AEM’s 9M profit dives 96.9% to S$3.5 million as revenue halves amid chip slump

SEMICONDUCTOR equipment maker AEM Holdings posted a 96.9 per cent decline in net profit to S$3.5 million for the first nine months of 2023, from S$115.3 million in the corresponding year-ago period.

Revenue fell by 48.2 per cent to S$387 million for 9M FY2023, from S$746.6 million for 9M FY2022.

In a business update on Thursday (Nov 9), AEM attributed the drop in revenue to “overall sluggishness” in the semiconductor industry, with most customers pushing their capital expenditures related to testing to 2024 as a result of lower demand across the industry.

The group pointed out that during the third quarter, semiconductor device makers continued to reduce their inventories due to a weak macroeconomic environment. This has been compounded by a slower recovery in demand from China, it added.

As consumers shift their spending towards services, consumer purchases of electronic devices worldwide have in turn taken a hit in the aftermath of the pandemic boom, the group said.

“This has driven tester utilisation rates down, resulting in device manufacturers delaying the release of new devices and similarly delaying the acquisition of new test platforms.”

AEM’s profit before tax fell 92.8 per cent to S$10.1 million for 9M FY2023, from S$141.4 million a year earlier. This was because it bore the full impact of a US$20 million settlement arising from a legal dispute in the third quarter, it said. The dispute involved two American companies, Advantest America and Advantest Test Solutions.

Noting the challenging test equipment market this year, AEM’s chief executive officer Chandran Nair said: “Despite the difficulties, we have navigated the landscape with agility and thus achieved profitability through cost optimisation and operational efficiency.”

He also said that AEM will continue investing in its technology pillars, noting that such investments have already resulted in a growing patent portfolio.

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“(This will) provide us with the technology differentiation that is highly sought after by our customers, and we firmly believe that we are well-positioned to take advantage of the market upswing expected in late 2024 and beyond,” Nair added.

Shares of AEM closed up 1.2 per cent or S$0.04 at S$3.50 on Thursday, before the release of the business update.