• Semiconductor firm UMS Integration positions itself as a direct and major beneficiary of two powerful trends in the semiconductor industry: Global chip sector rebound and regional supply chain shift to Southeast Asia (especially Singapore & Malaysia). • After a tough 2023–2024 downturn, worldwide demand for semiconductors is surging again. This is driven by, among other things, explosive growth in AI data centers (GPUs, high-bandwidth memory) 5G rollout, electric vehicles, and IoT devices. • Major global semiconductor leaders — Applied Materials (AMAT) and Lam Research, UMS’s two largest customers — are massively expanding in the region. Applied Materials is building a S$600M+ validation center in Singapore and expanding engineering in Malaysia. Lam Research is investing big in Malaysia for a new advanced manufacturing hub. • UOB Kay Hian recommends a buy on the stock. Read what UOB KH's latest report says .... |
Excerpts from UOB KH report
Analysts: John Cheong & Heidi Mo
UMS Integration (UMSH SP)
Continued Production Ramp-up For New Customer But Order Slower Than Expected
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Highlights • UMS continues to ramp up production and has successfully resolved various production issues for its new semiconductor customer.
• UMS has built up sizeable inventories and is awaiting its new customer to pullin more orders in the coming quarter as the demand is slower than anticipated. |
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| Analysis |
• Continues to ramp up production and has successfully resolved various issues. UMS Integration (UMS) continues to ramp up production for its new semiconductor customer and has successfully resolved most of the production issues including labour shortage, materials shortage, qualification processes for new products, etc.
In addition, UMS has hired more senior production managers from Singapore to monitor and train the staff in the Malaysia plant. 
Andy Luong, chairman and CEO of UMS -- and JEP Holdings. NextInsight file photo.• Slower-than-anticipated pull-in of orders. UMS has built up sizeable inventories and is waiting for its new customer to pull-in more orders in the coming quarter as pull-in of order has been slower than anticipated.
However, UMS is hopeful that its new customer should start pulling in more orders in the coming quarters.
• UMS expects brighter long-term prospects. UMS expects the robust recovery in the global semiconductor industry and the sustained aviation boom worldwide to continue lifting its performance.
Also, both its key customers have announced robust earnings guidance for the coming months.
UMS sees itself as a key beneficiary of the global chip sector rebound as well as the rising shift in global semiconductor supply chains to the region – especially Malaysia and Singapore, where its two key customers have committed to major expansion plans.
• Growth in total semiconductor manufacturing equipment sales is set to reach a new industry record of S$125.5b in 2025, a 7.4% yoy increase, according to SEMI.
Semiconductor manufacturing equipment growth is expected to continue in 2026, with sales projected to reach a new high of S$138.1b, driven by leading edge logic, memory and technology transitions.
AI-fuelled demand for chip innovations is driving investments in capacity expansions and leading-edge production.
SEMI has also forecast a 69% growth in advanced chipmaking capacity from now till 2028 due to AI.
• Maintain BUY and target price of S$1.73 on a PE-based valuation of 23x 2026F EPS.  John Cheong, analystOur valuation is pegged to 2SD above UMS’ historical mean PE to reflect the valuation re-rating from the dual-listing exercise and better earnings quality from new contributions from its new customer. • Our valuation multiple peg of 23x 2026F PE is at a 30% discount to its Malaysian peers’ 33x 2026F PE. UMS offers a better dividend yield and better net margin compared with its Malaysian peers. |
→ Full report here.
→ See also: This Company Benefits from Both SG’s Construction Surge and Regional Data Centre Boom
