ASE Technology Holding Co., Ltd. Q3 FY2025 earnings call

• Both ATM and EMS businesses outperformed sales and profitability expectations. Packaging and testing utilization was high. LEAP and test services led growth.
• Foreign exchange impacted margins, but NT dollar expected to be more stable in Q4.
• R&D spending increased, with operating expense percentage moderating due to higher revenues.
• Customer sentiment shifted to prebooking capacities and securing supply chains.

For the third quarter, ASE's ATM business had record revenues of TWD 100.3 billion, up 8% sequentially and 17% annually. Gross profit was TWD 22.7 billion with a margin of 22.6%. The EMS business had revenues of TWD 69 billion, up 17% sequentially but down 8% year-over-year. Its gross margin was 9.2%. ATM's test businesses growth outpaced assembly, with test growing 11% sequentially and 30% annually.

• Fourth quarter consolidated revenue expected to grow 1-2% QoQ, gross margin up 0.7-1 percentage points QoQ.
• ATM revenue expected to grow 3-5% QoQ, gross margin up 1-1.5 percentage points QoQ.
• EMS revenue flat or slight decline QoQ, operating margin similar to Q4 2024.
• Full-year ATM revenue expected to grow over 20% YoY in USD, with CapEx to increase for leading-edge business.

• Foreign exchange fluctuations negatively impact margins.
• Potential supply chain issues like T-Glass shortage could affect growth.
• Geopolitical uncertainties may impact market share and pricing.

Q: Could you give more color on LEAP revenues progress and margin contribution?

A: On track to reach TWD 1.6 billion this year, LEAP is accretive to margin.

Q: Commentary on pricing?

A: Pricing remains resilient, set based on current situation.

Q: Update on U.S. operation plans?

A: Evaluating opportunities, investment must be economical.

Q: Final test market share?

A: Investing in test capacity, expecting revenue from next-gen AI chips later next year.

Q: Incremental revenue for 2026 and packaging vs test contribution?

A: TWD 1 billion increase expected, test has stronger momentum now.

Q: Gross margin outlook and leading-edge advanced packaging progress?

A: Margin improving, leading-edge investment continues, full process revenue expected later next year.

Q: CP test outsourcing demand and customer engagement?

A: Close communication with foundry partners, ongoing dialogue.

Q: CapEx and T-Glass supply impact?

A: CapEx to continue, T-Glass shortage not yet disrupting supply, will manage customer needs.