ASE will build a second test plant in the United States and will also expand in Mexico/Malaysia/Japan

On June 26, the global sealed test leader ASE Investment Control CEO Wu Tianyu revealed in a media interview after the shareholders meeting that in order to respond to customers' requirements for regional politics and supply chain restructuring, ASE Investment Control has considered setting up factories in Japan, Mexico, the United States, Malaysia and other countries, and does not exclude the expansion of advanced packaging capacity in Japan, the United States and Mexico. However, the time of setting up overseas factories has yet to be further evaluated and the site determined. At the same time, ASE has confirmed plans to build a second chip test plant in Fremont, California, and will officially announce the project and investment scale on July 12.

In an interview with the media, Wu Tianyu said that in terms of overseas layout, the company is currently interested in the United States, Mexico, Malaysia and Japan. However, this part takes some time and requires some running-in with the local government. As for, after the factory is built, there is a business, what kind of machine, what kind of customers, what kind of employees are transferred in, this must be planned. After that, the third stage is capacity expansion action.

Wu Tianyu stressed that the first stage of ASE Investment Control is very positive, because customers have different requirements for regional political influence and supply chain resilience. For example, three years ago, the demand for automotive electronics was very tight, and now it has changed to other applications such as AI. Therefore, ASE Investment Control has also been exploring during this period, seeking changes in customer demand under the changes in the environment, and where each customer's requirements for the integrity of the industrial chain are in the end. Therefore, if you want to build a factory overseas, you should cooperate with the trend of the whole world, rather than saying that you think which country is interested in investing in where you go.

For example, if all high-end chips are produced in Taiwan, China, and then go overseas to do packaging, it feels strange. If there are some automotive and electronic customers, the wafers are all produced outside Taiwan, China, and then all pulled back to Taiwan, China, to do packaging and testing is also strange. Therefore, we have a practical economic benefit with customers, and then with the above needs, coupled with regional politics and global economic changes, to achieve the most suitable point.

Therefore, ISE Labs, Inc., a subsidiary of ASE Investment Control, will launch a new semiconductor test plant in California on July 12, planning to expand the local test capacity, mainly testing advanced chips. Moreover, the factory will not actively apply for subsidies for the US chip Act, but will be based on a number of local tax incentives, and the most important is mass production. Because after mass production, many concessions will naturally come.

In addition, ASE Investment Control Mexico plant has also bought land, especially its Huanxu Electronics has set up a factory there, there are about 3,000 employees there, but also related economic benefits. Future planning Mexico plant is to do automotive electronics and power management IC related supply chain, this to meet the demand of the North American market, to expand packaging, testing and assembly and other production capacity, in order to facilitate the future in the North American market long-term layout AI, autonomous driving, robotics and other emerging industries. As for what kind of technology to introduce next, it depends on the needs of customers around the world.

Wu Tianyu stressed that the current high-level wafer production is in Taiwan, China, that ASE Investment Control now all of the heavy investment naturally in Taiwan. However, because we have long-term contracts with large automotive electronics factories in Europe, this is a business imperative for us to build the resilience of the automotive electronics supply chain outside of Taiwan, China. Under the proportionality principle, Penang, Malaysia is expected to expand to a certain extent.

As for the advanced packaging part, Wu Tianyu said that this year, benefiting from the increased demand for AI chips, ASE CoWoS advanced packaging performance will be much higher than the original expectation of $250 million, and advanced packaging demand continues to be strong in the second half of this year and 2025. In terms of advanced packaging overseas production capacity layout, the company does not rule out expanding advanced packaging capacity in Japan, the United States, Mexico and other places. For example, if you consider doing advanced packaging in Japan, you must first lock the customer, that is, which customer needs to do closed testing in Japan is more in line with his economic benefits and value. However, at present, ASE in Japan's original "Yamagata factory" expansion is limited, so the next place to look is a relatively complete, relatively large place to do long-term planning. Overall, where will advanced packaging capacity expand, and finally follow customer demand.

It is understood that the current demand for advanced AI chips such as AI accelerators is very strong, and major chip companies require TSMC to increase CoWoS production capacity multiple times, but also expand the post-production capacity of WoS by commissioning packaging factories including ASE, and the main packaging factory is waiting for TSMC and NVIDIA chip factory verification, which can be connected with TSMC production capacity. To meet the market long line of AI chip demand.

Wu Tianyu also said that ASE continues to work closely with TSMC on CoWoS advanced packaging, but the cooperation between the two sides depends on the needs of the market and customers.

For the new technological direction in the future, Wu Tianyu further pointed out that the development of silicon photonics technology in Taiwan, China, is extremely important, because Taiwan has been in a leading position in the global semiconductor industry, if it continues to master silicon photonics technology, the semiconductor industry can be described as a tiger. He solemnly stressed that Taiwan must not release silicon photonics technology. Ase also continues to take root in silicon photonics and Co-packaged optical components (CPO) and will continue to invest in the future.

ASE Holdings also completed the reelection of directors today, electing six general directors and three independent directors, for a total of nine directors. The list of directors is reappointed by Cheung Chen-sang, Cheung Hong-ben, Wu Tian-yu, Chan Chang-yee, Tang Swee-man and Cheung Neng-Kit, while the independent members are You Sheng-fook, He Mei-yue and Weng Man-kei. The new Directors will be elected for a term beginning on June 26, 2024 and ending on June 25, 2027.

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