OREANDA-NEWS.  Within Singapore’s Information Technology (IT) sector, there are 14 stocks that represent the Semiconductors & Semiconductor Equipment industry. This is according to the Global Industry Classification Standard GICS®. According to GICS® these 14 Semiconductor plays  fit the criteria of business focus in either the manufacturers of semiconductors, semiconductor equipment or the related products. The 14 stocks have a combined market capitalisation of S\\$1.7 billion and they averaged a 15.8% price gain in the year thus far.

The Bloomberg Asia Pacific Semiconductors Index has declined 18.3% over the period and maintains a price-to-earnings (P/E) ratio of 8.7 with a dividend yield of 2.5%. This regional index is made up of well-known companies such as Samsung Electronics and TSMC. The Philadelphia Stock Exchange Semiconductor Index has declined 6.6% in the year thus far and trades at a P/E ratio of 19.5 with a similar indicative yield at 2.6%. By comparison the aforementioned 14 semiconductor plays listed on Singapore Exchange (SGX) maintain an average P/E ratio of 7.8 and dividend yield of 5.3%.

The Semiconductor Industry

The bulk of semiconductor demand is driven by consumer’s purchasing personal computers and mobile devices, such as cell phones and tablets. This has been noted in recent earnings reports for the aforementioned 14 stocks.

Before these consumer products are branded and shipped on the to end-consumers, there is active wholesale market for semiconductors. The Semiconductor Industry Association recently reaffirmed that Asia Pacific is by far the largest regional semiconductor market in terms of sales of semiconductors to electronic equipment makers. This market in Asia Pacific has quadrupled in size since 2001 - from US\\$39.8 billion to over US\\$194 billion in 2014. The recently released Semiconductor Industry Association Factbook for 2015 can be accessed here.

Earlier in the month, the Semiconductor Industry Association announced worldwide sales of semiconductors reached US\\$84.0 billion during in 2Q15. This was an increase of 2% from the same quarter in 2014. Global sales for June 2015 which were compiled with the World Semiconductor Trade Statistics organisation reached \\$28.0 billion, up 2% from June 2014 total. In terms of regions, sales increased compared to June 2014 in China (+7.8%), the Americas (+5.6%), and Asia Pacific/All Other (+5.2%), but fell in Europe (-11.5%) and Japan (-13.6%). 

Singapore’s Semiconductor Plays

As noted above the 14 stocks have a combined market capitalisation of S\\$1.7 billion and they averaged a 15.8% price gain in the year thus far. Please note that due to one stock gaining more than 150% in the year thus far, the average performance is higher than the median price performance which was a 1.6% gain. This stock, Manufacturing Integration Technologies (MIT) is a capital goods supplier serving the semiconductor, solar and contract equipment manufacturing industries, in Singapore, USA, Europe and the rest of Asia. On 5 August, MIT reported its 1H 2015’s revenue at S\\$53.3m, a 139% increase from S\\$22.3m in 1H 2014 while profit after tax was up 1513% to S\\$12.9m from S\\$0.8m for the same period. As of 5 August 2015, the outstanding order book for MIT stood at S\\$50.9m. MIT is the sixth largest semiconductor play to be listed in Singapore, after STATS ChipPAC, UMS Holdings , Micro-Mechanics (Holdings), CDW Holding and Ellipsiz.  

Details of the 14 semiconductors stocks are tabled below – please note that the table is sorted according to market capitalisation. To access the stock profile in SGX StockFacts please click on the stock name.

STATS ChipPAC

STATS ChipPAC is an independent provider of a rage of semiconductor packaging design, bump, probe, assembly, test, and distribution solutions. STATS ChipPAC is headquartered in Singapore and has manufacturing facilities in South Korea, Singapore, China, Malaysia, and Taiwan. In the second quarter of 2015, STATS ChipPAC reported a revenue of US\\$346.9 million, which was down from the revenue of US\\$409.9 million reported in the second quarter from one year ago.

UMS Holdings

UMS Holdings is an integration partner in manufacturing and engineering semi-conductor equipment manufacturers. In the second quarter of 2015, UMS Holdings saw revenue increase by 8% - from S\\$28.7 million in 2Q2014 to S\\$31.0 million in 2Q2015. Their net profit after tax increased by 14% from S\\$7.2 million in 2Q2014 to S\\$8.3 million in 2Q2015 and the board declared interim dividend of S\\$0.01 per share.

Mirco-Mechanics (Holdings)

Micro-Mechanics (Holdings) designs, manufactures, and markets high precision tools, parts, and assemblies for the semiconductor, medical, aerospace, and other high technology industries. In the quarter ended 30 June 2015, the group’s quarterly revenue and net profit reached record levels . It reported S\\$3.7 million in net profit – a 107.3% jump from the same quarter one year ago, and also reported S\\$13.4 million in revenue.

CDW Holding

CDW Holding produces and supplies precision components for mobile telecommunications equipment, gamebox entertainment equipment, consumer and information technology equipment, office equipment, and electrical appliances. In the first quarter of 2015, CDW Holding reported a revenue of US\\$38.2 million, which was reflective of a 10% increase from the first quarter one year ago. It also reported US\\$1.6 

Ellipsiz

Ellipsiz provides probe card, distribution, and service solutions to the semiconductor and electronics manufacturing industries. In the third quarter of 2015, Ellipsiz reported a 21% decrease in revenue from S\\$107.2 million in their third quarter of 2014 to S\\$85.1 million. This was attributed to the 45% decline in revenue of the Distribution and Services which was a result of divestment of its facilities and communication activities in the fourth quarter of 2014. However, Ellipsiz experienced a 14% increase in its gross profit in the quarter ended 31 March 2015 – from S\\$26.8 million in the same quarter of 2014 to S\\$30.5 million currently.

Manufacturing Integration Technology

MIT designs, develops, manufactures, and distributes automated equipment for the semiconductor industry worldwide. 

Global Testing Corporation

Global Testing Corporation is an investment holding company that provides testing services to the semiconductor industry primarily in Singapore, Taiwan, the United States, and Japan. In the first quarter of 2015, Global Testing Corporation reported a revenue of US\\$8.5 million, which was a 6% decrease from the first quarter of 2014 which reported a revenue of US\\$9.1 million. Its net profit for the period was US\\$734,000 – a 543.2% change from the first quarter of 2014 which reported a net profit of US\\$111,000.

Avi-Tech Electronics

Avi-Tech Electronics Limited provides burn-in, engineering, and manufacturing services for semiconductor and electronics industries. The company’s Burn-in and Related Services segment offers burn-in services, and tape and reel services. Avi-Tech Electronics Limited was incorporated in 1981 and is headquartered in Singapore

On 12 May 2015, the company reported their revenue for the quarter ended 31 March 2015, increased by 7.0% from S\\$5.7 million  to S\\$6.1 million year on year. The increase in revenue was primarily due to improved performances from all business segments. The Group experienced a 167.0% increase in gross profit to S\\$1.9 million.

Sunright

Sunright provides burn-in, testing, and electronic manufacturing services to semiconductor and electronics manufacturers The company was founded in 1978 and is headquartered in Singapore. On 13 March 2015, the company reported their revenue for the half year ended 31 January 2015 increased by 5.0% from S\\$67.1 million last year to S\\$70.7 million over the period. This increase was attributed to higher demand from the burn-in, testing and electronic manufacturing services segment.

ASTI Holdings

ASTI Holdings engages in the research, development, design, manufacture, and marketing semiconductor equipment. The company provides solutions and technologies in the back-end arena, including assembly, test, and finishing; and engages in semiconductor application in consumer electronics, computer peripheral, and communication solution. The company was incorporated in 1999 and is based in Singapore.

On 14 May 2015, the company reported their revenue for the financial year ended 31 March 2015, increased by 25.6% to S\\$33.7 million year on year. The company attributed this to higher demand from the equipment business.

Smartflex Holdings

Smartflex Holdings engages in the assembly and testing of smart card IC modules. The company provides IC module assembly and testing services for contact and dual interface smart cards, which are used in the banking and finance, pay TV, telecommunications, and transportation industries. It also offers value added services, such as electrical/functional testing of smartcard IC modules, initialization/pre-personalization of smartcard IC modules, initialization of Java-applet on JavaCard-based IC modules, downloading of operating systems onto flash-based smartcard microcontroller modules, and wafer dicing services.

On 27 February 2015, the company reported their revenue for the financial year ended 31 December 2014, increased by 10.2% to US\\$25.4 million year on year. The company attributed this to growth in customers’ demand and securing more orders in the Banking and Dual Interface segments.

AEM Holdings

AEM Holdings provides solutions in equipment systems; precision components; and plating and related manufacturing services for various industries. It is involved in the design and manufacture of semiconductor manufacturing equipment and related tooling parts, as well as automated machines and related parts for the semiconductor industry. The company manufactures precision engineering products, including test sockets, device change kits, stiffeners, golden units, holding jigs, preventive maintenance kits, and precision mechanical assembly modules that are used in the electronics, life sciences, instrumentation, and aerospace industries; and printed circuit boards.

On 6 August 2015, the company announced their revenue for the quarter ended 30 June 2015, increased by 51.1% to S\\$ 11.3 million year on year. The company attributed this to higher sales from its Equipment Systems business mainly due to higher demand for its equipment, kits and spares.  

Advanced Systems Automation

Advanced Systems Automation entered the semiconductor industry in 1986, and its core business lies in manufacturing automated equipment for the encapsulation of semiconductors. Today, ASA’s encapsulation equipment are used by semiconductor assembly processes around the world. Another core business segment within ASA is its Equipment Contract Manufacturing Services unit. This division manufactures electromechanical components and parts for the semiconductor, healthcare and scientific industries.

On 14 May 2015, the company announced their revenue for the quarter ended 31 March 2015, decreased by 13% to S\\$6.2 million year on year. The company attributed this to the decrease in revenue from the Equipment Contract Manufacturing Services business.

CPH

CPH manufactures and sells printed circuit boards (PCBs). It offers single-sided, double-sided, and multi-layered PCBs, as well as advanced interconnect substrates. The company serves customers in various industries, such as telecommunications, automotive, industrial equipment and instruments, consumer electronics, PCs and PC peripherals, and healthcare, as well as government and defense industries. CPH was founded in 1981 and is based in Singapore.

On 28 May 2015, the company reported their revenue for the quarter ended 31 March 2015, decreased by 3.5% to S\\$7.0 million year on year. The company attributed this to the reduced business activities of some of the Group’s customers in the first quarter of 2015 causing decline in orders and new business secured.

Chips

The aforementioned Semiconductor Industry Association notes that the process of manufacturing semiconductors or integrated circuits (commonly called ICs or chips) typically consists of hundreds of steps, during which hundreds of copies of an integrated circuit are formed on a single wafer.