ASE to Raise Advanced Packaging Prices by Up to 20% by 2026 Amid Soaring AI Demand

AXTEK Technology Company Limited Taiwan

Overview

ASE Technology Holding, the world’s largest OSAT provider, plans to increase its backend wafer packaging prices by 5-20% in 2026, driven by a surge in AI-powered semiconductor demand. With advanced packaging capacity utilization projected to reach approximately 90% by 2025 and limited room for expansion in existing facilities, ASE holds strong leverage in upcoming price negotiations. Its LEAP advanced packaging platform is forecast to generate over $3.5 billion in revenue by 2026, as the company prioritizes high-margin AI clients and accelerates the deployment of its proprietary FoCoS (Fan-Out Chip on Substrate) technology.

In Depth

Background

The evolution of artificial intelligence is profoundly impacting the entire semiconductor supply chain, from front-end wafer fabrication to back-end packaging and testing. AI chips, in particular, necessitate the integration of multiple logic dies and High Bandwidth Memory (HBM) into a single package, making advanced technologies like TSMC’s CoWoS critically important. However, advanced packaging capacities, including CoWoS, are facing chronic shortages, creating a significant bottleneck for the broader AI chip market. ASE’s impending price hike directly reflects this supply-demand imbalance, underscoring the substantially elevated strategic value of packaging within the semiconductor industry. The company’s strategy to prioritize high-margin AI-related customers further signals its intent to fully capitalize on the growth opportunities presented by the AI market.

Key Findings

ASE Technology Holding (ASE) has announced its intention to raise prices for its advanced packaging services by 5% to up to 20% in 2026, driven by an explosive surge in AI chip demand. This price adjustment reflects both the current market situation where supply cannot keep pace with demand, and the increasing technical complexity inherent in advanced packaging technologies.

Technical Details

As a leading company in the OSAT industry, ASE offers sophisticated packaging solutions including 2.5D and 3D packaging, chiplet integration, and High Bandwidth Memory (HBM) integration. Its “LEAP (Large-area advanced Packaging)” service platform is specifically designed for high-performance applications such as AI accelerators, High Performance Computing (HPC), and autonomous vehicles, encompassing a broad technological portfolio that includes flip-chip, fan-out, Wafer Level Package (WLP), and System-in-Package (SiP). Through its proprietary FoCoS (Fan-Out Chip on Substrate) technology, ASE achieves high-density interconnects and superior thermal management, meeting customers’ stringent performance demands. With utilization rates for advanced packaging already reaching approximately 90% by 2025, expanding new advanced packaging capacity is not straightforward, making supply constraints a primary driver of the price increases.

Outlook

ASE’s increase in advanced packaging prices is expected to significantly boost the company’s revenue and profit margins in 2026. The target of over $3.5 billion in revenue for its LEAP services further underscores that AI-related business is driving ASE’s growth. ASE is expanding its factory construction programs not only in Taiwan but also in other regions such as Vietnam, aiming to strengthen its global production capacity to meet long-term market demand. Through price adjustments and capacity expansion, ASE is poised to reinforce its position within the semiconductor value chain in the AI era and to drive further innovation in advanced packaging technologies. Ultimately, these efforts will contribute to enhanced performance and accelerated market deployment of AI chips, thereby supporting the sustainable growth of the entire semiconductor industry.