Laura Chen

Laura Chen asked about ASE's plans for various advanced packaging types, such as panel-based and chip-on-wafer-on-PCB, and how ASE will leverage its technology. She also inquired if the overall ATM gross margin could reach 30% or higher later in the year, given increasing advanced packaging contributions and favorable ASP trends.

Answer

Tien Wu discussed preparing for both larger (300mm wafer, 310x310 panel) and potentially smaller chiplet sizes, aiming for fully automated 300x300 panel production by year-end. He emphasized providing toolboxes for designers, including panel, CPO, and next-gen power delivery (VRM), to strengthen ASE's portfolio and R&D for system-level paradigm shifts. Joseph Tung reiterated confidence in ATM gross margins staying within the structural range and improving sequentially each quarter, reaching the upper end by H2. He noted further room for improvement with optimal ramp-up and expanding LEAP/testing, but stated they would assess margin guidelines one year at a time.

Laura Chen asked about ASE's strategic plans for various advanced packaging types, including panel-based and chip-on-wafer-on-PCB solutions, and how the company leverages its technology for these increasingly complex chips. She also inquired about the potential for overall ATM gross margin to reach 30% or higher later in the year, given the increasing contribution from advanced packaging and a favorable ASP trend.

Answer

Dr. Tien Wu, COO, stated that ASE is preparing for both larger (300mm wafer, 310x310 panel) and potentially smaller chip designs, aiming for fully automated 300x300 panel production by year-end. He emphasized providing a comprehensive toolbox for designers and strengthening ASE's portfolio in CPO and next-generation power delivery. Joseph Tung, CFO, reiterated that ATM gross margins would stay within the structural range, improving sequentially each quarter and reaching the upper end by the second half of the year, noting further room for improvement long-term but declining to give specific future targets.

Laura Chen asked about ASE's gross margin outlook, considering full utilization rates, stronger testing business, and increasing CapEx and depreciation costs. She also sought an update on the progress and customer engagement for ASE's internal advanced packaging solutions, such as Focus technologies, and their contribution to future revenue growth.

Answer

CFO Joseph Tung explained that excluding foreign exchange impact, ASE's ATM gross margin is already back to its structural range (26.8% in Q3 at Q1 forex, over 27% in Q4). He expressed confidence in continued margin improvement driven by leading-edge expansion, expecting ATM gross margin to be in the structural range for the full year 2026. Regarding Focus technologies, Tung confirmed ongoing investment and engagement with multiple customers, anticipating meaningful full process revenue from Focus in late 2026, which is included in the projected $1 billion revenue increase for next year.

Laura Chen inquired about the key drivers for the recovery seen in the wire bonding business and whether it was related to AI, market share gains, or geopolitical decoupling. She also asked how ASE prioritizes CapEx among different advanced packaging technologies and if the upcoming final test services for AI would include burn-in and system-level testing.

Answer

COO Tien Wu attributed the tightness in Taiwan's wire bond capacity primarily to the automotive market and, to a lesser extent, support chips for AI systems. He noted that overseas wire bond capacity remains somewhat idle. Regarding capacity, he explained that investments are made with a focus on fungibility and flexibility to support utilization for 5-10 years. He confirmed that testing revenue for AI will include burn-in and system-level test, as these are increasingly required by customers.

Laura Chen asked for an update on TSMC's advanced packaging expansion plans in Arizona, specifically for CoWoS capacity. She also inquired if TSMC would collaborate more closely with OSAT partners to meet the current strong demand for advanced packaging. She then asked about the key drivers for TSMC's revenue growth in 2026, specifically whether it would be primarily driven by ASP increases due to technology migration (like N2 ramp) or by volume growth, including a mild recovery in non-AI segments. She also asked if TSMC would add more N3 capacity or continue conversion to support strong leading-edge demand.

Answer

CEO Che-Chia Wei confirmed plans to build two advanced packaging fabs in Arizona. He also mentioned working with a large OSAT partner who is building a fab in Arizona with an earlier schedule than TSMC's own fabs, indicating collaboration to support customers in the U.S. Che-Chia Wei stated that all factors—technology migration, ASP increase, and volume growth—would drive revenue growth in 2026. CFO Wendell Huang added that TSMC continues to optimize N5 and N3 capacity and plans new buildings for N2 technology expansion, implying a focus on N2 for new capacity rather than new N3 buildings.

Laura Chen asked about TSMC's strategy and timeline for advanced packaging to support increasingly large and power-hungry AI chips. She also inquired about the company's strategy for mature nodes amid reports of industry-wide overcapacity.

Answer

Chairman & CEO Dr. C.C. Wei explained that TSMC develops a wide variety of advanced packaging solutions in close partnership with customers to meet their specific needs. Regarding mature nodes, he stated TSMC's strategy is to focus on specialty technologies like RF and CMOS image sensors, driven by customer demand, which insulates it from general overcapacity and justifies its fab expansions in Japan and Germany.

Laura Chen from Citi asked for the long-term gross margin outlook, details on depreciation cost increases, and the operational strategy for UMC's fabs in China.

Answer

President Jason Wang outlined the roadmap to improved margins through better loading, technology differentiation, and cost control. CFO Qi Dong Liu specified that depreciation growth will slow from over 20% this year to below 10% next year. Wang added that UMC's China fabs are part of a diversified manufacturing footprint available to serve global customer needs for supply chain resilience.

Laura Chen of Citigroup asked about the possibility of UMC collaborating with other U.S. IDMs beyond Intel, specifically mentioning market rumors about GlobalFoundries. She also questioned if Q1 marked the trough for gross margin and inquired about the margin outlook.

Answer

CFO Chi-Tung Liu confirmed UMC works with multiple U.S.-based IDM customers but stated the 12nm collaboration is the most important project currently. He declined to comment on market rumors regarding GlobalFoundries but affirmed that UMC consistently explores strategic options to enhance shareholder value, clarifying no merger is currently ongoing. Regarding margins, Liu acknowledged Q1 was impacted by one-time price adjustments but cited low second-half visibility as a reason for not providing a longer-term margin forecast.

Laura Chen of Citigroup asked if the Q3 order strength is sustainable into Q4, probed the reasons for the sharp decline in IDM revenue, and questioned if IDM outsourcing would decrease as they expand internal capacity. She also requested more detail on the business model for 3D ICs and hybrid bonding.

Answer

President Jason Wang clarified the Q3 outlook is a 'mild pickup' reflecting a return to seasonality, not a strong rebound. He explained the IDM revenue decline was broad-based across all segments due to inventory correction, not just automotive, and expects a gradual recovery. While acknowledging IDMs are building internal capacity for supply chain resilience, he believes they will continue to rely on foundry partners. For 3D ICs, he stressed the business model relies on a strong ecosystem partnership with OSATs and other suppliers.