[News] ASE, Powertech, KYEC CapEx May Hit NT$370B This Year as AI Drives Record OSAT Investment

The AI chip race is intensifying across the board, with advanced packaging growing in significance and driving a surge in OSAT capital spending. According to Commercial Times, Taiwan-based OSAT players ASE, Powertech, and King Yuan Electronics (KYEC) are expected to see their combined capital expenditures reach NT$370 billion this year. The report adds that all three have raised their investment plans and are on track to set record-high capex for the third consecutive year.

ASE Lifts Capex and Outlook on Strong AI Packaging Demand

As the report indicates, ASE said its LEAP (Leading-Edge Assembly & Testing) business is performing better than expected this year, prompting it to raise its full-year revenue target to above $3.5 billion, representing a 118% year-on-year increase. The company added that demand for AI packaging and high-end testing continues to accelerate, and growth momentum in 2027 is expected to be even stronger than this year.

In response to strong demand, as Economic Daily News indicates, ASE has raised its capex for a second time this year, from $7 billion to $8.5 billion (over NT$260 billion), an increase of more than 20%. The focus is on expanding wafer testing capacity, with equipment to be installed from the fourth quarter and volume ramp expected in 2027.

On the technology front, according to Economic Daily News, ASE is targeting about $300 million in CoWoS revenue this year. For co-packaged optics (CPO), the company is working closely with foundry partners and end customers. Previously, TechNews reported that ASE CEO Tien Wu said CPO mass production is expected to begin this year.

Powertech Ramps Investment, Advances FOPLP and CPO Push

Driven by demand from AI and high-performance computing (HPC), another Taiwanese player, Powertech, is seeing strengthening demand across both memory and logic packaging and testing, with revenue and gross margin expected to rise sequentially each quarter this year. According to Commercial Times, to support capacity expansion, the company has raised its full-year capital expenditure from a previous cap of NT$40 billion to NT$50 billion, an increase of 25%.

In addition, Powertech continues to deepen its capabilities in fan-out panel-level packaging (FOPLP), TSV, and bumping processes, while actively expanding into silicon photonics and co-packaged optics (CPO). Commercial Times highlights that its FOPLP yield has reached 95%, with customer validation expected to begin in the second half of 2026 and mass production slated for the first half of 2027, positioning it as a new growth driver.

KYEC Lifts Capex, Expands AI Chip Testing Capacity

Meanwhile, King Yuan Electronics is focusing on AI chip testing demand. As noted by Commercial Times, its board has approved raising 2026 capital expenditures from the originally planned NT$39.372 billion to NT$50 billion, an increase of about 27% and a new record high. The expansion will focus on high-power burn-in and advanced packaging testing to meet rapidly growing demand for AI GPUs and ASICs. The company said capacity will expand by 30% to 50% this year to support key customers, while it continues to build out overseas capacity, including in Singapore.

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(Photo credit: ASE on LinkedIn)