Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

ASE Technology Holding   / Equity Bottom-Up

<ul>
<li>4Q25 Outlook: Revenue is expected to grow by 1% to 2% QoQ.  Both of GM and OPM are projected to increase by 0.70 to 1 percent QoQ.  </li>
<li>Growth continues to be driven by AI and HPC demand, with testing revenue exceeding expectations and offsetting minor shortfalls in packaging due to geopolitical uncertainties.</li>
<li>With 2025 test revenue expected to grow at roughly twice the pace of packaging revenue. Investment priorities are focused on wafer probing capacity for both AI and non-AI devices</li>
</ul>


4Q25 Outlook: Revenue is expected to grow by 1% to 2% QoQ.  Both of GM and OPM are projected to increase by 0.70 to 1 percent QoQ.  
Growth continues to be driven by AI and HPC demand, with testing revenue exceeding expectations and offsetting minor shortfalls in packaging due to geopolitical uncertainties.
With 2025 test revenue expected to grow at roughly twice the pace of packaging revenue. Investment priorities are focused on wafer probing capacity for both AI and non-AI devices


ASEH (3711.TT; ASX.US): 3Q25 ATM Record High; 4Q25 Modest Growth; 2025 ATM Revenue +20% YoY (USD)

<ul>
<li>3Q25 guidance (Assuming US$1 = NT$29.2.): Consolidated US$ revenue: +12-14% QoQ; NT$ revenue: +6-8% QoQ; Gross margin: -1 to -1.2ppts QoQ; OPM: -0.1 to -0.3ppts QoQ.</li>
<li>Still keep US$1bn advanced packaging guidance despite AI boom (TSMC revised up).</li>
<li>Long-Term success definition for ASE: Transition from OSAT model to foundry-aligned scale.</li>
</ul>


3Q25 guidance (Assuming US$1 = NT$29.2.): Consolidated US$ revenue: +12-14% QoQ; NT$ revenue: +6-8% QoQ; Gross margin: -1 to -1.2ppts QoQ; OPM: -0.1 to -0.3ppts QoQ.
Still keep US$1bn advanced packaging guidance despite AI boom (TSMC revised up).
Long-Term success definition for ASE: Transition from OSAT model to foundry-aligned scale.


ASEH (3711.TT): FX Impact; AI Gains Attention; 3Q25 Grows, but GM and OPM Decline QoQ.

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

<ul>
<li>
ASE slightly missed 1Q25 profit expectations; operating margin slipped slightly due to seasonal ATM softness and higher opex from LEAP and test investments.</li>
<li>
LEAP advanced packaging and AI test continue to scale; but still make up only ~6% of revenue; ASE's exposure to vulnerable mature/legacy chip end-applications remains too high.</li>
<li>
We rate ASE Neutral, vulnerable to global slowdown; citing macro opacity, tariff-related pull-ins, and a non-cheap valuation relative to 2H25 growth uncertainty and risks of a market de-rating.</li>
</ul>



ASE slightly missed 1Q25 profit expectations; operating margin slipped slightly due to seasonal ATM softness and higher opex from LEAP and test investments.

LEAP advanced packaging and AI test continue to scale; but still make up only ~6% of revenue; ASE's exposure to vulnerable mature/legacy chip end-applications remains too high.

We rate ASE Neutral, vulnerable to global slowdown; citing macro opacity, tariff-related pull-ins, and a non-cheap valuation relative to 2H25 growth uncertainty and risks of a market de-rating.


ASE Technology: Demand Pull-Ins and Tariff Fears Create an Uneven Outlook for Backend Services

<ul>
<li>2Q25 OSAT revenue is expected to grow 9–11% QoQ, with GM up 1.4–1.8%; EMS revenue is expected to decline 10% YoY with a 1.0% YoY drop in OPM.</li>
<li>1H saw some pull-in and shift orders plus seasonal growth, but nothing is certain, including tariff and ASEH investing in US....</li>
<li>Automotive remains conservative; high-end demand is stronger. Inventory correction continues for low-end products like MCUs. Overall automotive segment is expected to grow YoY.</li>
</ul>


2Q25 OSAT revenue is expected to grow 9–11% QoQ, with GM up 1.4–1.8%; EMS revenue is expected to decline 10% YoY with a 1.0% YoY drop in OPM.
1H saw some pull-in and shift orders plus seasonal growth, but nothing is certain, including tariff and ASEH investing in US....
Automotive remains conservative; high-end demand is stronger. Inventory correction continues for low-end products like MCUs. Overall automotive segment is expected to grow YoY.


ASEH (3711.TT; ASX.US): Slight Upside in 2Q25; Uncertainty Expected in 2H Due to Tariffs.

<ul>
<li>4Q24 IC ATM sales recorded NT$162bn, up 1% QoQ, GM: 16.4%, down 0.1% QoQ. EMS sales were NT$74.9bn, down 1% QoQ mainly due to seasonality. </li>
<li>1Q25 EMS sales will decline slightly YoY, and OPM is down 0.13ppts YoY. IC-ATM sales will decline mid-single-digits QoQ and GM is down slightly more than 1% QoQ.</li>
<li>Believes it will bring upside from new US BIS policy to ban non-listed OSAT vendors (especially China vendors) to produce US-related chip, but can’t quantify at this moment.</li>
</ul>


4Q24 IC ATM sales recorded NT$162bn, up 1% QoQ, GM: 16.4%, down 0.1% QoQ. EMS sales were NT$74.9bn, down 1% QoQ mainly due to seasonality. 
1Q25 EMS sales will decline slightly YoY, and OPM is down 0.13ppts YoY. IC-ATM sales will decline mid-single-digits QoQ and GM is down slightly more than 1% QoQ.
Believes it will bring upside from new US BIS policy to ban non-listed OSAT vendors (especially China vendors) to produce US-related chip, but can’t quantify at this moment.


ASEH (3711.TT; ASX.US): A Seasonal Decline in 1Q25, But US BIS Policy Will Help ASEH Business.

Taiwan

ASE Technology Holding Co., Ltd. offers assembly and testing services. The Company provides outsourced assembly, semiconductor testing, semiconductor packaging, and other related services. ASE Technology Holding operates in Taiwan.

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ASE Technology Holding (3711 TT)

ASEH (3711.TT; ASX.US): 3Q25 ATM Record High; 4Q25 Modest Growth; 2025 ATM Revenue +20% YoY (USD)

4Q25 revenue to grow by 1-2% QoQ, driven by AI and HPC demand. Testing revenue exceeds expectations, offsetting packaging shortfalls. Investment...

Patrick Liao

ASEH (3711.TT): FX Impact; AI Gains Attention; 3Q25 Grows, but GM and OPM Decline QoQ.

ASEH expects revenue growth and margin decline in Q3, maintains advanced packaging guidance despite AI growth. ASEH aims for foundry-aligned scale...

Patrick Liao

ASE Technology: Demand Pull-Ins and Tariff Fears Create an Uneven Outlook for Backend Services

We rate ASE Neutral due to global slowdown risks, non-cheap valuation, and insufficient near-term exposure to AI/advanced packaging drivers.

Vincent Fernando, CFA

ASEH (3711.TT; ASX.US): Slight Upside in 2Q25; Uncertainty Expected in 2H Due to Tariffs.

2Q25 OSAT revenue to grow 9-11% QoQ, EMS revenue to decline 10% YoY. Automotive segment remains conservative, high-end demand strong, inventory...

Patrick Liao

ASEH (3711.TT; ASX.US): A Seasonal Decline in 1Q25, But US BIS Policy Will Help ASEH Business.

4Q24 saw a slight increase in IC ATM sales and a decrease in EMS sales due to seasonality. 1Q25 is expected declining in both EMS and IC ATM...

Patrick Liao

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ASEH (3711.TT; ASX.US): 3Q25 ATM Record High; 4Q25 Modest Growth; 2025 ATM Revenue +20% YoY (USD)

​4Q25 revenue to grow by 1-2% QoQ, driven by AI and HPC demand. Testing revenue exceeds expectations, offsetting packaging shortfalls. Investment...

Patrick Liao

ASEH (3711.TT): FX Impact; AI Gains Attention; 3Q25 Grows, but GM and OPM Decline QoQ.

ASEH expects revenue growth and margin decline in Q3, maintains advanced packaging guidance despite AI growth. ASEH aims for foundry-aligned scale...

Patrick Liao

ASE Technology: Demand Pull-Ins and Tariff Fears Create an Uneven Outlook for Backend Services

We rate ASE Neutral due to global slowdown risks, non-cheap valuation, and insufficient near-term exposure to AI/advanced packaging drivers.

Vincent Fernando, CFA

ASEH (3711.TT; ASX.US): Slight Upside in 2Q25; Uncertainty Expected in 2H Due to Tariffs.

​2Q25 OSAT revenue to grow 9-11% QoQ, EMS revenue to decline 10% YoY. Automotive segment remains conservative, high-end demand strong, inventory...

Patrick Liao

ASEH (3711.TT; ASX.US): A Seasonal Decline in 1Q25, But US BIS Policy Will Help ASEH Business.

​4Q24 saw a slight increase in IC ATM sales and a decrease in EMS sales due to seasonality. 1Q25 is expected declining in both EMS and IC ATM...

Patrick Liao

4Q25 revenue to grow by 1-2% QoQ, driven by AI and HPC demand. Testing revenue exceeds expectations, offsetting packaging shortfalls. Investment...

2Q25 OSAT revenue to grow 9-11% QoQ, EMS revenue to decline 10% YoY. Automotive segment remains conservative, high-end demand strong, inventory...

4Q24 saw a slight increase in IC ATM sales and a decrease in EMS sales due to seasonality. 1Q25 is expected declining in both EMS and IC ATM...