Apple's Taiwanese Chip Supplier ASE Tech Clocks Modest Q2 Growth In Revenues

ASE Technology Holding Co ASX reported a fiscal second-quarter 2024 net revenue growth of 2.9% year-on-year to 140.24 billion New Taiwan dollars ($4.35 billion), missing the analyst consensus estimate of $4.51 billion. The revenue of the Apple Inc AAPL chip supplier grew by 5.6% quarter-on-quarter.

Net revenues for ATM (assembly, testing, and material) business was 77.81 billion New Taiwan dollars, up by 2.2% Y/Y and 5.3% Q/Q. 

EMS (electronic manufacturing services) net revenues were 62.91 billion New Taiwan dollars, up by 4.1% Y/Y and 6.0% Q/Q.

Gross margin increased by 70 bps Q/Q to 16.4%. The operating margin grew by 70 bps Q/Q to 6.4%.

Diluted EPS was 1.75 New Taiwan dollars (or $0.109 per ADS) versus analyst consensus estimate of $0.110.

Capital expenditures totaled $406 million.

Earlier in July, ASE Technology opened its second testing facility in San Jose, California, to enhance its advanced chip testing capabilities to meet growing customer needs for artificial intelligence (AI) and high-performance computing (HPC). ISE Labs Inc, a wholly owned subsidiary of ASE, will manage this new facility, the Taipei Times reported.

ISE Labs has invested about $500 million in its U.S. labs, and plans to invest around $200 million in the San Jose facility.

In April, ASE Technology increased its capital spending by 10% from an earlier estimate of $2.1 billion to meet growing demand.

It also plans to allocate a larger portion of its budget to the chip testing business, increasing it to 24% from the original 18%. ASE Technology is also exploring potential locations for advanced chip packaging capacity in the U.S., Japan, and Mexico.

ASE Technology stock gained over 37% in the last 12 months.

Price Action: At the last check on Thursday, ASX shares traded lower by 0.38% at $10.56 premarket.

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