Singapore’s semiconductor stocks: Riding the AI-driven upcycle

• Singapore’s March 2026 NODX rose 15.3% year-on-year (YoY), 7.2 percentage points above consensus, despite the outbreak of the Iran war at the end of February. This surge was primarily driven by AI-linked electronics demand, validating a structural rather than cyclical demand.
• AEM Holdings delivered a standout 1Q26 result, with revenue up 36% YoY and net profit surging 329% YoY to SGD 14.3 million; full-year revenue guidance was raised by about 20% to SGD 550–600 million, though a YTD share price rally of over 400% has pushed valuations to demanding levels.
• UMS Integration posted a strong set of 1Q26 results, with revenue rising 20% YoY to SGD 69.4 million and net profit jumping 43% YoY to SGD 14 million, supported by stronger factory utilisation and improved operating efficiency.
• Frencken Group reported full-year FY2025 revenue of SGD 865.1 million (+9% YoY) and net profit of SGD 39.1 million (+5% YoY); its diversified multi-sector customer base offers stability, though near-term earnings momentum appears modest relative to the other two.
• Across all three, AI-driven semiconductor capex represents the primary structural growth driver, with the global semiconductor market on track to exceed USD 1 trillion in 2026 and USD 1.6 trillion by 2030.

Singapore’s March 2026 Non-Oil Domestic Exports (NODX) data delivered a decisive beat, rising 15.3% year-on-year (YoY) against the Bloomberg consensus of 8.1%. Electronics exports led the acceleration, reflecting Singapore’s position at the intersection of semiconductor equipment manufacturing, advanced packaging, and front-end fabrication.

The country accounts for roughly 20% of global semiconductor equipment production and hosts major memory capacity, including Micron’s recently commenced USD 24 billion NAND facility.

Against this backdrop, three SGX-listed companies stand out as direct beneficiaries: UMS Integration (SGX: 558), AEM Holdings (SGX: AWX), and Frencken Group (SGX: E28).

However, we note that each participates from a distinct vantage point: UMS through precision components for deposition and etch equipment, AEM through semiconductor test and handling solutions, and Frencken through diversified mechatronics manufacturing across semiconductors and adjacent high-technology end markets. Their most recent results reveal both a shared tailwind and meaningful differences in momentum, customer concentration, and valuation.

Related article: Singapore’s March NODX beat: AI-Driven electronics demand confirms our positive view

Related article: Singapore Semiconductor Stocks Set to Shine on AI, 5G, and EQDP Tailwinds

Latest earnings: Broad-based strength, differentiated intensity

• AEM Holdings produced the strongest set of results.

Revenue for 1Q26 rose 36% YoY to SGD 116.9 million, with net profit surging 329% YoY to SGD 14.3 million as profit before tax (PBT) margin expanded from 4.4% to 15.2%. The improvement was driven by its Test Cell Solutions segment, which grew 72% YoY to SGD 88.1 million. This accounted for 75% of group revenue, powered by proprietary PiXL thermal management technology (patented and developed by AEM), addressing the escalating complexity of AI and HPC devices. Results were strong enough to prompt an estimated 20% upward revision to full-year FY2026 revenue guidance, now set at SGD 550–600 million. The management described 1Q26 as the start of a multi-year earnings upcycle grounded in structural industry change.

• UMS Integration’s 1Q26 performance was equally encouraging.

Revenue grew 20% YoY to SGD 69.4 million while net profit leapt 43% YoY to SGD 14 million, reflecting the operating efficiency of a precision manufacturer running at elevated utilisation. The semiconductor segment led, with component revenue jumping 26% YoY and Integrated System revenue rising 14% YoY, supported by a new major customer with locations in South Korea and Taiwan. The group declared a tax-exempt dividend of 1 cent per share for the quarter (1Q25: 1 cent/share), maintaining its shareholder return track record of paying quarterly dividends since May 2012. The management flagged that key customers, Lam Research and Applied Materials (AMAT), both beat first-quarter revenue estimates, pointing to sustained order momentum.

• Frencken, reporting semi-annually, delivered FY2025 group revenue of SGD 865.1 million (+9% YoY), with net profit rising a more measured 5% YoY to SGD 39.1 million.

The Mechatronics Division (core business segment) contributed SGD 778.4 million (+10% YoY), led by the semiconductor segment’s 17% YoY expansion to SGD 426.6 million. The Advanced Plastics Solutions (APS) Division declined 3% YoY to SGD 83.1 million on softer automotive demand. PBT margin remained stable at 5.7%. The group declared a final dividend of 2.75 cents per share for FY2025.

Table 1: Comparison across the three stocks

Outlook: AI structurally supports all three, but trajectories differ

• AEM appears to have the strongest growth outlook among the three companies.

Its strategy is built around five growth drivers, including expanding its customer base in AI, high-performance computing, memory, and contract manufacturing. A key highlight is its new partnership with ASE Technology Holding, the world’s largest chip testing and packaging provider, which could help AEM gain access to major hyperscaler customers that were previously difficult to reach. The management estimates its market opportunity could grow from USD 3 billion today to USD 4.5 billion by 2028 (CAGR = 22.5%). That said, AEM’s share price has already surged more than 400% this year, meaning investors are likely expecting strong execution going forward, with less room for setbacks.

• UMS Integration continues to benefit from healthy demand from its key customers, as chipmakers maintain high spending levels to expand advanced semiconductor production capacity through 2028.

UMS Integration supplies critical components used in advanced semiconductor packaging equipment. The company is also participating in next-generation advanced packaging technologies, an area expected to see rising demand as AI chips become more complex.

At the same time, UMS is benefiting from one of its major customers, likely Lam Research, shifting more of its supply chain sourcing from the US to Asia amidst ongoing geopolitical and supply chain diversification trends. The company is currently qualifying multiple new products for this customer, which could support future growth.

The management also expects demand for its integrated systems business to improve further, supported by elevated semiconductor capital spending from 2026 to 2028 as chipmakers continue investing in advanced-node manufacturing capacity. They guided for FY2026 performance to exceed FY2025, with the caveat that there is no material deterioration in customer order trends.

• Frencken Group has a positive outlook as well, although growth may be more gradual.

Its Asian semiconductor business is expected to continue growing, but weaker orders from a major European customer (analytical life sciences company) could continue to affect its European operations until the second half of 2026. Meanwhile, its medical segment offers steady earnings support, while its automotive radar business could see stronger growth if demand for advanced driver-assistance systems (ADAS) picks up in FY2026. The group is also building a new mechatronics facility in Singapore, expected to be completed in 1Q27, which should support future expansion over the longer term.

Conclusion: UMS Integration (SGX: 558) offers the most compelling risk-reward

All three companies are clear beneficiaries of the ongoing AI semiconductor boom, and Singapore’s March 2026 NODX data suggests this growth trend is already feeding into the broader economy. The stocks also have delivered strong year-to-date (YTD) performance, ranging from 120% to 420%. For investors, the key question is not whether to gain exposure to the sector, but which company offers the best balance of growth potential and valuation at current levels.

• AEM Holdings (SGX: AWX) offers the strongest earnings growth story, supported by multiple growth drivers across AI, advanced computing, memory, and new customer segments (transitioned from an Intel-centric business model to a diversified, multi-customer portfolio). However, after a share price rally of more than 400% YTD, much of the optimism appears to already be reflected in its valuation. This leaves less room for execution missteps in the near term.
• Frencken Group (SGX: E28) provides a more defensive exposure through its diversified business mix across semiconductor, medical, and automotive segments. However, we note that its near-term growth may be moderated by softer European semiconductor demand.
• UMS Integration (SGX: 558) remains our preferred pick. The company delivered a strong 43% YoY rise in 1Q26 net profit, while continuing to benefit from AI-driven semiconductor equipment demand through key customers such as Lam Research and AMAT. At the same time, supply chain diversification into Asia is creating new customer opportunities for the group. In addition, its secondary listing on Bursa Malaysia is expected to further raise its visibility and market profile. That said, investors should be mindful of UMS’s customer concentration risk. Historically, AMAT has accounted for approximately 80% of UMS’s revenue, making the group’s earnings meaningfully exposed to any deterioration in AMAT’s end-demand or a disruption to that relationship. While the onboarding of a new major customer, Lam Research, is an encouraging step toward diversification, its revenue contribution remains relatively small at this stage. This concentration warrants monitoring, and investors should size positions accordingly.

All three names are also direct beneficiaries of Singapore’s MAS Equity Market Development Programme (EQDP), which could support greater institutional interest and liquidity over time.  Both UMS and Frencken are included in the iEdge Singapore Next 50 Index, which may further raise their visibility and market profile. On the other hand, with AEM at record highs, it may be included in the iEdge Singapore Next 50 Index at the next quarterly rebalancing.

Overall, with healthy customer spending visibility through 2028 and improving diversification, UMS (SGX: 558) appears best positioned to deliver attractive risk-reward for investors at current price-earnings levels.

Related article: UMS Integration: A structural re-rating built on earnings, not optimism

Figure 1: UMS’ valuation is at a sweet spot amongst the others

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools.  iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.