報告_Citi_日月光3711_20260730

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原始內容

(RIC: 3(11.1W, BB: 3(1111)

TWD

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Prepared for Kevin Lu

30 Jul 2026 13:01:07 ET │ 18 pages

Sep

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Jun

ASE Technology Holding (3711.TW)

AI semiconductor accelerates multi-year growth and structural Margin Upside

CITI'S TAKE

ASEH delivered another upbeat result, with solid 21% GM and net profit of NT$21bn (up 49% QoQ and 180% YoY). It raised its growth outlook (IC ATM to be up 35% YoY; LEAP revenue to be over US$3.5bn and doubling into 2027) and 2026 capex expectations (from US$8.5bn to now US$10.5bn), citing stronger-than-anticipated demand for LEAP (advanced packaging and testing). With accelerating investment in LEAP, panel-level packaging, full-process packaging and future CPO technologies, ASEH believes it is well positioned to capture a multi-year AI growth cycle while continuing to expand profitability. Maintain Buy and lift TP to NT$750 (25X 2027 EPS).

Capex accelerates to expand advanced packaging leadership -ASEH believes AI remains in the early stages of a structural infrastructure buildout, supporting sustained demand well beyond current AI accelerator deployments. Demand is also broadening beyond AI accelerators into industrial power, connectivity and storage, reinforcing confidence that AI infrastructure spending will remain a multi-year growth driver. Profitability continues to improve faster than expected as LEAP and advanced testing contribute a larger share of revenue. ATM gross margin reached 27.3% in 2Q26, while management expects margins to improve sequentially and potentially exceed the long-standing 30% structural ceiling in 4Q26. Margin expansion is being driven by higher utilization, richer product mix, automation and operating leverage rather than temporary cost benefits. Pricing also remains supportive, with inflationary cost increases largely passed through to customers.

Technology roadmap broadens beyond CoWoS -Other than CoWoS, ASEH is investing across multiple next-generation technologies, including panel-based packaging, full-process CoWoS packaging and future CPO integration. It expects its fully automated panel-level packaging line to begin production in 1Q27, providing a scalable platform for larger chiplet architectures. Meanwhile, CPO is expected to enter initial production later this year, allowing the industry to validate bandwidth, thermal performance and manufacturing yield before broader deployment. Management also highlighted future heterogeneous integration combining digital, analog and sensor technologies for AI and humanoid applications. ASEH believes its neutral ecosystem position enables collaboration across foundries, substrate suppliers and customers in various packaging architecture - CoWoS, EMIB, panelbased or future optical integration, reinforcing its long-term competitive advantage.

Earnings Summary

Source: Powered by dataCentral

See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations.

Price Performance (RIC: 3711.TW, BB: 3711 TT)

AC

Laura (Chia Yi) Chen +886-2-8726-9090 laura.cy.chen@citi.com

Prepared for Kevin Lu

Figure 1. AstH - 2240 Results Comparison

2Q26

40,150

21.0%

21,134

11.1%

21,068

4.85

1Q26

(NT$mn)

Revenue

Gross profit

Gross margin

Op. profit

OP margin

Net income

EPS (NTS)

34,818

20.0%

17,493

10.1%

14,132

3.26

15%

+1.0 ppt

21%

+1.0 ppt

49%

49%

2Q25

25,688

17.0%

10,193

6.8%

7,521

1.74

Y/Y

27%

56%

+4.0 ppt

107%

+4.3 ppt

180%

180%

@ 2026 Citioroun Inc No redistribution without Citioroun's written nermission

Prepared for Kevin Lu

2Q26

Citi

188,675

39,037

20.7%

20,735

11.0%

18,491

Diff.

1%

3%

+0.3 ppt

2%

+0.1 ppt

14%

2026

Cons

188,647

39,255

20.8%

21,216

11.2%

16,826

Diff.

1%

2%

+0.2 ppt

0%

• 0.2 ppt

25%

Further upward revision, maintain Buy -Along with its doubling revenue in LEAP, we are looking for 40kwpm capacity for ASEH into next year from 20kwpm in 2026. We also lift our earnings projection by 11%/23%/25% for 2026/2027/2028 thanks to better structural GM expansion and AI-led upside. We maintain our Buy rating on ASEH with higher TP at NT$750 (25x of our 2027 EPS estimate) .

Solid result and constructive outlook

ASEH reports a better than expected 2Q26 result and positive outlook with solid 21% GM and net profit of NT$21bn (up 49% QoQ and 180% YoY). Management raised both growth (IC ATM to be up 35% YoY; LEAP revenue to be over US$3.5bn and doubling into 2027) and capex expectations (from US$8.5bn to now US$10.5bn), citing stronger-than-anticipated demand for LEAP advanced packaging and testing. Thanks to better product mix and more LEAP revenue exposure, we see further upward earnings revision ahead.

Figure 1. ASEH - 2Q26 Results Comparison

Source: Citi Research, Bloomberg

Key takeaways from earnings call

IC ATM (Assembly, Test & Materials)

• 1H26 ATM revenue +35% YoY.
• LEAP revenue ahead of its target of US$3.5bn for 2026; expecting to be doubling into 2027
• 2Q26 ATM revenue reached a record NT$126.1bn, +12% QoQ / +36% YoY.
• Full-year ATM revenue expected to grow ~35% YoY.
• 3Q26 ATM revenue guidance: +11-13% QoQ.
• LEAP revenue is tracking ahead of the previous US$3.5bn guidance, with management targeting doubling LEAP revenue in 2027.
• Growth is constrained by capacity expansion and execution, rather than demand.
• 2Q26 ATM GM: 27.3% (+1.3ppt QoQ; +5.4ppt YoY), driven by higher LEAP mix, better operating leverage, higher utilization.

Prepared for Kevin Lu

• 3Q26 ATM GM guidance: 28-29%.
• Management expects 4Q26 ATM GM to exceed the structural 30% ceiling, after which it will review raising its long-term structural margin target.

Capex and technology Roadmap

• CoWoS continues to support current AI infrastructure while ASEH is also preparing alternative packaging technologies.
• CoPoS is being developed for larger reticle sizes, higher bandwidth and more complex chiplet integration.
• Panel-level packaging will begin production in 1Q27.
• CPO is expected to begin initial deployment toward the end of 2026, with commercial ramp depending on system performance, thermal efficiency and yield.
• ASEH also highlighted longer-term heterogeneous integration combining digital, analog and sensing devices for future AI and humanoid applications.
• 2026 CapEx increased by another US$2bn to US$10.5bn, reflecting stronger LEAP demand in both 2026 and 2027.
• Capex Breakdown: US$6.5bn for machinery & equipment; US$4.0bn for factories, facilities and infrastructure.
• Equipment allocation:
• o ~56% to assembly.
• o ~40% to testing.
• o Remaining to EMS and interconnect materials.
• Around 70% of equipment CapEx is dedicated to leading-edge (LEAP) technologies, with the remainder supporting mainstream advanced packaging and testing capacity.
• ASEH is simultaneously executing 13 greenfield projects and 8 brownfield expansions, which management believes should provide sufficient capacity through 2028 and potentially into 2029.

EMS

• 2Q26 EMS revenue: NT$65.8bn (+6% QoQ; +12% YoY).
• 3Q26 EMS revenue guidance: around +40% QoQ.
• Management noted the unusually strong sequential growth is primarily driven by higher memory component prices, which increases reported revenue.

Prepared for Kevin Lu

• Excluding the memory price effect, underlying EMS demand follows a more typical seasonal pattern.
• Management expects 4Q26 EMS revenue to remain roughly similar to 3Q26 levels.
• Gross Margin: 2Q26 EMS GM: 8.9% (-0.6ppt QoQ).
• Management believes combining EMS and ATM enables end-to-end system optimization for future AI infrastructure.

Maintaining Buy; TP raised to NT$750

Along with its doubling revenue in LEAP, we are looking for 40kwpm capacity for ASEH into next year from 20kwpm in 2026. We also lift our earnings projection by 11%/23%/25% for 2026/2027/2028 thanks to better structural GM expansion and AI-led upside. We maintain our Buy rating on ASEH with TP NT$750 (25x of our 2027 EPS estimate). Given its structural GM upward trend and promising LEAP business outlook, we believe our target PER of 25x (1.5-std above 3-year average) is justified.

Figure 2. ASEH - Estimates Revisions

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research

Figure 4. Asth - Forward P/t band

Figure 3. ASEH - LEAP revenues contribution

(US$ m)

16,000

600

14,000

400

12,000

200

10,000

0 f

8,000

Oct-14

Oct-16

—ASEH

6,000

4,000

Oct-18

• 9.0x

Oct-20

-11.0x

— 13.0x

Oct-24

• 15.0x

@ 2025 Citigroun Inc. No redistribution without Citicroun's written nermission

2,000

Prepared for Kevin Lu

2024

2025

2026

2027

• Leading edge advanced package sales (US$ m)

• Leading edge advanced package of total IC ATM (%, RHS)

M 2026 Citiornun Ine No redistrihution without Citioroun's written nermission

60%

50%

40%

30%

ROE

30%

20%

15%

10%

5%

0%

© 2026 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research

Oct-22

Figure s. Asth - Forward P/b band & KUt

NT$

800

600

400

200

Figure 6. AStH - Forecast Summary

2025

25,688

-15,494

-7,750

-8,004

10,193

-1,310

-15,221

24,893

-7,905

9,671

-7,579

-1,309

1,448

• 15,676

28,877

-7,631

-8,308

13,201

-1,590

371

2,365

Figure 6. ASEH - Forecast Summary

10,870

4QE

319,247

-244,681

74,566

-30,967

• 15,258

-15,962

43,599

-2.047

6,504

48,056

8.650

39,091

2025

645,388

-531,195

114,193

-63,437

-31,634

-32.851

50,756

-6,070

6,615

51,301

-9.460

40,658

2026E

866.810

-684,073

182,737

-83,501

-41,572

-42.976

99,236

-4.748

15,050

109,538

-19.623|

88.403

1QE

243,713

-188,165

55,548

-23,826

-11,893

-12,186

31,722

-1,630

4,868

34,960

6.293

28,369

2027

2QE

257,242

-196,853

60,389

-24,952

-12,343

-12.862

35,436

-1,888

5,408

38,957

7,012

31,635

3QE

282,653

-215.183

67,471

-26,852

-12.972

-14,133

40,619

-2.057

5,951

44,512

8.012

36,188

1Q

173,662

-138,844

34,818

-17,325

-8,739

-8.857

17,493

-664

1,332

18,161

3,629

14,132

2026

2Q

191,064

-150,914

40,150

-19,016

-9,733

-9.553

21,134

-1,100

5,666

25,700

4.172

21,068

3QE

232,969

-184,516

48,453

-22,132

-10,737

-11,648

26,321

-1,382

3,865

28,804

5,185

23,310

4QE

269,115

-209,799

59,316

-25,028

-12,363

-12.918

34,288

1,602

4,187

36,873

6.637

29,893

2027E

1.102.855

-844,882

257,973

-106,598

-52,467

-55.143

151,376

-7,623

22,731

166,484

-29.967

135,284

© 2025 Citigroup Inc. No redistribution without Citigroup's written permission.

Source: Citi Research, company data

Revenue

COGS

Gross Profit

Operating Expense

SG&A expenses

R&D expenses

EBIT

Net Interest Income

Net Other Income

Pre- Tax Profit

Tax

Net Profit to Parent

EPS (NT$)

Margins (%)

Operating Margin

Gross Margin

Net Margin

Revenue

Sequential Growth (%)

Gross Profit

EBIT

Net Profit

EPS

Prepared for Kevin Lu

4Q

2028E

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Adding Upside 90-Day Short-Term View on ASE Technology Holding (3711.TW)

Direction:

Upside

Duration:

Within 90 Days

Category:

Thematic driven

We expect ASEH's strong GM expansion and LEAP business development to support its share price performance in the coming months.

NT$

804

670

536

402

268

134

Jul 25

4 58% Upside

49% Upside

NT$ 400.00

• 21% Downside

Bull/Bear: ASE Technology Holding (3711.TW)

BASE Assumptions

• Solid development in LEAP business

• Long-term operating margin maintained at >12%

BEAR Assumptions

{j. Muted revenue growth with margin contraction

• Lower-than-expected utilization rate

Prepared for Kevin Lu

NT$ 750.00

Prepared for Kevin Lu

ASE Technology Holding

Company description

Advanced Semiconductor Engineering (ASE), incorporated in 1984 and listed at the TWSE in 1989, is one of the world's leading companies in the semiconductor packaging and testing sector. In June 2016, ASE entered into a Joint Share Exchange Agreement with SPIL under which ASE Industrial was eventually to be formed as a holding company with 100% equity interests in both ASE and SPIL. ASE Industrial was listed on Taiwan's main board on April 30, 2018, the same day on which ASE and SPIL were delisted.

Investment strategy

We have a Buy rating on ASE Holding. The combined ASE-SPIL entity is the highest-quality OSAT worldwide, in our view, with its market share leadership, superior operations, economies of scale, and customer/product diversification. Conditions imposed by the Chinese government on the ASESPIL merger, which required them to operate independently, were lifted in 2020. Consequently, we believe ASE Holding will benefit from further revenue and operating synergies as well as the trend for advanced packaging.

Valuation

Our target price of NT$750 is based on 25x 2027 EPS average. Our PER is higher than its five-year range as we expect ASEH to see accelerating earnings growth in the coming years with GM at upward expansion trend, mainly driven by its promising outlook in LEAP business and strong expansion for long-term AI demand. At our target price, the shares would trade at a 2026/27E P/B of 8x/7x.

Risks

Key downside risks that could prevent ASE shares from reaching our target price include: 1) poor efficiency and less synergy created from merger with SPIL; 2) failure to gain market share in advanced packaging; 3) industry oversupply due to aggressive capacity expansion; 4) severe pricing erosion due to competition; and 5) a longer-than-expected semiconductor inventory correction.

If you are visually impaired and would like to speak to a Citi representative regarding the details of the graphics in this document, please call USA 1-888-500-5008 (TTY: 711), from outside the US +1-210-677-3788

Appendix A-1