ASE Technology Holding-Discover the Hidden Gem in Chip Manufacturing Stocks

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].