Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 30, 2026 · Beat 5 of last 7 quarters
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ASE's results underscore the critical role of OSAT capacity in the AI infrastructure buildout, with LEAP services growing rapidly and capacity constraints gating growth. The company's aggressive CapEx expansion and margin trajectory signal sustained demand for advanced packaging and testing, which are essential for AI accelerators and data center hardware. This reinforces the thesis that packaging and testing are becoming bottlenecks in the AI supply chain.
ASE reported record ATM revenue of TWD 126.1B, up 36% YoY, with ATM gross margin of 27.3% ahead of guidance. Consolidated revenue reached TWD 191.1B, up 27% YoY, with operating margin of 11.1%. Utilization was 80-85%, with most capacities near full. EMS revenue grew 12% YoY but margins were slightly below expectations due to product mix and component costs. The company raised full-year CapEx by $2B and guided Q3 consolidated revenue up 21-22% QoQ.
Management raised full-year ATM revenue growth guidance to 35% (from prior 13% for general segment, now 20%), with LEAP tracking ahead of the $3.5B target. They aim to double LEAP revenue in 2027, citing clear line of sight on demand and capacity. CapEx was increased by $2B for 2026, with 13 greenfield and 8 brownfield projects underway to support growth into 2028-2029. ATM gross margin is expected to exceed the 30% structural ceiling in Q4, prompting a review of the structural margin range. Management emphasized that demand is not a concern; execution and capacity installation are the key constraints.
“We are investing in capacities and facilities because what we do has immediate impacts on key bottlenecks in semiconductor supply, performance and efficiency, the AI build-out regardless of open or closed model waiting will require unprecedented hardware capacity and capability expansion. At this point, we are just trying to keep up.”
on Capacity investment rationale
“We have clear line of sight in terms of who needs what. We also have a clear line of sight on the building, the facility that we're building today. When we make a comment that this year, by year-end, we're tracking ahead of the $3.5 billion. That comment is made because we see our yield and execution that gave us the confidence to tell you that by year-end, we will achieve that target.”
on LEAP revenue visibility
“We are not going to be shy in making the necessary investment to -- not just to support our customer, but also to maintain our clear leadership position in this field.”
on Investment commitment
Can you comment on your U.S. operations and the competitive landscape, including EMIB involvement?
Dr. Wu explained that ASE has U.S. operations in California and is expanding to third and fourth factories, but manufacturing focus remains in Taiwan until scale and efficiency are achieved. Regarding EMIB, ASE is collaborating with customers on alternative technologies, but sees CoWoS as the current focus and does not view EMIB as a threat due to its pure-play position.
What is the breakdown of LEAP revenue for 2027, and how much will come from full process?
Joseph Tung said LEAP revenue will be ahead of guidance by a couple hundred million dollars this year, and the company aims to double LEAP revenue in 2027. Full process is on track and will be a margin-accretive business with substantial growth next year, but detailed breakdown will be provided in two quarters.
Will CapEx keep rising into 2027 given the supply-demand gap?
Joseph Tung indicated CapEx will be 'big' but declined to give a number, saying they need another quarter for clarity. He also confirmed that 70% of equipment CapEx this year is for leading-edge, and the company is building 13 greenfield and 8 brownfield projects to support growth into 2028-2029.