Semiconductor Test, Equipment and AI Demand Driving Flows and Re rating

The semiconductor value chain runs from chip design and wafer fabrication through equipment, materials, testing and packaging to system manufacturing and final hardware. The Singapore Technology sector is positioned primarily in equipment, testing, and hardware segments.

Across the 49 stocks in the local Technology sector, around a dozen companies operate directly within the semiconductor production and testing chain. The majority are positioned in adjacent manufacturing, system integration, infrastructure, and software layers. These companies use semiconductors but do not participate in chip fabrication.

These twelve companies span the core execution layers of semiconductor production. This includes testing and validation with $AEM SGD(AWX.SI)$ , $Sunright(S71.SI)$ , $Avi-Tech Hldg(1R6.SI)$ and $Global Testing(AYN.SI)$ , backend packaging with $ASTI(575.SI)$ , fabrication equipment and precision components with $UMS(558.SI)$ , $Frencken(E28.SI)$ , $MFG Integration(M11.SI)$ and $Advanced(BLZ.SI)$ , and process consumables, materials and equipment support with $Micro-Mechanics(5DD.SI)$ , $Nanofilm(MZH.SI)$ and $Ellipsiz(BIX.SI)$ .

This group includes the three most traded stocks in the sector this year. AEM Holdings has been re-rated on AI driven demand for semiconductor test solutions. UMS Integration has been supported by stronger advanced packaging and semiconductor equipment demand. Frencken Group reflects expectations of a second half recovery and its exposure across wafer fabrication, assembly, and test.

A common thread across their 1Q26 business updates is AI driven semiconductor demand moving through the production chain. UMS Integration cited higher demand for deposition, etch, and advanced packaging tools. Frencken Group highlighted sustained activity across front end and back-end semiconductor equipment customers. AEM Holdings reported stronger demand for its test solutions.

Over the past month, Bloomberg shows a step up in consensus target prices. Consensus rose about 80% for AEM Holdings, about 70% for UMS Integration and about 30% for Frencken Group.

Separately, around five to six companies provide exposure to AI-driven hardware demand without participating in semiconductor production. This is led by $PC Partner(PCT.SI)$ and supported by system manufacturers and component suppliers such as $Venture(V03.SI)$ , $Valuetronics(BN2.SI)$ , $Aztech Gbl(8AZ.SI)$ and $InnoTek(M14.SI)$ .

Singapore Technology Sector: Segment Positioning and Institutional Flow Concentration

Net institutional flows across the 49 technology stocks in 2026 to 2 June totalled S$572.6 million. The allocation has been highly concentrated. The table below details the 20 stocks of the Sector that have booked the highest net institutional inflow for the 2026 year through to 2 June. 

The semiconductor production segment absorbed the bulk of the net buying by institutions. The hardware and systems segment also saw positive flows, while infrastructure was modest and software recorded net outflows. This reflects a rotation toward semiconductor execution and AI hardware exposure.

As a caveat, this classification and flow segmentation is based on disclosed business activities in recent annual reports. It represents a high-level view of positioning. Some companies may span multiple segments.

Semiconductor Value Chain (Core Execution)

This segment sits inside the semiconductor production chain. It covers wafer fabrication support, packaging, testing, and process support. For the Singapore Technology sector, year-to-date net institutional inflows were the strongest across segments. Inflows were led by AEM Holdings, followed by Frencken Group and UMS Integration, then Nanofilm Technologies International and Micro-Mechanics (Holdings). The remaining names, Avi-Tech Holdings, Sunright, Global Testing Corporation, ASTI Holdings, Advanced Systems Automation, MFG Integration Technology and Ellipsiz recorded smaller or mixed flows.

Hardware & Systems (AI Demand Layer)

This segment sits downstream of semiconductor production. It covers system manufacturing and final hardware where chips are integrated into end-products. Year-to-date net institutional inflows were positive and concentrated in selected names.

Inflows were led by Venture Corporation and PC Partner Group, followed by Valuetronics Holdings and Aztech Global, then InnoTek. CDW Holding, Miyoshi and Creative Technology recorded smaller flows.

Infrastructure, Industrial & Distribution (Enablement Layer)

This segment sits alongside the semiconductor production chain. It supports deployment, connectivity, automation, and distribution. Year-to-date net institutional flows were modest and mixed, and led by Addvalue Technologies and ISDN Holdings, followed by iWOW Technology, Powermatic Data Systems and Nera Telecommunications. Comba Telecom Systems, Global Invacom Group, Telechoice International, Karin Technology Holdings, Willas Array Electronics (Holdings), Multi Chem, Jadason Enterprises, CSE Global, Jason Marine Group and DISA recorded modest or negative flows.

Software, Platforms & Services (Digital Layer)

This segment sits outside the semiconductor hardware chain. It covers software, platforms and services that run on top of digital infrastructure. Year to date net institutional flows were negative.

Outflows are led by iFAST Corporation, followed by AvePoint and MetaOptics, then Toku, Azeus Systems Holdings and 17LIVE Group. Accrelist, IPS Securex Holdings and TOTM Technologies also recorded outflows, while Info Tech Systems, OIO Holdings, Y Ventures Group and Assurance Healthcare saw smaller or mixed flows.

Valuation Expansion Across Semiconductor Production and AI Demand

P/E re rating over the past year has been highly concentrated, with the largest expansion clustered in a small group of semiconductor production and production‑support names. AEM Holdings saw its P/E rise from 34x to 183x, UMS Integration from 20x to 56x, and Frencken Group from 13x to 34x. This also extends to other semiconductor linked names such as Nanofilm Technologies International, which rose from 5x to 71x, and Micro Mechanics (Holdings), which rose from 19x to 30x. These companies sit across testing, equipment, and production‑linked exposures, where valuation accretion has been strongest.

The average current P/E across the twelve semiconductor production names is approximately 50x, with a median of around 32x, reflecting a skew toward higher multiple outliers.

Separately, AI hardware demand names also saw significant multiple expansion, with InnoTek increasing from 14x to 85x, reflecting its positioning in the hardware integration and AI infrastructure supply chain.

A similar pattern is seen in P/B. AEM Holdings increased from 0.8x to 6.2x, UMS Integration from 2.0x to 5.4x, and Frencken Group from 1.1x to 2.8x. Nanofilm Technologies International rose from 0.9x to 1.9x, while Addvalue Technologies increased from 4.4x to 30.5x. Hardware linked names also saw positive uplift, with Venture Corporation rising from 1.1x to 1.9x, Valuetronics Holdings from 1.1x to 1.9x and Aztech Global from 0.5x to 1.0x.

P/S expansion is more dispersed according to LSEG Workspace, but the clearest increases remain concentrated in semiconductor linked and AI exposed names. AEM Holdings rose from 1x to 8x, UMS Integration from 3x to 9x, and Frencken Group from 1x to 6x. Addvalue Technologies also saw a sharp rise from 2x to 22x, while Nanofilm Technologies International increased from 2x to 3x. 

Overall, valuation expansion across P/E, P/B and P/S is most evident in semiconductor production and production‑support exposures, led by AEM Holdings, UMS Integration and Frencken Group, with additional support from hardware names linked to AI driven demand.

InnoTek: AI Hardware Positioning, Institutional Support and Value Accretion

InnoTek’s valuation expansion reflects its positioning in the AI hardware demand layer, supported by customer traction, product mix, and capacity build-out. The company has been entering the AI server supply chain, supplying precision components for server racks and related infrastructure.

This positioning is reinforced by capital raising activity. In April 2026, the company completed a S$16.0 million private placement at S$0.6506 per share, drawing participation from institutional investors including Amova Asset Management, Areca Capital, Asdew Acquisitions, Avanda Investment Management, Ginko AGT Global Growth Fund, ICH Synergrowth Fund, Lion Global Investors, TIH Investment Management, Tokio Marine Life Insurance Singapore, UOB Asset Management and Value Partners Hong Kong, alongside high net worth investors. Proceeds are directed toward AI server components, liquid cooling, and regional capacity expansion.

Management highlighted that the Group is becoming more prominent in the AI supply chain and is investing to capture this growth. This includes customer onboarding, with Ablecom identified as a key AI customer and the company approved as a recommended vendor to Nvidia and Inspur toward the end of FY25. Mass production of GPU server components commenced in 4QFY25, with AI server revenue rising to S$43.2 million in FY25 from S$35.6 million in FY24.

The shift in positioning is supported by improving product mix, with higher precision components typically supporting stronger margins. Management indicated that such components for AI-related applications can achieve margins of 20% to 25%, higher than traditional products. This comes alongside FY25 revenue of S$209.9 million, with softer contributions from legacy segments offset in part by AI server growth, and the Group maintaining its tenth consecutive year of profitability with net profit of S$2.0 million.

At the same time, the company is investing ahead of growth, with ongoing capacity expansion and automation across facilities, including a major Thailand expansion to support AI server and regional manufacturing demand. Current utilisation was reported at around 60% to 70%, indicating room for ramp-up as demand materialises. This supports expectations that earnings will follow capacity ramp and customer demand.

Looking ahead, the Group is positioned for a step up in growth as its AI server and electric vehicle segments scale. Revenue is expected to inflect, supported by its status as a “Recommended Vendor” to global AI leaders and a shift toward higher value precision machining. SAC Capital expects revenue growth of around 10% to 15% in FY26 and FY27, with gross margins normalising at about 15% as higher margin products displace legacy segments. P/E has re-rated to around 85x on a current basis, while forward P/E for FY26 is around 22x based on LSEG Workspace, highlighting expectations that earnings will scale as AI-driven capacity and customer traction translate into revenue growth.

Secondary Market Strength and the Emerging IPO Pipeline

Secondary market re-rating across semiconductor and AI-linked hardware names is occurring alongside a growing base of advanced manufacturing companies in the region that are scaling and moving closer to listing readiness. These companies are capital-intensive, particularly across semiconductors, EVs and automation, and increasingly require long-duration funding for capacity, automation, and R&D, positioning public markets as a natural next step in their growth cycle.

The current concentration of institutional flows and valuation expansion in semiconductor test, equipment and production‑support exposures provides a clear signal on the types of advanced manufacturing businesses most likely to attract investor demand in new listings.

This suggests that not all advanced manufacturing segments will convert equally into IPO activity, with stronger listing potential in semiconductor‑linked, precision engineering and AI hardware exposures, where earnings visibility and institutional participation are already established in the secondary market.

The alignment of secondary market re-rating and a maturing base of capital‑intensive companies creates a more supportive backdrop for new listings, with valuation benchmarks, investor appetite and sector visibility now better established.

This pattern of flows and valuation across semiconductor‑linked and AI‑driven hardware exposures reinforces Singapore’s positioning as a production‑ and integration‑based technology market, with its listed universe aligned to segments of the global value chain where demand is visible and capital spending is actively flowing through the system.

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