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1、 1 ASE Technology Holding Co.,Ltd.First Quarter 2025 Earnings Conference Call/Webcast April 30,2025 2:00 p.m.Taiwan Time Kenneth Hsiang,Head of IR of ASE Technology Holding Hello.I am Ken Hsiang,the Head of Investor Relations for ASE Technology Holdings.Welcome to our first quarter 2025 earnings rel

2、ease.Thank you for attending our earnings release today.Please refer to our safe harbor notice on page 2.All participants consent to having their voices and questions broadcast via participation in this event.If participants do not consent,please disconnect at this time.I would like to remind everyo

3、ne that the presentation that follows may contain forward-looking statements.These forward-looking statements are subject to a high degree of risk and our actual results may differ materially.For the purposes of this presentation,dollar figures are generally stated in New Taiwan Dollars unless other

4、wise indicated.As a Taiwan based company,our financial information is presented in accordance with Taiwan IFRS.Results presented using Taiwan IFRS may differ materially from results using other accounting standards including those presented by our subsidiary using Chinese GAAP.I am joined today by J

5、oseph Tung,our CFO.For todays presentation,I will be going over the financial results and company guidance.Joseph will then be available to take your questions during the Q&A session that follows.During the Q&A session,I will be moderating receiving and as needed clarifying and condensing each inter

6、action down to a single question.With that,lets get started with the financial results.Our first quarter revenues came in ahead of our original outlooks for both our ATM&EMS businesses.There appeared to be a slight accelerated seasonality from certain customers that emerged during the 1st quarter es

7、pecially as it pertains to our EMS business.We believe there are some customers looking to minimize supply chain volatility by building secure inventory ahead of potential trade tariffs.With that said,we are unable to quantify such impact as we do not have a method to ascertain inventory build level

8、s from regular order flow.On the flip side,we also saw some delay in upstream component availability 2 due to the January earthquake in Southern Taiwan.Within our ATM business,our leading-edge advanced packaging(or LEAP)services continued its strong growth and were generally full during the quarter.

9、For the 1st quarter,LEAP services accounted for 10%of our overall ATM revenues as compared to 6%for the full year 2024.Our test business also continued its strong momentum growing 2%in the usually seasonally down quarter.Our overall utilization rate came in slightly above our original expectation of

10、 65%for the quarter with the latter part of the quarter fairing better than the beginning of the quarter.Test utilization was full for advanced platforms while being in the sixties for trailing edge capacities.Our EMS business also came in a bit ahead of expectations.At this point,we believe our EMS

11、 business customers may be adjusting order flow patterns for the year.And,as a result,our EMS business may be experiencing a potentially shallower seasonal dip for the year.The overall macro environment has been rather unsettled over the early part of this year.Given that our strategic decisions and

12、 investments are evaluated on a long term basis,these decisions become significantly more difficult with rapidly changing business fundamentals.For us,volatility is the enemy of sound long term planning and strategy.But,even with such volatility,we can continue to focus on core trends of our industr

13、y and the strengths of the company.Technological trends such as the increasing importance of package based connective technologies will continue to persevere regardless of the macro environment.The continuous improvement of our process technologies remains paramount to continuing to extend our compe

14、titive advantages.From a business perspective,we also continue to believe the assuredness of profitability and the market sustainability of our product offerings remain the key evaluation points when looking at business opportunities both small and large.In a nutshell,we need to minimize the short-t

15、erm noise in order to reach the long-term signal.For today,we will attempt to avoid the noisy play-by-play while continuing to try to offer insights into the strategy and positioning of the company on a longer term basis.With that lets go through the numbers in more detail.Please turn to page 3 wher

16、e you will find our 1st quarter consolidated results.3 For the 1st quarter,we recorded fully diluted EPS of$1.64 and basic EPS of$1.75.Consolidated net revenues declined by 9%sequentially and increased 12%year-over-year.We had a gross profit of$24.9 billion with a gross margin of 16.8%.Our gross mar

17、gin improved by 0.4 percentage points sequentially and improved by 1.1 percentage points year-over-year.The sequential improvement in margin is primarily due to foreign exchange fluctuations and a higher ATM product mix.The annual improvement is primarily due to foreign exchange,higher utilization a

18、nd beneficial product mix.Our operating expenses decreased by$0.2 billion sequentially and increased by$1.9 billion annually to$15.2 billion.The sequential decrease in operating expenses is primarily due to lower factory supply and other expenses related to lower consumption during the holiday perio

19、d offset by higher labor due to incremental hiring.The year-over-year increase in operating expenses is primarily attributable to continued R&D staff-up,other labor related costs and geographical site expansion.Our operating expense percentage increased sequentially by 0.8 percentage points and annu

20、ally by 0.3 percentage points year-over-year to 10.3%.Operating profit was$9.7 billion,down$1.5 billion sequentially and up$2.2 billion year-over-year.Operating margin declined 0.4 percentage points sequentially and improved 0.9 percentage points year-over-year.During the quarter,we had a net non-op

21、erating gain of$0.1 billion.Our non-operating gain for the quarter primarily consists of net foreign exchange hedging activities,profits from associates and other non-operating income offset in part by net interest expense of$1.3 billion.Tax expense for the quarter was$1.9 billion.Due to timing of c

22、ertain tax expenses,our effective tax rate for the quarter was 20.6%-higher than our full year projection of slightly below 20%.Net income for the quarter was$7.6 billion representing a decrease of$1.8 billion sequentially and an increase of$1.9 billion year-over-year.The NT dollar depreciated 2.0%a

23、gainst the US dollar sequentially while depreciating 4.8%annually.From a sequential perspective,we estimate the NTD depreciation had a 0.6 percentage point positive impact to the Companys gross and operating margins.While from an annual perspective,we estimate the NTD depreciation had a 1.4 percenta

24、ge point positive impact to the Companys gross and operating margins.On the bottom of the page,we provide key P&L line items without the inclusion of PPA related expenses.Consolidated gross profit excluding PPA expenses would be$25.4 billion with a 17.2%gross margin.Operating profit would be$10.5 bi

25、llion with an operating margin of 7.1%.Net profit would be$8.4 billion with a net margin of 5.6%.Basic EPS excluding PPA expenses would be$1.93.4 On page 4 is a graphical presentation of our consolidated quarterly financial performance.Gross margins have been gradually improving even heading into ou

26、r seasonally slow first quarter.On the operating margin front,operating expenses are continuing to increase primarily for LEAP business preparation,labor acquisition and retention and offshore site expansion costs.On page 5 is our ATM P&L.The ATM revenue reported here contains revenues eliminated at

27、 the holding company level related to intercompany transactions between our ATM&EMS businesses.For the 1st quarter of 2025,revenues for our ATM business were$86.7 billion,down$1.7 billion from the previous quarter and up$12.8 billion from the same period last year.This represents a 2%decline sequent

28、ially and a 17%increase annually.Gross profit for our ATM business was$19.6 billion-down$1.0 billion sequentially and up$4.1 billion year-over-year.Gross profit margin for our ATM business was 22.6%,down 0.7 percentage points sequentially and up 1.6 percentage points year-over-year.The sequential ma

29、rgin decline was primarily due to softer loading during our seasonally soft first quarter offset in part by foreign exchange impact.The annual margin improvement is primarily the result of higher loading,product mix and foreign exchange differences offset by higher utility costs.During the 1st quart

30、er,operating expenses were$11.3 billion,up$0.1 billion sequentially and$1.8 billion year-over-year.The sequential increase in operating expenses was related to increased headcount.The annual increase is primarily the result of R&D ramp-up and labor related expenses.Our operating expense percentage f

31、or the quarter was 13.0%-increasing 0.4 percentage points sequentially and up 0.2 percentage points annually.The sequential increase was primarily related to seasonality of revenue while the annual increase was primarily due to labor ramp-ups preparing for higher leading edge advanced packaging reve

32、nues.During the 1st quarter,operating profit was$8.3 billion representing a sequential decline of$1.1 billion&an annual increase of$2.3 billion.Operating margin was 9.6%down 1.1 percentage points sequentially while up 1.4 percentage points year-over-year.For foreign exchange,we estimate that the NT

33、to US dollar exchange rate potentially had a positive 0.97 percentage point impact on our ATM sequential margins and a positive 2.3 percentage point impact on a year-over-year basis.Without the impact of PPA related depreciation and amortization,ATM gross profit margin would be 23.2%and operating pr

34、ofit margin would be 10.5%.On page 6,youll find a graphical representation of our ATM P&L.5 On page 7 is our ATM revenue by the 3C market segments.You can see here that the computing segment took a big step up in terms of the relative positioning of applications.This was made more apparent given the

35、 stable high demand nature of AI products while handsets and other communications related devices were seasonally impacted.On page 8,you will find our ATM revenue by service type.Moves here were generally product mix driven.What is good to note is the testing percentage of our business has sustained

36、 at 18%.We continue to believe we can gain market share in testing throughout the year.We now believe we are slightly ahead of plan for increasing our test business.By the end of the year,our test business should reach between 19 to 20%of our overall ATM revenue.We continue to be the largest provide

37、r of outsourced test services in the world and test is becoming a more strategically critical component of our overall strategy.We believe that as future products become more integrated with multi-chip and RDL based packaging,the insertion of incremental test steps during the assembly processes will

38、 become increasingly prevalent potentially disrupting classic wafer probe and final test frameworks.For example,silicon and organic interposers,like those used on the newest generations of AI chips,are ideally tested pre and post die attach;the post die attach test provides turnkey providers the opp

39、ortunity to accelerate failure detection ahead of the final test process.Financially,we also believe that the test business is accretive to our overall ATM margins and as such almost all acquirable test business is good business.We remain committed to being aggressive in the test space.We have a tar

40、get of gaining incremental test market share throughout the year.In particular,we continue to believe that we will start to make significant progress during the back half of 2025 in regards to increasing our AI testing market share.On page 9,you can see the 1st quarter results of our EMS business.Du

41、ring the quarter,EMS revenues were$62.3 billion,declining$12.6 billion or 17%sequentially while increasing$2.9 billion or 5%year-over-year.The sequential revenue decline is generally related to the seasonality of products that we service while the annual revenue improvement is likely due the current

42、 quarter following a slightly different seasonal pattern.Sequentially,our EMS businesss gross margin improved 0.6 percentage points to 8.9%.This change was principally the result of product mix.Operating expenses within our EMS business declined$0.3 billion sequentially and while increasing$0.1 bill

43、ion annually.The sequential expense decline was primarily attributable 6 to lower running costs during the seasonally soft timeframe.Despite an absolute dollar decline in operating expenses sequentially,our 1st quarter operating expense percentage of 6.3%was up 0.7 percentage points.Annually,our EMS

44、 operating expense percentage was down 0.2 percentage points on higher revenues.Operating margin for the 1st quarter was 2.6%declining 0.1 percentage points sequentially and year over year.The sequential and annual improvements were primarily due to product mix.Our EMS 1st quarter operating profit w

45、as$1.6 billion,down 0.4 billion sequentially while flat annually.You will find a graphical representation of our EMS revenue by application on the bottom of the page.The percentage shifts here are generally related to the seasonal nature of underlying consumer and communications products.On page 10,

46、you will find key line items from our balance sheet.At the end of the year,we had cash,cash equivalents and current financial assets of$93.5 billion.In preparation for upcoming capital expenditures,our total interest-bearing debt increased by$17.7 billion to$231.6 billion.We anticipate increasing ou

47、r debt outstanding throughout the year.Total unused credit lines amounted to$358.4 billion.Our EBITDA for the quarter was$27.6 billion.Our net debt to equity this quarter was 41%.As a point of reference,we anticipate that our net debt to equity will be peaking in the 3rd quarter of this year at or n

48、ear 60%.On page 11,you will find our equipment capital expenditures relative to our EBITDA.Machinery and equipment capital expenditures for the 1st quarter,in USDs,totaled$892 million,of which$395 million were used in packaging operations,$472 million in testing operations,$23 million in EMS operati

49、ons and$2 million in interconnect material operations and others.In addition to spending on machinery and equipment,during the quarter we also spent$410 million on facilities which includes land and buildings.The machinery and equipment we are investing in this year not only represent capacities all

50、ocated for current product demand,they also represent a broader target of servicing the generational evolution of packaging in electronic devices.Future generations of AI,networking and communications have fundamental needs for specification improvements only LEAP can provide.Whether its the need to

51、 move power delivery closer to the package or the need to bring HBM closer to logic dies or the need to address higher I/O densities in newer generations of future products,all these core trends will require the generational leap in equipment and facilities we are currently installing.And,though we

52、continue to possess the ability to adjust capital equipment delivery times,current investment timelines continue to align with capacity needs.7 Heading into the 2nd quarter,product flow appears to be strong.Our leading-edge advanced packaging and testing businesses continue to lead the way.And,as we

53、ve mentioned,we are seeing some potential for accelerated seasonality and inventory build during the second quarter.And,as stated earlier,we are not necessarily able to fully discern between customer inventory build and customer product sell through.Avoiding a potentially thornier tariff environment

54、 by accelerating production would appear to be rational.However,it comes with a large caveat that wafers must have been completed,substrates are ready to go and we have the proper tooling and capacity to support the acceleration.So,not all who may wish to accelerate are able to do so.As such,there i

55、s some impact to our ATM business,but such impact is relatively limited.Looking beyond the 2nd quarter is probably impractical at this time.But,we at this moment have not seen any out of the ordinary adjustments which may or may not be meaningful.With that,we would like to summarize our outlook for

56、the 2nd quarter 2025 as follows:For our ATM business,in NT dollar terms,our ATM 2nd quarter 2025 revenues should grow by 9 to 11 percent quarter over quarter.Our ATM 2nd quarter gross margin should increase by 140-180 basis points quarter over quarter.For our EMS business,in NT dollar terms,our EMS

57、2nd quarter 2025 revenues should decline ten percent year over year.Our EMS 2nd quarter 2025 operating margin should decline by 100 basis points year over year.During the Q&A session that follows,we would appreciate if questions can be kept concise and asked one at a time.I will be receiving each qu

58、estion and repeating the asked question to Joseph.Again,we will be limiting the number of questions asked to two questions per turn but asked one at a time.Callers may return to the queue for additional questions.Thank you.Moderator Now we have a question from Mr.Gokul Hariharan.Gokul Hariharan of J

59、P Morgan Okay,good afternoon,Ken and Joseph,thanks for taking my question.My first question is on test.First of all,when you talk about increasing AI test market share,is it mainly for the dominant GPU platform that youre referring to in second half of this year?And second 8 on test,I think I saw th

60、at the test capex,even in Q1 is almost like 500 million following on from the 900 billion that we spent last year.So we are starting to spend very heavy capex on test Joseph,can you outline how we should think about the economic return framework for these test investments,and how does that compare t

61、o your target ROE for the overall business,etc.Kenneth Hsiang,Head of IR of ASE Technology Holding Hi Gokul,so youre looking for a summary in terms of what in particular is ramping up in the back half of the year,and also how that necessarily impacts our overall capex spending for tests.Is that corr

62、ect?Gokul Hariharan of JP Morgan Yeah.Also,I think some economic framework given the test capex is now becoming pretty,pretty meaningful.I think even single quarter capex seems to be pretty,pretty chunky now,yeah.Joseph Tung,CFO of ASE Technology Holding Yeah.I think we will,we have been and will co

63、ntinue to be very,very aggressive in terms of making our test investment and aiming at continue to expand our market share in the test area.I think we have been making a lot of progress,as you can see,the past two,three years,we have been growing our test portion of the business from 16%all the way

64、to 18%,and were looking at closing into 20%by the end of the year.In terms of the composition of the test business,I think,aside from the,you know,the kind of the general market test,special emphasis is also put on the AI chips testing,or more advanced testing as well.On that,I think,in terms of waf

65、er sort,we have been executing as planned and progress are being made,and I think the focus will also be turned on the final test of these chips,and we are in the process of lining up and also aligning our capacity,and we expect to see progress in the second half of the year in terms of penetrating

66、into this very important market for us.In terms of economics,I think tests,of course,as Ken mentioned,it has a higher margin.So its a margin-accretive business for us.And in terms of return,I think it has a very similar return to the leading-edge packaging on the financial standpoint.Capex-wise,we w

67、ill make the necessary investment in our capex,not just on the equipment itself,but also on the facility that we need to put in to address this demand.9 Kenneth Hsiang,Head of IR of ASE Technology Holding Gokul,does that answer your question?Gokul Hariharan of JP Morgan Yeah,thats pretty clear.Thank

68、s,Ken.Maybe my second question is on your US investments.Any plans there given your partner,the large foundry,has already announced 2 packaging fabs in the US?Also,one of your competitors seems to have gone ahead and invested a fair bit of capex in their US fab,and they seem to be positioning themse

69、lves as a US partner for your kind of large foundry partner.So how do you think about US investments from here on,given environment seems to have changed a little bit.When does ASE need to start preparing for some US capacity,especially for your LEAP,leading edge advanced packaging portfolio?Kenneth

70、 Hsiang,Head of IR of ASE Technology Holding Gokul,youre looking for a summary in terms of an overall framework for our view on the US investment,right?Gokul Hariharan of JP Morgan Yes.Joseph Tung,CFO of ASE Technology Holding I think we were invited by the customer and to evaluate the possibility o

71、f having some operation to support their business in the United States.Currently,we are engaging in discussion and are evaluating the opportunity with interest.There are no further details so far in terms of the actual investment size or the timing of it,but any decision that we will eventually make

72、 will be made with economic viability.Gokul Hariharan of JP Morgan Is that going to be similar stuff to what you do in Taiwan right now,or is it going to be like different,maybe more advanced packaging technology compared to what you what youre investing in?Just wanted to understand,is it just geogr

73、aphic diversification,or is like 10 completely different products that you think would be invested in the US?Joseph Tung,CFO of ASE Technology Holding I think it will be extension of what we are offering here.But you know,in terms of eventually what exactly that we will be doing,or what kind of inve

74、stment well be making,it depends on the the situation and also the economics of it.So I think at this point,we dont really have much detail to share with everybody,except the fact that we are being invited and we are evaluating the situation here.Gokul Hariharan of JP Morgan Got it.Thanks,Joseph,tha

75、nk you.Joseph Tung,CFO of ASE Technology Holding Thank you.Kenneth Hsiang,Head of IR of ASE Technology Holding Thank you.Moderator Our next question is from Mr.Bruce Lu of Goldman Sachs.Bruce Lu of Goldman Sachs Okay,can you hear me?Hello.Can you hear me?Okay,just one quick clarification from Gokuls

76、 question,does your economic value in US,when you do the evaluation,does geopolitical consider as one of the economic value?Joseph Tung,CFO of ASE Technology Holding Not really,I think the whatever.Im sorry,Ken,do you want to repeat the question?11 Kenneth Hsiang,Head of IR of ASE Technology Holding

77、 No,please go ahead.Joseph Tung,CFO of ASE Technology Holding Anyway,I think its really to request whatever we eventually will do is really offering our support to our customer and try to meet customers demand in any way we can,provided that its a feasible or economically feasible option for us.Bruc

78、e Lu of Goldman Sachs Okay,thank you.So for my 2nd question is for the,again,go back to the AI testing.You guys mentioned that you are confident to win,like you know,more than 50%market share in AI testing.Can you provide us some update in terms of your market share situation in different products,s

79、uch as GPU versus ASIC,or,you know,final test versus wafer test or burn in you know,what kind do you see any disproportional market share,or where do you see your growth driver in this AI testing business?Kenneth Hsiang,Head of IR of ASE Technology Holding So Bruce,youre looking for a summary in ter

80、ms of our market position relative to GPUs,or in total.Bruce Lu of Goldman Sachs Well,I want to know,like,you know,the market share in different products.Joseph Tung,CFO of ASE Technology Holding I dont think we have a market share breakdown in between different product.I think the overall emphasis

81、is really,we want to expand our test business in whichever area,I think,legacy or more advanced or leading edge,its across the board.Were making efforts to penetrate this market further,and we have been making a lot of progress,not just on the AI chips,but as an overall test business,which is being

82、shown in our in this,in the percentage of our revenue.As I said,this has grown to 18%and were going to reach 20%pretty soon,and this effort will continue.But in terms of AI chips,I think were really the dominant player in terms of wafer sort and were moving in very aggressively into final tests as w

83、ell.And we will see some results coming in in the later part of the year.And we 12 expect to grow this part of the business very aggressively next year as well.Kenneth Hsiang,Head of IR of ASE Technology Holding Does that answer your question,Bruce?Bruce Lu of Goldman Sachs Yes,thank you.So my secon

84、d question again is for the long term CoWoS demand.You know,there is a lot of noise about the CoWoS demand.Do you see some capacity planning of changes or fluctuation in TSMC?What does that change for your CoWoS or similar related capacity expansion plan for like,you know,later part of this year or

85、in 2026?Kenneth Hsiang,Head of IR of ASE Technology Holding Bruce,youre looking for a view on our leading-edge advanced packaging roadmaps.In particular our products,our FOCoS-based products.Is that correct?Bruce Lu of Goldman Sachs I want to make it clear that we do see the fluctuation in terms of

86、the advanced packaging demand in you know,one of your major partner in TSMC,and does that have,you know,secondary impact to your business,or do you change any of your plan because of that?Joseph Tung,CFO of ASE Technology Holding So far,we havent seen anything as out of the ordinary.I think the thin

87、gs are going as planned and in terms of a leading edge.I think were still in a catch-up mode in terms of building our capacity to meet the demand.And as our foundry partner has mentioned,it has a long term,or five year category of 45%and we,and we are also a true believer of the long term prospect o

88、f this AI related growth,and more importantly,is that,you know,its not just AI itself,but the AI generated demand for other products as well as the as the AI adoption expands.So you know,were not going to change our course in terms of making the necessary investment in time to meet this growing dema

89、nd,not just on AI itself,but on the overall.So right now,were not seeing any major behavioral changes among our customers,and therefore for this year,we are not making any changes.I dont think anything structural,13 any structural changes is warranted at this point,so we will just go ahead with what

90、ever we set out to do.And you know that theres going to be short term uncertainties or fluctuations,but the longer-term direction is it remains the same,and were making all our investments according to that.Kenneth Hsiang,Head of IR of ASE Technology Holding Does that answer your question,Bruce?Bruc

91、e Lu of Goldman Sachs Yes,thank you.Kenneth Hsiang,Head of IR of ASE Technology Holding All right,thank you.Moderator Next question is from Charlie Chan of Morgan Stanley.Charlie Chan of Morgan Stanley Hello,good afternoon,Joseph and Ken.Thanks for taking my question.So first of all,I wanted to know

92、 your 3D IC technology development,I think the similar technology your foundry partner is SoIC,so Im not sure when the chip migrates to two nanometer,whether you are receiving more business opportunity for the 3D IC packaging,and can we get a sense about your investments and potential revenue contri

93、bution next year.Kenneth Hsiang,Head of IR of ASE Technology Holding Charlie,youre looking for an update in terms of our overall positioning within the 3D IC framework,right?Charlie Chan of Morgan Stanley Yeah,because one of the very big US customers recently,high profile talk about its two-nanomete

94、r chip at your foundry partner.So we heard that the packaging could leverage 14 some 3D IC technology,right?So wondering whether you can seize this opportunity,and also how big the revenues contribution could be.Joseph Tung,CFO of ASE Technology Holding We really dont have much of a clarity in terms

95、 of when,how this new packages will come on stream,and what kind of volume we can expect,maybe next year and onwards,what we can do is not just on the 3D IC,I think a lot of the advanced technology thats now in play,including 3D IC,including CPO,including panel,I think,we all,you know,putting a lot

96、of resources in this.As you can see,our R&D investment has been increasing year over year,not just on CoWoS itself,but also on these upcoming technology we need to prepare ourselves,and we are forming very strong alliance with different parties,also engaging,very active engagement with the foundry p

97、artners as well as customers,to ready ourselves for these technology when they come on stream.So our strategy is really to prepare ourselves and when the volume comes,be ready.Charlie Chan of Morgan Stanley Okay,thank you.Thanks,Joseph,and if I may ask a second one would be the common tariff questio

98、n.So beforehand,do you see any kind of pull-in given tariff?And also,do you see second half could be,you know,very,very moderate given kind of pull-in in first half already,resulting in very flattish second half growth.Kenneth Hsiang,Head of IR of ASE Technology Holding Charlie,youre looking for a v

99、iew on the tariff impact on us,and then how that reflects various timelines in our business,right?Is that correct?Charlie Chan of Morgan Stanley Indeed,indeed,yeah,because your foundry partners kind of said theres no behavior change,but two of them all guided very,very strong second quarter,and very

100、,kind of implying very slow second half.But Im wondering,because backend is even closer to customers,right?So were looking for your view.Joseph Tung,CFO of ASE Technology Holding Yes,we,we do have a pretty strong second quarter,and thats,I think,something that we 15 can,we still have high confidence

101、 on that,but when it comes to second half,I mean,I really,I wish I have a better answer,but I really dont have a bigger crystal ball than you do.So you know,how do we mitigate this risk?I think the first thing is to really understand what the risk is,when dust is more settled.I think its very,very d

102、ifficult for us to make any prediction.Whatever prediction I make is going to be a wrong one at this point.So I refrain from making any real comments or substance for second half.Charlie Chan of Morgan Stanley Yeah,but just want to ask,is that,do you see kind of pull-in,or is just some market specul

103、ation and,customers,they just operate as usual?Joseph Tung,CFO of ASE Technology Holding Well,I think its,its,its,its very normal or reasonable that there will be some pull-in,during this first half.But in terms of,like Kenneth trying to explain,theres still limitations in terms of capacity and read

104、iness to entertain all these supposed to be pull-in demand.So its very,very difficult for us to quantify how much of our growth in first half is really coming from pulling in.And theres,there are also factors affecting the quarters performances,including,you know,we are being put on the white list,s

105、o there will be some business shifting to us because of that.So its a combination of a lot of things.But as we said earlier,at this point,aside from this sporadic pull-ins,were not seeing any major behavioral changes or forecasts from our customers at this point,so I think the best thing we can do i

106、s really to stay on course and just do whatever we set out to do for the year,and,you know,stay nimble and responsive to whatever changes thats coming ahead of us.Charlie Chan of Morgan Stanley Thank you.This is super helpful.Thank you.Moderator Next question is from Sunny Lin of UBS.Sunny?Sunny Lin

107、 of UBS Hi,could you hear me?16 Moderator Yes.Sunny Lin of UBS Thank you very much.So my first question is on EMS.So if I calculate correctly,your guidance basically imply your Q2 EMS sales could drop sequentially.I know earlier you mentioned there are some earlier seasonality for build in Q1 given

108、the pull-in for tariff.But could you share a bit more color on why theres a pull-in Q1 but for Q2 now theres a 90-day delay,but we have started to see orders maybe dropping off in Q2 already?Kenneth Hsiang,Head of IR of ASE Technology Holding So,Sunny,your question relates to our view on what is cau

109、sing the movement in terms of our Q2 revenues.Is that correct?Sunny Lin of UBS Thats right.Joseph Tung,CFO of ASE Technology Holding I think the pattern is a typical seasonality pattern.Second quarter is always the slowest quarter for us in terms of EMS.What Ken mentioned earlier on is that for the

110、first half,when we were entering these down quarters,this time around,the dip is a bit shallower than before or than previous years,because of some of the pull-ins thats been happening in not just first quarter,but also second quarter.But still,second quarter is the down quarter,its the lowest quart

111、er for us.Sunny Lin of UBS Got it.And a quick follow-up for EMS.Last year,your largest customer had earlier build for the new products.So now,based on your Q2 guidance,theres no earlier build for this year,right?17 Kenneth Hsiang,Head of IR of ASE Technology Holding I can summarize your question,but

112、 I can pretty much answer for you at this point,I dont think we can really comment on that customer per se.Do you have a different question to ask?Sunny Lin of UBS Yeah,no problem.So maybe switching gear to your profitability in CapEx.I recall maybe two quarters ago,you mentioned that for 2025 as yo

113、u start to ramp more sales from advanced packaging,the second half gross margin should be higher than first half,although,now I understand theres some macro uncertainty for second half,but does that gross margin guidance still hold?And then for your CapEx,you spend quite a bit in Q1,and so for 2025

114、full year,are you still guiding$2.5 to$2.6 billion CapEx for full year?Or should we expect a bit higher CapEx?Kenneth Hsiang,Head of IR of ASE Technology Holding Sunny,youre asking for our seasonal outlook in terms of how we would normally expect a peak seasonal gross margin level,right?Especially p

115、ertaining to our leading-edge advanced packaging ramps.Is that correct?Sunny Lin of UBS Yeah,so basically,directionally,all gross margin trends up in second half with higher advanced packaging contribution?And also CapEx guidance for 2025.Joseph Tung,CFO of ASE Technology Holding As I said,you know,

116、were not making any changes for the years projection at this point,and thats on the revenue as well as on CapEx for the year.And you know,I think in terms of progress that were making,I think our performance is a bit ahead of originally expecting.In terms of second quarter,I think the overall utiliz

117、ation will be around 70%and will reach to 70%hurdle threshold earlier than what we were expecting.And as such,we were saying that our second half margin will get back into the structural margin range,but that seems to be happening earlier.We will start seeing that starting from second quarter.And fo

118、r the whole year,I think we will also be meeting our target in putting our margin back into the structural range.Second half short of any major surprises,I think our margin will go back to the midpoint of our structural margin level.I think that remains unchanged.18 Sunny Lin of UBS Got it.Thank you

119、 very much.Moderator Next question is from Laura Chen of Citigroup.Laura Chen of Citigroup Hello!Hi!Good afternoon!Can you hear me?Moderator Yes.Laura Chen of Citigroup Yes.Hi,thank you for taking my questions.I recall last time we talked about,like,$1.6 billion leading-edge advanced package revenue

120、 for this year.Just wondering that,based on Q1 our achievement and also the Q2 outlook,what kind of the achievement we already have right now,as we know that from our foundry partner,they have technology migration,say,like from the CoWoS-S to CoWoS-R or L.So will that have any implication to our adv

121、anced packaging revenue ramping up now?Thats my first question.Kenneth Hsiang,Head of IR of ASE Technology Holding Laura,youre asking for an update in terms of our leading-edge advanced packaging,in terms of the revenue,and then the shape of the ramp at this point.Right?Is that correct?Laura Chen of

122、 Citigroup Yes,yes.Yes,thank you.Joseph Tung,CFO of ASE Technology Holding Theres really no change at this point.I think we are moving ahead with our original plan,19 both on the overall as well as on the leading edge.We are making the necessary investments.We are not cutting our capex at this point

123、 and we are set out to do to reach our revenue target on leading-edge as well for the year.Different types of CoWoS,I think we have our capacity ready for,you know,whatever the the package type thats needed,we will have our capacity aligned for that.Laura Chen of Citigroup Okay,thank you.Very clear.

124、And also my second question,again,is related to the testing.We know that we have set the objective,the target,to ramp up the internal testing revenue contribution,but just wondering that for further more upside,can we assuming that is mostly coming from the GPU or AI accelerator,or its also includin

125、g some of the other,like application,like smartphone?Kenneth Hsiang,Head of IR of ASE Technology Holding Laura,youre asking about who were targeting in terms of expanding overall tests.Is that correct?Laura Chen of Citigroup Right,yes.And then also,Im just wondering that,can it also count into our l

126、ike leading,some of our,like leading-edge advanced packaging,revenue,or its separate?Because as we know that sometimes its more like a turnkey total service for the whole OSAT process.Joseph Tung,CFO of ASE Technology Holding I think its in all our effort of trying to grab as much market share as po

127、ssible throughout the whole test arena.You know,of course,theres going to be extra effort on the AI or the leading-edge test,and,you know,necessary investment will be made.And you know,we have strong confidence that we will be making a lot of progress going forward.You know,things will start happeni

128、ng,particularly on the final test of it,we will have maybe a lot of headways,starting for second half of the year.Were in the process of,you know,preparing our capacity,and also going through qualification and so on and so forth.So were expecting business to start coming in in the second half of the

129、 year.Its an all-out initiative,and we,I think,if you have to make a comparison,I think what were trying to do is not just leveraging on our turnkey capability as much as possible to get the test business 20 part of it,but also we will be putting a lot of effort in getting the pure test business as

130、well.Laura Chen of Citigroup Okay,thank you.Thats very clear.Moderator We have a question from Brad Lin of BoA.Brad Lin of BoA Thank you for taking my question.Hello.Good afternoon,Joseph and Ken.I have two questions.My first question would be mainly related to tariff.So if the new tariffs are reall

131、y to be implemented,particularly on the semiconductors,does ASE expect to absorb part of the additional cost?And also given that a significant portion of your EMS manufacturing is currently in China,what strategies are in place to reduce the potential tariff exposure?Thank you.Kenneth Hsiang,Head of

132、 IR of ASE Technology Holding Hi,Brad,your first question relates to the tariff and the cost,whether were going to be absorbing any costs,and then also how our EMS business would react in such situations.Correct?Brad Lin of BoA Exactly.Thank you,Ken.Joseph Tung,CFO of ASE Technology Holding I dont k

133、now how much we need to absorb but I do know adjusting our prices is not the solution to that tariff problem.So I dont think thats really an option.I think most of the direct exposure to the US is very minimum from the group perspective.I think only less than 10%of our EMS business shipment is going

134、 directly to the US,and that can be managed through moving some of the parts to other locations that we have.In terms of ATM,we have really very,very minimum direct shipment to the US.So whatever the tariff will be,I think right now its very,very difficult to estimate what kind of impact it will hav

135、e 21 on the overall.What I can say is,if there is an impact,its going to impact our competitors a lot more than we do.Brad Lin of BoA Got it.Got it.My second question would be,well,switch gear to the general demand of the industry,such as consumer electronics,industrial,and automotive?And do you ant

136、icipate a recovery,particularly in the industrial and auto segments in the second half of the year?And also compared to three months ago,are we more optimistic or less optimistic on the consumer electronics?Thank you.Kenneth Hsiang,Head of IR of ASE Technology Holding Brad,your question relates to o

137、ur view of the overall general demand of electronics,including automotive and consumer related products.Is that correct?Brad Lin of BoA Yes.Thank you.Joseph Tung,CFO of ASE Technology Holding I think its a general consensus that other than maybe automotive,the other sectors are gradually recovering.

138、In terms of automotive,I think on the high end,automotive actually is having a much better momentum at this point.But the legacy,the MCUs and the lower end stuff,is still going through some level of inventory correction at this point.So from our own business portfolio perspective,I think automotive,

139、we will see growth in this area for this year as well.Brad Lin of BoA Got it.Thank you very much.Moderator If you have any question,please raise your hand.Our next question is from Jason Tsang of CL Securities.22 Jason Tsang of CLSA Hello,can you hear me?So thank you for taking my questions.I want t

140、o follow up the EMS questions in terms of your Q2 revenue.Can you give us more color in terms of each of different sectors,revenue outlook or guidance in Q2?Which sector do you expect probably can have a sequential growth or all the sectors will drop in Q2,thank you.Kenneth Hsiang,Head of IR of ASE

141、Technology Holding Yes,and youre looking for characterization in terms of market segment related to our Q2 revenues,right?Is that correct?Jason Tsang of CLSA Yeah,yeah,yeah.Kenneth Hsiang,Head of IR of ASE Technology Holding Hang on just a sec.Joseph Tung,CFO of ASE Technology Holding I think this i

142、s a very difficult question to answer,because I cant answer this without linking this to a particular customer.So I think Im not going to reply.Jason Tsang of CLSA Okay,got it.So what,probably what kind of sector do you expect,probably,can you know,demand or shipments or revenue can better than othe

143、r segments in Q2 or which sector did you expect is probably worse than other sector?Or your expectation in Q2.Kenneth Hsiang,Head of IR of ASE Technology Holding I think,in terms of our EMS business,given that it is the second quarter,and its usually the seasonally down quarter.Its probably not a re

144、ally fair assessment in terms of trying to figure out what,you know,what products are ramping and what products are not.The current,the current movements in these types of products tend more to be about the situation or at the point at which theyre in their manufacturing cycle.So I dont know if its

145、23 particularly meaningful to have that discussion at this time.Jason Tsang of CLSA Got it.Got it.So my second question is,in terms of your new technology plan in the future,I think yesterday,Powertech suggests that they are working with HPC or AI client with two nanometers for their panel level pac

146、kaging.So wondering if you have any plans or timeline for mass production stage,for panel level packaging,for more high end or advanced applications or,or also,can you give us some of the timeline for silicon photonic something like that.Thank you.Kenneth Hsiang,Head of IR of ASE Technology Holding

147、Jason,youre looking to understand what our explosive growth plans are for our leading-edge technologies.Is that correct?Jason Tsang of CLSA Yeah,including panel level packaging or silicon photonic.Joseph Tung,CFO of ASE Technology Holding Well,I cant speak for our competitors.Apparently,they,they,I

148、think they made a pretty aggressive statement yesterday.But in terms of our own panel,I think the,were in the process of establishing and aligning a pilot line for the customer qualification scheduled in,later part of 2025,and 26,and you know,adoption,the actual adoption and timeline will be depende

149、nt on customers,you know,so we have been,we have been investing in this for a very,very long period of time,and were very happy that our foundry partner is also,you know,getting into this and setting the pace for,for setting the standard for the,for the industry,or for this particular technology.So

150、we are on schedule,and were taking one step at a time to make sure that whatever solution or offering that we come up with is what the market needs.Kenneth Hsiang,Head of IR of ASE Technology Holding Does that answer your question,Jason?24 Jason Tsang of CLSA Yeah,understood.Thank you very much.Moderator Theres no questions from the floor.Kenneth Hsiang,Head of IR of ASE Technology Holding Okay,I think that thats a wrap for the quarter.Thank you for attending our call.See you next time.