| The semiconductor industry that AEM Holdings operates in has historically been cyclical. Whether the unprecedented AI boom breaks this cycle remains to be seen but in response to investor questions ahead of its AGM, AEM paints an encouraging picture of a business transforming into a diversified, resilient powerhouse. AEM, a rare deep-tech Singapore company, provides the critical testing infrastructure for High-Performance Computing (HPC) and AI chips. As these chips become more complex (using "chiplets" and advanced packaging), traditional testing isn't enough as it cannot handle the thermal loads or the interconnected nature of chiplets. AEM has innovated the solutions and can test hundreds of devices simultaneously, significantly lowering the cost-of-test for manufacturers. |
1. Customer Diversification
For years, AEM had concentration risk tied to one customer, Intel Corp.
AEM now confirms this narrative is obsolete.
After years of engagement with a fabless AI/HPC customer, AEM says the customer is "undergoing a significant ramp, and we expect them to become our number one customer by revenue this year."
In other words, this customer which is unidentified under non-disclosure agreements -- but is sometimes speculated to be AMD -- will surpass Intel in business done with AEM.
The relationship with the Intel remains formidable. AEM was "honoured to accept the 2026 Intel EPIC Supplier Award, Intel's highest level of supplier recognition."
Aside from those two AI/HPC customers, AEM's progression with a leading memory customer is tracking nicely.
It has moved from a niche engagement in 2021 to a "next-generation Final Test handler solution addressing their DDR, NAND flash, and broader packaged memory device test requirements".
With a purchase order already placed and early tool revenue expected in late 2026, AEM is successfully unlocking a new, massive total addressable market.
Crucially, management assured investors that major engagements are global: "When we win a customer, we win them at a global level."
2. Ecosystem Scaling via the ASE Partnership
Investors queried the recently announced AEM-ASE partnership—specifically the seemingly low revenue milestones of S$30 million and S$50 million for warrant tranches.
AEM said these figures are merely the "gate to the long-term partnership, not our estimate of its steady-state contribution."
By partnering with ASE, the world's largest OSAT (Outsourced Semiconductor Assembly and Test) provider, AEM says it gains "privileged access to that ecosystem, relationships and market channels that would take AEM many years and significant capital to develop organically."
When dealing with hyperscalers designing custom ASICs (application specific integrated circuits), having ASE provide the "manufacturing infrastructure, customer relationships, and process credibility" vastly accelerates high-volume deployment.
The deal structure also protects existing shareholders. The warrants are struck at 103% and 105% of the Volume Weighted Average Price on signing day.
AEM says: "ASE only benefits after AEM shareholders have already benefited."
So it's not diluting equity cheaply.
| Global Wins |
| "Importantly, for all of our major customers, our engagement is global in nature – we are not a localised or regional partner. When we win a customer, we win them at a global level, and our solutions are deployed across their worldwide operations." -- AEM |
3. Operational Agility
The growth trajectory that AEM is entering requires capable supply chain maneuvers.
As operations scale, AEM is transitioning to a demand-driven model to "optimise working capital, improve inventory turns, and reduce holding costs and obsolescence risk".
AEM is proactively mitigating risks by maintaining a "strategic buffer stock for critical and long-lead time components" and investing in dynamic demand forecasting.
At the customers' end, AEM said "demand signals from our customer base remain intact, and we are not seeing any pull-back in forward commitments".
4. Stronger Balance Sheet
Why did AEM prioritize debt clearance in 2025 over higher dividends?
By "reducing our debts and moving towards a net cash position," it "lowered interest costs and enhanced our ability to navigate cyclical volatility."
This empowered them to negotiate better credit facilities in 2H2025, while concurrently maintaining a payout ratio of "at least 25% of consolidated profit after tax".
AEM (market cap: S$1.6 billion) is no longer tied to the peaks and troughs of the semiconductor cycle.  It has broadened its top-tier clientele, secured a globally scalable go-to-market partner in ASE, optimized its balance sheet, and built a recurring revenue stream from consummables and services. And the unprecedented AI boom is placing AEM on a stronger footing than ever before -- and the market has recently quickly recognised that, pushing the stock nearly 200% year-to-date (from $1.72 to $5.12) . |
→ See AEM's full AGM response here.
→ See also: AEM’s KL Roadshow: Fund Managers Get Clarity on ASE Partnership, Legal News, etc
