ASE Technology Holding Co., Ltd. (ASX) Income Statement

The sequential acceleration from 17.4% in 2026Q1 to 34.1% in 2026Q2 suggests a sharp inflection in demand, likely tied to AI-related advanced packaging. Revenue reached $191.1B, a record high in the provided data, indicating that the company is capturing a larger share of high-value packaging work. The sustainability of this growth depends on continued AI capex and the ability to convert new capacity into revenue, but the current trajectory appears robust.

The consistent quarterly gross margin expansion, from 15.5% in 2024Q2 to 21.0% in 2026Q2, indicates that ASE is benefiting from a richer product mix, likely driven by higher-value SiP and 2.5D/3D packaging. This outpaces peer Amkor's 14.0% gross margin, highlighting ASE's pricing power and operational efficiency. However, the absolute margin remains modest, and investors should monitor whether this expansion is sustainable as capacity additions come online.

The operating margin expanded from 6.9% in 2025Q2 to 11.1% in 2026Q2, a 420 basis point improvement, while revenue grew only 34%. This indicates that fixed costs are being absorbed more efficiently as volumes rise, and the company is not proportionally increasing SG&A or R&D. The SG&A-to-revenue ratio declined from 5.4% in 2025Q2 to 4.6% in 2026Q2, suggesting disciplined cost control. If utilization remains high, operating leverage could continue to drive margin expansion.

The steady decline in COGS ratio indicates improved cost management, likely from higher utilization and a shift to advanced packaging with better pricing. R&D and SG&A expenses have grown in absolute terms but remained relatively stable as a percentage of revenue, indicating that the company is not overspending on overhead. The focus on cost efficiency is evident, but the sustainability of this trend depends on maintaining high utilization rates and managing input costs like gold and copper.

Prior to 2026Q2, gross margins hovered in the 15-17% range, and operating margins were below 8%. The jump to 21.0% gross margin and 11.1% operating margin suggests that ASE's investments in advanced packaging are beginning to pay off, likely driven by AI-related demand. This inflection may signal a new phase of higher profitability, but it is critical to see if these margins can be sustained in subsequent quarters, especially as new capacity comes online and competition intensifies.