ASE × Analog Devices: selling Penang isn’t retreat — it’s paying an OSAT to hold your risk

Analog Devices is handing its Penang, Malaysia packaging site to ASE and signing a long-term supply deal. People will call it “asset-light.” It’s actually risk-light. Packaging is where schedules go to die, and OSAT giants live and breathe yield headaches that mixed-signal vendors shouldn’t be carrying alone.

What’s on the table

Site transfer: ASE acquires ADI’s Penang facility. Close targeted for 1H’26, subject to approvals.
Co-investment and LTA: Money and guaranteed lanes for the flows that matter (flip-chip BGA/QFN now, room to step up later). Translation: elasticity when the next demand spike hits.

Why packaging is the fight you can outsource

It’s not just CPUs and GPUs needing 2.5D tricks. ADI’s world—sensors, power, RF—keeps pushing tighter footprints and hotter parts with automotive reliability bins. You want breadth (substrates, underfills, test) and you need it at scale. Owning the die and renting the package is sane, as long as your LTA buys you allocation when everyone else is queuing at the same doors.

What decides if this is strategy or just cost cutting

Which flows move first? If it’s only mainstream QFN, you saved opex. If there’s a roadmap to higher-integration packages and thermal headroom, you bought options.
Allocation language in the LTA: When capacity is tight, paper promises don’t ship parts. Priority needs teeth.
PPAP and reliability timelines: Automotive quals slip easily. I want dates by package family, not a hand-wave.