Hello. I am Ken Hsiang , the Head of Investor Relations for ASE Technology Holdings. Welcome to our fourth quarter and full year 2025 earnings release. I'm joined today by Dr. Tien Wu, our COO; and Joseph Tung, our CFO. Thank you for attending our earnings release today. Please refer to our safe harbor notice on Page 2. All participants consent to having their voices and questions broadcast via participation in this event. If participants do not consent, please do not ask questions or you may leave the session at this time. I would like to remind everyone that the presentation that follows may contain forward-looking statements. These forward-looking statements are subject to a high degree of risk, and our actual results may differ materially. For purposes of this presentation, dollar figures are generally stated in new Taiwan dollars unless otherwise indicated. As a Taiwan-based company, our financial information is presented in accordance with Taiwan IFRS. Results presented using Taiwan IFRS may differ materially from results using other accounting standards, including those presented by our subsidiaries. For today's presentation, Dr. Wu will be delivering the company's keynote. I will be going over the financial results, and Joseph will then provide the company's guidance. We will then be available to take your questions during the Q&A session that follows. With that, let me hand the presentation over to Dr. Tien Wu.

Good afternoon. I would like to give you a 2, 3 years' outlook for the ASE business. This represents the best perspective that we have as of today from our partner as well as customer. Let me talk about the megatrend and future opportunities. The AI server cycle continues, primarily led by hyperscaler and the data center development. There's a lot of activity in the physical layers via edge applications. For example, we're seeing more design perspective regarding to the robotics and the drone, also the equipment surrounding the automotive and the smart manufacturing. And I think the volume will gradually show up in the next 2 years. which is what we're looking for. We are seeing last year, the mainstream business recovered. We believe the mainstream, namely the IoT, the automotive, the general sector, the mainstream business will recover better this year comparing to last year. The second category is what I call the ASE and the Taiwan cluster. I would like to give you 2 backgrounds. Many of you have raised the questions, there seems to be a very fast evolution in technology as was demand. So the question is, how will ASE and the Taiwan cluster react to the fast evolution of technology and manufacturing requirement? The second question is, there seems to be a lot of constraints in substrate and maybe memory. And how would that change our perspective regarding to the manufacturing for our partner? I will try to answer that using a longer time frame. I think there's no question about the leadership in semiconductor manufacturing in Taiwan for this year as well as a few years down the road. I don't think there's any question about our position, Taiwan as was ASE. We also understand that what is driving the business in AI…

Thank you, Tien. For the fourth quarter from a financial perspective, our ATM factory loading was slightly better than originally anticipated. With higher loading, we were able to extract higher operating leverage. Our ATM factories in Taiwan ran at or near full capacity with LEAP and traditional advanced packaging utilization rates outpacing that of wirebond. Non-Taiwan utilization rates continued to show improvement. Our overall ATM utilization rate was around 80%. Our EMS business slowed slightly due to underlying product seasonality. Revenue and profitability was aligned to our initial outlooks. Please turn to Page 6 where you will find our fourth quarter consolidated results. For the fourth quarter, we recorded fully diluted EPS of $3.24 and basic EPS of $3.37. Consolidated net revenues were $177.9 billion, representing an increase of 6% sequentially and 10% year-over-year. On a U.S. dollar basis, our sales increased by 2% sequentially and 14% year-over-year. Our gross profit was $34.7 billion with a gross margin of 19.5%. Our gross margin improved by 2.4 percentage points sequentially and by 3.1 percentage points year-over-year. This sequential improvement in margin is primarily due to higher loading in our ATM business and NT dollar depreciation. The annual improvement is primarily due to higher factory utilization offset in part by the annual appreciation of the NT dollar. We estimate that foreign exchange had a positive 1.1 percentage point impact to our gross margins sequentially, and while having a negative 1.2 percentage point impact annually. Our operating expenses increased by $1.4 billion sequentially and $1.6 billion annually to $17 billion. The sequential and annual increases in operating expenses are primarily due to higher R&D labor-related costs. Our operating expense percentage increased 0.3 percentage points sequentially to 9.6% and edged up 0.1 percentage points annually. Operating profit was $17.7 billion, up $4.5 billion sequentially…

Thank you, Ken. Let me go over the first quarter guidance. For '26 first quarter, we will be seeing a much stronger than normal seasonality for both our ATM as well as EMS businesses. Based on our current business outlook and exchange rate assumption of USD 1 to NTD 31.4 versus last quarter it was about NTD 30.9. Management projects overall first quarter performance in NT dollar terms to be as follows. On a consolidated basis, first quarter revenue should decline only by 5% to 7% quarter-over-quarter. First quarter gross margin should decline by 50 basis points to 100 basis points quarter-over-quarter. Our first quarter operating margin should decline by 100 basis points to 150 basis points quarter-over-quarter. For ATM business, our ATM first quarter revenue should decline only by low to mid-single-digit percentage quarter-over-quarter. Gross margin should stay in our structural margin range but fall between 24% to 25%. The sequential decline in both revenue and gross margin in first quarter is largely due to less working days and higher labor costs as a result of higher overtime during Lunar New Year holidays. For EMS business, our EMS first quarter revenue and operating margin should be similar with first quarter 2025 levels. With that, let me give you some color for the full year. For ATM, as Tien mentioned, we expect 2026 leading-edge revenue to at least double compared with last year, while demand continues to significantly exceed supply. As for general market, last year's growth momentum will continue this year given AI proliferation and automotive and industrial sector recovery. On ATM profitability, we're expecting a favorable pricing environment for the year. And as operating leverage continues to improve, we expect ATM gross margins to stay within our structural margin range throughout the year and to improve every quarter, while second half gross margin to reach the upper end of the range. With increasing mix of lead services and overall testing, expanding scale as well as automation, we are optimistic on our mid- to long-term profitability. Lastly, on CapEx, we will remain aggressive in CapEx spending to support the strong business prospects for 2026 and beyond and to further extend our lead over competition. This year, we plan to add another USD 1.5 billion in machinery on top of last year's USD 3.4 billion, of which about 2/3 will be for leading-edge services. Also needed investment in buildings and facilities is expected to be at a similar level versus last year's USD 2.1 billion. With that, thank you.

Thank you, Joseph. During the Q&A session that follows, we would appreciate if your questions could be as clear and concise as possible and ask singularly. We will start by taking questions from live participants and then alternating questions from our online participants. I, as the moderator, will be receiving each question and repeating and directing each ask question. After participants' initial question, he or she may ask a follow-up question, clarifications of the earlier question or another question entirely. Then we will move to the next participant. Participants may return to the queue for any additional questions or clarifications. Thank you. Questions? Can we get the microphone over to Sunny here?

Thank you very much. Hopefully, not too late to say Happy New Year. So to kick off, so on your LEAP business, you just guided revenue to double to $3.2 billion for this year. So appreciate a bit more color on maybe breakdown by OS, outsourcing, full process and also test.

So you're looking for a breakdown of our LEAP incremental business for the year.

I think Tien just mentioned that we're at least going to double our LEAP revenue next year -- this year, I'm sorry. And the momentum continues to be strong. I think there is still further upside if we're not constrained by a lot of the capacity build that we're scrambling at today. In terms of the breakdown, I think we'll predominantly still be in OS and also on test side will be on the wafer sort. And I think the full process, which is going on track, and we do have engagement with multiple customers, but we're going to start seeing the meaningful revenue contribution by later of the year. And we expect to triple our full process revenue this year to reach about 10% of the overall LEAP service revenue. In terms of final tests, I think we will also be putting a lot of -- most of our focus right now on the wafer sort. In terms of final tests, I think we will start to have a meaningful revenue as well by the later part of the year, and we should have roughly 10% of the business coming from final tests of the wafer -- of the test business coming from final tests.

Very helpful. And so I think one highlight from earnings was very strong margin expansion in Q4, given improving utilization rate and also better product mix. And so how should we think about from here? You just guided the IC ATM gross margin to trend towards the high end, maybe towards like high 20% or even 30%. But how should we think about from there? Meaning LEAP gross margin should be higher than the structural gross margin trend. And I do think your LEAP gross margin will continue to improve, given better scale and also improvement mix. And so how should we think about maybe going to next 2 to 3 years, how high could the gross margin get to?

So Sunny, you're looking for a longer-term guidance on overall margins.

We would like to take 1 year at a time. So we'll talk about this next year. Thank you.

Thank you, Sunny. Let's give the microphone over to Haas there.

This is Bank of America, Haas. Congrats on the good results and also guidance. I think first one is just regarding your mainstream business outlook for this year. You mentioned you will grow at a similar pace compared with last year. And in the near term, you also have that part of the business above seasonal. So just wondering what are you seeing regarding shipment versus pricing benefiting on that above seasonal in the near term and also for full year, the breakdown between shipment and also pricing outlook for that part of the mainstream business? And then, I think also related on IC ATM, it's just you mentioned that you will exceed at least USD 3.2 billion for the LEAP business for this year. I remember last year, you only mentioned you will reach $1.6 billion. So it doesn't sound like that you're already fully factoring in the potential upside in the LEAP business. Could you also comment on that?

So Haas, you've asked 2 questions here. Going against the rules, huh, very aggressive. So the first question is relating to mainstream business and what we see in the mainstream business in terms of growth. And I'll summarize your second question after this.

The mainstream business has two sources. The first source is from IoT, automotive, industrial. Those are the general sector that we are familiar with. Not surprisingly, part of the general loading does come from the AI data center. For example, the power management, the switch router. So as they're building the data center, we have a difficult time to track which part of the general sector loading comes from the AI data center, which part comes from the general, right? But in general, when we talk to our customers, our general sector loading has been quite decent. The pricing environment, I would say, friendly. I will not comment on pricing increase or any customer-specific information. The only thing I might comment is, the gold price, the substrate price, whatever the price is going up, then it's up to us and the customer. We do have long-term service agreement. In general, it's a friendly environment. Should I answer the LEAP? Well, the second question is the, last quarter, we talked about $1.6 billion, most likely will go to $2.6 billion. And this time, we revised to $3.2 billion. And you're asking what happened? Because 3 months later, we have a better visibility about our factory space. I have already said many times, actually, the demand is far beyond the capacity that we're capable of building. And I remember last year, one of you asked us, if this is so good, why don't you just do it? We are. However, we have to manage the quality, the delivery, all of the resource planning, and these are complicated progress. Processes, equipment lead time and all of the management and also the engineering training, they're not easy. And we just try to do this very, very carefully. So right now, our CFO and myself, our best view is we believe we can achieve $3.2 billion comfortably, right? And over time, if we have any good news, you'll be the first one to know.

Let's see if I can go online.

We have Mr. Gokul Hariharan from JPMorgan.

Can you hear me?

Yes.

We can't hear him.

Can you hear me now?

Yes, you are on the line, but we had some technical issues here. The audience on the floor cannot hear you?

Let's ask Gokul to hold off for 1 second. We can pass -- as you guys fix the technical issue, let's transfer over to Charlie over there.

Ken, let me try to fill the void. And Dr. Wu, Joseph, good afternoon. So my first question actually is about your subsidiary, USI, they announced the acquisition of EugenLight for the CPO repeat component, the optical engine. So I'm wondering what does it mean to the ASE group overall for your CPO business? And going forward, how you're going to split the process between yourself and also USI?

Charlie, you're asking about our fiberoptic acquisition at EMS, EugenLight. Do we have a comment on that?

The optical business is an important direction for the industry. Everybody understands that. At ASE, we're working with our foundry partner as well as the end customer, trying to implement the silicon photonics part of it, which is a CPO. At a system level, it is not a CPO. However, the optical, it needs to go through from the chip to the packaging as well as to the system as well as to the optical transceiver as well as to the rack and beyond. So I think the optical technology as well as business, it goes very pervasive and very, very long. I think what you mentioned is USI is trying to piece together early deployment in terms of the future optical road map, and this is part of it. And I announced the silicon photonics quite a few years ago. The whole industry is trying to do early deployment and development and positioning. And I think we are going to see some early volume on the silicon and the CPO part of it. And if that goes well, and I believe the volume will start catching up. So the technology development, the manufacturing capacity development needs to happen well before that. So I think this is the USI and the ASE story. There is no conflict. However, it is important that if we can manage the silicon, the CPO, the packaging, we need to have a good know-how as well as inside knowledge on the system level such that we can support our customers on the overall system optimization if we need to switch hybrid or electrical all the way to optical, right? It's a very long question, I gave you a longer answer.

So it seems like ASE get involved deeply, right, in the CPO supply chain. And we do hear there are some kind of technical challenging, for example, put together, there's a major compute die with those FAU together on a substrate. So I'm wondering is ASE very critical to solve this problem? Or it's more like your foundry partner figure out how to work it and then outsource to you guys with the missed production.

Charlie, you're looking for clarification on the actual processes that we can be involved with on CPO?

It's a very difficult question because at the silicon level, the technology complexity is very, very different. So the foundry partner, they can be working on like a really, really complicated issues, right? And this, you're dealing with at the silicon level, how they convert the light out. So I will not comment on that. So I have partner addressing those. I also have partner addressing more traditional way. If you do the photo or if you do the electrical separately, and those are more existing. So at our level, we have to manage the really complex PIC, EIC together or separately and via different kind of stacking configuration. For example, chip-to-chip, chip-to-packaging, chip-to-rack. So at the packaging level, I will not say it is easier or more difficult. I think packaging level is easier. However, you have to go much, much deeper because you have to deal with different alternative of the electrical source, the light source and different configuration, different memory and who connects to what, right? At a system level, I will not say it's easier, but you got to go deeper. So the beauty about Taiwan is, we have the chip, we have the CPO, substrate. We also have the system. So in terms of sharing co-optimization trade-off, I believe within this ecosystem, you have a much better chance to hit the first product.

Thanks for your clarification. So my next question is to Joseph.

I think you got your 2 questions there. Sorry. Let's try to go see if we can get to online again. Is it working?

Hello? Can you hear me now?

Yes, I can hear you. But the audience on the floor cannot hear you.

Can you put the microphone to your ear piece.

Can you try again, Gokul?

Is it better now?

Still doesn't work. Can you write down your questions in the Q&A session?

Yes, I'll do.

Do we have further questions over here? Let's go to Rick over here.

Dr. Wu, Joseph and Ken, I just got 1 question here. Regarding your EMS, it seems to me it has been quite muted over the past 2 years. Are you guys strategically downsizing your EMS business only focusing on what adds the most value? The reason why I'm asking is because I remember you used to fund a big chunk of your EMS from consumer, like a SIP, for example, wearable, et cetera. So can you give us more color about your strategy about your EMS going forward?

The EMS business has a few angles, all right? First is your competitive landscape. The competitive landscape inevitably have to deal with the geographical location. And then the second angle will be either the consumer AI or the futuristic sector. And then you will talk about the synergy between the ATM business and the USA business. And I'll try to answer this in a very, very brief way, okay? So what has transpired in the last few years is, we understand our consumer business has ramped to a level that we're comfortable with. But we are facing competition. Also, we're feeling constrained. At the same time, this AI sector and also the AI emerging general sector, I really don't know how to describe it. In the AI data center, for example, you have the glass, as one example, which is really not a consumer, it's more related to the AI space. Then you have the optical, which optical has been there forever. But because of the data center, we're pushing the system-level optimization to a brand-new level. And I can give you a few examples. The optical is one example, power supply, absolutely is the second angle. You will have optical transformation or upgrade or paradigm shift. You have a power delivery paradigm shift. All of this are hinting us with AI, also the system level optimization. There are good opportunities we can divert the resource and start more synergistically with the ATM part of the business, and that's called the realignment or recalibration. So what we have hinted, which we will report in the next few quarters is, in the AI space of consumer what are the activity that we're engaging. Also in the AI data center or AI enable or AI motivated system-level optimization what are the efforts that we're making. So I think in the next few years, you will see a much stronger vintage in that direction. So no, we're not trying to downsize, but the market is shifting the geographic positioning is changing, the requirement of customers changing. So we just have to change accordingly.

Just one quick follow-up. So how long would this transition take? So meaning that this year, your EMS will continue to undergrow your ATM? How long this transition would take before your EMS catch up the corporate average?

I think this year, we are growing. Yes, this year, we're -- well, okay. So the question is the, okay, your ATM is growing very fast. I view that as a good news because the sector change, you tend to go to leadership and ASE happened to be a member, a key member of this leadership cluster. And then I think you were seeing some significant input on the EMS part of it. For the last few years, there has been a lot of design in pipeline, and hopefully, we can give you a better view into the revenue contribution. But as soon as this year, it's not the -- yes.

So do we want to give a try?

I can read out your questions.

I think we're trying to use a speaker phone methodology to microphone, very, MacGyver like.

Okay. Third time lucky, I guess.

Perfect.

All right. You could finally hear me.

Great.

Thanks for going through all the trouble. First question, Dr. Wu, given this very strong CapEx continuing in '26, could we understand how much of this is going to full process packaging. And when we look forward, how big is your full process business likely to scale from the 10% of LEAP this year? Can it get to like 30%, 40% of the total revenue eventually in like a 2- to 3-year time frame? And I also wanted to understand whether it aligns with your partners' future plans? Because right now, there is a bit of a division of labor between you and your partner, but full process kind of a little bit of competition with them, but just wanted to understand how it aligns with their future plans.

Gokul wants to know about our full process plans and such.

Well, as Joseph already talked about, out of the $3.2 billion, we're looking at about 10% full process revenue by the end of this year. There are a few clarifications. We're not competing. And this is part of the cluster ideas, right? Because the wafer level, the foundry partner they will have the first right, the first knowledge and the first need to come up with the different configuration, 2.5D or 3D packaging. The long-term prospect or motivation, how long or how big do they want to grow the business is up to the foundry partner. Our understanding is, if we're fully capable of executing customers as well as partner would like to have second source, right? Therefore, there will be technology sharing not on the OS side, but also on the full process. Now the configuration is a big question, right? It's complicated. As the HBM and also the TPU size grows, the wafer level, the panel level, they have all different configurations of stacking big panel substrate. So the technology also evolved very, very quickly between the foundry process and know-how, between the customer cost, architectural and design requirements and the packaging. This is where the co-optimization and the collaboration will come in. Now everybody has the question, why you're spending so much CapEx? What if the customer switch? First, you have to understand it's not a one customer thing. They are mainly many customers. Are they competing? In a way. But in a way, they're not competing. They're trying to fulfill the diversification of the AI space in all kinds of inference, all kinds of learning large language model. It's a very, very big market. This is the beginning. What we are trying to do is as fast as we can come out with alternative and the toolbox. So our partner, the designers will have the total freedom to pick and choose whichever way they want to put this together for whichever application. I'm telling you 90% of the application we couldn't see yet. This is why the AI is so exciting, right? So with that, I think our CapEx is fine. The partnership collaboration, competition is healthy. All the iteration and the fast evolution of technology from our customer is not a penalty for us, it's actually very, very healthy for the industry. And being the first mover in the Taiwan, first-mover cluster, you will have some natural advantage. So I believe this is the good time for us to do this.

Thanks, Dr. Wu. That's very clear. Second question, we did mention we are expecting the mainstream demand to keep growing similar to 2025, 10-plus percent. Within that, obviously, PC and smartphone related, especially smartphone-related is a pretty big chunk, and some of your larger customers have been turning down on the smartphone demand for the last few weeks or so. So how does this kind of sit within this expectation of mainstream demand continuing to grow at a similar pace? I'm sure you've done your math and come up with this assumption, but can you explain a little bit.

So Gokul is looking for characterization of our outlook on our mainstream market.

The mainstream market, the ASE has a large market share on the communication or the cell phone. Again, it's a good news, right? And thanks to our customer and long-term support. That sector will continue. There could be some fluctuation that I will not go into detail. But please remember, we are fully loaded. The AI data center now has the FPGA, microcontroller, power management, router and all kinds of loading coming to ASE. And you understand that we have signed -- we bought 2 factories for Infineon. We have also announced we are buying another factory in Penang for ADI. We already announced that. That is most likely to close in Q2 this year. With all of this, the Infineon loading, the ADI loading, they're also coming to us as part of the acquisition, also the co-optimization and the co-design for today's device and system as well as for the next-generation device and system. So when I talk about there's a general sector recovery, I truly mean it. I have seen industrial automotive recovery. On top of that, I have unknown demand, could be AI data center, could be not, from the same guys asking us to run up the loading. And of course, because our fully automated general process, we could be gaining market share. And that we have to look at ASE versus our competitor in all different spaces. I will not comment on that. But in general, we feel comfortable for 2026 and beyond for our general sector recovery.

Do we want to go to who, another online Laura?

Congrats for the great results. I also have questions on the LEAP business. Actually, we see that there's various different type of advanced packaging as Dr. Tien mentioned that. Definitely, we see the great chance as he has seen promising growth with the AI chip involving, but we see that the chips and die sizes are getting more compact, and there are various different type of, like a panel base, even some are talking about the chip-on-wafer-on-PCB. So can you share with us your plans on various packaging type and also your strategic focus? And how should ASE fit and leverage your technology to get into these different type of packaging going forward.

All right. So the question, again, it's a loaded question. Now because of the AI system demand, there are 2 family of thoughts. We believe that the chip will get bigger. Therefore, the wafer size will get bigger. Therefore, the chiplet size will get bigger. And therefore, the 3D, the 2.5D and the HBM will get bigger, which is why you need the silicon photonics, which is why you need a new conceptual power delivery method to provide the vertical power supply. That's one family thought. The second family thought is because of the efficiency of design, everything will go smaller, okay? I will not get into that debate. All I can tell you is the last 4 years, things just got bigger, right? Therefore, ASE will prepare both. If you can handle this in the 300-millimeter wafer form, we got that already. But if the chiplet size, the requirement are going unreasonably large, we will have the 310x310 panel to give you a better relief. Now will the 310x310 go to 620x620? Depending on the volume, also the technology requirement. Also, our process capability, can we handle a larger panel size with the kind of resolution and I/O count they require? But ASE's job is by the end of this year, we will have a fully automated 310x310 in production. Today, we already have manual. But in my view, the manual process doesn't count. I can only count in this space, it needs to be fully light out. By the end of this year, we'll have that. That will provide the first try in the throughput and cost improvement on all of the wafer level process that we do. Now our foundry partner and our customer will continue to drive the different configuration. I cannot comment. Our job is to provide all the toolboxes. So pending on your resolution I/O and cost requirement, we will give you different options. And I'm comfortable to say that Taiwan cluster overall, we have the most toolbox and the best option with capacity in place. We will be the fastest to ramp up in the world. ASE being part of this ecosystem on the packaging world, we are responsible to provide more packaging level toolbox, including panel, including CPO, including the next-generation power delivery for the VRM though we have not talked much about it. But the whole idea is, we will leverage this opportunity to strengthen our portfolio and the R&D in-depth understanding about the system requirement. It's not just CoWoS. It's not just the full process. It's after this AI boom, the following through system-level paradigm shift improvement, we need to put all of this in place. And this is part of the ASE's vision. We will co-work with foundry as well as our USI EMS arm as well as the other system assembler partner and trying to come up with a total solution from chip all the way to system long term.

Very comprehensive, very exciting. My second question is about the gross margin. As we see that actually these advanced packaging contribution continue going up. And overall, we see that ASP trend is more friendly, as you just mentioned. Can we kind of expect the overall ATM gross margin later this year we'll be able to reach 30% or potentially to be higher?

Laura has a question in terms of the ceiling of our structural margin.

As I explained earlier on, I think, first of all, this year -- starting from second half of last year, we already started to see the improvement in our operating leverage as we continue to improve our ramp-up. And I think for this year, we are confident to say that we will see throughout the whole year, every quarter, we will have our gross margin fall into the structural range. And so in the first quarter, we will see -- well, our margin will be between 24% to 25%. And then sequentially, every quarter, we will see continuous improvement in our margin. And also by a second half of the year, we will see our gross margin closing in on the upper end of the structural margin. There's further room for improvement as we continue to reach an optimal ramp-up stage and we -- in local term, as we continue to expand our leading edge services, expand our testing business, also continue to reach a full ramp-up, I think there's further room for improvement. But as Tien mentioned, in terms of the margin movement, we will take 1 year at a time and see how the product mix will shift and how the utilization will improve to see whether we need to adjust our margin guidelines.

I'm sorry, I don't know your name. Name and company, please.

Hello Joseph and Dr. Wu. My name is Alan Patterson. I'm with EE Times. You mentioned that you're buying clean room space from foundries. And I would just like to know, is that a first? I've heard from people in the supply chain that this is something that -- advanced packaging is something that's been done primarily by TSMC. So I'm just wondering if this move into advanced packaging, like 2.5, 3D is this something new?

The gentleman would like some clarification on clean room specifications related to advanced packaging.

First of all, I said that we're buying factory with clean rooms already built from partners. I did not specify foundry partners. We have many partners. And also in terms of doing the full process, 2.5D, no, it is not new for ASE. We have been doing this for quite some time.

And then maybe a follow-up question. Is Photonics a new area for you? You had mentioned that this is something that you're moving into. I mean there are many different flavors of photonics. So I wonder if there's any one that you see with greater potential for your company.

You would like an outlook in terms of how we view the CPO market.

Well, Photonics is a new technology. It represents a paradigm shift. And I think there will be a first-mover coming in, and then we will see how the first-mover fares, right? I will not comment, there are different alternatives. And we always believe that different alternatives will serve different solutions for different architectural requirements. So we will not take size in terms of the -- there's a high end, midrange and also low end and different requirements, between the scaled up, the scaled out chip-to-chip level, chip-to-package level or the package-to-package level, they're all different, right? So again, our job is to develop the toolboxes for the designers, so they can -- they have the freedom to choose based on whatever. But keep in mind, the electronic signal and also the optical signal it is continuous. You got to go through all the way. And our job is to make sure that whatever technology is not limited to any kind of segment. You just need to go all the way down at a different cost of the potential.

We're going to restart the queue here. So Haas, do you want to ask another question?

I think just a quick follow-up on your CapEx because you mentioned you have a lot of amazing demand opportunity, no matter it is in mainstream or in the AI space going forward. But just wondering if you could share with us your view just regarding the capital intensity targets because this year, you definitely grow your CapEx from the amount perspective. But your sales definitely seems to be outgrowing this year based on your guidance just now. So just wondering if you have a guidance or a view on your capital intensity in the longer term, how should we think about the pace that you are going to grow your capacity versus your customers' demand? How would you balance that?

Haas is looking for a financial balance in terms of how we view our capital intensity over time and how that moves and changes.

There is no guideline. CapEx, Joseph and I, we were very comfortable with $2 billion for the longest time. And then for some reason, we just showed up $4 billion. And then we showed up like $5 billion. And then Joseph talks about even bigger number. I'm not comfortable. I think he is not comfortable. We're all under pressure. Long term, there's a little half of me saying that, yes, there are more. Half of me saying, I'm sure we're doing the right thing. Listen, we're a human being. We struggle exactly the same way you struggle. The only way we can do is, we look at the landscape. AI is brand-new. This is like the beginning of a boom. I mean I won't call Big Bang. This is too religious, right? It's a boom. And then we are in the first-mover leadership position. We have all of the support from everybody and customer. This is our time to shine. And as we move in, we are responsible for the CapEx discipline. And then there's a financial -- I mean, Joseph is very clever, managing different instruments alone. We're learning all of this. And our guys, we have, I mean, 64,000 people in Taiwan, 100,000 worldwide. It's a good number. You want to stretch them, but you don't want to stretch it to a point that all went to hospital. So as you're doing this and the customer is giving you different voices. I mean, they're a good customer, they're not so good customer. So you're dealing with a lot of this kind of thing. Can I give you a view about 5 years from now, what's our CapEx? No. One year at a time, we would deal with the margin, execution. If anything, I do not want to disappoint my partner and customer. I will rather deliver whatever we have promised and make everybody happy going forward until the next stop. I will not stretch. Are we aggressive? Yes and no. I don't think we're pushing ourselves to the limit nor should we believe we should, all right? I'm not answering your question because I don't have an answer for you.

No, no, that's great. That's a great comment. And I think just a follow-on question that your LEAP business definitely has been growing quite significantly in the past few years and also this year and probably in the coming years. And as a good leading indicator, CapEx, that you have also been spending quite meaningfully in the past couple of years and also this year, so just wondering if you could share with us your metric regarding the ROIC for that part of the CapEx, especially on the advanced nodes versus your traditional business?

The logic is very simple, right? The CapEx is a leading indicator on technology capacity and PO, also margin. If you spend CapEx, you should come up with -- your depreciation will go up. It should at least cover that part of depreciation. Otherwise, you shouldn't be doing this, right? So if with CapEx, the margin shows improvement, that means you're on the right track. And then you add the CapEx. And not the improvement, you're on the right track, which means that the market supports you and you have a better visibility. Also, your team becomes more sophisticated, and they're ready to launch the next level of endeavor. We're engineers. We climb stories, floors, one step at a time. So you're asking 2026, we will spend more CapEx. What does that imply to 2027? I already gave you the answer. Hopefully, we can achieve that. But we will not know until third quarter, fourth quarter of 2026 that we can comfortably say, listen, this is what we have come up with. We're making calibration. As we move along, we will give you better visibility of how that calibration is.

I think to sum up your question, I think we're still in this megatrend, and we're certainly not going to be shy on making the necessary investments in terms of CapEx also as well as in R&D dollars that we're going to put in to keep our lead in the -- and we are the chosen partner around this whole ecosystem here. So it's not the time for us to be conservative, I think. So this year, of course, our CapEx is much higher than last year. Last year is much higher than the year before. And we're seeing this trend actually continuing, maybe not just for this year, next year also. We will continue to spend quite large in terms of CapEx and R&D dollars. But having said that, I think we're still in a very healthy financial condition here, and we do have multiple cost-effective funding sources to support our growth and support our investments. And in terms of return, we are actually seeing that -- first of all, these leading-edge services is margin accretive and certainly return accretive as well. So we're seeing that happening already. And from last year to this, I think both on an ROE or ROIC standpoint, we are seeing improvement, although I'm not giving out any real numbers at this point yet, but we are seeing that our investments are paying off.

Just one more comment. The CapEx dollar and capacity are not the best entry barrier, but it is an entry barrier.

Charlie, do you want to follow up?

So my question to Joseph, was very similar to Laura's question on gross margin, but more focused on those structural factors. So I think in the past, how you talked about utilization, FX, I think it's more short-term cyclical and you talk about the product mix improvement, I think it's more structural. How about pricing? We are hearing that for your wirebond flip chip, et cetera, it seems like there is a price hike this year. Do you think it's more like a structural price hike? And is that ASE specific? Or do you think it's kind of overall ATM industries enjoying this kind of a structural price hike?

Charlie is looking for commentary on the ASP environment.

The price hike is not part of the structure margin. During the COVID days, we have gone through that. Technology is the product mix, the value you provide is. And when Joseph comment, we have not included the price hike, the price hike is a very opportunistic approach and depending on the management philosophy, also in relation with the customer, it will be exercised when needed. But in general, we do not comment on the price increase with customers.

I think our pricing, we will continue to seek the most suitable pricing strategy depending on the situation and also the requirement of -- and our return requirement.

And a follow-up question on the CapEx and clean room part. So I'm wondering whether ASE have some concrete plan to solve the clean room, right? I think TSMC announced they have a piece of new land here and there. So you have so-called circa visibility, right? And if not, whether there is going to be a gating factor for your future spending for business growth?

Charlie is asking about the physical factory progress and development that we are working on, right?

In your CapEx, if you can break down your infrastructure or clean room portion, I think that would be great.

Okay. With separation of machinery and equipment and facilities, CapEx?

Right. This year, I think for the building and facilities, we are still looking at about $2.1 billion, which is about the same level as of last year. Yes, finding new locations and new factories, it's a bit of a challenge. We're doing all we can to look at over the island to find a suitable location for our new buildings. As Tien mentioned, that includes green greenfield factory buildings as well as buying some existing from our partners. So we are going out to find the suitable location for that.

Do we have a follow-up question? I think we have time for 1 more question. If we want to ask for 1 more question. If not, we can wrap it up at this time. Thank you very much for attending our full year fourth quarter 2025 earnings release. Hope to see you next time. Thank you.

Happy New Year.