SINGAPORE: The semiconductor industry, known for its cyclical nature, is anticipated to rebound strongly in 2024, with a projected 13.1% year-on-year growth in sales, according to the World Semiconductor Trade Statistics (WSTS).
As the industry gears up for recovery, here are five Singapore stocks set to gain in 2024 semiconductor recovery, The Smart Investor reports.
1. Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics (MMH) designs and manufactures high-precision tools and parts crucial in the wafer fabrication and assembly processes with manufacturing facilities in Singapore, China, Malaysia, the US and the Philippines.
Despite a challenging first quarter of fiscal 2024, marked by a 21.5% year-on-year drop in revenue to S$15.9 million, the company maintains a positive outlook.
Notably, initiating the “Five-Star Factory” initiative aims to enhance operational efficiency across all manufacturing facilities, positioning Micro-Mechanics for the anticipated recovery.
2. Venture Corporation Limited (SGX: V03)
Venture Corporation, a blue-chip contract manufacturer like Micro-Mechanics, faced revenue challenges in the first nine months of 2023, experiencing an 18.8% year-on-year decline to S$2.3 billion.
Despite the downturn, the company sustains a robust net cash position of S$956 million as of 30th September 2023. Looking ahead, Venture aims to introduce new products in 2024, expanding its foothold in high-growth technology domains to diversify revenue streams.
3. Frencken Group Ltd (SGX: E28)
Frencken, providing integrated manufacturing services to various industries, including semiconductors, navigates the downturn with a focus on existing and new customer programs.
Despite a dip in revenue by 8.4% year on year to S$535.4 million for 9M 2023, the company, backed by a strong balance sheet, remains resilient. Frencken’s strategic approach positions it to weather the current challenges and capitalise on the recovery.
4. UMS Holdings Ltd (SGX: 558)
UMS Holdings, specialising in equipment manufacturing and engineering services for semiconductor OEMs, saw a decline in revenue by 17% year on year to S$226.4 million in 9M 2023.
Despite the challenging environment, the company generated positive free cash flow and declared an interim dividend of S$0.012.
CEO Andy Luong expresses optimism, supported by positive industry projections for a rebound in 2024, extending through 2026.
5. AEM Holdings Ltd (SGX: AWX)
AEM Holdings, a global provider of semiconductor and electronics test solutions, faced a 48.2% year-on-year drop in revenue to S$387 million in the wake of delayed capital expenditures.
Net profit, impacted by exceptional items, saw a substantial decline. However, signs of stabilisation in smartphone and PC markets and the anticipated generative AI wave present long-term opportunities for AEM. The company believes increasing device complexity will drive demand for comprehensive testing solutions. /TISG