ASE Technology Holding(ASX) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenues grew by 2% year-on-year in 2024, with ATM revenues up by 3% year-on-year [9][31] - For Q4 2024, fully diluted EPS was TWD 7.23, while basic EPS was TWD 7.52 [31][20] - Gross profit for the year was TWD 96.9 billion, improving by TWD 5.2 billion year-on-year or by 6% [100] - Operating profit for the year was TWD 39.2 billion, declining by TWD 1.1 billion [102] Business Line Data and Key Metrics Changes - The testing business grew by 9% year-on-year in 2024, with Q4 growth at 18% year-on-year [11][79] - ATM business revenues for Q4 2024 were TWD 88.3 billion, up 3% sequentially and 8% year-on-year [39][107] - EMS revenues for Q4 2024 were TWD 74.9 billion, declining by 1% sequentially and 5% year-on-year [120] Market Data and Key Metrics Changes - Leading-edge advanced packaging and testing revenues exceeded USD 600 million, accounting for around 6% of ATM revenues, up from USD 250 million in 2023 [10][79] - The overall equipment utilization was in the mid- to high 60s [86] - The company expects total semiconductor revenues to reach $1 trillion in the next decade, driven by AI and IoT-related products [14][82] Company Strategy and Development Direction - The company plans to invest significantly in R&D, human capital, and advanced packaging capacity in preparation for an AI-led super cycle [13][81] - The company aims to double its CapEx to around USD 2 billion in multiple new sites to support aggressive expansion [65][68] - The company is focused on maintaining flexibility and agility in handling business model evolutions to widen its competitive moat [14][83] Management's Comments on Operating Environment and Future Outlook - Management noted a soft recovery in some segments due to inventory correction and lagging end market demand [10][78] - The company expects its ATM business to outgrow the logic semiconductor market, driven by strong momentum in leading-edge advanced packaging and testing [12][80] - Management acknowledged uncertainties ahead that could change the overall business landscape but remains focused on executing plans for 2025 [70] Other Important Information - Operating expenses increased by TWD 6.4 billion for the year, primarily due to the ramp-up of leading-edge advanced packaging services [101][90] - The effective tax rate for the year was 18.6%, with expectations for a slight decrease in the coming year due to government incentive programs [104][36] - The company recorded a net nonoperating gain of TWD 2.5 billion for the year, primarily from foreign currency hedging activities [103][34] Q&A Session Summary Question: What is the outlook for the first quarter of 2025? - The company projects ATM revenue to decline by mid-single digits quarter-over-quarter and EMS revenue to decline slightly year-over-year [62][61] Question: How does the company plan to address the inflationary environment? - Management indicated that higher operating expenses are due to active R&D investment and that they expect operating expense ratios to decline as revenues grow [68][69] Question: What are the expectations for the gross profit margin in 2025? - The company expects ATM gross profit margin to recover to the structural target of 24% to 30% as capacity ramps up [66][68]