Leading semiconductor packaging and testing company ASE expects that fourth quarter revenue in NTD will grow 1-2% quarter-over-quarter, while semiconductor assembly and test materials (ATM) revenue is expected to rise 3-5% sequentially. Full-year 2025 ATM revenue in USD is projected to increase more than 20%, with advanced packaging revenue reaching US$1.6 billion as planned, and full-year 2026 revenue anticipated to rise by an additional $1 billion.
CFO Joseph Tung noted that demand in both AI and non-AI markets for 2026 is very strong, especially for wafer probing orders. As a result, ASE has raised its 2025 capital expenditure for the fourth time, adding several hundred million USD for equipment, plant construction, and other projects, bringing total annual investment to as much as US$6 billion to ensure customer demand is met.
ASE stated that flip-chip and wafer bumping production lines are running at full capacity. Wire-bond packaging capacity utilization is gradually improving, with the overall packaging business operating at roughly the upper range of 70-80% utilization.
Additionally, its foundry partners and ASE itself have recently invested heavily to expand capacity for 2.5D packaging demand, such as CoWoS.
However, as market supply and demand remain tight, several customers are considering adopting ASE's in-house FOCoS technology, with positive developments expected as early as the second half of 2026.
ASE reported that it expanded its advanced testing operations in 2025, with related revenue growth projected to be twice that of advanced packaging. Current capacity expansion plans prioritize wafer testing over final testing. By the second half of 2026, mass production of next-generation AI chips is expected to drive significant growth in final testing revenue. According to Tung, 65% of the 2025 full-year distribution of advanced packaging and testing revenue will come from advanced packaging and 35% from advanced testing; the same proportion is expected to continue in 2026.
Customer ordering behavior has become more proactive, shifting from a demand-driven approach to pre-booking capacity in advance. This indicates steady and stable growth in both AI and non-AI markets, with some customers taking extra steps to secure upstream raw material supply. According to analysts, the shift in customer behavior is primarily due to the tight supply of upstream IC substrates and other packaging materials.
ASE maintained a conservative stance in response to rising prices for outsourced packaging and testing services, emphasizing that the company will adopt relatively reasonable pricing for high-utilization business lines to address external uncertainties such as delayed upstream material delivery or increased costs.
Article edited by Jack Wu
