ASE Technology Holding ASX is expanding its advanced packaging capabilities as AI drives demand for larger chips, higher bandwidth and more complex semiconductor designs. Rising AI demand is creating hardware requirements in terms of size, complexity and integration, making packaging an important part of the AI infrastructure buildout. ASE Technology believes that hardware infrastructure has become a key bottleneck, while packaging is moving up in the system architecture value chain.
CoWoS is one of the main technologies supporting this opportunity. The company is working to increase its CoWoS scale and efficiency as demand from AI infrastructure remains strong. ASE Technology is also expanding its full process business, which management said is on track to generate about TWD 300 million in revenues in 2026. The company expects substantial growth in this business in 2027 and sees it becoming margin accretive as it scales.
Panel-level packaging could add another growth opportunity. ASX’s fully-automated 310-by-310 panel line is expected to start production in the first quarter of 2027. Management said that the solution is complementary to foundry offerings and is aimed at a similar customer set and reticle size. Customer adoption will depend on factors such as capacity, performance and speed of execution. This gives ASE Technology another packaging option as customers look for solutions to meet rising AI hardware requirements.
The growth opportunity is supported by ASX's broader LEAP business. First-half 2026 consolidated revenues increased 24% year over year, while ATM revenues grew 35%. Management expects full-year ATM revenues to increase 35%, with LEAP service revenues tracking ahead of its earlier $3.5-billion target. ASE Technology also aims to double LEAP revenues in 2027 as it adds facilities and equipment. If ASX can bring the new capacity online as planned, CoWoS, panel packaging and LEAP could provide multiple growth drivers as AI infrastructure demand continues to expand.
The Zacks Consensus Estimate for 2026 and 2027 indicates year-over-year revenue growth of 27.9% and 22.5%, respectively.
Here’s How Competitors Fare Against ASE Technology
ASX faces stiff competition from the likes of Amkor Technology AMKR and Intel INTC in advanced semiconductor packaging.
Amkor Technology is expanding its advanced packaging business as demand from AI and high-performance computing remains strong. In the second quarter, Amkor reported record revenues of $1.9 billion, rising 26% year over year. Management said that growth was supported by advanced packaging and demand across its end markets. Amkor is also expanding its strategic relationships with TSMC and NVIDIA to support advanced packaging and AI infrastructure.
Intel is investing heavily in advanced packaging as AI demand increases the need for more computing capacity. Intel said that customer interest in its EMIB-T packaging technology remains high, with a growing backlog and plans to ramp the technology into high-volume production in 2027. The company also raised its 2026 capital expenditure outlook to more than $20 billion and expects 2027 spending to be significantly higher, with the majority of the investment going toward its U.S. network.
ASX's Price Performance, Valuation & Estimates
Shares of ASE Technology have surged 181.4% year to date compared with the Zacks Electronics - Semiconductors industry’s return of 31.5%.
ASE Technology’s YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ASX trades at a forward price-to-earnings ratio of 24.45X, higher than the industry’s average of 13.61X. ASE Technology has a Value Score of D.
ASX’s 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 surges of 115.8% and 61.8%, respectively. EPS estimates for 2026 and 2027 have been revised up by 2 cents and 6 cents, respectively, over the past 30 days.
Image Source: Zacks Investment Research
ASE Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).