ASE Technology Q4 Earnings Call Highlights

Core Viewpoint - ASE Technology is expanding its operations outside Taiwan, particularly in Penang, to cater to customers in the automotive and robotics sectors, while also anticipating a recovery in mainstream businesses by 2026 [1][2][6]. Group 1: Business Expansion and Strategy - ASE is focusing on a "Taiwan Plus One" strategy, with Penang as the primary expansion region, alongside Korea and the Philippines, to serve automotive and edge customers [1][6]. - The company expects leading-edge revenue to at least double in 2026, supported by increased capital expenditures of $1.5 billion, primarily for leading-edge services [5][19]. - Management highlighted a "cross-collaboration" model across various semiconductor processes, emphasizing the importance of Taiwan in semiconductor manufacturing [2][6]. Group 2: Financial Performance - For 2025, ASE reported a consolidated revenue growth of 12%, with the assembly, test, and materials (ATM) business up 23%, contributing 60% of total revenue [7][12]. - The fourth-quarter results showed a gross margin improvement due to higher ATM loading, with overall ATM utilization around 80% [9][11]. - Full-year 2025 net income rose 25% to TWD 40.7 billion, with ATM accounting for 87% of operating profit [14][15]. Group 3: Future Outlook - Management anticipates a lighter seasonality in Q1 2026, projecting a revenue decline of 5% to 7% quarter-over-quarter, but expects margins to improve throughout the year [16][18]. - The company expects to triple full-process revenue in 2026, contributing significantly to LEAP service revenue [20]. - ASE's gross margin for Q1 2026 is projected to be between 24% and 25%, with expectations for continued improvement in the second half of the year [19].