ASE Technology Holding Co (日月光投控) yesterday raised its capital expenditure for this year by 20 percent in response to stronger customer demand for leading-edge advanced packaging (LEAP) this year and next.
The company, headquartered in Kaohsiung, plans to spend US$1.5 billion on new facilities and machinery equipment this year on top of an estimate of US$7 billion made in February, it said.
ASE has not ruled out the possibility of hiking spending again this year, the company said, adding that it expects another “heavy spending” year next year.
Photo: CNA
LEAP services revenue is expected to grow 10 percent to US$3.5 billion this year, ASE chief financial officer Joseph Tung (董宏思) said at an earnings conference yesterday.
The company had expected LEAP services revenue to reach US$3.2 billion this year.
Growth next year would outpace this year’s, Tung said.
“For this year, I think we are seeing stronger-than-anticipated demand, particularly in the LEAP part of the business. And as such, we need to increase our capex [capital expenditure] to support that expansion. A lot of the increase is really to prepare ourselves for next year’s ramp-up,” he said.
LEAP services are part of ASE’s high-end packaging technology, which is similar to the chip-on-wafer-on-substrate (CoWoS) packaging technology of Taiwan Semiconductor Manufacturing Co (台積電), for chips powering artificial intelligence (AI) applications.
ASE also provides total turnkey LEAP solutions to customers, called full-process LEAP services, a business that is projected to generate US$300 million in revenue this year, Tung said.
“We can see quite substantial growth in that area [full-process LEAP services]. Not just revenue growth, we also expect customer base [expansion]. We believe other applications [than AI] will move into CoWoS-like packaging,” he said.
In addition, ASE is developing panel-based packaging technology and has installed a fully automated pilot line in Kaohsiung, which is prepared for volume production next year, Tung said.
This quarter, revenue is forecast to grow between 7 percent and 9 percent sequentially, compared with NT$173.66 billion (US$5.5 billion) last quarter, Tung said.
Assembly and testing service revenue would grow faster at 9 percent to 11 percent sequentially, he said.
Gross margin would improve by 0.2 percentage points to 1 percentage point this quarter, from 20.1 percent last quarter, Tung said.
For its assembly and testing business, gross margin is expected to rise 0.5 percentage points to 1.2 percentage points this quarter from 26 percent last quarter, he added.
ASE’s net profit last quarter beat its own predictions, reaching NT$14.15 billion, up 87 percent from NT$7.55 billion a year earlier, but down 4 percent from NT$14.71 billion the previous quarter.
Earnings per share rose to NT$3.24, compared with NT$1.75 a year earlier and NT$3.37 a quarter earlier.
ASE attributed the stronger-than-usual seasonal earnings to customers’ “pull-in” demand.
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