ASE Technology Holding(US:ASX)2025-10-30 08:02Financial Data and Key Metrics Changes - The company recorded fully diluted EPS of NT$2.41 and basic EPS of NT$2.50 for Q3 2025, with consolidated net revenues of NT$168.6 billion, representing a 12% sequential increase and a 5% year-over-year increase [4] - Gross profit was NT$28.9 billion with a gross margin of 17.1%, improving by 0.1% sequentially and 0.6% year-over-year [4][6] - Operating profit increased to NT$13.2 billion, up NT$3 billion sequentially and NT$1.7 billion year-over-year, with an operating margin of 7.8% [6][7] Business Line Data and Key Metrics Changes - The ATM business achieved record revenues of NT$100.3 billion, up NT$7.7 billion sequentially and NT$14.5 billion year-over-year, representing an 8% sequential increase and a 17% annual increase [8] - The EMS business reported revenues of NT$69 billion, increasing 17% sequentially but down 8% year-over-year, primarily due to differing underlying device seasonality [12][13] - The test business grew 11% sequentially and 30% annually, outpacing the assembly business [8] Market Data and Key Metrics Changes - The NT dollar appreciated by 4.6% against the US dollar during the quarter, negatively impacting margins at the holding company and ATM levels by 1.4% and 2.1% sequentially, and 2.4% and 3.6% annually [3][4] - The company expects a more stable NT dollar environment in Q4 with an average exchange rate of NT$30.4 per US dollar [4] Company Strategy and Development Direction - The company is focusing on expanding its LEAP services, driven by AI demand, and expects to reach NT$1.6 billion in revenue for LEAP by the end of the year [21][27] - The company plans to increase capital expenditures to support customer requests and business momentum into 2026, particularly for wafer probing for AI and non-AI chips [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue targets despite geopolitical uncertainties affecting packaging [26] - The company anticipates continued strong momentum in the AI and HPC-related business, with expectations for significant revenue growth in 2026 [27][64] Other Important Information - The company reported a net non-operating gain of NT$0.8 billion, primarily from foreign exchange hedging activities [7] - Total interest-bearing debt increased to NT$295.7 billion, primarily due to a NT$50 billion syndicated loan for capital expenditures [15] Q&A Session Summary Question: Progress on LEAP revenues and margin contribution - Management confirmed they are on track to reach the NT$1.6 billion target for LEAP this year, with strong momentum expected to continue into 2026 [26][27] Question: Pricing environment and negotiations - Management indicated that pricing remains resilient and will be adjusted based on the current market situation, with stable pricing expected for mainstream advanced packaging [32][35] Question: Update on US operations and competition - Management is evaluating investment opportunities in the US but has not made any decisions yet, emphasizing the need for economic viability [41] Question: Final test business update - Management is making necessary investments to build capacity for final tests, expecting meaningful revenue generation in the latter part of next year [44] Question: Revenue split for incremental AI-related revenue - Management indicated that for the expected NT$1 billion increase in AI-related revenue, approximately NT$650 million is anticipated from packaging and NT$350 million from testing [49] Question: Gross margin outlook - Management expects gross margins to improve, with a target of over 27% in Q4, driven by increased utilization and expansion in leading-edge business [64][83]