Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: The conference call primarily discusses the semiconductor industry, specifically the advanced packaging segment and the adoption of chiplet architectures. - **Key Technologies**: Emphasis on CoWoS (Chip-on-Wafer-on-Substrate) and FOCoS (Fan-Out Chip on Substrate) technologies as critical for advanced packaging solutions. Core Insights and Arguments - **Chiplet Adoption**: The adoption of chiplet architectures is accelerating, particularly as the industry transitions to 2nm nodes. Projections indicate chiplet penetration for nodes 5nm and below will reach 21% in 2025, 30% in 2026, and 37% in 2027, with 2nm node adoption expected to reach 57% by 2027E [1][40]. - **Cost and Yield Improvements**: Chiplet architectures can significantly lower manufacturing costs by splitting larger dies into smaller ones, improving yield rates. For instance, manufacturing costs can be reduced by 79.2% when transitioning from a single large die to multiple smaller chiplets [1][24][36]. - **Growing Demand for CoWoS**: The increasing chiplet penetration is expected to drive demand for CoWoS technology, which facilitates high-speed die-to-die interconnections. This demand is projected to grow at a CAGR of 71% for capacity and 63% for shipments from 2025 to 2027E [1][54][55]. Company-Specific Insights - **TSMC (2330.TW)**: - TSMC is a leader in advanced semiconductor packaging, particularly through its CoWoS technology, which is essential for AI and HPC applications. The company is expected to see significant revenue growth from CoWoS, with projections indicating it will account for 8.3% to 15.3% of TSMC's revenue from 2025 to 2027E [1][66]. - TSMC's CoWoS capacity is forecasted to reach 75k, 120k, and 170k in 2025, 2026, and 2027, respectively, reflecting aggressive capacity expansions to meet demand [1][66]. - **ASE (3711.TW)**: - ASE is gaining traction with its FOCoS technology, which is a cost-effective alternative to CoWoS, typically priced at half the cost. ASE's revenue from advanced packaging is expected to grow by 15% and 11% YoY in 2025 and 2026, respectively [1][67][69]. - **All Ring (6187.TWO)**: - All Ring is positioned to benefit from the advanced packaging trend, with expectations of revenue growth of 42% and 18% in 2025 and 2026, driven by CoWoS capacity expansion and new opportunities in CPO (Co-Packaged Optics) [1][71]. - **GPTC (3131.TWO)**: - GPTC is a key supplier of wet processing equipment for advanced packaging, with a market share of approximately 50% at TSMC. The company is expected to see revenue growth of 18.7% CAGR from 2024 to 2027, driven by the complexity of advanced packaging technologies [1][74][90]. Additional Important Insights - **Market Dynamics**: The report highlights the shift from traditional packaging methods to advanced solutions like CoWoS and FOCoS, indicating a broader market trend towards higher integration and performance in semiconductor designs [1][53]. - **Total Addressable Market (TAM)**: The total addressable market for CoWoS is projected to reach US$27.8 billion by 2027, growing at a CAGR of 65% from 2025 to 2027E [1][55][60]. - **Risks and Challenges**: Key risks include potential deterioration in end-demand, competition, and execution challenges that could impact profitability and market share for the companies involved [1][80][85][89]. This summary encapsulates the critical insights and projections discussed in the conference call, focusing on the semiconductor industry's evolution towards advanced packaging technologies and the implications for key players in the market.

Core Viewpoint - ASE Technology Holding Co., Ltd. experienced a slight decline in net revenue for July, with a year-over-year decrease of 0.1% but a month-over-month increase of 4.1% [1] Financial Performance - July net revenue reached NT$51.542 billion, translating to approximately USD 1.769 billion [1] - In USD terms, July net revenue showed a year-over-year increase of 11.2% and a month-over-month increase of 6.5% [1] Stock Market Reaction - ASE Technology's stock dropped over 2% in pre-market trading, with shares priced at USD 9.8 [1]

Core Insights - ASE Technology Holding Co., Ltd. (日月光半导体) reported a revenue of NT$298.9 billion for the fiscal year ending June 30, 2025, representing a year-on-year growth of 9.47% [1] - The net profit attributable to shareholders reached NT$15.08 billion, marking a year-on-year increase of 12.18% [2] Financial Performance - For the fiscal year 2025, ASE's earnings per share (EPS) was NT$3.48 [2] - The company's stock price increased by 2.06% to USD 10.175 per share, with a trading volume of USD 3.45 million and a total market capitalization of USD 22.469 billion [1] Company Overview - ASE is a leading global provider of semiconductor packaging and testing services, offering a comprehensive range of services from front-end testing to back-end packaging and product testing [2] - The company integrates resources across its subsidiaries to enhance technological innovation and reduce operational risks, thereby improving competitiveness and ensuring sustainable development of the supply chain [2]

Group 1 - The core viewpoint of the article highlights the positive financial performance of ASE Technology Holding Co., Ltd., with a significant increase in revenue and net profit for the fiscal year ending June 30, 2025 [1][2] - ASE's total revenue reached NT$298.9 billion, representing a year-on-year growth of 9.47% [1] - The net profit attributable to shareholders was NT$15.08 billion, showing a year-on-year increase of 12.18%, with basic earnings per share at NT$3.48 [2] Group 2 - ASE Technology is recognized as a leading global provider of semiconductor packaging and testing services, offering a comprehensive range of services from front-end testing to back-end packaging and product testing [2] - The company integrates resources from its subsidiaries to enhance technological innovation and reduce operational risks, thereby improving competitiveness and ensuring sustainable development of the industry chain [2]

Group 1 - The core viewpoint of the article highlights the positive financial performance of ASE Technology Holding Co., Ltd., with a significant increase in revenue and net profit for the fiscal year ending March 31, 2025 [1][2]. - ASE's stock price rose by 5.0% to $9.975 per share, with a trading volume of $7.7482 million and a total market capitalization of $22.027 billion [1]. - The company's total revenue reached NT$148.153 billion, representing a year-on-year growth of 11.56%, while the net profit attributable to shareholders was NT$7.554 billion, reflecting a year-on-year increase of 33.46% [1]. Group 2 - ASE Technology is recognized as a leading global provider of semiconductor packaging and testing services, offering a comprehensive range of services from front-end chip testing to back-end packaging and product testing [2]. - The company integrates resources from various subsidiaries to enhance technological innovation and reduce operational risks, thereby improving competitiveness and ensuring sustainable development of the supply chain [2].

Core Insights - ASE Technology Holding Co., Ltd. (日月光半导体) opened at $10.06 per share, up 5.89% on August 1, with a total market capitalization of $22.215 billion [1] - For the fiscal year ending March 31, 2025, ASE's total revenue is projected to be NT$148.153 billion, reflecting a year-on-year growth of 11.56%, while net profit attributable to shareholders is expected to reach NT$7.554 billion, marking a 33.46% increase [1] Financial Performance - ASE's revenue for the fiscal year 2025 is forecasted at NT$148.153 billion, which is an increase of 11.56% compared to the previous year [1] - The net profit attributable to shareholders is anticipated to be NT$7.554 billion, showing a significant growth of 33.46% year-on-year [1] Company Overview - ASE Technology Holding Co., Ltd. is a leading global provider of semiconductor packaging and testing services, offering a comprehensive range of services from front-end chip testing to back-end packaging and product testing [2] - The company integrates resources from its various subsidiaries to enhance technological innovation and reduce operational risks, thereby improving competitiveness and ensuring sustainable development of the supply chain [2]

Financial Data and Key Metrics Changes - Unconsolidated revenue grew by 9% year on year in 2025, with ATM revenues up 18% year on year [5] - Consolidated net revenues for Q2 2025 were NT$150.8 billion, representing a 2% sequential increase and a 7% year-over-year increase [31] - Gross profit for Q2 2025 was NT$25.7 billion, with a gross margin of 17%, improving by 0.2 percentage points sequentially and 0.6 percentage points year over year [32] - Operating profit was NT$10.2 billion, up NT$500 million sequentially and NT$1.2 billion year over year, with an operating margin of 6.8% [33] Business Line Data and Key Metrics Changes - The testing business grew by 31% year on year in the first half of 2025, with expectations for continued momentum into the second half [6] - ATM revenues for Q2 2025 were NT$92.6 billion, up NT$5.9 billion sequentially and NT$14.8 billion year over year, representing a 19% annual increase [36] - EMS revenues for Q2 2025 were NT$58.8 billion, declining 6% sequentially and 7% year over year [43] Market Data and Key Metrics Changes - The company noted a disparity between AI and other general sectors, with expectations for improvement in the second half of 2025 and beyond [21] - The company is experiencing strong demand for high-performance computing (HPC) and AI, alongside a healthy recovery in the general market [63] Company Strategy and Development Direction - The company aims to expand its leading-edge advanced packaging and testing revenue, targeting a significant increase in 2025 [7] - Investment in R&D, human capital, advanced capacity, and smart factory infrastructures are seen as key supports for multiyear growth [9] - The company is considering overseas expansions while optimizing resources between Taiwan and other locations [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects despite current foreign exchange challenges, expecting a return to structural margin levels in 2026 [29][93] - The company is focused on leveraging its scale and capabilities to align pricing and investment strategies with its value proposition [55] Other Important Information - The NT dollar strengthened by 4.9% against the U.S. dollar, negatively impacting financial performance due to currency fluctuations [26] - The company anticipates increasing its debt outstanding throughout the year, with a net debt to equity ratio of 52% [46] Q&A Session Summary Question: How to reconcile strong ATM guidance with slow end markets? - Management indicated that guidance is based on firm customer orders, which include AI and other sectors like wireless and automotive [61][62] Question: Why maintain revenue guidance for advanced packaging despite TSMC's revision? - Management explained that capacity constraints are a factor, and they are focused on execution and operational challenges [66][68] Question: Will pricing strategy change due to current currency environment? - Management noted that pricing strategies are under consideration, with a focus on resource optimization and customer loyalty [74][98] Question: Expectations for AI-related business growth in packaging? - Management confirmed intentions to grow both packaging and testing businesses, with a focus on meeting customer requirements [78][80]

Financial Data and Key Metrics Changes - Unconsolidated revenue grew by 9% year on year in 2025, with ATM revenues up 18% year on year [6] - Consolidated net revenues for Q2 2025 were NT$150.8 billion, representing a 2% sequential increase and a 7% year-over-year increase [30] - Gross profit for Q2 2025 was NT$25.7 billion, with a gross margin of 17%, improving by 0.2 percentage points sequentially and 0.6 percentage points year over year [31] - Operating profit was NT$10.2 billion, up NT$500 million sequentially and NT$1.2 billion year over year, with an operating margin of 6.8% [32] Business Line Data and Key Metrics Changes - ATM business revenues for Q2 2025 were NT$92.6 billion, up NT$5.9 billion sequentially and NT$14.8 billion year over year, representing a 7% sequential increase and a 19% annual increase [35] - EMS revenues for Q2 2025 were NT$58.8 billion, declining 6% sequentially and 7% year over year [42] - The testing business grew by 31% year on year in the first half of 2025, with expectations for continued momentum into the second half [7] Market Data and Key Metrics Changes - The company noted a strong demand for high-performance computing (HPC) and AI, with a healthy recovery observed across all sectors in Q2 2025 [62] - The disparity between AI and other general sectors is expected to improve in 2026 and beyond [20] Company Strategy and Development Direction - The company aims to expand its leading-edge advanced packaging and testing revenue, targeting a significant increase in 2025 [8] - Investment in R&D, human capital, advanced capacity, and smart factory infrastructures is seen as crucial for multiyear growth [9] - The company is focusing on resource optimization between Taiwan and overseas expansions due to current market dynamics [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects driven by AI proliferation and a general recovery expected in 2026 [9] - The impact of foreign exchange fluctuations was highlighted as a temporary challenge, with expectations for margins to return to structural levels in the future [28][29] - Management emphasized the importance of execution and operational efficiency in navigating current challenges [22] Other Important Information - The company is experiencing a full capacity in leading-edge operations in Taiwan, prompting considerations for overseas expansions [20] - The company anticipates increasing its debt throughout the year, with a net debt to equity ratio expected to peak in Q3 2025 [45] Q&A Session Summary Question: How to reconcile strong ATM guidance with slow end markets? - Management indicated that guidance is based on firm customer orders covering AI and other sectors, suggesting a strong outlook despite general market weakness [60][62] Question: Why maintain revenue guidance despite TSMC's revision? - Management explained that their capacities are full and incremental capacities are being added, indicating a cautious approach to revenue guidance [65] Question: Will pricing strategy change due to current currency environment? - Management noted that strategic initiatives are being recalibrated, including pricing strategies, but emphasized the importance of customer relationships and long-term growth [72][76] Question: Expectations for AI-related business growth in 2026? - Management expressed optimism about growth in both packaging and testing, with a focus on expanding capabilities to meet increasing demand [79][88]

Financial Performance - First Half 2025 - Consolidated revenues grew by 9% year-over-year (YoY) in the first half of 2025 [3] - ATM (Assembly, Testing, and Material) revenues increased by 18% YoY in the first half of 2025 [3] - The testing business experienced substantial growth, increasing by 31% YoY in the first half of 2025 [3] Strategic Focus - Advanced Packaging and Testing - Leading-edge advanced packaging and testing revenues accounted for over 10% of ATM revenues in the first half of 2025, compared to 6% for the full year 2024 [3] - The company targets a US$1 billion increase in leading-edge advanced packaging and testing revenues versus 2024, contributing 10% of growth [4] - The company expects revenue uptrend continuing into 2026 and beyond driven by leading-edge solutions and broad-based semiconductor demand related to AI proliferation and general recovery [4] Capital Expenditure - Machinery capital expenditure (capex) amounted to US$19 billion in the first half of 2025 [3] - Building, facility, and automation capex reached US$09 billion in the first half of 2025, primarily driven by advanced packaging and testing [3] Second Quarter 2025 Results (NT$ million) - ATM net revenues for Q2 2025 were 91,648, representing a 20% YoY increase [10] - EMS net revenues for Q2 2025 were 58,374, showing a 7% YoY decrease [10] - Total net revenues for Q2 2025 reached 150,750, representing a 7% YoY increase [10]

Core Insights - ASE Technology Holding Co., Ltd. reported unaudited net revenues of NT$150,750 million for 2Q25, representing a year-over-year increase of 7.5% and a sequential increase of 1.8% [1] - Net income attributable to shareholders for the quarter was NT$7,521 million, down from NT$7,778 million in 2Q24 and NT$7,554 million in 1Q25 [1] - Basic earnings per share for 2Q25 were NT$1.74 (US$0.111 per ADS), compared to NT$1.80 for 2Q24 and NT$1.75 for 1Q25 [1] Financial Performance - Net revenues from packaging operations, testing operations, EMS operations, and others accounted for approximately 49%, 11%, 39%, and 1% of total net revenues, respectively [6] - Cost of revenues for the quarter was NT$125,063 million, an increase from NT$123,260 million in 1Q25 [6] - Gross margin increased by 0.2 percentage points to 17.0% in 2Q25 from 16.8% in 1Q25 [6] - Operating margin was 6.8% in 2Q25, compared to 6.5% in 1Q25 [6] Non-Operating Items - Net foreign exchange gain was NT$11,885 million, primarily due to the depreciation of the U.S. dollar against the New Taiwan dollar [3] - Total non-operating expenses for the quarter were NT$938 million [6] - Income before tax was NT$9,255 million in 2Q25, compared to NT$9,810 million in 1Q25 [6] Customer Concentration - The five largest customers accounted for approximately 43% of total net revenues in 2Q25, down from 44% in 1Q25 [11] - One customer represented more than 10% of total net revenues in 2Q25 [11] - Top 10 customers contributed 60% of total net revenues in 2Q25, compared to 61% in 1Q25 [11] Capital Expenditures - Equipment capital expenditures in 2Q25 totaled US$992 million, with US$690 million allocated to packaging operations [11] - Total unused credit lines amounted to NT$355,299 million as of June 30, 2025 [11] - Current ratio was 1.02 and net debt to equity ratio was 0.52 as of June 30, 2025 [11]