Increase in ASE's Equipment Budget Could Reach 16%
ASE Technology Holding Co, the world's largest chip assembly and testing service provider, is experiencing a surge in demand for AI and automotive semiconductors, as reflected in its 2025 financials.
In the second quarter of 2025, ASE reported net revenues of NT$150,750 million (approximately US$4.8 billion), a 7.5% year-over-year increase. The growth was primarily driven by a 19.0% growth in its assembly, testing, and material (ATM) segment, which benefits from surging AI chip packaging and heterogeneous integration technologies. However, net profit last quarter contracted about 3.3 percent to NT$7.52 billion (US$251.37 million) from NT$7.78 billion in the same quarter last year.
ASE's chief operating officer, Tien Wu, stated that the disparity between AI and other general sectors will improve in the second half of this year. He also predicted that in 2026 and beyond, the cycle will start showing less of a disparity.
Regarding capital expenditure, ASE's equipment spending reached approximately US$992 million in Q2 2025, underscoring substantial investment to support expanding capacity for semiconductor assembly and testing, particularly for AI and automotive applications. This aligns with the industry's trend of heavy investment to meet high-performance computing demands.
Looking beyond Q2 2025, ASE’s overall revenue for the first half of 2025 showed a solid 9% increase year-over-year, with advanced packaging growth fueling optimism for further expansion. The company’s strategic focus on AI-driven semiconductors and automotive electronics suggests sustained capital spending and revenue growth for 2025 and beyond, despite margin pressures and challenges in some EMS areas related to automotive inventory adjustments.
The growth momentum is expected to carry into this quarter and the next, with "very strong" demand for high-performance computing and AI applications. To satisfy customer demand, ASE is accelerating its machine and equipment investments. ASE plans to add US$300 million to US$400 million to its capital expenditure budget of US$2.5 billion this year.
Despite capacity constraints, ASE did not increase its revenue growth forecast this year. Revenue in the third quarter is projected to expand 6 to 8 percent sequentially. Gross margin this quarter is expected to drop 1 to 1.2 percentage points from last quarter, due to the stronger NT dollar. Earnings per share fell to NT$1.74 from NT$1.8 a year earlier and NT$1.75 a quarter earlier.
ASE aims to add US$1 billion to its revenue this year from last year with its leading-edge packaging and testing services. The increase is in response to strong customer demand for artificial intelligence (AI) applications. ASE's leading-edge capacity in Taiwan is currently fully utilized.
ASE Technology is capitalizing on increased AI and automotive semiconductor demand through continued revenue growth and close to US$1 billion quarterly capital expenditure in 2025, positioning the company for further advances beyond 2025. The company also anticipates a growing demand for semiconductors in the automotive and industrial sectors for next year.
ASE also expects the revenue uptrend to continue into next year and beyond, driven by leading-edge solutions and a broad-based semiconductor demand related to AI proliferation. The gross margin next year is expected to return to the firm's "structural margin range" of about 25 percent, provided the New Taiwan dollar stabilizes at NT$29 to NT$29.2.
- ASE's strategic focus on AI-driven semiconductors and automotive electronics has resulted in a substantial investment of approximately US$992 million in Q2 2025, indicating a significant investment to support expanding capacity for semiconductor assembly and testing, particularly for AI applications.
- In the second half of 2025, ASE's chief operating officer, Tien Wu, stated that the disparity between AI and other general sectors will improve, and he also predicted that in 2026 and beyond, the cycle will start showing less of a disparity, suggesting sustained growth for AI technology and artificial-intelligence semiconductors.
