ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand.
This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February.
About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said.
Photo: CNA
ASE is considered by analysts as one of the major beneficiaries of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) prolonged advanced packaging capacity scarcity, given robust demand for Nvidia Corp’s AI chips.
TSMC said last week that it is leveraging the capacity of its outsourced semiconductor assembly and test partners to help solve the capacity bottleneck, adding that it plans to double its advanced chip-on-wafer-on-substrate capacity this year, but that the expansion would not be sufficient to catch up with demand.
“We still see very, very good growth momentum in AI and leading-edge packaging and testing,” ASE chief financial officer Joseph Tung (董宏思) said during an online investor’s conference yesterday. “We are ahead of our schedule in doubling our leading-edge and advanced packaging revenue this year. We’ll expect strong growth next year as well.”
ASE said it aims to increase advanced packaging and testing revenue from a low-single digit percentage to a mid-single-digit percentage of its assembly and test manufacturing (ATM) revenue.
In addition to orders passed from the foundry customer, ASE is engaging with multiple customers, including chip designers and system houses, or hardware vendors, to offer its advanced packaging services, Tung said.
Aside from advanced packaging technology, ASE is also focused on boosting its investment in advanced testing technology capacity, including burn-in testing technology, Tung added.
Tung made the remarks amid speculation that ASE could make an inroad into the burn-in testing technology, which is used in Nvidia AI chips provided by King Yuan Electronics Co (京元電子).
With rising revenue contribution from advanced packaging and testing services, ASE said it is confident that the gross margin for its ATM business would expand to between 25 to 35 percent this year.
The gross margin of ASE’s ATM business improved to 21 percent last quarter from 20.1 percent in the prior year, thanks to favorable foreign exchange rates, the company said, adding that it expects a slight improvement in gross margin during the current quarter.
Revenue for the ATM business is expected to grow 5 percent sequentially this quarter from NT$73.91 billion (US$2.27 billion), ASE said.
However, electronics manufacturing service revenue would stay at a similar level to last quarter’s NT$59.37 billion, ASE added.
On a consolidated basis, the company should see a mild revenue growth this quarter from the NT$132.8 billion in the first quarter, backed by restocking demand.
“Most sectors are seeing a bottomming out in the second quarter. Auto and industrial are the segments that are still seeing lingering softness,” Tung said.
Equipment utilization is to increase to more than 60 percent this quarter and reach 70 percent in the third quarter from less than 60 percent last quarter, ASE said.
Net profits dropped about 2 percent year-on-year to NT$5.68 billion during the quarter ending March 31, compared with NT$5.82 billion, ASE said, representing a quarterly decline of 40 percent from NT$9.39 billion. Earnings per share dipped to NT$1.32 last quarter from NT$1.36 a year ago and NT$2.18 a quarter earlier.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RECORD LOW: Global firms’ increased inventories, tariff disputes not yet impacting Taiwan and new graduates not yet entering the market contributed to the decrease Taiwan’s unemployment rate last month dropped to 3.3 percent, the lowest for the month in 25 years, as strong exports and resilient domestic demand boosted hiring across various sectors, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. After seasonal adjustments, the jobless rate eased to 3.34 percent, the best performance in 24 years, suggesting a stable labor market, although a mild increase is expected with the graduation season from this month through August, the statistics agency said. “Potential shocks from tariff disputes between the US and China have yet to affect Taiwan’s job market,” Census Department Deputy Director Tan Wen-ling
RSS