Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The company reported a revenue of NT$140.238 billion for Q2 2024, representing a year-over-year increase of 3% and a quarter-over-quarter increase of 6% [3][4] - Gross margin for Q2 2024 was 16.4%, up 0.4 percentage points year-over-year and 0.7 percentage points quarter-over-quarter [3][4] - Operating profit margin was 6.4%, showing a decrease of 0.5 percentage points year-over-year but an increase of 0.7 percentage points quarter-over-quarter [3][4] - The company expects revenue growth in its ATM business for Q3 2024 to be in the high single-digit percentage range compared to Q2 2024 [12][13] - The advanced packaging market is experiencing robust growth, and the company is increasing capacity to meet rising demand, although the overall market recovery is slower than anticipated [12][14] Summary by Sections Overall Performance - Q2 2024 revenue reached NT$1402.38 billion, with a gross margin of 16.4% and an operating profit margin of 6.4% [3][4] - The continuous improvement in gross margin is attributed to the depreciation of the New Taiwan Dollar and changes in product mix within ATM and EMS businesses [3][4] Revenue Breakdown - ATM Business: Revenue of NT$778 billion in Q2 2024, with a gross margin of 22.1% and an operating profit margin of 9.3% [7][10] - EMS Business: Revenue of NT$629 billion in Q2 2024, with a gross margin of 9.6% and an operating profit margin of 3.1% [10][11] Capital Expenditure - Total capital expenditure for Q2 2024 was US$406 million, with allocations of US$215 million for packaging, US$154 million for testing, US$31 million for EMS, and US$6 million for interconnect materials and other businesses [6][10] Company Guidance - The company anticipates that the ATM business will see revenue growth of 15% to 20% in Q3 2024 compared to Q2 2024, with operating profit margins slightly above 3.5% [12][13] Demand Outlook - The advanced packaging market is thriving, and the company is working to expand capacity to meet increasing demand, particularly in the smartphone sector, which is expected to see a positive trend in Q3 and Q4 2024 [12][25]

Financial Data and Key Metrics Changes - For Q2 2024, the company reported fully diluted EPS of NTD 1.75 and basic EPS of NTD 1.80, with consolidated net revenues increasing by 6% sequentially and 3% year-over-year [6][9] - Gross profit was NTD 23.1 billion, with a gross margin of 16.4%, improving by 0.7 percentage points sequentially and 0.4 percentage points year-over-year [6][9] - Operating profit was NTD 9 billion, up NTD 1.5 billion sequentially but down NTD 0.4 billion year-over-year, with an operating margin of 7.3% [8][10] Business Line Data and Key Metrics Changes - The ATM business reported revenues of NTD 77.8 billion, up 5% sequentially and 2% year-over-year, with a gross profit margin of 22.1% [11][12] - EMS revenues were NTD 62.9 billion, improving by 6% sequentially and 4% year-over-year, with a gross margin of 9.6% [15][16] Market Data and Key Metrics Changes - The communications application segment saw a 3 percentage point drop, while computing and consumer segments increased, indicating mixed demand across different markets [14] - The automotive products within the EMS business experienced decent growth on an annual basis, although overall sentiment in the automotive market remained soft [17][69] Company Strategy and Development Direction - The company is focusing on increasing investments in leading-edge products, particularly in labor and equipment, to meet rising demand [5][18] - There is an ongoing expansion in Malaysia, with Phase 1 completed and volume production expected to start in Q1 2025, alongside acquisitions in the Philippines and Korea [22][23] Management Comments on Operating Environment and Future Outlook - Management noted a bifurcated market with strong demand for leading-edge products, particularly in AI and high-performance computing, while traditional products are seeing cautious customer behavior [4][19] - The company anticipates a moderate growth outlook for the full year, with expectations for improved margins in the second half of the year [26][27] Other Important Information - The company plans to double its full-year 2024 consolidated machinery CapEx from last year's USD 914 million levels to meet booming demand for leading-edge ATM capacity [22] - The effective tax rate for the quarter was 19%, with net income for the quarter at NTD 7.8 billion, flat year-over-year [9][10] Q&A Session Summary Question: Guidance on ATM growth and gross margin expectations - Management indicated that the full-year growth for ATM is now expected to be more moderate due to a slower recovery in the general market, with third-quarter gross margin projected to be slightly lower than previously expected [26][27] Question: CapEx breakdown for advanced packaging - The CapEx breakdown is approximately 53% for assembly, 38% for testing, and the remainder for materials and EMS [27] Question: Competitive strategies in advanced packaging - The company is enhancing its leading-edge testing capacity and leveraging turnkey services to meet demand, with expectations for good progress starting next year [35] Question: Expansion plans in the US - The company is considering how to apply for R&D and manufacturing funding under the CHIPS Act, with no tangible plans for high-volume manufacturing in the US yet [49] Question: Advanced packaging revenue contribution - The company expects leading-edge revenue to double this year, contributing over NTD 250 million, with a target of around 5% of ATM business revenue [66][67] Question: Automotive market outlook - The automotive segment is expected to represent roughly 11% of overall sales, with continued growth anticipated despite a soft overall market sentiment [69]

Core Viewpoint - ASE Technology Holding Co., Ltd. reported a 2Q24 net revenue of NT$140,238 million, reflecting a year-over-year increase of 2.9% and a sequential increase of 5.6, with net income attributable to shareholders reaching NT$7,783 million, up from NT$5,682 million in 1Q24 [1][2]. Financial Performance - Net revenues from packaging operations, testing operations, EMS operations, and others accounted for approximately 45%, 9%, 45%, and 1% of total net revenues in 2Q24, respectively [2]. - Cost of revenues for the quarter was NT$117,172 million, with raw material costs at NT$70,387 million (50% of total revenues) and labor costs at NT$15,673 million (11% of total revenues) [2]. - Gross margin improved to 16.4% in 2Q24 from 15.7% in 1Q24, while operating margin increased to 6.4% from 5.7% in the previous quarter [2]. - Basic earnings per share for 2Q24 were NT$1.80 (US$0.112 per ADS), consistent with 2Q23 and up from NT$1.32 in 1Q24 [1][2]. ATM Operations - ATM net revenues were NT$77,813 million for the quarter, up 2.2% year-over-year and 5.3% sequentially [3]. - Gross margin for ATM operations increased to 22.1% in 2Q24 from 21.0% in 1Q24, with an operating margin of 9.3% compared to 8.2% in the previous quarter [3]. EMS Operations - EMS net revenues reached NT$62,907 million, reflecting a 4.1% year-over-year increase and a 6.0% sequential increase [4]. - Cost of revenues for EMS was NT$56,870 million, with raw material costs at NT$49,075 million (78% of total revenues) and labor costs at NT$3,121 million (5% of total revenues) [5]. Liquidity and Capital Resources - Capital expenditures in 2Q24 totaled US$406 million, with significant allocations to packaging (US$215 million) and testing operations (US$154 million) [6]. - The current ratio was 1.17 and the net debt to equity ratio was 0.34 as of June 30, 2024 [6]. Customer Concentration - The five largest customers accounted for approximately 45% of total net revenues in 2Q24, with the top 10 customers contributing 60% [7]. - In EMS, the five largest customers represented about 67% of total net revenues, with the top 10 contributing 74% [8].

Core Viewpoint - ASE Technology Holding Co. Ltd. is a leading semiconductor manufacturing company that has not yet seen significant benefits from the AI boom, as the industry normalizes after a pandemic-induced inventory glut [1][2]. Financial Performance - ASE Technology reported Q1 2024 EPS of 4 cents, matching consensus estimates, with revenues of $4.28 billion, a 9.5% year-over-year decline but above the $4.25 billion consensus [4]. - Gross margin was 51.5%, while net income stood at $178 million, and operating margin decreased to 5.1% from 7.4% in Q4 2023 [4]. - The ATM segment saw revenues rise 0.8% year-over-year to $7.39 billion but fell 9.9% sequentially, with raw material costs at 27% of total net revenues [5]. - The EMS segment's revenues increased 2.8% year-over-year to $5.94 billion but dropped 25% sequentially, with raw material costs representing 79% of total net revenues [6]. Guidance and Outlook - ASE Technology issued downside revenue guidance for Q2 2024, estimating revenues between $7.44 billion and $8.11 billion, below the $8.41 billion consensus [7]. - The company reaffirmed its full-year 2024 revenue guidance at $30 billion, slightly above the $29.97 billion consensus [7]. - The head of investor relations indicated that demand for EMS services is slightly ahead of expectations, driven by improving customer inventory levels [8]. Market Position and Customer Base - ASE Technology is the world's largest chip assembler, employing 91,000 people and serving major clients like Apple, NVIDIA, and Qualcomm [1][2]. - The top 10 customers contributed 61% of total net revenues in the ATM segment, up from 58% in Q4 2023, indicating a concentration of revenue among key clients [5]. - In the EMS segment, the top 10 customers accounted for 75% of total net revenues, down from 79% in the previous quarter [6].

Company Expansion - USI officially opened its new Tonala Site in Mexico on July 16, 2024, with a significant investment of nearly 82 million USD, creating 3,000 new jobs in the region [1] - The Tonala Site is part of USI's strategic expansion in North America, enhancing service capabilities to meet client needs in a dynamic market [1] - The facility aims to foster innovation, quality, and community engagement, aligning with USI's commitment to economic development in the region [1] Sustainability Initiatives - USI prioritizes Sustainable Development Goals through four core strategies: Low Carbon, Circular, Collaborative, and Inclusive, with a focus on responsible business practices [1] - The Guadalajara factory achieved a 100% Green Electricity Ratio in 2023, and this sustainability program will extend to the Tonala factory [1] Regional Impact - The opening of the Tonala Site is seen as a long-term investment in Jalisco, contributing to the state's vision of innovation and high technology [1] - Local officials emphasize the importance of this investment for the municipality of Tonala, which is experiencing significant growth and development [1]

Core Viewpoint - The article emphasizes the importance of value investing, highlighting ASE Technology (ASX) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [1][2][3] Group 1: Value Investing Strategy - Value investing focuses on identifying companies that are undervalued by the market, utilizing fundamental analysis and traditional valuation metrics [1] - The Zacks Rank system and Style Scores are tools that help investors find stocks with specific traits, particularly in the "Value" category [2] Group 2: ASE Technology (ASX) Metrics - ASE Technology has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [2] - The stock's P/E ratio is 16.16, significantly lower than the industry's average of 36.84, suggesting it may be undervalued [2] - The Forward P/E for ASX has ranged from 10.10 to 21.39 over the last 12 months, with a median of 13.22, further supporting its undervaluation [2] - The P/S ratio for ASX is 1.39, compared to the industry's average P/S of 3.88, reinforcing the notion that ASX is likely undervalued [2][3] Group 3: Earnings Outlook - The strength of ASE Technology's earnings outlook contributes to its appeal as a value stock, indicating potential for future growth [3]

Core Viewpoint - The article emphasizes the importance of value investing, highlighting the strategy of identifying undervalued companies through fundamental analysis and traditional valuation metrics [1]. Group 1: Investment Strategy - Value investing is a strategy that focuses on finding companies undervalued by the broader market [1]. - Investors can utilize the Zacks Rank and Style Scores system to identify high-quality value stocks, particularly those with high Zacks Ranks and "A" grades for Value [2]. Group 2: ASE Technology (ASX) Analysis - ASE Technology (ASX) is currently rated 2 (Buy) by Zacks and has a Value grade of A, indicating strong potential as a value stock [2]. - ASX has a Forward P/E ratio of 15.80, significantly lower than its industry's average Forward P/E of 34.83, suggesting it may be undervalued [2]. - The stock's Forward P/E has fluctuated between 9.95 and 21.39 over the past year, with a median of 12.95 [2]. - ASX's P/S ratio is 1.36, compared to the industry's average P/S of 3.66, further indicating potential undervaluation [3]. - The combination of these metrics suggests that ASE Technology is likely being undervalued and has a strong earnings outlook, making it an attractive value stock [3].

TAIPEI, June 11, 2024 /PRNewswire/ -- ASE Technology Holding Co., Ltd. (NYSE: ASX, TAIEX: 3711, "ASEH" or the "Company"), announces its unaudited consolidated net revenues for May 2024.CONSOLIDATED NET REVENUES (UNAUDITED) May Apr May Sequential YoY (NT$ Million) 2024 2024 2023 Change Change Net Revenues 47,493 45,820 46,239 +3.7 % +2.7 % <td colspan="1" nowrap rowspan= ...

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Financial Data and Key Metrics Changes - For Q1 2024, the company recorded fully diluted EPS of $1.28 and basic EPS of $1.32, with consolidated net revenues declining 17% sequentially but increasing 1% year-over-year [5][8] - Gross profit was $20.9 billion with a gross margin of 15.7%, which declined by 0.3 percentage points sequentially but increased by 0.9 percentage points year-over-year [5][6] - Operating profit was $7.5 billion, down $4.3 billion sequentially and down $0.2 billion year-over-year, with an operating margin decline of 1.7 percentage points sequentially and 0.2 percentage points year-over-year [7][8] Business Line Data and Key Metrics Changes - ATM business revenues were $73.9 billion, down $8.1 billion sequentially (10% decline) but up $0.6 billion year-over-year (1% increase) [9][10] - EMS revenues were $59.4 billion, declining $19.8 billion or 25% sequentially but improving $1.6 billion or 3% year-over-year [15][16] - The gross margin for the ATM business was 21%, down 2.4 percentage points sequentially but up 0.9 percentage points year-over-year [10][12] Market Data and Key Metrics Changes - The overall demand environment for services fell on a sequential basis due to seasonality, with higher and leading-edge services performing better than legacy services [4] - The NT dollar appreciated 2% against the U.S. dollar sequentially during Q1, impacting gross and operating margins negatively by 0.55 percentage points [8][9] - The company expects a slightly improved demand environment for Q2 2024, with ATM revenue projected to grow by mid-single digits quarter-over-quarter [22] Company Strategy and Development Direction - The company aims to double leading-edge advanced packaging revenues in the current year, tracking ahead of target [15] - There is a focus on increasing investments in R&D and expanding overseas operations, with a 10% increase in CapEx planned for the year [29][42] - The company is monitoring the potential for establishing a facility in the U.S. but currently does not see it as economically viable [52][53] Management's Comments on Operating Environment and Future Outlook - Management believes that most sectors are bottoming out, with expectations for gradual recovery in the second half of the year [25][34] - The company anticipates that the increase in electricity rates will negatively impact gross margins by approximately 0.8 percentage points in Q2 [21][58] - Despite challenges, management remains confident in reaching structural gross margin targets of 25% to 30% for the second half of the year [58][60] Other Important Information - The company reported cash, cash equivalents, and current financial assets of $83.5 billion, increasing by $11.5 billion [18] - Total interest-bearing debt increased slightly to $195.3 billion, primarily due to currency fluctuations [18] - The company is seeing increasing adoption of AI-related packaging services, which are expected to drive future growth [19][20] Q&A Session Summary Question: Overall end demand outlook and automotive sector - Management sees most sectors bottoming out in Q2, with automotive still expected to grow despite some softness [25][27] Question: Advanced packaging growth and long-term view - Strong growth momentum is expected in AI-related packaging and testing, with a 10% increase in CapEx focused on this area [29][30] Question: Utilization rates and pricing changes - Utilization rates are expected to improve above 70% in the second half, with overall pricing remaining resilient despite some pressure on legacy products [70][72] Question: U.S. expansion plans and SiP business growth - The company is monitoring the U.S. market for potential expansion but does not see immediate plans, while SiP business growth is expected to resume next year [56][52]