ASE Technology Holding might raise capital spending despite setting a record budget for 2026, as it plans to build more than a dozen sites to meet an expected increase in artificial-intelligence-driven demand.
The Taiwanese company plans roughly 15 new sites, part of its supply chain expansion designed to address the industry's long-term capacity requirements looking toward 2029 and 2030, rather than reacting to short-term market cyclicality, said Tien Wu, chief operating officer of the world's largest provider of chip-packaging and testing services, at the annual shareholder's meeting on Wednesday.
The experience since the Covid-19 pandemic has shown how quickly new capacity can be absorbed, he said, and the rapid acceleration of AI has only strengthened the need to stay ahead.
The push could ultimately require ASE to spend more than its already announced $8.5 billion capital outlay this year, Wu said.
ASE raised its planned 2026 capex by $1.5 billion in April to $8.5 billion, as the company has seen stronger-than-expected demand, particularly for leading-edge advanced packaging services.
The company sits at a critical chokepoint in the AI hardware supply chain, providing the advanced packaging technologies needed for high-performance chips.
Wu emphasized that ASE's technology remains competitive, with the company preparing to introduce what is expected to be the world's first fully automated, economically viable FO-PLP production line, a panel-level packaging technology that allows more chips to be processed at once. Mass production is slated to begin before the end of the year.
Washington has been pushing to reduce reliance on Taiwan-based packaging giants like ASE. As part of that effort, TSMC recently struck a deal to work with U.S. packaging heavyweight Amkor on advanced chip packaging in Arizona. However, companies such as Nvidia still ship U.S.-made chips to Taiwan for packaging, underscoring the shortfall. The Trump administration has said it wants the full chip-making process, including advanced packaging, brought onto U.S. soil.
Asked whether ASE would participate in similar U.S. initiatives, Wu said the company "won't sit out," but added that ultimately competitiveness is what matters most.
ASE is also deepening its overseas footprint as customers diversify supply chains, with Penang in Malaysia positioned to become a major hub for physical AI and next-generation electronics. The company is evaluating additional U.S. investments as well, including potential new facilities in regions like California and Arizona.
The company's annual spending used to hover around $2 billion before surging to more than $5 billion last year, and is set to hit $8.5 billion this year. Nonetheless, Wu said ASE might still need to boost its investments as AI demand spreads beyond data centers to physical AI.
"Taiwan's upstream and downstream industries are all expanding aggressively, and everyone is taking a long-term view," he said.
Write to Yang Jie at yang.jie@wsj.com and Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
June 24, 2026 06:18 ET (10:18 GMT)
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