ASE Technology Holding(US:ASX)2025-07-31 08:00Financial 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]