ASE Technology (NYSE:ASX) outlined a multi-year growth outlook tied to artificial intelligence (AI) demand and an improving broader semiconductor market as the company reported fourth-quarter and full-year 2025 results. Management highlighted continued strength in advanced packaging and testing, a steady ramp in “leading-edge” services, and plans to step up capital spending to expand capacity.
AI demand and “Taiwan cluster” seen as a competitive advantage
COO Dr. Tien Wu said the “AI server cycle continues,” driven largely by hyperscalers and data center buildouts, while edge applications such as robotics, drones, automotive, and smart manufacturing are generating increased design activity that he expects to translate into volume over the next two years.
On “Taiwan Plus One,” Wu said ASE is expanding its footprint outside Taiwan—particularly in Penang—to serve customers whose wafers may not be produced in Taiwan, with a focus on automotive and potential future robotics applications. He added that Korea and the Philippines are also part of the footprint strategy, though Penang is expected to be the primary ramp region outside Taiwan.
2025 recap: ATM growth led by LEAP services and testing
In its review of 2025, management said consolidated revenue grew 12% “at a whole core level,” with the assembly, test, and materials (ATM) business up 23%, supported by advanced packaging services and testing. Wu said “LEAP services” reached TWD 1.6 billion in 2025, or 13% of ATM revenue, up from TWD 0.6 billion in 2024 (6% of ATM revenue). The company also noted testing business growth of 36% year-over-year in 2025, driven by expanding turnkey and leading-edge test.
Management cited 2025 capital spending of TWD 3.4 billion for machinery and TWD 2.1 billion for building facilities and automation, which it said was mainly driven by LEAP services and testing investment.
Fourth-quarter results: higher utilization and margin expansion
Investor Relations Head Ken Hsiang said fourth-quarter ATM factory loading was “slightly better than originally anticipated,” helping operating leverage. ASE’s ATM factories in Taiwan ran “at or near full capacity,” with LEAP and traditional advanced packaging utilization outpacing wire bond; non-Taiwan utilization also improved. Overall ATM utilization was around 80%. The EMS business slowed slightly due to seasonality, with results aligned to the company’s initial outlooks.
For the fourth quarter, ASE reported:
- Fully diluted EPS: $3.24; basic EPS: $3.37
- Consolidated revenue: NT$177.9 billion, up 6% sequentially and 10% year-over-year (up 2% sequentially and 14% year-over-year in U.S. dollars)
- Gross profit: NT$34.7 billion; gross margin: 19.5%, up 2.4 points sequentially and 3.1 points year-over-year
- Operating expenses: NT$17.0 billion, rising sequentially and annually primarily due to higher R&D labor-related costs
- Operating profit: NT$17.7 billion; operating margin: 9.9%
- Net income: TWD 14.7 billion; effective tax rate: 18%
Hsiang said the sequential gross margin improvement was primarily due to higher ATM loading and NT dollar depreciation. The company estimated foreign exchange had a positive 1.1 percentage point impact on gross margin sequentially, but a negative 1.2 points year-over-year. The quarter’s net non-operating gain of TWD 0.6 billion was mainly tied to foreign exchange hedging, offset in part by net interest expense of TWD 1.7 billion.
Full-year 2025: ATM becomes a larger profit driver
For the full year, ASE reported fully diluted EPS of $8.89 and basic EPS of $9.37. Consolidated net revenues rose 8% versus 2024, with ATM up 20% and EMS down 5%. ATM represented 60% of consolidated net revenue, up from 54% in 2024.
ASE reported full-year gross margin of 17.7% (up 1.4 points), citing higher ATM mix and improved ATM utilization, partly offset by a stronger NT dollar and higher utility costs. Operating expenses totaled TWD 63.4 billion, and management said R&D spending in absolute dollars is expected to continue increasing as service complexity rises. The company said it currently expects 2026 ATM operating expense percentage to decline by nearly 100 basis points, with the consolidated operating expense percentage falling about 80 basis points.
Operating profit for 2025 was TWD 50.8 billion and operating margin was 7.9%. Management said ATM accounted for 87% of 2025 operating profit, up from 80% in 2024. Net income rose 25% to TWD 40.7 billion, and the company said the appreciating NT dollar had a negative 0.9 percentage point impact on consolidated gross and operating margins for the year.
Within ATM, fourth-quarter ATM revenue reached a record TWD 109.7 billion, up 9% sequentially and 24% year-over-year. Test revenue rose 13% sequentially and 33% year-over-year, with management noting that test growth continued to outpace assembly. Fourth-quarter ATM gross margin was 26.3%, and operating margin was 14.7%. For full-year ATM, revenue rose 19% (packaging up 17%, test up 32%), while ATM gross margin improved to 23.5% and operating margin improved to 11.3%.
2026 guidance: lighter seasonality in Q1, LEAP growth and higher CapEx
CFO Joseph Tung guided to “much stronger than normal seasonality” in the first quarter of 2026 for both ATM and EMS. Using an exchange rate assumption of 1 USD to 31.4 NT dollars, management projected consolidated first-quarter revenue to decline 5% to 7% quarter-over-quarter, with gross margin down 50 to 100 basis points and operating margin down 100 to 150 basis points.
For ATM, Tung said first-quarter revenue should decline in the low- to mid-single-digit range sequentially, with gross margin between 24% and 25%. He attributed the sequential decline largely to fewer working days and higher labor costs tied to Lunar New Year overtime. For EMS, Tung said first-quarter revenue and operating margin should be similar to first-quarter 2025 levels.
Looking to the full year, management reiterated expectations that 2026 leading-edge revenue will at least double versus 2025, while demand “continues to significantly exceed supply.” Tung said the company expects a favorable pricing environment for the year and that ATM gross margins should stay within the structural margin range throughout 2026 and improve each quarter, with the second half reaching the upper end of the range.
On capital spending, Tung said ASE plans to add another $1.5 billion in machinery on top of 2025’s $3.4 billion, with about two-thirds targeted at leading-edge services. Investment in buildings and facilities is expected to be similar to 2025’s $2.1 billion.
In the Q&A, management provided additional detail on LEAP composition, saying most LEAP revenue remains tied to OSAT services and wafer sort on the test side. The company said it expects to triple full-process revenue in 2026 to reach about 10% of total LEAP service revenue, with meaningful full-process and final test contributions expected later in the year.
About ASE Technology (NYSE:ASX)
ASE Technology Holding Co, Ltd. (NYSE: ASX), commonly referred to as ASE, is a Taiwan-based provider of semiconductor assembly and testing services. The company focuses on back-end semiconductor manufacturing and related services that prepare integrated circuits and other semiconductor devices for final use. Its core activities include advanced IC packaging, final testing, wafer probing, and related engineering and supply-chain support for semiconductor customers.
ASE offers a range of products and technical capabilities designed to meet increasingly complex packaging and system-in-package requirements.
