ASE Technology Holding (ASX) Q1 2023 Earnings Call Transcript

For the period ending March 31, 2023

April 27, 2023 3:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ken Hsiang

Hello. I am Ken Hsiang, the Head of Investor Relations for ASE Technology Holdings. Welcome to our First Quarter 2023 Earnings Release. Thank you for attending our conference call 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 disconnect 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 the purposes of this presentation, our dollar figures are generally stated in new Taiwan dollars, unless otherwise indicated. As a Taiwan-based company, our financials are 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 subsidiary using Chinese GAAP.

I am joined today by Joseph Tung, our CFO. For today's call, I will be going over our financial results and outlook. Joseph will then be available to take your questions during the Q&A session to follow.

During our year-end 2022 earnings release, we reported that the company and the overall semiconductor industry was entering a period of inventory digestion. We touched upon the impending soft environment and noted prognosticating outlooks can be incredibly difficult, especially when trying to spot the end of an inventory correction. Our business during the first quarter ran expectedly soft, given that we expected many customers were going to be drawing down product inventories.

For the large part, our customers generally met their near-term plans. However, towards the end of the first quarter, when many customers reviewed their channel inventory relative to their expectations. They realized their inventory depletion was happening slower than anticipated. Apparently, end markets had not performed as they expected, whether it be poor Lunar New Year sell-through or a missing corporate IT refresh, sluggishness and excess inventory persisted.

For our ATM factories, during the quarter, key equipment utilization rates were hovering slightly above 60%. And given these levels are near-term record lows, our factories focused on how to lower ongoing expenses. Working hours and bonuses were trimmed, raw materials pricing was scrubbed with our vendors, projects were reviewed and reprioritized, all in the name of costing down. However, the soft loading environment did allow us to continue automating factory lines, scaling up new product introductions and completing R&D projects.