ASE Technology Holding Co., Ltd. — FY2021 Form 20-F
Reporting period: Year ended December 31, 2021. This is an annual report, not a standalone Q4 filing; quarterly figures below are unaudited. Financial statements are prepared under IFRS as issued by the IASB and reported in New Taiwan dollars (NT$), unless stated otherwise.
Business context and reporting period
ASE Technology provides semiconductor packaging, testing and electronic manufacturing services (EMS), along with interconnect materials and smaller real-estate and integrated-circuit activities. FY2021 growth was led by packaging and EMS. The company completed the disposal of specified China operations in December 2021.
Financial performance and liquidity
| Metric | FY2021 | FY2020 | Change or context |
|---|---|---|---|
| Operating revenue | NT$570.0bn | NT$477.0bn | +19.5% |
| Gross profit / margin | NT$110.4bn / 19.4% | NT$78.0bn / 16.3% | Margin +3.1 percentage points |
| Operating profit / margin | NT$63.3bn / 11.1% | NT$35.4bn / 7.4% | Operating profit +79.0% |
| Profit for the year | NT$62.25bn | NT$28.65bn | Includes a significant China-site disposal gain |
| Profit attributable to owners | NT$60.15bn | NT$26.97bn | +123.0% |
| Diluted EPS / equivalent ADS | NT$13.54 / NT$27.07 | NT$6.17 / NT$12.33 | One ADS represents two common shares |
Packaging revenue rose 24.6% to NT$272.5bn, testing revenue rose 5.7% to NT$50.0bn, and EMS revenue rose 17.0% to NT$239.5bn. Packaging, testing and EMS gross margins were 25.7%, 34.8% and 9.0%, respectively; EMS margin declined from 9.2%, which management attributed mainly to a shift toward products with higher material pass-through.
Q4 2021 revenue was NT$172.9bn versus NT$148.9bn in Q4 2020; gross profit was NT$32.9bn versus NT$23.3bn. Overall gross margin was 19.0% versus 15.7%. The filing does not provide a clear standalone Q4 net profit value in the supplied text.
Net cash from operating activities was NT$81.7bn; investing activities used NT$49.1bn and financing activities used NT$5.9bn. Cash PP&E payments were NT$70.9bn. Cash and cash equivalents at year-end were NT$76.1bn, working capital was NT$75.1bn, current assets NT$292.4bn and current liabilities NT$217.2bn. Unused credit lines totaled NT$278.8bn.
Total debt was NT$227.2bn: NT$41.0bn short-term borrowings, NT$15.2bn current portion of long-term debt and NT$170.9bn long-term debt. The filing states that the company was in compliance with existing loan financial covenants at year-end. FY2021 capital expenditures were NT$74.4bn; commitments for capital expenditures were approximately NT$52.7bn, with NT$3.8bn prepaid by year-end.
Material changes versus the prior comparable period
- Higher demand for advanced packaging and wirebonding products supported packaging growth; EMS growth was attributed principally to consumer-electronics orders.
- Gross margin improvement reflected stronger packaging and testing profitability, higher loading, efficiency gains and pricing adjustments. Management noted that NT-dollar appreciation partly offset those gains.
- Net non-operating income rose to NT$16.9bn from NT$0.4bn, primarily because of the China-site disposal gain. The disposal generated a recognized gain of NT$17.34bn; cash proceeds from subsidiary disposals reported in investing cash flows were NT$23.94bn.
- Income tax expense increased to NT$17.9bn from NT$7.1bn, reflecting higher taxable income, tax on unappropriated earnings and tax associated with the disposal gain. The reported effective tax rate was 22% versus 20%.
- Cash dividends paid were NT$18.1bn. The company repurchased 55.0m shares under a program with an aggregate stated purchase price of NT$8.25bn; 53.067m were bought back by year-end, with the remainder purchased in January 2022. The shares were cancelled in February 2022.
Outlook, commentary, risks and unusual items
- Funding and investment: Management said cash, marketable securities, expected operating cash flow and available credit lines should cover capital expenditures, working capital, debt and lease obligations for at least 12 months. It expected 2022 capital spending to be funded from these sources. No quantified revenue or earnings guidance is provided. The company said future expansion would be reassessed against market conditions and demand.
- China-site transaction: The filing describes aggregate consideration of NT$36.94bn (US$1.33bn), while the sale-agreement discussion also describes US$1.08bn in cash plus US$380m follow-on cash consideration, subject to terms and adjustments. These descriptions should be reconciled; the filing text does not make the relationship between the amounts clear.
- Business risks: Semiconductor and electronics cyclicality, pricing competition, capacity utilization and capital intensity; raw-material availability and inflation; dependence on major customers (the five largest represented 49.6% of revenue in 2021); and technology change are key exposures.
- Geopolitical and operational risks: The company highlights Taiwan–China tensions, concentration of operations in Taiwan, earthquakes, typhoons, drought, water supply and power outages, as well as supply-chain disruption, COVID-19, foreign exchange and interest-rate exposure.
- Legal and environmental matters: A criminal proceeding involving director and COO Tien Wu was remanded for further proceedings in January 2022; related director-removal and civil cases remained pending. Environmental proceedings included a wastewater matter remanded for further administrative action; a separate China environmental case concluded in April 2021. These matters may entail costs and reputational risk.
- Accounting and audit: The 2020 comparative statements were retrospectively adjusted following completion of purchase-price allocation for the FAFG acquisition. FY2021 impairment charges on assets were NT$126.8m; no goodwill impairment was recognized, though goodwill valuation was identified as a critical audit matter. Auditors gave an unqualified opinion, and management and auditors reported effective internal control over financial reporting.
Most important facts for investors to verify
- Reconcile China-site sale consideration, payment timing, post-closing adjustments, indemnities and cash actually received against the NT$17.34bn disposal gain.
- Assess how much of FY2021 earnings growth was operational versus the disposal gain, and review the resulting tax impact.
- Track 2022 capital spending, committed equipment purchases, operating cash conversion and debt maturities against management’s liquidity assessment.
- Monitor packaging and testing utilization and margins, EMS margin and material costs, customer concentration, and any effects from currency movements or supply constraints.
- Review developments in the Tien Wu proceedings and environmental matters, and confirm the continuing status of U.S. audit-inspection and listing requirements.