ASE Technology Holding Co., Ltd. (ASX)
Chart Events
Performance Outlook
| Previous Close | 7.66 |
| Open | 7.57 |
| Bid | 7.52 x 3200 |
| Ask | 7.53 x 3000 |
| Day's Range | 7.50 - 7.60 |
| 52 Week Range | 3.17 - 7.75 |
| Volume | 1,528,387 |
| Avg. Volume | 1,365,753 |
| Market Cap | 16.053B |
| Beta (5Y Monthly) | 1.29 |
| PE Ratio (TTM) | 24.26 |
| EPS (TTM) | N/A |
| Earnings Date | N/A |
| Forward Dividend & Yield | 0.14 (1.81%) |
| Ex-Dividend Date | Aug 13, 2020 |
| 1y Target Est | N/A |
Fair Value
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- Bloomberg
A Year of Poor Planning Led to Carmakers’ Massive Chip Shortage
(Bloomberg) -- Near-sighted planning, supply-chain complexities and a tradition of keeping inventories low caused the semiconductor shortage that is now forcing carmakers to idle production lines and straining their relationship with chip manufacturers.Seeds of the imbroglio were sown almost a year ago as the virus outbreak led to plunging car demand, prompting auto-chip companies to slash orders. But when they wanted to increase supply toward the end of 2020, they struggled to secure capacity at Taiwan Semiconductor Manufacturing Co. and other contract chipmakers that were busy servicing a boom in demand for gadgets that help housebound consumers stay connected, according to people familiar with the situation.While publicly assuring the problem is solvable, in private the parties are pointing fingers. Chipmakers say car companies’ preference for low inventories hurt their planning, while auto and part manufacturers say the supply chain is thrown into disarray as semiconductor makers drag their feet. Automakers also contend chipmakers are prioritizing consumer electronics because those devices provide the bulk of their sales and profits. Chipmakers deny they are playing favorites. The quagmire reveals the risks for automakers from Ford Motor Co. to Volkswagen AG as vehicles become smarter and technologically more complex. Carmakers with more software and chip expertise are set to face a smoother ride, while those whose traditional strength is metal-bending are potentially more prone to supply hiccups.“Even if the OEMs say they didn’t over-correct, they may not have been thinking far enough ahead,” said Tor Hough, founder of Elm Analytics, a supply-chain research firm based in the Detroit area, referring to automakers, or original equipment manufacturers in industry parlance. “They’re also very wedded to ‘lean manufacturing’ -- so keeping low inventory to be more cost efficient.”Autos vs. SmartphonesCarmakers don’t deal directly with TSMC and other contract chipmakers. Instead, they work with auto-part suppliers like Robert Bosch GmbH and Continental AG, which in turn deal with automotive-chip designers including NXP Semiconductors NV and Infineon Technologies AG.While those two European chipmakers both make some parts in-house, they outsource a significant portion of production to TSMC and other foundries. It’s difficult for automotive-chip designers to get their orders prioritized by foundries because their volume is dwarfed by their consumer-electronics peers.Because of carmakers’ “just-in-time” manufacturing model, their suppliers worried about quick inventory buildups and canceled orders originally planned for foundries in the first half of 2020, the people said. At the same time, foundries began seeing a surge in demand for gadget chips after Apple Inc., Samsung Electronics Co. and Chinese brands prepped an avalanche of 5G devices including the iPhone 12, which require as much as 40% more silicon content as 4G handsets.One contract chipmaker notified all its customers in the third quarter that it might be time for them to place more orders as it anticipated a rebound in demand, but automotive clients demurred and ended up being the last ones to seek more capacity, one of the people said.Appeal to GovernmentsTSMC’s automotive customers continued to decrease demand in the third quarter, and the chipmaker only began to see sudden recovery in automotive orders in the fourth quarter, Chief Executive Officer C.C. Wei said in an earnings call earlier this month. By contrast, makers of consumer electronics and other hardware quickly built up chip inventories above the usual seasonal level, and are continuing to do so as they fret about potential future supply disruptions.The shortage has been exacerbated by a lack of capacity at assemblers including ASE Technology Holding Co., a person familiar with the matter said. Chip assemblers like ASE represent the critical final stage in finishing and preparing a chip for use, but the company’s production expansion has been hindered by an equipment supplier’s tardiness in delivering new gear, the person said. A further squeeze to the global supply was caused by the Trump administration blacklisting China’s Semiconductor Manufacturing International Corp. in December.Once European and U.S. carmakers realized they had a problem, they appealed to officials in Taiwan, home to TSMC and other leading foundries including United Microelectronics Corp., for assistance in stabilizing their chip supply.The American Automotive Policy Council, which represents major U.S. car companies, sought out the Taiwanese government for help, according to people familiar with the matter. In addition, General Motors Co. spoke to Taiwanese officials, and got them to help relay its request to TSMC, Bloomberg News has reported. The European Union has approached Taipei about the same issue, and Volkswagen has separately reached out as well, according to a person familiar with the matter.“We have requested that the U.S. government help us find a solution to the problem because it will diminish our production and have a negative impact on the U.S. economy until it’s resolved,” Matt Blunt, president of the American Automotive Policy Council, said in an interview.Scaling Back OutputBecause chip production requires a lead time of about three months, the impact will last throughout the first half and could bleed into the third quarter, Blunt said. His organization is working with the Biden administration on the issue, he said.Ford, Toyota Motor Corp., Nissan Motor Co., VW and Fiat Chrysler Automobiles NV -- now a part of Stellantis NV -- are among global carmakers that have scaled back output due to a lack of chips required for a wide range of components, from brakes to windshield wipers.With vehicles adding entertainment and autonomous-driving features, the amount of chips required is increasing and the supply chain becoming more complex. A car from a premium brand can require more than 3,000 chips, and even if just one is missing, the vehicle won’t get completed.“There are more chips, more varieties of chips. It’s not one batch of chips that went bad and they’re struggling with recovering that one chip,” said Hough at Elm Analytics. “The ecosystem upstream of the OEMs stopped purchasing the chips they used in production as the manufacturing went down.”Another bottleneck lies with smaller automotive-chip designers which supply critical chips to the whole industry and depend entirely on foundries. They often lack bargaining power to secure timely production because of their modest sizes.While automotive supply-chain managers are adept at containing short-term crises like the explosion in the northern Chinese port of Tianjin in 2015, they tend to be slower in making bigger changes that would help them deal with potential long-term disruptions, Elm Analytics’ Hough said.Foundry Spending SurgeBosch, the German car-parts maker, said its chips supply has been significantly diminished because a chipmaker’s expansion and production increases were delayed by the pandemic. In an emailed statement, Bosch said it is in daily contact with suppliers and customers to mitigate the impact.The shortage may start to ease as TSMC boosts its spending to a staggering $28 billion for 2021, with the foundry pledging this month that automotive chips will be a priority. The company has begun to offer more capacity in recent days to at least one automotive chip designer, although the volume still isn’t enough to satisfy demand, according to a person with direct knowledge of the matter.The situation isn’t as devastating as last spring’s car-plant shutdown that spanned the globe, said Sig Huber, a consultant at Conway MacKenzie and a former head of purchasing at Fiat Chrysler.“This will be more sporadic, a plant here or a plant there, for a shorter period of time, as opposed to a full industry shutdown,” Huber said. “This will not have anywhere near the impact of the production losses we saw last year.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
- Bloomberg
Missing Chips Snarl Car Production at Factories Worldwide
(Bloomberg) -- More than a year after its outbreak, the coronavirus keeps finding new ways to hit carmakers.After first wiping out auto demand, the virus is now hindering parts supply: chips used in vehicles are harder to come by because semiconductor manufacturers allocated more capacity to meet soaring demand from consumer-electronics makers such as Apple Inc.The shortage risks dragging on, with lockdowns and travel restrictions prompting housebound consumers to snap up more phones, game consoles, smart TVs and laptops to get online. Lower down in importance to chipmakers, auto manufacturers from Toyota Motor Corp. to Volkswagen AG risk not getting enough goods to fuel a fledgling recovery in their own industry.“Customers can’t build because they can’t get parts,” Glen De Vos, chief technology officer of car-component supplier Aptiv Plc, said in an interview. “We’ve avoided a situation where we’re shutting down customers, but we’ve been impacted.”Semiconductor shortages may persist throughout the first half as chipmakers adjust their operations, researcher IHS Market predicted on Dec. 23. Automakers will start to see component supply gradually ease in the next two to three months, China Passenger Car Association, which groups the country’s largest carmakers, said Monday.Chipmakers favor consumer-electronics customers because their orders are larger than those of automakers -- the annual smartphone market alone is more than 1 billion devices, compared with fewer than 100 million cars. Automaking is also a lower-margin business, leaving manufacturers unwilling to bid up chip prices as they avoid risking their profitability.And while the newest cars require more chips, so do the latest consumer gadgets. Smartphones using so-called 5G connectivity require 40% more semiconductors than older 4G versions. Chip foundry Taiwan Semiconductor Manufacturing Co. reported record fourth-quarter revenue last week, with new 5G iPhones taking up a large chunk of capacity.The auto-chip shortage stems from overly conservative demand estimates made early last year as car plants closed to cope with the onset of the pandemic, De Vos said. Once the plants re-opened, vehicle sales rebounded more strongly than anticipated after governments unleashed stimulus packages and commuters avoided public transport.At the same time, foundries such as TSMC, United Microelectronics Corp. and Globalfoundries Inc. as well as chip assemblers like ASE Technology Holding Co. weren’t expanding fast enough to meet the pandemic-induced spike in demand for consumer gadgets. Those bottlenecks snarled the flow of chips not just to cars, but also in Xboxes and Playstations and even certain iPhones. The foundries are responsible for making a significant portion of the world’s semiconductors and serve automotive-chip companies such as NXP Semiconductors NV, Infineon Technologies AG and Renesas Electronics Corp.The Trump administration’s move to blacklist China’s Semiconductor Manufacturing International Corp. in December drove customers to seek alternatives and further constrained the global chip supply. Some semiconductor buyers have also been building up inventories to hedge against future shortages or disruptions.“It’ll take some time,” De Vos said, “but we’re climbing out of it.”Auto-chip companies cut orders with Taiwanese foundries significantly in the first half of 2020 and when they wanted the capacity back in the second half, the contract chipmakers had allocated it to others, a person familiar with the matter said.General Motors Co. has asked for the Taiwanese government’s help to secure chip supply, and Taiwanese officials have helped to relay the request to foundries including TSMC, according to the person. The European Union has also approached Taiwanese officials about the same issue, the person said.There’s no guarantee such requests will yield results -- smartphone and gadget customers contribute more to foundries’ revenue and profit and are willing to shell out more.“Consumer-electronics companies are ready to pay more for chips to ensure their gadgets will get to market on time,” said Jeff Pu, an analyst at GF Securities. “Carmakers are less inclined to do so.”Meanwhile, it’s not simple to boost semiconductor supply. Chipmakers need to spend years and billions of dollars to build fabrication plants capable of cranking out silicon for a wide range of products. They tend to err on the side of conservative planning because of the risks involved -- and the enormous potential losses.At least one major automotive chip supplier is having a significant volume of its orders turned away by TSMC because of lack of capacity, according to a person familiar with the matter. There are no signs of the situation getting easier for carmakers, the person said. A TSMC spokeswoman declined to comment, saying the company will discuss automotive chips at its investor conference on Thursday.Such setbacks have left some carmakers with no option but to cut production.Toyota said Tuesday it’s partially halting production in China while Honda Motor Co. is reducing output at five factories across North America as it becomes harder to procure chips.Toyota, the world’s No. 2 automaker, said the impacted lines were at its factory in Guangzhou, in China’s south. The suspension could result in a cut in January’s output of as much as 30% depending on how long it drags on, the Nikkei reported earlier Tuesday, without attribution. Toyota jointly operates the site with Guangzhou Automobile Group Co. Toyota is additionally lowering output of a pickup made in Texas.Honda, which had to scale back output at its U.K. plant last week, said it will reduce manufacturing of the Accord, Civic and Insight sedans, as well as the Odyssey minivan and Acura RDX, a crossover sports-utility vehicle. The Japanese automaker is also reducing output by about 4,000 cars at a domestic factory, while Nissan Motor Co. is adjusting production of its Note hatchback.VW said last month it would have to change manufacturing plans. Fiat Chrysler Automobiles NV is temporarily closing a Canadian plant and delaying the restart of output at a Mexican Jeep factory until the end of January.“The global semiconductor shortage is presenting challenges and production disruptions,” Ford Motor Co. said in an emailed statement. The carmaker is working to prioritize key vehicle lines, “making the most of our semiconductor allocation.” In North America, Ford is idling a SUV factory in KentuckyCarmakers’ predicament is exacerbated by the fact that chips are crucial for the latest features they are touting, be it assisted driving, large displays or connectivity. Semiconductor-based components are set to account for more than 50% of a car’s manufacturing cost by 2030, up from about 35% now, according to a report by China EV 100 and Roland Berger.“Chips are getting more important for the upcoming software-defined cars,” said Shi Ji, an analyst at Haitong International Securities Co. in Hong Kong. “They are essential to all cars, not just electric ones.”(Updates with detail on Toyota, Honda cuts in 19th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
- Bloomberg
Japan Chip Sector Boosted by Report TSMC to Build Tokyo Facility
(Bloomberg) -- Stocks involved in Japan’s semiconductor supply chain jumped in Tokyo on Tuesday following a report that chip giant Taiwan Semiconductor Manufacturing Co. will build an advanced packaging facility in the city together with Japan’s Trade Ministry.The two sides will soon sign a memorandum of understanding and form a 50-50 joint venture for the project, Taiwan’s United Daily News reported, without saying how large investment for the plant might be.“This would be a positive surprise for Japan’s semiconductor sector, including device firms and parts suppliers, due to the large investment,” said Kazuyoshi Saito, a senior analyst for Iwai Cosmo Securities. “While the scale is still unclear, we can expect there to be a certain amount of orders, which could accelerate the potential recovery of Japan’s chip industry.”Packaging materials firm Shinko Electric Industries Co. rose 6.5%, the biggest gain since April, while Lasertec Corp., which gets 42% of its revenue from TSMC, climbed 4% to another record. Tokyo Electron Ltd. also reached a new high while Nikon Corp., whose precision equipment business now brings in a larger share of revenue than its more familiar camera operations, added 4.6%.TSMC spokeswoman Nina Kao declined to comment, citing the company’s quiet period before its earnings announcement.Japan has been boosting spending in semiconductor manufacturing and cutting-edge technology as it eyes the national security implications amid U.S.-China confrontation over the technologies -- an area the country lacks in expertise despite being a world leader in chip-making equipment and materials.The Ministry of Economy, Trade and Industry allocated 110 billion yen ($1.1 billion) in the fiscal 2019 budget and an additional 90 billion yen to a forthcoming extra budget to manufacture advanced chips domestically.While traders jumped on the TSMC report on speculation the deal will help advance Japan’s competitiveness in the field, its impact may be limited. A chip assembly plant, while an important stage in the semiconductor production process usually requires much less investments than a chip fabrication facility: the world’s largest chip testing and packaging service provider ASE Technology Holding spent slightly less than $1.6 billion in capital expenditure in 2019, while TSMC spent about 9 times that amount.Seiichi Miyashita, an assistant manager at the IT industry division of Japan’s Ministry of Economy, Trade and Industry, said no decision had been made, but that the ministry was conscious of the need for Japan to acquire the ability to manufacture advanced chips domestically.The Yomiuri newspaper reported in July last year that Japan had offered several billions of dollars in support to TSMC to tempt it to build plants in the country. At least one Japanese delegation traveled to Taiwan hoping of convincing the chipmaker to invest, a person with knowledge of the visit told Bloomberg News last year.That followed TSMC’s decision to build a $12 billion chip plant in Arizona which will employ its 5-nanometer technology, though even that will likely be several generations old by the time output begins.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
