Singapore – Semiconductor test-equipment maker AEM Holdings Ltd. is emerging as a prime beneficiary of the surge in artificial-intelligence infrastructure spending, Maybank Investment Bank said in a client note issued Tuesday.
Maybank analysts Kelvin Tan and Daphne Ng reiterated a “Buy” rating on the Mainboard-listed company and raised their 12-month price target to S$4.50 from S$4.00, arguing that AEM’s proprietary Test 2.0 platform is now qualified at a leading U.S. hyperscaler and could enter volume production in the second half of 2024. “AI servers require far more high-performance chips, and each chip needs to be tested more rigorously than a traditional CPU,” the note said.
The upbeat assessment sent AEM shares up as much as 4.3% in early trading before they pared gains to close 2.1% higher at S$3.96, outpacing the 0.5% rise in the Straits Times Index.
Global capital expenditure on AI-related hardware is expected to expand at a compounded annual rate of roughly 25% through 2026, according to data compiled by TrendForce. Maybank estimates that every US$1 billion invested in advanced data centres generates US$45-50 million of additional demand for chip-testing solutions, a niche where AEM competes against Advantest and Teradyne.
AEM booked revenue of S$746 million and net profit of S$75 million for the fiscal year ended December, beating its own guidance after a late-year pickup in orders from its top customer, widely believed to be Intel. For 2024, the company guided for revenue of “at least S$600 million,” a figure Maybank views as conservative because it excludes potential orders tied to new AI accelerators.
Company officials declined to comment on the brokerage report, citing a blackout period ahead of next month’s first-quarter results. However, a person familiar with AEM’s supply chain said the firm has begun shipping pilot units of its new Panther handler system, designed specifically for high-power AI chips. “If the evaluations go smoothly, you could see thousands of units shipped next year,” the source told Business Today Malaysia.
Analysts caution that the growth outlook hinges on the pace at which hyperscalers such as Amazon Web Services, Microsoft and Google roll out next-generation AI servers. Any delay in those projects could push back AEM’s revenue recognition. Currency fluctuations and intensifying competition from larger Japanese rivals also remain key risks.
Still, Maybank argues that AEM’s first-mover advantage in thermal-aware testing positions it well for a market “that is only in the early innings.” Should AI capital spending accelerate as projected, the brokerage believes AEM’s earnings could revisit the record levels seen at the height of the pandemic boom as early as 2025.