ASE Technology Holding(US:ASX)2025-10-30 08:02Financial Data and Key Metrics Changes - For Q3 2025, the company reported fully diluted EPS of TWD 2.41 and basic EPS of TWD 2.50, with consolidated net revenues of TWD 168.6 billion, representing a 12% sequential increase and a 5% year-over-year increase [4][7] - Gross profit was TWD 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 was TWD 13.2 billion, up TWD 3 billion sequentially and TWD 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 TWD 100.3 billion, up 8% sequentially and 17% year-over-year, with a gross profit margin of 22.6% [8][9] - The test business grew 11% sequentially and 30% annually, outpacing the assembly business [8] - EMS revenues were TWD 69 billion, increasing 17% sequentially but down 8% year-over-year, with a gross margin of 9.2% [13][14] Market Data and Key Metrics Changes - The NT dollar appreciated by 4.6% against the U.S. dollar during Q3, negatively impacting margins [3] - The company expects a more stable NT dollar environment in Q4 with an average exchange rate of TWD 30.4 per U.S. dollar [4] Company Strategy and Development Direction - The company is focusing on expanding its leading-edge business, particularly in AI and HPC-related areas, with plans to increase CapEx to support this growth [21][22] - The company aims to maintain a competitive edge by investing in both packaging and testing capabilities, with a strong emphasis on customer needs and market demands [17][18] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in reaching the $1.6 billion revenue target for LEAP this year, with expectations for continued strong momentum into 2026 [26][27] - The company anticipates gross margin improvements in Q4, projecting a gross margin over 27% at stable currency levels [67] Other Important Information - The company reported a net non-operating gain of TWD 0.8 billion, primarily from foreign exchange hedging activities [7] - Total interest-bearing debt increased to TWD 295.7 billion, mainly due to a TWD 50 billion syndicated loan for CapEx [15] Q&A Session Summary Question: Progress on LEAP revenues and future outlook - Management confirmed they are on track to reach the $1.6 billion target for LEAP this year, with strong momentum expected to continue into 2026 [26][27] Question: Pricing environment and negotiations - Pricing remains resilient, with management indicating they will adjust pricing based on current market conditions [32][36] Question: U.S. operations and competition - The company is evaluating investment opportunities in the U.S. but has not made any decisions yet [42] Question: Final test business update - The company is expanding its test business aggressively, expecting meaningful revenue from next-generation AI chips in the latter part of next year [46] Question: Revenue split for incremental $1 billion in 2026 - The expected breakdown for the $1 billion increase is approximately $650 million from packaging and $350 million from testing [54] Question: T-glass shortage impact - Management stated they have not seen disruptions in service due to material shortages and are well-positioned to secure necessary components [116]