ASE Technology Holding Co Ltd_ Key takeaways from CEO-CFO conference. Fri Feb 21 2025

Summary of ASE Technology Holding Co Ltd Conference Call Company Overview - Company: ASE Technology Holding Co Ltd - Ticker: 3711.TW - Current Price (as of 20 Feb 2025): NT$179.50 - **Price Target (Dec 2025)**: NT$215.00 - Industry: Technology and Telecoms Key Takeaways Financial Performance and Projections - AI Revenue Growth: ASE expects its IC ATM revenue to grow at mid-to-high teens YoY, with a target of $1.6 billion in AI revenues for 2025, up from$600 million in 2024, indicating a growth of approximately 167% [4][6] - Revenue Composition: The additional $1 billion in AI revenues is expected to be split 75$2.6 billion in 2025, with approximately 60% allocated to advanced packaging [4][5] - Facility Expansion: Capex for facilities is expected to rise to $2-2.2 billion in 2025, up from$1.1 billion in 2024, to meet the demand for specialty facilities [4] Business Segments - Testing Business Growth: ASE's testing business is projected to grow over 18% YoY in 2025, driven by AI testing and increased testing content for high-end smartphones [6] - 2.5D Advanced Packaging: There is rising interest in non-AI 2.5D advanced packaging, particularly for edge devices, with potential adoption from major customers like Apple starting in 2H26 [6] Market Dynamics - Order Shifts: ASE anticipates a potential revenue upside in 2Q25-2H25 due to order shifts from Chinese OSATs to approved OSATs, although specific revenue impacts were not quantified [6] - Panel Level Packaging (PLP): ASE is investing $200 million to build capacity for PLP, with mass production expected to start in 2026, although meaningful adoption is still considered distant [6] Investment Thesis - Rating: Overweight (OW) - Rationale: The investment thesis is supported by rising revenues in advanced packaging and testing, improving structural gross margins, and potential recovery in traditional semiconductors [7][9] Risks - Downside Risks: Key risks include a slower-than-expected recovery in traditional semiconductors, which could impact overall performance [10] Conclusion ASE Technology Holding Co Ltd is positioned for significant growth in AI-related revenues and advanced packaging, with strategic investments in testing and facility expansion. The company maintains a positive outlook despite potential market risks.