ASE raises capex budget to US$11.5bn
ROOM TO GROW: The company’s biggest bottleneck is still space, chief financial officer Joseph Tung said, adding that it was scouting existing factories to acquire
By Lisa Wang / Staff reporter
ASE Technology Holding Co (日月光投控) yesterday raised its annual capital expenditure budget for the third time to US$11.5 billion, driven by expectations that customer demand next year would continue to outpace capacity, particularly for its leading-edge advanced packaging (LEAP) technologies used in artificial intelligence (AI) chips.
ASE, the world’s biggest chip packaging and testing service provider, plans to add US$1 billion to its US$10.5 billion outlay on capacity expansion.
About 60 percent of the US$500 million equipment budget would be allocated for LEAP and 40 percent for mainstream packaging technology capacity, ASE chief financial officer Joseph Tung (董宏思) told an online investors’ conference.
An ASE Technology Holding Co building in Kaohsiung is pictured on Sept. 25 last year.
Photo: CNA
Next year’s capital outlay would escalate even further as the company grapples with persistent capacity crunches, he said, adding that ASE has 22 factory construction projects in Taiwan.
“Although demand is there, it is still difficult to catch up in terms of supply. For next year, we are expecting demand to be even higher than what we would be able to deliver,” Tung said. “I think the biggest bottleneck today is really still space.”
ASE is scouting manufacturing facilities to accelerate capacity expansion in addition to its greenfield projects, he said, in response to an analyst’s question about whether the company would consider acquiring idled factories to bump up capacity rapidly as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has.
TSMC yesterday announced a NT$38.8 billion (US$1.2 billion) deal to acquire an AUO Corp (友達) flat-panel facility, clean room and associated plant equipment.
ASE yesterday also raised its annual LEAP revenue forecast to more than US$4 billion this year, from the US$3.7 billion estimate it gave three months earlier.
ASE’s new full-process service, a turnkey offering for advanced semiconductor packaging, is expected to contribute more than US$1 billion in revenue next year, more than tripling from US$300 million this year, the company said.
Additionally, it has broadened its offerings to include co-packaged optics services, which are expected to contribute more than US$500 million next year as part of the company’s LEAP revenue, Tung said.
Next year’s gross margin for ASE’s assembly, testing and materials (ATM) business is projected to rise each quarter, scaling up from a 30 percent baseline, driven by robust demand for its high-margin LEAP services, he said.
This quarter, consolidated revenue is expected to grow 6 percent to 8 percent sequentially, from NT$244.16 billion last quarter, he said.
Gross margin is expected to improve to 23 percent to 24 percent from 22.1 percent last quarter.
ATM revenue is expected to expand 11 percent to 13 percent sequentially this quarter, from NT$151.49 billion last quarter, Tung said, adding that gross margin for that business is to increase 1 to 2 percentage points from 30.6 percent last quarter.
ASE’s electronic manufacturing services business revenue is to hold steady on a quarterly basis, while that segment’s operating margin is expected to dip to about 2 percent this quarter from 3.3 percent in the previous quarter, he said.
The company yesterday reported its strongest quarterly net profit for 19 quarters, at NT$27 billion for last quarter, surging 28 percent sequentially from NT$21.07 billion. That was a 148 percent increase from NT$10.87 billion a year earlier.
Basic earnings per share rose to NT$6.13 from NT$4.8 in the second quarter and NT$2.50 in the third quarter last year.
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