AEM denies allegations of patent infringement from US semiconductor firm; shares close 8.8% lower
Separately, DBS Group Research has raised its target price for AEM, citing its tech edge and the semiconductor sector’s growth trajectory as long-term tailwinds
[SINGAPORE] AEM has denied allegations of patent infringement made by US semiconductor test equipment supplier Advantest Test Solutions.
Following news of the allegations against AEM and two of its subsidiaries – AEM Singapore and AEM Americas – the company’s shares plunged on Monday (Oct 6) morning. The counter hit an intraday low of S$1.85 at 10.53 am, down by 9.3 per cent, with some 12.3 million shares changing hands. It closed the day at S$1.86, down by 8.8 per cent, with more than 22.6 million shares transacted.
In a Monday bourse filing, AEM said the alleged infringements relate to US patents relating to a wafer level test system. It added that Advantest had filed its complaint in the US District Court for the Southern District of California.
However, AEM said it does not practice the wafer level test system in question and that the complaints “lack merit”.
The company said: “AEM has its own extensive patent portfolio and respects the intellectual property of others. It strongly denies the allegations in Advantest’s complaint.” AEM added that it has retained counsel in the US to defend itself against the claims.
AEM and Advantest were previously involved in an arbitration case that ended in a settlement on Jul 28, 2023. The agreement involved AEM making two payments – worth US$9 million and US$11 million – to the complainants.
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AEM said the latest complaint does not affect its business operations.
It added that its revenue guidance for the second half of 2025 remains unchanged. On Aug 13, it projected that revenue for H2 would be in the range of S$170 million to S$190 million, as a major customer is expected to ramp up production in late 2025 or early 2026.
DBS lifts target price
Notwithstanding the near-term volatility of AEM’s share price, DBS Group Research on Monday raised its target price for the counter from S$1.50 to S$2.10. This was 2.9 per cent above the stock’s closing price of S$2.04 last Friday. It was then up 6.3 per cent or S$0.12
The research house also maintained its “buy” call on the counter.
DBS Group Research analyst Amanda Tan said AEM is poised for growth due to its technological edge over its competitors and the semiconductor sector’s expansion trajectory.
Highlighting that AEM is a pioneer in providing system-level test solutions (SLT), Tan said the group is “around one generation ahead of its competitors”.
“Given its technological superiority, we believe AEM is well-positioned to ride on the growing SLT market, which has benefited from increased complexity of chips and increased test coverage requirements, alongside the need for advanced heterogeneous packaging,” she said.
Tan added that the semiconductor industry is “well-poised for growth” amid a push for digitalisation, which could boost demand for AEM’s offerings in the long term.
Additionally, she noted that AEM has announced several customer wins in recent years. She believes its customer diversification strategy could yield “more significant returns” moving forward.
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