260701_3711_日月光_ubs_ASE

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原始內容

ASE Industrial

Higher capex to power larger advanced packaging opportunity

Higher capex suggests stronger advanced packaging sales

ASE has rallied 171% YTD, outperforming the 59% increase in Taiex, and we expect its strength to continue. We believe ASE is in the early stage of a multi-year fundamental transformation due to Cloud AI and the fast growing advanced packaging opportunity, and that ASE's industry position is strengthening. At its recent AGM, management flagged upside potential for its already elevated 2026 capex of US$8.5bn vs. TSMC's back-end capex of cUS$8.3bn in 2026. We raise our ASE 2026/27 capex forecasts to US $9.0bn/10.0bn from US$8.5bn/9.0bn.

LEAP sales to rise to US$3.6bn/6.7bn in 2026/27E

Our recent industry analysis indicates that ASE has been further accelerating full process CoWoS expansion. We forecast ASE's CoWoS capacity to increase from c20kwpm at end-2026 to c50kwpm at end-2027 vs. our prior estimate of 35-40kwpm. We think the significant expansion is to support stronger demand for AMD's new Venice server CPUs and possible upside for AI accelerators. We forecast ASE's full process CoWoS sales to rise from US$0.3bn in 2026 to US$2.0bn in 2027 with upside risk. The outlook for TSMC's on-substrate outsourcing, probing and final test has been strengthening as well. For final test, we expect ASE to grow sales in 2027E via Amazon's Trainium 3 and MediaTek's TPU v8t, both of which are set to ramp meaningfully next year. We forecast ASE's LEAP platform sales to rise from US$3.6bn in 2026 to US$6.7bn in 2027 vs. our prior estimate of US$5.8bn (see Figure 1 S A ' s E l e a d i n - v g c p k b u , for our detailed LEAP sales forecasts). We raise our IC ATM GM to 27.9%/32.8%/33.7% in 2026/27/28E.

Healthy outlook for mainstream packaging & testing

The traditional back-end outlook appears better than expected in coming quarters. We expect mature foundry utilisation to further improve in H226-2027E with stable consumer restocking, growing demand for servers, and an improving auto and industrial cycle. This should support ASE's mainstream semis sales growth to the guided 13-14% in 2026 and sustain growth in 2027E.

Valuation: raise price target to NT$835.00 from NT$660.00; reiterate Buy

We fine tune 2026E EPS and raise 2027/28E EPS by 11%/10% to factor in our more optimistic LEAP outlook. Our new PT is based on 25x 2027-28E PE vs. 25x 2027E PE previously, justified by 26% long-term earnings CAGR forecast. Key catalyst could be its upcoming earnings conference in late July, as we anticipate another solid set of earnings and guidance, and a potential capex upgrade.

Sunny Lin

Analyst sunny.lin@ubs.com +886-2-8722 7346

Ryan Sun

Associate Analyst ryan-za.sun@ubs.com +886-2-8722 7267

Christine Chen

Associate Analyst christine.chen@ubs.com

+886-2-8722 7352

Source: Company accounts, LSEG Eikon, UBS estimates. Metrics marked as (UBS) have had analyst adjustments applied. Valuations: based on an average share price that year, (E): based on a share price of NT$ 680.00 on 30-Jun-2026

Thesis Map UBS Research THESIS MAP a guide to our thinking and what´s where in this report

Pivotal Questions

UBS VIEW

EVIDENCE

WHAT´S PRICED IN?

Upside/Downside Spectrum

Company Description

Q: Can ASE's IC ATM GM continue to improve and be in line with its structural GM target?

Likely. ASE's IC ATM GM reached 26.0% in Q126, and management expects a high 20-30% range by H226. We are optimistic about ASE's GM outlook in the next two to three years with strong expansion of LEAP , increasing turnkey testing and a rebound in non-AI demand. We forecast ASE's IC ATM GM to improve to 27.9% in 2026 and 32.8% in 2027 vs. 22.6% in 2023-25.

Q: Could ASE benefit from structural growth in advanced packaging and testing?

Yes. We expect ASE to grow LEAP and testing segment sales to US$3.6bn in 2026E and US$6.7bn in 2027E. We are positive about ASE's opportunity as: 1) it is the largest back-end supplier globally and has the largest scale to invest in R&D and capex; 2) its close collaboration with TSMC; and 3) upside potential in testing via the full turnkey service.

We are constructive about ASE's fundamental business transformation due to the LEAP platform and testing, and we expect meaningful upside for profitability and earnings for 2026E and beyond. We think ASE's strong earnings beat in Q1 was further evidence that its investment is starting to pay off and we expect further upside. We believe GM is on track to continue to strengthen based on the rising contribution from LEAP and testing, ASE's expanding scale and value add, and tighter traditional packaging supply/demand. ASE's ramp of full-process CoWoS could accelerate, given its improving technology maturity and customer diversification along with TSMC being more focused on higher-end solutions.

In April ASE raised its total capex target to US$8.5bn for 2026, a significant step up from US$5.5bn in 2025. At ASE's AGM in June 2026 , the CEO flagged the possibility of a further increase in capex. The increased investment is for 2027-28 and also for longer term plans, which could include developing new manufacturing sites as well as expanding existing sites. This reflects the robust future demand profile for Cloud AI in the upcoming years.

ASE has rallied 171% YTD, outperforming the 59% increase in Taiex. We believe the stock has room to continue to re-rate, driven by the increasing advanced packaging TAM and ASE's improving position in full-process CoWoS, probing and final test.

Source: UBS estimates

ASE Industrial is the holding company that controls ASE and Siliconware, and was the world's largest and assembly and testing service provider in 2024 in terms of revenue. In addition to semiconductor back-end services, ASE provides electronic manufacturing services (EMS).

Forecast changes and key financials

Figure 1: ASE's leading-edge advanced packaging business

Source: Company data, UBS estimates

Figure 2: ASE's operating metrics

Source: Company data, UBS estimates Note: Our EPS estimates are based on basic EPS, and may differ from the table on the cover page

Figure 3: Margins more resilient in this cycle

Source: Company data, UBS estimates

Figure 4: Capex rebounded from a trough in 2024

Source: Company data, UBS estimates

Figure 5: Revisions to UBS earnings estimates

Source: Company data, UBS estimates Note: Our EPS estimates are based on basic EPS, and may differ from the table on the cover page

Figure 6: UBS earnings estimates vs. consensus pre-results

Source: Visible Alpha, UBS estimates Note: Our EPS estimates are based on basic EPS, and may differ from the table on the cover page

Figure 7: UBS earnings forecasts

Source: Company data, UBS estimates Note: Our EPS estimates are based on basic EPS, and may differ from the table on the cover page

Figure 8: ASE's forward P/BV band before SPIL consolidation

Source: Company data, TEJ, UBS

Figure 10: ASE's forward P/BV band after SPIL consolidation

Source: Company data, LSEG

Figure 12: Peer valuation comparison

Source: LSEG, UBS estimates

Figure 9: ASE's forward PE band before SPIL consolidation

Source: Company data, TEJ, UBS

Figure 11: ASE's forward PE band after SPIL consolidation

Source: Company data, LSEG

ASE Industrial (3711.TW)

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts. 1 Cash EPS (UBS, diluted) is calculated using UBS net income adding back depreciation and amortization.

ASE Industrial (3711.TW)

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.

Forecast returns

Company Description

ASE Industrial is the holding company that controls ASE and Siliconware, and is the world's largest and assembly and testing service providers in 2024 in terms of revenue. In addition to semiconductor back-end services, ASE provides electronic manufacturing services (EMS).

Valuation Method and Risk Statement

Our price target is based on a PE multiple relative to ASE and SPIL's previous historical valuation ranges.

We believe ASE Industrial faces a variety of upside and downside risks, including rapidlychanging technology, intense competition, high capital investment and cyclical demand.

Quantitative Research Review

UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. The views for this month can be found below. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https://neo.ubs.com/quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubs-quant-answers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research Team on the email above.

ASE Industrial

Required Disclosures

This document has been prepared by UBS Securities Pte. Ltd., Taipei Branch, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates, including former Credit Suisse AG and its subsidiaries, branches and affiliates are referred to herein as "UBS".

For information on the ways in which UBS manages conflicts and maintains independence of its UBS Global Research product; historical performance information; certain additional disclosures concerning UBS Global Research recommendations; and terms and conditions for certain third party data used in research report, please visit https://www.ubs.com/disclosures. Unless otherwise indicated, information and data in this report are based on company disclosures including but not limited to annual, interim, quarterly reports and other company announcements. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivatives) that may be the subject of this report. This recommendation was finalized on: 01 July 2026 03:11 AM GMT. UBS has designated certain UBS Global Research department members as Derivatives Research Analysts where those department members publish research principally on the analysis of the price or market for a derivative, and provide information reasonably sufficient upon which to base a decision to enter into a derivatives transaction. Where Derivatives Research Analysts coauthor research reports with Equity Research Analysts or Economists, the Derivatives Research Analyst is responsible for the derivatives investment views, forecasts, and/or recommendations. Quantitative Research Review: UBS Global Research publishes a quantitative assessment of its analysts' responses to certain questions about the likelihood of an occurrence of a number of short term factors in a product known as the 'Quantitative Research Review'. Views contained in this assessment on a particular stock reflect only the views on those short term factors which are a different timeframe to the 12-month timeframe reflected in any equity rating set out in this note. For the latest responses, please see the Quantitative Research Review Addendum at the back of this report, where applicable. For previous responses please make reference to (i) previous UBS Global Research reports; and (ii) where no applicable research report was published that month, the Quantitative Research Review which can be found at https://neo.ubs.com/ quantitative, or contact your UBS sales representative for access to the report or the Quantitative Research Team on ubs-quantanswers@ubs.com. A consolidated report which contains all responses is also available and again you should contact your UBS sales representative for details and pricing or the Quantitative Research team on the email above.