you have four kinds of 2.5D. The end customer is x86 CPU. Their part scoring is 3x, right?

Speaker #6: And I assume you're testing business also going more than double. So how come the rest of the kind of consumption kind of outsourcing can also double next year?

Speaker #6: Because Nvidia I think the three consensus is like next year is growing 50%. And TSMC calls extension is like 70%.

Speaker #5: Well, I think that was referring to, in general, assembly and test seems to have the same momentum. But assembly includes not just OS; there are full processes.

Joseph Tung: Well, I think I was referring to in general, assembly and test seems to have the same momentum. Assembly includes not just OS. There are full process, there are other steps or process steps that we are entering. Also some new packages that are coming on stream. I think that's a general description of what we are seeing next year in terms of between assembly and test.

Speaker #5: There are other steps or process steps that we are entering, as well as some new packages that are coming on stream. So I think that's a general description of what we are seeing next year in terms of assembly and test.

Speaker #6: Anyway, we're very happy to see that strong growth. I just want to make sure we get the breakdown right. And, next question is a little bit joking, but I just see that your quarterly CAPEX is fitting your EBITDA, right?

[Company Representative] (Morgan): We were very happy to see that strong growth. I just want to make sure we get the breakdown right. Next question is a little bit joking, but I just see that your quarterly CapEx is feeding your EBITDA, right? Is that your free cash flow is also turning negative. Do you think share price will react negatively tomorrow?

Charlie Chan: We were very happy to see that strong growth. I just want to make sure we get the breakdown right. Next question is a little bit joking, but I just see that your quarterly CapEx is feeding your EBITDA, right? Is that your free cash flow is also turning negative. Do you think share price will react negatively tomorrow?

Speaker #6: So is it that your free cash flow is also turning negative? Do you think the share price will react negatively tomorrow?

Speaker #3: Yeah, I think we will continue to have very heavy CAPEX for this year—not only this year, but also going into next year. So I think the negative cash flow situation will remain for some time.

Joseph Tung: Yeah, I think we will continue to have very heavy CapEx for this year. Not only this year, but also going into next year. I think the negative cash flow situation will remain for some time. At the same time, we're still maintaining a very healthy balance sheet, and we do have multiple cost-effective funding sources to fund the upcoming CapEx requirement.

Speaker #3: But at the same time, we are still maintaining a very healthy balance sheet. And we do have multiple cost-effective funding sources to fund the upcoming CAPEX requirement.

Joseph Tung: At the same time, we're still maintaining a very healthy balance sheet, and we do have multiple cost-effective funding sources to fund the upcoming CapEx requirement.

Speaker #3: So at this point, I think we are we're pretty confident that we can we will be able to support our growth in a healthy manner.

Joseph Tung: At this point, I think we're pretty confident that we will be able to support our growth in a healthy manner. We are still at the early stage of this mega trend. Like I said last time, we are not going to be shy in making the necessary investment, not just to support our customer, but also to maintain our clear leadership position in this field.

Speaker #3: And we are still at the early stage of this mega trend. And so, like I said last time, we are not going to be shy in making the necessary investments to not just support our customers, but also to maintain our clear leadership position in this field.

Speaker #6: Okay. Thanks, Joseph. Yeah. We very like to hear you have a more funding need. So last one is the pricing and the margin. So we keep hearing from your customers that you hike price aggressively in second half.

[Company Representative] (Morgan): Okay. Thanks, Joseph. Yeah. We very like to hear you have a more funding need. Last one is the pricing and the margin. We keep hearing from your customers that you hike price aggressively in H2. Can we confirm if this is the case? Whether it's more price hike in the traditional service or the advanced packaging? I think it's part one. Secondly, how does that translate into your long-term gross margin outlook? I think you were having this 26% to 29% margin range for several years, right? Do you think you can break through the 30% anytime soon? Thank you.

Charlie Chan: Okay. Thanks, Joseph. Yeah. We very like to hear you have a more funding need. Last one is the pricing and the margin. We keep hearing from your customers that you hike price aggressively in H2. Can we confirm if this is the case? Whether it's more price hike in the traditional service or the advanced packaging? I think it's part one. Secondly, how does that translate into your long-term gross margin outlook? I think you were having this 26% to 29% margin range for several years, right? Do you think you can break through the 30% anytime soon? Thank you.

Speaker #6: Can we confirm if this is a case where there's more price hike in traditional services or in advanced packaging? I think it's the first one.

Speaker #6: And secondly, how does that translate into your kind of long-term gross margin outlook? I think you were having this, like, 26 to 29 percent margin range for several years, right?

Speaker #6: Do you think you can break through the 30% anytime soon? Thank you.

Speaker #3: Yeah. I think it's like I said in the outset, we will be we're very likely to exceed the margin ceiling in fourth quarter. And at that point of time, I think we will be we will start to review whether we should adjust the margin structural margin range of course when I say adjust, I mean upward adjustment.

Joseph Tung: Yeah. I think it's, like I said in the outset, we're very likely to exceed the margin ceiling in Q4. At that point of time, I think we will start to review whether we should adjust our structural margin range. Of course, when I say adjust, I mean upward adjustment. I think we are still in a very friendly pricing environment. I think, of course, we saw a lot of inflationary pressures in terms of materials and components so far. We can definitely pass on these cost increases to our customers through our pricing arrangements. Of course, we'll continue to see for the most suitable pricing strategy, considering the situation as well as our margin, our return requirement.

Speaker #3: I think we are still in a very, very kind of friendly pricing environment. I think, of course, we saw a lot of inflationary pressure in terms of materials and components and so forth.

Speaker #3: So far, we can definitely pass on these cost increases to our customers through our pricing arrangements. And of course, we'll continue to seek the most suitable pricing strategy.

Speaker #3: Considering the situation, as well as our margin return requirement.

Ken Hsiang: Are you okay? Oh, okay. The next question, we will go back online.

Speaker #6: Are you okay? Okay. So, for the next question, we will go back online.

[Company Representative] (ASE Technology Holding): Our next online question is from Hass Liu of BOA.

Operator: Our next online question is from Haas Liu of BOA.

Speaker #7: Our next online question is from Hasliu of BOA.

Speaker #8: Hi, can you hear me? Thank you so much for your time today. I just have a few questions. My first one is: when you commented on the gross margins, you mentioned it's likely to exceed the ceiling of your structural gross margins range in the fourth quarter.

Hass Liu: Hi, can you hear me?

Haas Liu: Hi, can you hear me?

[Company Representative] (ASE Technology Holding): Yes.

Operator: Yes.

Hass Liu: Thank you so much for your time today. Yeah. Just a few questions from me. I think first one is that when you commented on the gross margins it's likely to exceed the ceiling of your structural gross margins range in Q4. Would you be able to share with us how much of that would actually be contributing from your price hike on the mature part of the business, and how much of that would be potentially lifted by your growing mix in the lead contribution? Thank you.

Haas Liu: Thank you so much for your time today. Yeah. Just a few questions from me. I think first one is that when you commented on the gross margins it's likely to exceed the ceiling of your structural gross margins range in Q4. Would you be able to share with us how much of that would actually be contributing from your price hike on the mature part of the business, and how much of that would be potentially lifted by your growing mix in the lead contribution? Thank you.

Speaker #8: Would you be able to share with us how much of that would actually be contributing from your price hike on the much more part of business and how much of that would be potentially looked at by your growing mix in the LEAP contribution?

Speaker #8: Thank you.

Speaker #6: Haas, you were kind of breaking up, but I think you're asking what is contributing to our positive outlook in terms of maybe, perhaps, hitting our structural margin.

Ken Hsiang: Hass, you were kind of breaking up, but I think you're asking what is contributing to our positive outlook in terms of maybe perhaps hitting our structural margin. Is that correct?

Ken Hsiang: Haas, you were kind of breaking up, but I think you're asking what is contributing to our positive outlook in terms of maybe perhaps hitting our structural margin. Is that correct?

Speaker #6: Is that correct?

Hass Liu: Yes. In Q4. Yes, that's correct. In Q4. Specifically, I wanted to know which part of the sector is more important. Is it the lead business contributing more, or is it because the mature packaging and logistics you are adjusting your pricing strategy to make that more valuable? Thank you.

Haas Liu: Yes. In Q4. Yes, that's correct. In Q4. Specifically, I wanted to know which part of the sector is more important. Is it the lead business contributing more, or is it because the mature packaging and logistics you are adjusting your pricing strategy to make that more valuable? Thank you.

Speaker #8: Yes, in the fourth quarter. Yes, that's correct, in the fourth quarter. And specifically, I wanted to know which part of the factory is more important. Is it the LEAP business contributing more, or is it because of mature packaging, and are you assessing your price?

Speaker #8: Use your pricing strategy to make that your advantage. Thank you.

Speaker #6: Haas is looking for the prime contribution for structural margin.

Ken Hsiang: Hass is looking for the prime contribution for structural margin.

Ken Hsiang: Haas is looking for the prime contribution for structural margin.

Speaker #3: Well, I think margin improvement is a combination is a result of many combination of different factors. Including the margin equitative business growth, including our improvement in efficiency, including the continuous expansion of our automated factories.

Joseph Tung: Well, I think margin improvement is a result of many combinations of different factors, including the margin accretive business growth, including our improvement in efficiency, including the continuous expansion of our automated factories. Operating leverage, of course, it plays a very important role as well, we continue to see volume growth. On the operating side, we are also seeing our passive investments start paying off. On an annual basis, we're seeing our OPEX ratio continue to drop. I think overall, the efficiency is much, much improved, and we have a much solid base in terms of our revenue coming on stream. That gives us the confidence that we should continue to see margin expansion on a sequential basis, at least for this year and next. Like I said, once we pass the structural margin range, we will start reviewing that and see how far we can go.

Speaker #3: Operating leverage, of course, plays a very important role as we continue to see volume growth. On the operating side, we are also seeing our passive investments start paying off.

Speaker #3: On an annual basis, we're seeing the OPEX ratio continue to drop. I think overall the efficiency is much, much improved, and we have a much more solid base in terms of our revenue coming on stream.

Speaker #3: So that gives us the confidence that we should continue to see our margin expansion on a sequential basis, at least for this year and next.

Speaker #3: And like I said, once we pass the structural margin range, we will start reviewing that and see how far we can go. Thank you.

Joseph Tung: Thank you.

Speaker #8: Yeah, that’s great. Thank you so much. And then just a quick follow-up on your CapEx. Would you be able to provide the breakdown, since you also mentioned that the general market demand is also very strong as well?

Hass Liu: Yeah. That's great. Thank you so much. Just a quick follow-up is on your CapEx. Would you be able to provide a breakdown, since you also mentioned that the general market demand is also very strong as well. Would you be able to provide a breakdown for your CapEx for this year and for next year? I know you probably will not be able to give quantitative guidance at this stage for CapEx, but would you be able to discuss that which part of the business is probably going to outgrow from the spending perspective? Is it going to be advanced or mature business is going to still be pretty solid from the spending? Thank you.

Haas Liu: Yeah. That's great. Thank you so much. Just a quick follow-up is on your CapEx. Would you be able to provide a breakdown, since you also mentioned that the general market demand is also very strong as well. Would you be able to provide a breakdown for your CapEx for this year and for next year? I know you probably will not be able to give quantitative guidance at this stage for CapEx, but would you be able to discuss that which part of the business is probably going to outgrow from the spending perspective? Is it going to be advanced or mature business is going to still be pretty solid from the spending? Thank you.

Speaker #8: Would you be able to provide the breakdown for your gross and your CapEx for this year? And for next year—I know you probably will not be able to give quantitative guidance at this stage for CapEx.

Speaker #8: But would you be able to discuss that which part of the business is probably going to outgrow from the spending perspective? Is it going to be advanced or mature business is going to still be pretty solid from the spending?

Speaker #8: Thank you.

Ken Hsiang: Hass, you're looking to understand what the CapEx makeup is, what's driving the increase, or what components are driving the increase this year. Maybe if we have any type of nuggets of wisdom related to next year's CapEx.

Ken Hsiang: Haas, you're looking to understand what the CapEx makeup is, what's driving the increase, or what components are driving the increase this year. Maybe if we have any type of nuggets of wisdom related to next year's CapEx.

Speaker #6: Haas, you're looking to understand what the CapEx makeup is, what's driving the increase, or what components are driving the increase this year.

Speaker #6: And then, maybe, if we have any type of nuggets of wisdom related to next year's CapEx.

Speaker #3: Well, I think yeah, obviously we are seeing a stronger demand or demand forecast coming from not just customers but also our boundary partner. in quite require a lot of the new investments, not just for this year, but also for next year as well.

Joseph Tung: Well, I think, obviously, we are seeing a stronger demand forecast coming from not just customers, but also our foundry partner. The requests that are coming in require a lot of the new investments, not just for this year, but also for next year as well, as we continue to see very strong business momentum, in both assembly and test, I stress again. Also, there are new projects or new products, new process steps that we are entering into. We would not just put in the necessary equipment, the CapEx, we also have to have the new facilities to house those capacity, and also spending quite a bit of money for the R&D to support those new products or new projects that are coming on stream.

Speaker #3: As we continue to see very, very strong business momentum. In both assembly and tests, like I stressed again, also there are new projects or new products, new process steps that we are entering into.

Speaker #3: We will not just put in the necessary equipment, Capex. We also have to have the new facilities to house that capacity, and also spend quite a bit of money for R&D to support those new products or new projects.

Speaker #3: That are coming on stream. So our Capex is really based on the what's necessary coming out of our customers' demand and we want to put the right resources onto the those high potential revenue basis for us to continue to invest.

Joseph Tung: Our CapEx is really based on what's necessary, coming out of our customers' demand, and we want to put the right resources onto those high potential revenue bases for us to continue to invest.

Speaker #8: Okay. And your expansion going forward will probably just be just pretty similar to your boundary here, right? Probably you are going to probably focus more on the areas that you can convert capacity from one to the other.

Hass Liu: Okay. Your expansion going forward will probably be just pretty similar to your foundry here, right? You are going to probably focus more on the areas that you can convert capacity from one to the other. For example, flip chip and also bumping, you can both use in the mature business as well as in the advanced business. That is probably the area that you'll have to spend more money?

Haas Liu: Okay. Your expansion going forward will probably be just pretty similar to your foundry here, right? You are going to probably focus more on the areas that you can convert capacity from one to the other. For example, flip chip and also bumping, you can both use in the mature business as well as in the advanced business. That is probably the area that you'll have to spend more money?

Speaker #8: For example, flip shipment as a boundary, you can both use in the mature business as well as in the advanced business. So that is probably the area that you are spending more money.

Speaker #6: You're looking to well, Haas, we got to try to limit those questions to two in the future again. But I guess we can try to comment a little bit on where we're spending the Capex as it relates to maybe this is an opportunity to talk about construction and our difficulties in terms of building buildings or getting enough buildings.

Ken Hsiang: Well, Hass, we got to try to limit those questions to two in the future again.

Ken Hsiang: Well, Haas, we got to try to limit those questions to two in the future again.

Hass Liu: Okay.

Haas Liu: Okay.

Ken Hsiang: I guess we can try to comment a little bit on where we're spending the CapEx as it relates to, maybe this is an opportunity to talk about construction and our difficulties in terms of building buildings or getting enough buildings.

Speaker #3: Okay. But this year, we're raising the Capex by another 2 billion. That brings up the total to about 10.5 billion dollars and out of this 10.5, four will be for new factory buildings and facilities and 6.5 for equipment.

Joseph Tung: Okay. For this year, we're raising the CapEx by $2 billion. That brings up the total to about $10.5 billion. Out of this 10.5, four will be for new factory buildings and facilities and 6.5 for equipment. Like Tien just mentioned, in terms of these new capacity that we're going to put in, we need to have the more advanced factory buildings and facilities to house this capacity. At the same time, at this very moment, we are having 13 greenfield projects going on. We have another eight brownfield projects. By brownfield, we mean that we are buying existing factories, and try to renovate them and to suit our needs. I think the current projects will be sufficient for us to carry ourselves into 2028, maybe into some part of 2029.

Speaker #3: Like Ken just mentioned, in terms of this new capacity that we're going to put in, we need to have more advanced factory buildings and facilities to house this capacity.

Speaker #3: So at the same time, at this very moment, we are having 13 greenfield projects going on. We have another eight brownfield projects. Brownfield by meaning by brownfield, we mean that we are providing existing factories and try to renovate them and to suit our needs I think the current projects will be sufficient for us to carry ourselves into 28, maybe into some part of 29.

Speaker #3: And we will continue to look at the situation and find a suitable new locations for further expansion going forward. And with this 20 projects going on at the same time, it puts a lot of challenge on us.

Joseph Tung: We will continue to look at the situation and find a suitable new locations for our further expansion going forward. With these 20 projects going on at the same time, it puts a lot of challenge on us, puts a lot of pressure on us in terms of we really need to have a very efficient and very responsive construction partner for us to make sure everything is delivered on time, all the quality is according to spec. This is something that we are working on, and hopefully, I think Tien mentioned that execution is everything. Demand is there. What we need to do is really to execute whatever we set out to do.

Speaker #3: That puts a lot of pressure on us in terms of—we really need to have a very, very efficient and very responsive construction partner for us to make time, so that all the specs and all the qualities are according to spec.

Speaker #3: And this is something that we are working on. And hopefully—I think Tim mentioned that execution is everything. The demand is there. What we need to do is really execute whatever we've set out to do.

Speaker #8: Got it. Thank you so much, Joseph.

Hass Liu: Got it. Thank you so much, Joseph.

Haas Liu: Got it. Thank you so much, Joseph.

Speaker #6: Do we have another question online there?

Ken Hsiang: Do we have another question online there?

Speaker #2: Yes, we have an online question from Goku: How are we going to run all JP Morgan?

[Company Representative] (ASE Technology Holding): Yes. We have online question from Gokul Hariharan of J.P. Morgan.

Ken Hsiang: Yes. We have online question from Gokul Hariharan of JPMorgan.

Speaker #8: Yeah. Hi. Thanks for taking my follow-up questions. First of all, on Capex, Joseph, I know that you're not guiding for next year, but looking at what Dr. Wu mentioned, it definitely feels like Capex is still likely to keep rising into 2027.

Gokul Hariharan: Yeah. Hi. Thanks for taking my follow-up questions. First of all, on CapEx, Joseph, I know that you're not guiding for next year, but looking at what Dr. Wu mentioned, it definitely feels like CapEx is still likely to keep rising into 2027. Is it a fair statement to make, given the gap between supply and demand that you're currently facing, especially for LEAP?

Speaker #8: Is that a fair statement to make, given the gap between supply and demand that you're currently facing, especially for lead?

Speaker #6: Goku, are you looking for some hint in terms of 2027? Not CapEx.

Ken Hsiang: Gokul, you're looking for some hint in terms of 2027?

Gokul Hariharan: CapEx, yes.

Ken Hsiang: Yeah, CapEx.

Joseph Tung: Well, I think it's better if we know it's going to be big, but how big? I think we want to wait for another quarter or so to have a better clarity on how much we would need to spend next year.

Speaker #3: Well, I think it's better if we I know it's going to be big, but how big? I think we want to wait for another quarter or so to see to have a better clarity on how much we need to spend next year.

Speaker #8: Okay. Understood. Could you also talk a little bit about anything that you're seeing on the CoPOS or the panel-level packaging development based on your current assessment?

Gokul Hariharan: Okay. Understood. Could you also talk a little bit about anything that you're seeing on the CoPoS or the panel level packaging development? Based on your current assessment, when do you expect this to potentially start entering production, given that there are so many different views out there in the market?

Speaker #8: When do you expect this to potentially start entering production given that there are so many different views out there in the market?

Speaker #6: Goku, you're looking for an update on our panel processes?

Ken Hsiang: Gokul, you're looking for an update on our panel processes?

Speaker #8: Yeah. Panel process, yes.

Gokul Hariharan: Yeah. Panel process, yes.

Speaker #6: Yeah. There's a different panel process for ASE's panel process. Our fully automated line will start production by Q1 of next year, and that is in the form factor of 310 by 310.

Tien Wu: Yeah. The different panel process for ASE's panel process, our fully automated line will start production by Q1 of next year. That is in the form factor of 310 by 310. In terms of the CoPoS, I know there are many alternative materials that people are evaluating. Our R&D people are working with substrate supplier, foundry, as well as customer, to evaluate the feasibility and also the economics of it. Right now, we do not have

Speaker #6: In terms of the CoPOS, I know there are many alternative materials that people are evaluating. Our R&D people are working with substrate supplier foundry as well as customer to evaluate the feasibility and also the economics of it.

Speaker #6: But right now, we do not have the glass substrate in production, not for the next 12 months, if that's the question you're asking. Thank you.

Tien Wu: The glass substrate in production, not for the next 12 months. If that's the question you're asking. Thank you.

Speaker #8: Got it. And how does the ASE 310-by-310 solution differ? Is it for a completely different kind of market or customer compared to the foundries' CoPOS kind of solution?

Gokul Hariharan: Got it. How does ASE's 310 by 310 solution differ? Is it for a completely different kind of market or a customer compared to the Foundry's CoWoS kind of solution, or is it quite complementary compared to what they are trying to offer?

Speaker #8: Or is it quite complementary compared to what they are trying to offer?

Speaker #6: They're quite complementary. It's actually the same customer set—similar direct full size. In terms of the pitch size and line width, they're all identical. They cover a similar range.

Tien Wu: They're quite complementary. It's actually the same customer set. Similar, the reticle size. In terms of the pitch size, line width, they're all identical. Cover the similar range. In terms of which customer will adopt what, not only depends on the capacity, the performance, and also the speed of execution.

Speaker #6: But in terms of which customer will adopt what, not only depends on the capacity and the performance, and also the speed of execution.

Speaker #8: Okay. Okay. That's clear. Yeah. Thank you very much. Thanks.

Gokul Hariharan: Okay. That's clear. Yeah. Thank you very much. Thanks.

Speaker #3: On Capex, I want to give you guys a better clarification. I think for this year, out of the total Capex, like I said, 4 billion is for factory and facilities.

Joseph Tung: On CapEx, I want to give you guys a bit of a clarification. I think for this year, out of the total CapEx, like I said, TWD 4 billion is for factory and facilities, TWD 6.5 for equipment. For equipment, I think it's about 56% is for assembly, 40% for test, and the remaining for EMS and some for material. In terms of assembly and test breakdown, in terms of the leading edge, I think 70% of the equipment CapEx is for leading edge for this year.

Speaker #3: It's $6.5 million for equipment. And for equipment, I think about 56% is for assembly, 40% for test, and the remaining for EMS and some for material.

Speaker #3: In terms of assembly and test breakdown, for the leading edge, I think 70% of the equipment CapEx is for leading edge this year.

Speaker #6: Goku, we got you covered there. Yeah, he's on. Okay, another online question?

Ken Hsiang: Gokul, we got you covered there? Yeah, he's on. Okay. Another online question?

Speaker #2: Yes. We have someone from UBS.

[Company Representative] (ASE Technology Holding): Yes. We have Sunny of UBS.

Operator: Yes. We have Sunny Lin of UBS.

Speaker #7: Thank you very much for taking my follow-ups. So, my first follow-up will be on CPO. And so, maybe it's a good time if you could share with us, given the complexity of the technologies, what type of services ASE, as a group, will be able to offer?

Sunny Lin: Thank you very much for taking my follow-ups. My first follow-up will be on CPO. Maybe good time, if you could share with us, given the complexity of the technologies, what type of services ASE as a group will be able to offer? Based on the current development, when do you see the revenue contribution for ASE could become then more meaningful? Given USI, they also acquired an optical module company as well earlier. What type of synergies that you think you could drive since you have ICAT and also EMS capabilities?

Speaker #7: And then, based on the current development, when do you think the learning contribution for ASE could become a bit more meaningful? And then, given USI—they also acquired an optical module company as well earlier.

Speaker #7: And so, what type of synergies do you think you could drive, given you have IC ATM and also EMS capabilities?

Speaker #6: Sunny, you're looking for an update on what in particular we would be doing in regard to CPO, and also potential linkages with our EMS business.

Ken Hsiang: Sunny, you're looking for an update on what particular we would be doing in regards to CPO and also potential linkages with our EMS business. Is that correct?

Speaker #6: Is that correct?

Speaker #7: Right. Yeah. Thank you.

Sunny Lin: Right. Yeah. Thank you.

Speaker #6: On the CPO, I would like to wait for two quarters before I give you more detail. The CPO service asked us about the revenue, as well as the 2027 outlook.

Tien Wu: On the CPO, I would like to wait for 2 quarters before I give you more detail. The CPO service, as was the revenue, also the 2027 outlook. I prefer to have a little bit more time to talk about that. In terms of the optical hierarchy, the hybrid between the electrical signal and also the optical signal, I think that direction is definitive. The question now is when and how could we execute that as a system architecture from near-field to outer field. Some optical devices are quite mature, that has been used for many, many years. In some near-field, at a chip level, at a substrate level, that needs to be created, which is very, very difficult, which is why the industry has taken so much time trying to develop.

Speaker #6: I prefer to have a little bit more time to talk about that. In terms of the optical hierarchy, the optical, the hybrid between the electrical signal and also the optical signal, I think that direction is definitive.

Speaker #6: The question now is, when and how can we execute that? And what is the system architecture from near field to outer field? Some optical devices are quite mature.

Speaker #6: It has been used for many, many years. And some near-field at the chip level, at the substrate level, needs to be created, which is very, very difficult. That is why the industry has taken so much time trying to develop it.

Speaker #6: I think by the end of the year, we'll have some database in terms of how that is behaving, how that is working, and whether—how much benefit, how much ramp-up—I think in two quarters' time.

Tien Wu: I think by the end of the year, we'll have some database in terms of how that is behaving, how that is working, and whether how much benefit, how much ramp up, I think in 2 quarters' time. By the way, we have been working on this for about 20 years. 2 more quarters, I think we can wait.

Speaker #6: By the way, we have been working on this for about 20 years. So, two more quarters—I think we can wait.

Speaker #7: Sure, we're looking forward to that. Yeah, looking forward to that update. And my second question will be very quick. So, for your full process co-ops, given that you have better visibility now for 2027...

Sunny Lin: Sure. Looking forward to that.

Tien Wu: Thank you.

Sunny Lin: Yeah, looking forward to that update. My second question, I'll be very quick. For your full process CoWoS, given you have better visibility now for 2027. Want to understand your progress in terms of diversifying for your client, also product base. Should we assume for 2027, CPU should be very major, or should we assume good volume coming from the other applications like accelerators as well?

Speaker #7: So I want to understand your progress internal diversifying for your client, also product base. Should we assume for 2027, CPU should be very major?

Speaker #7: Or should we also assume good volume coming from other applications, like accelerators, as well?

Speaker #6: Sunny, you're probably looking for something that can't be answered. But in terms of, you're looking for what products would be included in our full process services?

Ken Hsiang: Sunny, you're looking for probably something that can't be answered. You're looking for what our product set would be in terms of our full process services?

Speaker #6: Is that?

Speaker #7: Yeah. Basically, your progress in terms of product-based diversification for full process.

Sunny Lin: Yeah. Basically, your progress in terms of product-based diversification for full process.

Speaker #6: I think for the full process, we should be able to give you a better visibility in a quarter or two. Right now, we do have line of sight in terms of full process.

Tien Wu: I think for the full process, we should be able to give you a better visibility in a quarter or two. Right now, we do have line of sight in terms of full process. We're tracking nicely. Also for the next year, we do have line of sight. We have full visibility in terms of capacity that we're developing. Now, in terms of the customers, we need a little bit more time to digest how much information can we share. I think in two quarters' time, we should be able to give you the following: our leading edge, our LEAP Services revenue for next year, and also the OS, full process, and others, the assembly and test. I think that we can share. In terms of GPU, CPU, ASIC, we need a little bit more time to digest how much information we can share. All right?

Speaker #6: We're tracking nicely. And also, for the next year, we do have a line of sight. We have full visibility in terms of capacity that we're developing.

Speaker #6: Now, in terms of the customers, that is the we need a little bit more time to digest how much information can we share. I think in two quarters' time, we should be able to give you the following: our leading edge, our leap services revenue, for next year, and also the OS, full process, and others.

Speaker #6: The assembly and test. I think that we can share. But in terms of GPU, CPU, ASIC, we need a little bit more time to digest how much information we can share.

Speaker #6: All right. But right now, our clientele portfolio covers all of them, which is good. And we're just waiting for a clear execution, such that we know our yield and also how well the system performs in the marketplace. And that, we're waiting.

Tien Wu: Right now, our clientele portfolio covers all of them, which is good. We're just waiting for a clear execution such that we know our yield and also how well the system performs in the marketplace, and that we're waiting anxiously. Thank you.

Speaker #6: Anxiously. Thank you.

Speaker #7: Thank you very much.

[Company Representative] (ASE Technology Holding): Thank you very much. Our next online question is from Michael Rasnicas.

Operator: Thank you very much. Our next online question is from Michael Rasnicas.

Speaker #2: Our next online question is from Michael Resnikus.

Speaker #6: Michael?

Ken Hsiang: Michael?

Speaker #5: Hi. How are you? Thank you for the call here. I just wanted to clarify, when you gave Q3 guidance, did you say that EMS will grow 40% quarter on quarter revenues?

Michael Rasnicas: Hi. How are you? Thank you for the call here. I just want to clarify, when you gave Q3 guidance, did you say that EMS will grow 40% quarter-on-quarter revenues?

[Analyst 2]: Hi. How are you? Thank you for the call here. I just want to clarify, when you gave Q3 guidance, did you say that EMS will grow 40% quarter-on-quarter revenues?

Speaker #6: Michael, you're looking for a little bit of explanation behind the EMS growth.

Ken Hsiang: Michael, you're looking for a little bit of explanation behind the EMS growth.

Speaker #5: Yeah, that's a pretty huge, huge quarter-on-quarter growth. So, yeah, just wanted to clarify what's going on there.

Michael Rasnicas: Yeah. It's a pretty huge quarter-on-quarter growth. Yeah, I just wanted to clarify what's going on there.

[Analyst 2]: Yeah. It's a pretty huge quarter-on-quarter growth. Yeah, I just wanted to clarify what's going on there.

Speaker #6: I think the 40% growth is it is a little bit abnormal seasonality. I think this is largely because of the component price hikes. Particularly in the memory sector.

Joseph Tung: I think the 40% growth is a little bit abnormal seasonality. I think this is largely because of the component price hikes, particularly in the memory sector. If we take that part of the number out, I think the Q3 EMS should see a typical seasonality kind of movement.

Speaker #6: So if we take that part of the number out, I think the third quarter EMS should see a typical seasonality kind of movement.

Michael Rasnicas: Makes sense. How about Q4 in terms of quarter on quarter? Is it still growing over Q3, or will revenues shrink in Q4 versus Q3?

Speaker #5: Makes sense. And how about Q4 in terms of quarter on quarter? Is it still growing over Q3, or is there will it shrink? Will revenues EMS shrink revenue shrink in Q4 versus Q3?

[Analyst 2]: Makes sense. How about Q4 in terms of quarter on quarter? Is it still growing over Q3, or will revenues shrink in Q4 versus Q3?

Speaker #6: At this point, we're seeing a pretty similar level of revenue in the fourth quarter for EMS.

Joseph Tung: At this point, we're seeing a pretty similar level of revenue in Q4 for EMS.

Speaker #5: Oh, okay. That's very helpful. And so, overall for the year, did you—I think, did you say in your overall comments that you're looking for 25% plus full-year revenue growth?

Michael Rasnicas: Oh, okay. That's very helpful. Overall for the year, did you say in your overall comments that you're looking for a 25% plus full year revenue growth?

[Analyst 2]: Oh, okay. That's very helpful. Overall for the year, did you say in your overall comments that you're looking for a 25% plus full year revenue growth?

Speaker #6: Michael, you're looking for full-year guidance or full-year outlook for EMS and ATM? Is that?

Ken Hsiang: Michael, you're looking for full year outlook for EMS and ATM? Is that

Speaker #5: Yeah. Overall revenue growth. I thought there was a comment about sort of 25% plus type of revenue growth. Is that right?

Michael Rasnicas: Yeah, overall revenue growth. I thought there was a comment about sort of 25% plus type of revenue growth. Is that right?

[Analyst 2]: Yeah, overall revenue growth. I thought there was a comment about sort of 25% plus type of revenue growth. Is that right?

Speaker #6: EMS at this point, I think for the full year, is just sub-20% kind of growth for the year.

Joseph Tung: EMS at this point, I think during the full year is a sub 20% kind of growth for the year.

Speaker #5: Sub-20?

Michael Rasnicas: Sub 20?

[Analyst 2]: Sub 20?

Speaker #6: Correct.

Joseph Tung: Correct.

Speaker #5: Okay, so that's sub-20, and the ATM business will be 35% plus type of growth.

Michael Rasnicas: Okay, that's sub 20, the ATM business will be 35% plus type of growth.

[Analyst 2]: Okay, that's sub 20, the ATM business will be 35% plus type of growth.

Speaker #6: Also correct.

Joseph Tung: Also correct.

Speaker #5: Okay, got it. And what is the impact on EMS margins from the big memory component and larger revenues? Is it flat year-over-year, or is there an increase or decrease, relatively?

Michael Rasnicas: What is the impact on EMS margins with the big memory component and larger revenues? Is it flat year-over-year, or is there an increase or decrease relatively?

[Analyst 2]: What is the impact on EMS margins with the big memory component and larger revenues? Is it flat year-over-year, or is there an increase or decrease relatively?

Joseph Tung: I can talk about Q3. I think if we take out the component price hikes, I think the operating margin will be very similar to a typical seasonality of a 3.7%, 3.8% level.

Speaker #6: Well, I can talk about third quarter. I think if we take out the component price hikes, I think the operating margin will be very similar to a typical seasonality above 3.7, 3.8 percent level.

Joseph Tung: I can talk about Q3. I think if we take out the component price hikes, I think the operating margin will be very similar to a typical seasonality of a 3.7%, 3.8% level.

Speaker #5: Oh, okay. And so the memory is just sort of a pass-through type of cost for you guys?

Michael Rasnicas: Oh, okay. The memory is just sort of a pass-through type of cost for you guys.

[Analyst 2]: Oh, okay. The memory is just sort of a pass-through type of cost for you guys.

Speaker #6: That's correct.

Joseph Tung: That's correct.

Speaker #5: Got it. Okay, thank you for that clarification. And yes, strong performance. Thank you.

Michael Rasnicas: Got it. Okay. Thank you for that clarification. Yeah, congratulations on a very strong performance.

[Analyst 2]: Got it. Okay. Thank you for that clarification. Yeah, congratulations on a very strong performance.

Ken Hsiang: Thank you.

Tien Wu: Thank you.

Speaker #6: Do we have more questions online? More questions on the floor? No? Okay. Very good. Thank you very much. I would like to thank everyone for attending our conference call today.

Ken Hsiang: Do we have more questions online? More questions on the floor? No? Okay. Very good. Thank you very much. I would like to thank everyone for attending our conference call today. Joseph, do you want to close up?

Speaker #6: Joseph, do you want to close up?

Speaker #4: Well, I'm sure we're going to have another good quarter of in third quarter, and we'll bring you some more new good news next quarter.

Joseph Tung: Well, I'm sure we're going to have another good quarter in Q3, and we'll bring you some more good news next quarter. We'll see you next quarter.

Speaker #4: I'll see you next quarter.

[Company Representative] (ASE Technology Holding): Goodbye.

Operator: Goodbye.

Q2 2026 ASE Technology Holding Co Ltd Earnings Call

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