Xinhua and ASE sign a two-year contract to ensure production capacity supply in the AI era

Lin Hongming, chairman of Xinhua, is confident of substantial operational growth in the next two years.

First time since the epidemic! In the past, during the epidemic, the demand for computer-related products surged. In order to grab production capacity, many IC design companies signed long-term contracts (LTA) with wafer factories and packaging and testing plants. Years later, AI has rapidly emerged, and semiconductors, memories and related important components have become seriously tight. The situation of signing long-term contracts to ensure production capacity has reappeared. IC design factory Xinhua (5274) Today the board of directors decided to sign a two-year purchase contract with ASE (3711), from January 1, 2027 to December 31, 2028. Xinhua said that in response to the company’s operational development needs, this move is to ensure a stable source of production capacity supply and will have positive benefits for the company’s future financial and business development.

In the first half of this year, Xinhua's revenue growth was lower than expected due to shortages in the upstream supply chain. Xinhua actively added new supply partners. Lin Hongming, chairman of Xinhua, recently stated that the scale of orders on hand for next year will be quite large, already higher than this year's full revenue. The growth momentum next year will be stronger, with order visibility reaching 2028. Due to the increase in the cost of upstream raw materials, product increases will be carried out in the fourth quarter. Communication with customers about price increases is currently going smoothly, and the increase is expected to reach double digits.

Xinhua's consolidated revenue soared to a new high in August, setting a new monthly record for 10 consecutive months. Xinhua's consolidated revenue in August was 1.626 billion yuan, a monthly increase of 6.69%, and an annual increase of 118.42%. The cumulative consolidated revenue in the first eight months of this year was 10.168 billion yuan, an annual increase of 74.49%.