ASE Technology HoldingASX is seeing strong demand for its leading-edge advanced packaging and testing (LEAP) services, driven by growing AI infrastructure needs. In the first half of 2026, the company’s ATM revenues increased 35% year over year, with leading-edge advanced packaging and testing growing faster than the overall business. ASX expects this momentum to continue in the second half of 2026 and now projects ATM revenues to grow 35% in 2026. This strong momentum should help ASX to strengthen its position against other advanced packaging players such as Amkor TechnologyAMKR and IntelINTC.
LEAP services are a key driver of this growth. ASX previously expected LEAP revenues of $3.5 billion in 2026. Following strong demand, management now expects LEAP revenues to be a couple hundred million dollars above this level. The company is also aiming to double LEAP revenues in 2027. Management said customer demand remains strong and it has clear visibility into the capacity needed for 2027. Both assembly and testing are seeing strong demand, while the expansion of full-process packaging is expected to provide another growth opportunity.
The higher contribution from LEAP is also helping ASX improve margins. In the second quarter of 2026, ATM revenues reached a record TWD 126.1 billion, up 36% year over year. The ATM business accounted for 66% of consolidated revenues and 94% of operating profit. ATM gross margin increased to 27.3% from 21.9% a year ago, helped by higher utilization and a greater mix of LEAP services. ASX expects ATM gross margin to improve further and could exceed 30% in the fourth quarter of 2026.
ASX is spending more to add capacity and meet demand. The company raised its 2026 capital expenditure plan by $2 billion to about $10.5 billion. Of the $6.5 billion planned for equipment, about 70% is for leading-edge operations. If ASX can bring new capacity online as planned, strong LEAP demand should continue to support its revenue growth and margin expansion. The Zacks Consensus Estimate for 2026 and 2027 indicates revenue growth of around 27.9% and 22.5%, respectively.
How Competitors Fare Against ASE Technology
Amkor Technology is also expanding its advanced packaging business to benefit from AI and high-performance computing demand. In the second quarter of 2026, Amkor reported record revenues of $1.9 billion, up 26% year over year. Management said it advanced key AI and HPC customer programs and continued to expand advanced packaging and test capacity. Amkor also announced a multiyear, $1.5 billion partnership with NVIDIA in July to expand advanced packaging and testing capabilities in the United States. These investments could help Amkor compete more directly for AI-related packaging demand.
Intel is another competitor with a growing focus on advanced packaging. The company views advanced packaging as an important part of its foundry strategy as AI systems move toward more complex systems-in-package designs. In the second quarter of 2026, management said interest in its EMIB-T technology remains high, with a growing backlog and plans to ramp the technology into high-volume production in 2027. Intel also highlighted its ability to combine wafer manufacturing and advanced packaging, giving it an integrated offering that differs from the pure-play OSAT model used by ASX and AMKR
ASX's Price Performance, Valuation & Estimates
Shares of ASX have surged 147.2% year to date compared with the Zacks Electronics - Semiconductors industry’s return of 35%.
ASX YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ASX trades at a forward price-to-earnings ratio of 23.97X, higher than the industry’s average of 14.73X. ASX has a Value Score of D.
ASX Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ASX’s 2026 and 2027 earnings per share (EPS) implies year-over-year growth of 112.3% and 59.5%, respectively. EPS estimates for 2026 and 2027 have been revised up by 8 cents and 2 cents, respectively, over the past 30 days.
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