OSAT ASE Technology (ASE) anticipates a return to 80% plant utilization in the second half of 2023, up from 60% in the first half of the year. After the third quarter, the business will be back on track.
Still, ASE altered its core IC assembly, testing, and material (ATM) business sales forecast for this year from flat to a single-digit reduction to a greater 7–13% decline.
ASE expects its IC ATM business to post about flat revenue and gross margin increases sequentially in the second quarter, said company CFO Joseph Tung. As for its electronics manufacturing services (EMS) division, revenue will likely register slight sequential growth, with operating margin edging up 0.5pp on quarter.
The IC ATM unit has landed a pull-in of short lead-time orders since the first quarter, Tung indicated. However, sluggish consumer electronics demand continues to drive down overall demand, pushing many customers to postpone deliveries until the third quarter.
Nevertheless, ASEH has no intentions to implement significant price cuts, according to Tung.
In addition, ASE's capex this year will be lower than the 2022 level, Tung indicated. About 53% of ASE's 2023 capex wil be utilized for packaging, 25% for testing, and 15-16% for its EMS and automotive related products.
It is worth mentioning that ASE's automotive electronics business is expected to register a double-digit sales surge in 2023, according to the company. The business generated revenue of US$1.6 billion in 2022, with packaging and testing accounting for approximately US$1 billion, and EMS accounting for the remaining US$600 million.
ASE's EMS business will be essentially static in the first half of 2023, while sales generated by the automotive industry will modestly improve business revenue in the second quarter, the company said. With customers' new products set to be released in the third quarter, the business recovery will be underway in the third quarter.
ASE's reported consolidated revenue fell 26% sequentially and 9% on year to NT$130.89 billion (US$4.27 billion) in the first quarter of 2023, when the company's core IC ATM business posted revenue decreases of 22% on quarter and 13% from a year earlier. Sales of its EMS division also saw declines of about 31% on both sequential and on-year bases.
ASE posted net profits of NT$5.82 billion in the first quarter, down 63% on quarter and 55% from a year ago, with EPS coming to NT$1.36.
