Oct 29, 2026 earnings call — LEAP-driven revenue and margin growth, CapEx and guidance
Company reported record consolidated net revenues of TWD 244.2 billion for Q3, up 28% sequentially and 45% year-over-year.
Revenue $7.5B (est $7.3B) · EPS $0.37 (est $0.34)
Key quotes
"Our revenues grew faster than we had initially expected, driven primarily by faster-than-expected installations of high-demand LEAP capacities."
"Year-to-date, we have spent USD 8 billion of CapEx, USD 4.8 billion in equipment and USD 3.2 billion in facilities."
"For the third quarter 2026, our ATM business represented 62% of our consolidated holding company revenues, while representing 91% of our operating profits."
Analyst Q&A 14
Audio check
Q (Sunny Lin · UBS): Analyst asked if the call could hear him.
A: Management later answered Sunny's LEAP revenue question. They said for 2027 they expect to double LEAP revenue versus their prior projection.
LEAP sales and full process ramp
Q (Sunny Lin · UBS): Asked for LEAP sales outlook for 2027 and 2026, and asked about full-process (CoWoS) ramp, yield and customer/product diversification for 2027.
A: They said 2027 LEAP revenue is expected to double versus prior projection. For 2026 they raised LEAP revenue from USD 3.7 billion to over USD 4 billion. Full-process revenue is on track at USD 300 million for 2026 and they expect over USD 1 billion next year; yield is sufficient for mass production.
"Yes. As I said, we are upping our 2026 LEAP revenue from originally USD 3.7 billion that we mentioned last quarter to over USD 4 billion for this year." — Joseph Tung (CFO)
Intro / connection
Q (Gokul Hariharan · JPMorgan): Analyst greeted management and began questions.
A: Management said as they continue ramping LEAP, they expect further margin improvement in Q4 and into next year.
Audio check / start
Q (Gokul Hariharan · JPMorgan): Analyst checked audio and clarified question on yields and product base.
A: Management said the old concept of a 'structural margin ceiling' no longer applies; that ceiling is now their base, and they expect quarterly margin improvement from a base of 30% into next year.
Gross margin and full-process capacity
Q (Gokul Hariharan · JPMorgan): Asked what drove the gross margin upside in Q3 versus guidance, whether margin improvements are pricing or mix, and asked for full-process engagement, ramp, and CapEx implications into 2027–2028.
A: They said LEAP ramp and mix are improving margins and they expect sequential margin improvement. On full process, they have many customer engagements but are capacity constrained. They project over USD 1 billion revenue from full process next year and said space is the biggest bottleneck.
"So right now, we're still projecting over USD 1 billion revenue coming from full process." — Joseph Tung (CFO)
Hearing check (Citigroup)
Q (Chia Yi Chen · Citi): Analyst checked audio and prepared to ask about full process breakdown.
A: Management said they do not have much characterization on types of full process because it is customer-specific and they cannot comment much.
Full-process breakdown and CPO
Q (Chia Yi Chen · Citi): Asked what types of full-process will contribute next year and LEAP revenue breakdown, and asked about CPO revenue expectations over 2 years.
A: They said substrate still drives LEAP but assembly and test also show strong momentum; capacity is constrained. They are conservatively projecting over USD 1 billion from full process and expect over USD 0.5 billion from CPO next year. They said they already break down LEAP into OS, full process, wafer sort and CPO, but gave no multi-year CPO projection.
"there are some other new projects that we're entering, for example, CPO, and we're expecting over USD 0.5 billion of revenue coming from CPO as well for next year." — Joseph Tung (CFO)
Reconnect / CapEx question
Q (Haas Liu · BoA): Analyst rejoined and asked about using Q3 gross margin as base and updated CapEx and facility acquisition plans.
A: They said space is a constraint and they are seeking suitable existing plants but competition is strong. They raised this year's CapEx from USD 10.5 billion to USD 11.5 billion, adding USD 1 billion, with half for facilities and half for equipment; 60% of the added spend is for LEAP and 40% for mainstream.
Using Q3 margin as base and CapEx details
Q (Haas Liu · BoA): Can we use Q3 gross margin (~30%) as a base for next year? Also update on CapEx and whether ASE will buy fabs or step up equipment next year.
A: They said yes, they now use the prior structural margin ceiling as the base and expect quarterly margin improvement next year. On CapEx, they increased 2026 to USD 11.5 billion and said they are aggressively seeking space but options are limited.
"And also for this year's CapEx, we are increasing our CapEx for the year from USD 10.5 billion to USD 11.5 billion now." — Joseph Tung (CFO)
CapEx outlook and test constraints
Q (Gokul Hariharan · JPMorgan): Asked about CapEx trajectory for next year, funding plans or prepayments with customers, and whether test capacity is more constrained than packaging.
A: They said CapEx next year will be even larger than this year and they will use multiple funding sources, including trade financing; they expect continued negative cash flow during expansion. For test, assembly growth should outpace test and they will prioritize wafer probe over final test due to space constraints; assembly uses space more efficiently than test.
"So at this point, I believe the CapEx spending for next year will be even larger than this year." — Joseph Tung (CFO)
CPO role and pricing
Q (Haas Liu · BoA): Asked whether ASE expects a meaningful CapEx step-up next year like peers, and asked for details on CPO role, related CapEx and revenue projections.
A: They would not comment on specific products or customers. They said ASE is a very active participant in CPO with their foundry partner and customer, and they expect to generate more than USD 0.5 billion of revenue from CPO next year. On pricing they would not comment on specifics but said the environment is pricing-friendly.
"we're expecting to generate more than USD 0.5 billion worth of revenue coming from CPO for next year." — Joseph Tung (CFO)
CPO revenue split and competition
Q (Charlie Chan · Morgan Stanley): Asked whether testing or substrate contributes more to the USD 0.5 billion CPO revenue, and whether competitors (foundry subsidiary) entering on-substrate business will take share.
A: They declined to split the CPO revenue by testing vs substrate. On competition, they said it's sensitive to discuss partners but given ASE's scale they are the dominant player and do not expect a price war; they are in catch-up mode to meet demand. They also said non-AI market weakness is offset by automotive, industrial and AI-adjacent demand, and they saw more than 20% growth in general market this year.
"And all I can say is given the scale, I think we are really the dominant player in this field." — Joseph Tung (CFO)
CPO vs NPO and EMS outlook
Q (Sunny Lin · UBS): Asked whether CPO is mature enough for mass production in 2027 vs NPO, whether ASE can capture MPO, and how EMS will trend into early 2027.
A: They said CPO mass production already started in Q4 and will continue into 2027, and they expect over USD 0.5 billion from CPO next year. NPO and CPO will coexist. ASE will enter MPO if demand exists. For EMS they expect continued growth into 2027, with high-performance computing now roughly mid-teens of EMS revenue and ramping, and a focus on optical, silicon photonics, power and AI-related products.
"We already started mass production in quarter 4, and that will continue into 2027." — Joseph Tung (CFO)
Q3 gross margin drivers and compute mix
Q (Haas Liu · BoA): Asked how much of Q3 gross margin improvement was mix vs pricing vs utilization, and whether margin improvement will accelerate in 2027; also asked compute application targets (GPUs, CPUs, ASICs, switches).
A: They said the Q3 margin improvement was largely due to LEAP ramp-up and better utilization across mainstream packaging and test. They expect sequential margin improvement quarter to quarter into next year. On compute applications they would not be specific and said they aim to address all high-performance computing products.
"Third quarter margin improvement is largely because of the LEAP ramp-up as well as overall improvement in utilization across the board, including the general market or mainstream packages and test." — Joseph Tung (CFO)