Fitch Scores has revised the Outlook on the Lengthy-Time period Overseas-Forex Issuer Default Scores (IDRs) and Nationwide Lengthy-Time period Scores of Taiwan-based outsourced meeting and check (OSAT) firm ASE Know-how Holding Co., Ltd. (ASEH) and its wholly owned subsidiary, Superior Semiconductor Engineering, Inc. (ASE), to Secure from Optimistic. We now have affirmed their IDRs at ‘BBB’ and Nationwide Lengthy-Time period Score at ‘A+(twn)’. The company has additionally downgraded their Quick-Time period IDRs to ‘F3’ from ‘F2’ whereas their Nationwide Quick-Time period Scores have been affirmed at ‘F1(twn)’. A full checklist of score actions is on the finish of this commentary.
The Outlook revision and Quick-Time period IDR downgrade mirror our view that ASEH’s EBITDA gross leverage is prone to stay above 2.0x over the subsequent two to 3 years, towards our improve threshold of under 2.0x. That is pushed by elevated upfront, debt-funded development capex to increase its modern packaging and superior testing functionality and capability. The Quick-Time period IDR of ‘F3’ is the “baseline” possibility for short-term rankings, indicating that greater capex lowers the monetary flexibility mid-point rating. Nonetheless, we anticipate stable income development and structural margin enchancment to raise EBITDA, supporting a gradual enchancment in gross leverage over time.
We anticipate ASEH’s enterprise profile to strengthen additional because it beneficial properties market share in modern superior packaging (LEAP). The corporate is nicely positioned to profit from sturdy AI demand and continued share beneficial properties in chip testing companies. That is underpinned by its market-leading place, technological and operational excellence, proximity to its key foundry accomplice, and diversified manufacturing footprint.
Key Score Drivers
Clear Management: ASEH’s enterprise profile is underpinned by its management within the international OSAT business, anchored by technological strengths, scale and a rising mixture of superior packaging and testing. ASEH’s 2024 meeting, testing and materials (ATM) income was 72% greater than that of Amkor Know-how, Inc. (BB+/Optimistic), the world’s second-largest OSAT. ASEH’s profitability can be greater, with ATM working revenue in 9M25 exceeding the whole of the subsequent 4 OSAT opponents.
Sturdy Demand from Foundry Companion: We anticipate outsourcing demand from its foundry accomplice for substrate-level meeting in chip-on-wafer-on-substrate (CoWoS) packaging to be the first development driver of ASEH’s LEAP income within the subsequent few years. We anticipate its foundry accomplice to strategically prioritise its scarce CoWoS capability for AI accelerator chips and proceed to steer overflow or non-urgent tasks to OSATs, together with ASEH and Amkor. ASEH is well-positioned to seize a major share, mirrored in its 9M25 outcomes.
Full-Process Enterprise Alternatives: We anticipate ASEH’s full-process LEAP options to start ramping up from late 2026 earlier than a extra significant improve in 2027. Tight CoWoS capability means clients are looking for alternate options to satisfy demand, creating a possibility for ASEH to commercialise its choices, together with fan out chip-on-substrate (FOCoS) for heterogeneous integration. ASEH expects its FOCoS full-process enterprise to attract curiosity from AI and non-AI purposes and is partaking clients to plan for the capability.
Take a look at Share Positive aspects: We anticipate ASEH to achieve check market share over the subsequent few years, as AI accelerators, excessive bandwidth reminiscence (HBM)-enabled gadgets and better turnkey adoption improve demand for wafer probe and last testing companies. We anticipate outsourcing from its foundry accomplice for wafer probe testing to stay the first driver for ASEH’s superior testing income. ASEH can be increasing package-level capability for last testing and anticipates a extra significant income ramp-up from late 2026 into 2027 as next-generation AI chips’ manufacturing quantity rises.
Restoration in Traditional Enterprise: We anticipate a average restoration in ASEH’s conventional ATM enterprise on non-AI chip demand in 2026. ASEH is nicely positioned amid the supply-chain bifurcation between China and the remainder of the world given its broad manufacturing footprint and inclusion on the US’s Bureau of Trade and Safety accredited lists. We forecast muted development in digital manufacturing companies (EMS), which made up 43% of income in 2024 however solely 14% of EBITDA, limiting its profitability affect, as ATM will drive EBITDA enchancment.
Structural Margin Enchancment: A bigger share from higher-margin LEAP and testing ought to raise margins structurally. We anticipate LEAP to rise to 14% of ATM income in 2025, 20% in 2026 and 27% in 2027, from 6% in 2024. Testing ought to make up 19% of ATM income in 2025 and develop quicker than whole ATM within the coming years. This, mixed with a modest restoration within the conventional enterprise, will assist ASEH obtain its ATM gross margin goal of 24%-30% from 2026.
Increased Progress Capex: ASEH is accelerating capex to make the most of development in modern packaging and testing. We estimate whole capex of about USD5.5 billion in 2025, with roughly 60% allotted to equipment and tools, and anticipate spending to stay elevated by way of 2026 at round USD5.5 billion. Capex is prone to keep excessive in 2027 and doubtlessly into 2028, relying on the trajectory of AI-related demand. Nearly all of capex targets LEAP and testing capability, aligned with buyer and foundry accomplice necessities.
Reasonable Leverage: Modern investments and front-end ramping up of capability will preserve leverage above 2x within the subsequent few years. We anticipate EBITDA gross leverage to rise to 2.2x in 2025 (2024: 1.9x). Nonetheless, strong LEAP income development and structural margin enchancment ought to raise EBITDA and drive gradual deleveraging, aided by buyer prepayments that partially fund capex. We forecast EBITDA gross leverage declining to round 2.0x by 2028.
Equalised Scores: We equalise ASE’s rankings with these of ASEH beneath the “stronger mum or dad, weaker subsidiary” path of our Mother or father and Subsidiary Linkage Score Standards. Authorized incentives for ASEH to help ASE are ‘Low’, as there aren’t any debt ensures and we imagine the credit score safety provided by cross-default clauses is proscribed. Nonetheless, we assess strategic and operational incentives as ‘Excessive’, as ASE’s enterprise is core to ASEH group’s operations, contributing a good portion of group’s ATM income and EBITDA in 2024. There’s additionally sturdy administration and model overlap.
Peer Evaluation
ASEH’s credit score profile is considerably stronger than that of Amkor in mild of its market management, technological benefits within the OSAT business and diversification into the EMS enterprise. Amkor’s whole income and EBITDA are about 72% and 166%, respectively, of ASEH’s ATM section. We forecast ASEH’s gross leverage to be greater than that of Amkor, primarily as a result of ASEH’s greater development capex.
SK hynix Inc.’s (BBB/Optimistic) credit score threat profile is much like that of ASEH. ASEH is the biggest OSAT whereas SK hynix is at the moment the world’s largest dynamic random entry reminiscence chip maker, supported by its HBM management. The reminiscence market is very cyclical with greater capex depth. SK hynix has better income and EBITDA scale than ASEH. We additionally anticipate SK hynix to take care of decrease monetary leverage than ASEH within the subsequent few years.
ASEH’s enterprise profile is much like that of United Microelectronics Company (UMC, BBB+/AA-(twn)/Secure). Nonetheless, UMC has a stronger monetary profile than ‘BBB’ class friends, with a structurally greater EBITDA margin of above 40% even throughout downcycles and a conservative capital construction. We anticipate UMC to take care of a decrease gross leverage of under 1x and stronger pre-dividend free money movement technology within the subsequent few years.
ASML Holding N.V.’s (A+/Secure) credit score profile is stronger than that of ASEH, as ASML has a major market share in its lithography tools area of interest and a bigger share of wafer fabrication tools income whereas sustaining a extra conservative monetary profile.
Fitch’s Key Score-Case Assumptions
Fitch’s Key Assumptions Throughout the Score Case for the Issuer:
– Income CAGR of 8% in 2025-2028 (2024: 2%);
– Working EBITDA margin of 18%-22% (2024: 17%);
– Capex/gross sales ratio of 12%-27% (2024: 14%);
– Dividend payout of round 65% of earlier yr’s web revenue, excluding non-operating objects;
– No main debt-funded M&A.
RATING SENSITIVITIES
ASEH
Components that would, individually or collectively, result in damaging score motion/downgrade:
– Sustained decline in EBITDA or working money movement;
– EBITDA gross leverage above 2.5x for a sustained interval.
Components that would, individually or collectively, result in optimistic score motion/improve:
– Stronger market place, together with bigger market share or better diversification;
– EBITDA leverage improves to under 2.0x for a sustained interval.
ASE
Components that would, individually or collectively, result in damaging score motion/downgrade:
– Destructive score motion on ASEH.
Components that would, individually or collectively, result in optimistic score motion/improve:
– Optimistic score motion on ASEH.
Liquidity and Debt Construction
We anticipate ASEH to take care of satisfactory liquidity over the medium time period. The corporate had about TWD75 billion in available money at end-September 2025, in contrast with short-term debt of TWD50 billion. The corporate has stable entry to native banks and the home bond market, serving to it to boost financial institution loans and concern bonds. Whole unused credit score traces (uncommitted) amounted to TWD345 million at end-September 2025.
Issuer Profile
ASEH operates its OSAT enterprise by way of ASE and Siliconware Precision Industries Co., Ltd., and its EMS enterprise by way of its 76%-owned subsidiary, China-based Common Scientific Industrial (Shanghai) Co., Ltd. ASEH is the world’s largest OSAT firm by income.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of data used within the evaluation are described within the Relevant Standards. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click on right here to entry Fitch’s newest quarterly International Corporates Sector Forecasts Monitor knowledge file which aggregates key knowledge factors utilized in our credit score evaluation. Fitch’s macroeconomic forecasts, commodity value assumptions, default fee forecasts, sector key efficiency indicators and sector-level forecasts are among the many knowledge objects included. ESG Concerns
The very best stage of ESG credit score relevance is a rating of ‘3’, until in any other case disclosed on this part. A rating of ‘3’ means ESG points are credit-neutral or have solely a minimal credit score affect on the entity, both as a result of their nature or the best way through which they’re being managed by the entity. Fitch’s ESG Relevance Scores aren’t inputs within the score course of; they’re an statement on the relevance and materiality of ESG elements within the score resolution. For extra info on Fitch’s ESG Relevance Scores, go to https://www.fitchratings.com/matters/esg/merchandise#esg-relevance-scores.
ASE Know-how Holding Co., Ltd.; Lengthy Time period Issuer Default Score; Affirmed; BBB; Score Outlook Secure
; Quick Time period Issuer Default Score; Downgrade; F3
; Nationwide Lengthy Time period Score; Affirmed; A+(twn); Score Outlook Secure
; Nationwide Quick Time period Score; Affirmed; F1(twn)
Superior Semiconductor Engineering, Inc.; Lengthy Time period Issuer Default Score; Affirmed; BBB; Score Outlook Secure
; Quick Time period Issuer Default Score; Downgrade; F3
; Nationwide Lengthy Time period Score; Affirmed; A+(twn); Score Outlook Secure
; Nationwide Quick Time period Score; Affirmed; F1(twn)
—-senior unsecured; Lengthy Time period Score; Affirmed; BBB
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kelvin.ho@fitchratings.com
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steve.durose@fitchratings.com
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Further info is on the market on www.fitchratings.com
Relevant Mannequin
Numbers in parentheses accompanying relevant mannequin(s) include hyperlinks to standards offering description of mannequin(s).
Company Monitoring & Forecasting Mannequin (COMFORT Mannequin), v8.2.0 (1,2)
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