Singapore defies regional weakness as economic resilience drives STI to record highs

Key Points

Electronics were the clear driver: electronic NODX rose 66.7% YoY (March 2026: +73.9%), led by integrated circuits (ICs), disk media products, and personal computers (PCs), all directly linked to AI infrastructure and data centre buildout.

Non-electronic NODX also returned to growth territory at +10.9% YoY, recovering from -0.6% in March, driven by pharmaceuticals (+97.1% from a low base) and measuring instruments (+60.5%). With specialised machinery (+23.6%) reflecting upstream semiconductor equipment demand, this is further confirmation that Singapore's AI capex exposure runs deeper than finished electronics exports alone.

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

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

Table 1: April 2026 NODX snapshot

Table 2: NODX to top markets (% YoY growth)

The geographic breakdown reveals an important nuance. NODX to the US surged 59.6% YoY, with electronic NODX to the US up 224.0%. Non-electronic NODX to the US includes pharmaceutical exports, which surged 739.1%. This scale of increase likely reflects front-loading ahead of potential US tariff escalation, a trend also visible in strong disk media product exports (+648.1% to the US). While front-loading creates a positive near-term tailwind, it introduces some risk of payback in subsequent months if import curbs materialise.

NODX to China expanded 37.8% on specialised machinery and ICs, while South Korea grew 71.2% on IC and PC demand, both anchoring global AI hardware assembly and data centre deployment.

Demand visibility remains strong despite base effects

The April surge does not mark a peak in the cycle. Growth is likely to moderate in the second half as base effects tighten, but the underlying demand cycle remains intact.

Hyperscaler capital expenditure continues to anchor AI infrastructure demand. Amazon, Alphabet, Microsoft, Meta, and Oracle have collectively committed between USD 660 billion and USD 690 billion in 2026 capex. This is nearly double the 2025 levels, with roughly 75% directed toward AI infrastructure. TSMC raised its full-year 2026 revenue growth guidance to above 30% in its first-quarter results, describing AI demand as extremely robust.

Moreover, Singapore’s YTD NODX growth of 13.5% already materially exceeds Enterprise Singapore’s full-year forecast range of 2.0% to 4.0%. This raises the likelihood of an upward revision to its full-year outlook, further reinforcing Singapore’s economic resilience despite ongoing global macro uncertainties.

SGX-Listed Beneficiaries

Singapore accounts for roughly 20% of global semiconductor equipment production and hosts front-end fabrication and advanced packaging for major memory players, positioning it across multiple high-value segments of the AI chip value chain.

Capital deployment reinforces the structural case: Micron’s USD 24 billion NAND wafer facility, its largest single-country investment, is under construction in Singapore, paired with a USD 7 billion high-bandwidth memory advanced packaging plant expected to contribute supply from 2027.

The global semiconductor market approached USD 1 trillion in 2026, with AI chips estimated to account for roughly USD 500 billion of that total. Singapore’s exposure across memory, packaging, and equipment aligns directly with this growth.

For investors seeking direct equity exposure, three SGX-listed companies are well-positioned to benefit from the AI semiconductor upcycle that April’s NODX data confirms.

UMS Integration (SGX: 558) supplies precision components for front-end deposition and etch equipment (equipment used in chip fabrication) used by Lam Research and Applied Materials (AMAT). Both customers beat first-quarter 2026 revenue estimates, supporting sustained order momentum. UMS reported 1Q26 net profit of SGD 14.0 million, up 43% YoY, and guided for FY2026 to exceed FY2025, with a dividend yield of approximately 4.4%. Investors should note that AMAT has historically accounted for approximately 80% of UMS revenue; the onboarding of Lam Research is an encouraging step toward diversification.

AEM Holdings (SGX: AWX) provides AI and high-performance computing test and handling solutions via its proprietary PiXL thermal management technology (AEM's proprietary chip-testing thermal platform). 1Q26 revenue rose 36% YoY to SGD 116.9 million, with net profit surging 329% YoY. Full-year FY2026 revenue guidance was raised by approximately 20% to SGD 550 to 600 million. A new partnership with ASE Technology Holding, the world’s largest chip testing and packaging provider, could open access to major hyperscaler customers. According to the company management, this is expected to expand AEM’s addressable market from USD 3 billion to USD 4.5 billion by 2028 (CAGR = 22.5%). That said, its share price has risen more than 400% YTD, leaving limited room for execution shortfalls.

Frencken Group (SGX: E28) offers more diversified exposure through mechatronics manufacturing across semiconductors, medical, and automotive segments (highly precise components and assemblies, including wafer manufacturing equipment, electron microscopes, mass spectrometers, and medical scanners). Its semiconductor division grew 17% YoY to SGD 426.6 million in FY2025. Growth may be more gradual in the near term, given weaker orders from an undisclosed major European life sciences customer. However, a new Singapore mechatronics facility, expected in 1Q27, supports longer-term capacity expansion.

All three are beneficiaries of Singapore’s MAS Equity Market Development Programme (EQDP). UMS and Frencken are included in the iEdge Singapore Next 50 Index, and AEM may be added at the next quarterly rebalancing.

However, all three stocks have experienced robust YTD rallies (e.g., UMS +137%, AEM +417%, Frencken +114% YTD (as of 18 May 2026)). Given current valuations, we see the most attractive risk-reward opportunity in UMS Integration (SGX: 558).

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

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

STI reclaims record highs

April’s strong NODX data provides clear evidence that Singapore’s growth is being supported by durable structural drivers rather than a temporary cyclical rebound. While we will continue to monitor the May and June data for signs of any front-loading effects, the broader structural AI infrastructure demand story remains firmly intact.

This economic resilience helps explain why the STI continues to trade near record highs even as rising global bond yields weigh on neighbouring Asian markets. Singapore banks have also remained resilient despite margin pressure, and if interest rate hikes materialise as currently priced by bond markets, that pressure could potentially reverse into a direct earnings tailwind.

In addition, Singapore’s institutional stability continues to attract global safe-haven inflows, providing a structural tailwind for its banking and wealth management ecosystem that should continue to support the broader index.

In terms of valuations, we maintain our target price of 5,987 for the STI by the end of 2028, reflecting an upside potential of 18.0% as of closing on 19 May 2026, alongside an average dividend yield of 5.0%.

For investors seeking diversified exposure to this structural growth story, we continue to recommend positioning through the Amova Singapore Dividend Equity SGD Fund, the Amova Singapore STI ETF (SGX: G3B), and the LionGlobal Singapore Trust Fund.

Related article: Singapore: STI to hit near 6,000 by the end of 2028, alongside an annual dividend yield of 5%

Related article: SG banks 1Q26: Non-interest income drives earnings resilience, supporting constructive outlook

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.