Its founder and CEO Andy Luong remains instrumental in steering the company’s long-term direction. With more than four decades of industry experience, Luong is known for his hands-on leadership, disciplined capital allocation and focus on high-value segments. Under his guidance, UMS has weathered multiple semiconductor cycles with resilience.
“We typically plan five years ahead. What you’re seeing today is the result of plans we put in motion half a decade ago. Now, we’re collaborating with our customers on engineering and R&D work that was traditionally done in the US but is now being carried out in Singapore and Malaysia,” says Luong.
He adds that customers are increasingly shifting more production to Asia, particularly Malaysia. “So, I have no choice but to acquire more land, build new factories and expand our workforce. We are also looking into automation to strengthen our capabilities. As you know, Malaysia is evolving in terms of labour dynamics. So, we are investing in the best equipment the market can offer — perhaps even better than what we’ve had before.”
The group operates two core business segments, high-precision component manufacturing and integrated systems assembly. It supplies critical parts used in front-end semiconductor tools and assembles complex modules in cleanroom environments, adhering to the rigorous quality standards required by its customers.
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Its key clients include two Nasdaq-listed global leaders in wafer fabrication equipment — referred to as Customer A and Customer H — which together control an estimated 60% to 80% share of the global deposition tools market. Deposition tools, a vital category in semiconductor fabrication, account for about 25% of total wafer fab equipment spending.
A cornerstone of UMS’s portfolio is its flagship deposition tool product, introduced in 1990 and widely regarded as a landmark in chip equipment history. Today, it remains in use by virtually every major manufacturer of advanced microchips.
Customer A, which contributes 68.4% of UMS’s total revenue, has maintained a long-standing relationship with the group for more than 24 years. In contrast, Customer H, which accounts for 4.5% of revenue, entered into a commercial partnership only two years ago but is expected to become a significant driver of growth.
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Luong has known Customer H for much longer, though. Their relationship began in the 1990s, when he operated a machining company in California and collaborated with the firm in its early days.
“About five years ago, they decided to set up a factory in Asia. So, it gives me an upper hand because I’m from Fremont, California, and all my customers are from Silicon Valley,” he says.
Luong also highlights that UMS has aligned its capabilities to support emerging opportunities in artificial intelligence (AI) and advanced packaging. He points to etching products as the group’s next key growth area, especially as wet processing gains momentum in 3D chip manufacturing.
Wet processing involves the application of liquid chemicals to treat semiconductor wafers through key stages such as cleaning, etching and surface modification.
Despite the ongoing rhetoric around US chip restrictions, Luong notes that his customers continue to ship products to China. “There are some restrictions but it’s not a complete ban,” he says. China remains a critical market for Customers A and H, contributing about 30% of their revenue, driven by the nation’s ongoing semiconductor fabrication boom.
Following the global fab boom, UMS posted record revenue of $372 million in FY2022 ended Dec 31, 2022. Since then, revenue has declined to $242 million in FY2024, with margins easing to 16.8% — below the group’s typical range of 20% to 30%.
Despite the downturn, Luong remains confident in UMS’s long-term prospects. He believes the group can sustainably deliver more than $300 million in annual revenue, with the potential to exceed $500 million within the next three to five years.
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“The years 2026 to 2028 will be critical,” he explains. “If we perform well in 2026 and 2027, it means we’re on track to reach the $500 million mark. Once the semiconductor upcycle takes off again, many of our US competitors may no longer be around — and when that happens, customers will turn to us or other Asian suppliers. Because we invested five years ahead of the ramp, we’ll be best positioned to benefit.”
Luong adds that margins are also expected to improve as volumes pick up, given that overhead costs are largely fixed. “The good thing is, when you are ready and customers need the capacity, they don’t push back on pricing.”
Strong vertical integration and capacity
Incorporated in Singapore in January 2001, UMS’s inorganic growth strategy began in 2012 with the acquisition of Integrated Manufacturing Technologies, which specialises in critical semiconductor processes such as gas lines and precision welding. UMS then diversified further in 2018 by acquiring a stake in SGX Catalist-listed JEP Holdings, marking its entry into the aerospace sector. That same year, it acquired a 70% stake in Starke Singapore, a materials distribution firm that now supports its supply chain and procurement capabilities.
These acquisitions have allowed UMS to diversify revenue streams, mitigate risk from customer concentration and broaden its technical portfolio. Importantly, they have also supported UMS’s strategy of vertical integration — bringing key manufacturing and sourcing functions in-house to improve lead times, reduce costs and control quality.
The company’s ability to qualify more than 70 specialised processes internally — including anodising, chemical cleaning, vacuum welding and plastic fabrication — sets it apart from its peers. Many competitors rely on external vendors for these functions, creating bottlenecks and increasing quality variability. By consolidating these capabilities, UMS shortens delivery cycles and strengthens quality assurance across its product range.
UMS’s manufacturing model is further supported by its material stockist arm. Starke sources raw materials not only for UMS but also for other industry players, positioning UMS as a central node in the supply chain. This internal procurement capability helps the group secure high-quality materials at competitive prices and manage fluctuations in material costs more effectively than firms without such leverage.
According to Luong, these quality and operational advantages have consistently positioned UMS as the primary supplier to its major customers, which typically employ a dual-sourcing strategy.
UMS distinguishes itself by investing in capacity ahead of demand — a proactive approach that sets it apart from many Malaysian manufacturers, which typically expand only after securing firm orders. By anticipating future requirements, UMS positions itself to capture new opportunities swiftly and decisively.
This forward-looking mindset is evident in its 2024 commissioning of a 213,000 sq ft facility and an adjacent 5.38-acre site in Penang Science Park North. Both were developed to support its long-standing customer as well as a newer client in Penang, while maintaining the flexibility to accommodate future partners as opportunities arise.
“There are only a handful of players who can do this,” said Luong. “When customers see we already have the capacity in place, they’ll say, ‘All right, I’ll give you the whole order.’ Price is no longer the first conversation.”
Beyond semiconductors, UMS’s aerospace segment is also expected to contribute to long-term growth. As global air travel continues its post-pandemic recovery, aircraft manufacturers are ramping up production, translating into stronger demand for precision-engineered aerospace parts. UMS, with its relevant certifications and engineering expertise, is well positioned to benefit from this trend through its 80%-owned subsidiary JEP.
From an operational standpoint, UMS continues to focus on medium- to large-format components, particularly those that require higher capital investment and have higher barriers of entry. By specialising in complex, critical parts, UMS avoids low-margin, commoditised manufacturing and further differentiates itself from smaller players.
Leveraging Malaysia’s valuation premium and industrial familiarity
UMS’ secondary listing on Bursa Malaysia through an introductory route is to widen its investor base and increase stock liquidity. No new shares will be issued; instead, the listing will be supported by a market-making arrangement involving the borrowing of shares from Luong to provide initial liquidity. The listing reference price will be pegged to the closing price on the Singapore Exchange as at July 31, ahead of the expected listing on Aug 1.
UMS believes Malaysian investors are well positioned to understand and value semiconductor companies such as itself, especially given its manufacturing presence in Penang and track record of shareholder returns.
Market watchers are optimistic about UMS’s upcoming secondary listing on Bursa Malaysia. Ben Shane Lim, head of research at New Paradigm Securities (formerly PM Securities) in Kuala Lumpur, believes the company is well positioned to attract institutional capital, particularly from domestic GLIC funds and insurance funds, which face a scarcity of high-growth firms with external market exposure.
“The combination of surplus domestic capital and scarcity of external-facing, high-growth companies has driven Malaysian tech stocks to elevated valuations against other markets,” Lim says. “UMS fits the profile and, in the short term, could enjoy a re-rating to match the valuations of Malaysian-listed tech firms, which are averaging 24 times forward P/E compared with UMS’s current 18 times.”
Prior to the dual-listing announcement, UMS traded at an average forward P/E ratio of 11 times.
Lim cautions, however, that the dual listing could prompt profit-taking from Singapore-based investors as UMS re-rates. “As UMS’s valuations become more expensive versus Singapore-listed peers, the existing investor base may rotate to alternative names,” he says.
Meanwhile, Malacca Securities head of research Loui Low Ley Yee describes UMS as an appealing opportunity for investors. He highlights the company’s relatively undemanding valuation, stronger earnings margins and higher dividend yields — supported by a consistent quarterly dividend policy — compared to most semiconductor stocks listed on Bursa.
The public float of UMS’s Singapore-listed shares is estimated at 74.25%. Major shareholders are Luong, who holds a 15.38% stake, followed by Abrdn Holdings and Taiwanese die-casting specialist Catcher Technology Co, each holding 5.12%.
This story first appeared in The Edge Malaysia Issue 1582, July 7
