Can Strong LEAP Demand Help ASE Technology Challenge AMKR & INTC?

• ASX raised 2026 capital expenditure to $10.5 billion (up $2 billion), with 70% of equipment spending allocated to leading-edge operations to meet growing demand
• ATM gross margin improved to 27.3% in Q2 2026 from 21.9% a year ago, with management expecting margins to exceed 30% by Q4 2026 due to higher LEAP mix and utilization
• The company aims to double LEAP revenues in 2027, while competitors Amkor announced a $1.5 billion partnership with NVIDIA and Intel plans to ramp EMIB-T technology into high-volume production in 2027

Summary: ASE Technology's LEAP Demand and Competitive Positioning

Key Developments:

ASE Technology (ASX) is experiencing robust demand for its leading-edge advanced packaging and testing (LEAP) services, driven by AI infrastructure growth. The company now expects 2026 LEAP revenues to exceed $3.5 billion—several hundred million above prior projections—and aims to double these revenues in 2027.

Financial Performance:

• Q2 2026 ATM revenues reached record TWD 126.1 billion, up 36% year-over-year
• ATM gross margin improved to 27.3% from 21.9%, with potential to exceed 30% in Q4 2026
• Full-year 2026 ATM revenue growth projected at 35%
• ATM business represents 66% of consolidated revenues and 94% of operating profit
• Consensus estimates indicate 27.9% revenue growth in 2026 and 22.5% in 2027

Capital Investment:

ASX increased 2026 capital expenditure by $2 billion to approximately $10.5 billion, with 70% of the $6.5 billion equipment budget allocated to leading-edge operations.

Competitive Landscape:

• Amkor Technology (AMKR): Posted record Q2 2026 revenues of $1.9 billion (up 26% YoY) and announced a $1.5 billion partnership with NVIDIA for U.S. advanced packaging expansion
• Intel (INTC): Advancing EMIB-T technology with plans for high-volume production in 2027, leveraging integrated wafer manufacturing and packaging capabilities

Valuation:

ASX trades at 23.97X forward P/E versus industry average of 14.73X. The stock carries a Zacks Rank #1 (Strong Buy) despite a value grade of D.