Key exports
Originally, Malaysia was hit with 24%, followed by Indonesia and Thailand at 36% and Vietnam at 46%. Semiconductor industry leader Taiwan will see 32% while China will be hit with 125% after retaliating.
Even with the 10% tariff in place, two of Singapore’s key exports — semiconductors and pharmaceuticals — remain exempt. However, given the unpredictable nature of the White House, this could change at any time. “The possibility of tariffs on semicon chips remains, but tariffs, if implemented, would be separate from the current reciprocal tariffs being implemented,” add the CGSI analysts.
As analysts attempt to estimate the potential impact of the tariffs better, they note possible responses, including absorbing the tariffs within the supply chain or passing them along the production process. When approached for a comment, these companies declined. In the meantime, the market’s reaction has been telling.
See also: DBS identifies Singapore tech’s winners and losers from Trump’s tariff roulette
Since April 3, Venture Corporation (Venture) has seen a 14.47% drop in share price to close at $10.40 on April 9 before recovering to close at $10.88 the following day. Frencken Group (Frencken) has similarly suffered a 16.67% decline to 85 cents before jumping 12.35% to end the following day; Aztech Global ’s (Aztech) share price decline has been slightly less at 11.04%, eventually settling to close at 68 cents on April 9 and 72 cents on April 10.
CGSI remains positive about Frencken, with an “add” call and $1.40 target price, due to the positive outlook of its key semicon segment, seen to help drive earnings growth for FY2025 to FY2027. “Although Frencken derived 8% of its FY2024 revenue from the automotive segment, which could see headwinds from automotive tariffs, in our view, the impact may be limited as this business segment has traditionally not been a big contributor to its net profit,” write Lock and Lim.
CGSI takes a more cautious view of Venture. In his April 9 report, William Tng downgraded the stock to “hold” from “add” at a reduced target price of $10.13 from $14.95, noting that Venture will likely report a consecutive year of earnings decline. “The escalation in the trade war between the US and its trading partners is, in our view, likely to have a negative impact on Venture’s FY2035 earnings.”
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Tng has reduced his revenue forecasts for the FY2025 to FY2027 period by 7.4% to 13.9% and its earnings estimate for the same period by 17.1% to 18.3%. He recalls that during the 2007 to 2009 Global Financial Crisis, Venture’s valuation dipped to 12.1 times earnings versus 14.9 times now. By applying the same multiple to the reduced earnings estimate, Tng has derived his revised target price of $10.13. With a net cash position of $1.32 billion and a yield of 6.89%, Tng believes that the stock’s share price will be supported at the $10 level.
The CGSI analyst is not alone in his bearish outlook for Venture. In its April 3 note, DBS Group Research highlighted that Venture, with its main manufacturing facilities in Penang and Johor, Malaysia, and over 50% of revenue derived from exports rather than a ‘local-for-local’ model, would be significantly impacted. “While the company may be able to pass some of these tariffs onto customers, it could lead to higher overall costs at the initial stage, potentially affecting its pricing competitiveness.”
Venture now operates sites in Singapore, China and the US as well, leaving it exposed to tariffs on multiple fronts. “While the company may be able to pass some of these tariffs onto customers, it could lead to higher overall costs at the initial stage, potentially affecting pricing competitiveness,” warns DBS.
Overall, DBS notes that the most impacted tech players will be those with exports to the US. Tech manufacturer Aztech Global, with around 80% of its total revenue derived from its key customers stateside, is another that they see could be affected. Currently, around half of its production is sourced from its plant in Johor, with the remainder produced at its plant in China.
Although Aztech has commenced commercial production for five new products catering to a mix of both new and existing customers in the 4Q2024, as well as securing seven new customers to produce consumer and health-tech products throughout last year, the bulk of total revenue is still heavily reliant on its key US customer. “Given this significant exposure to the US market, the company is likely to be impacted by tariffs,” says DBS.
‘Local for local’
Conversely, companies with a ‘local-for-local’ model, such as semicon-focused Grand Venture Technology (GVT), AEM Holdings (AEM) and UMS Integration (UMS), are cited by the analysts to be the least impacted as their production is mainly for local consumption.
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GVT, with its manufacturing model that closely aligns production with customer operations in each geography, could be relatively insulated from the impact of tariffs, writes the team. “We believe that this geographic alignment, coupled with its precision engineering capabilities, can enhance GVT’s stickiness with customers and position it as a strategic partner in a more regionalised and diversified global supply chain landscape,” adds DBS.
Brighter outlook
The outlook for AEM is brighter, due to its tools serving as the plan-of-record solution for key customer Intel’s back-end test needs in client and server applications. “This reduces the likelihood of second sourcing, and we expect equipment demand to remain supported by non-cancellable purchase orders, providing near-term revenue visibility and stability. Additionally, most of Intel’s assembly and test operations are based in Malaysia, Vietnam, China and Costa Rica, minimising direct tariff exposure, with New Mexico being the key exception,” says DBS.
Despite this, there remains a risk of indirect exposure if chips tested offshore are shipped back to the US and end-demand softens under tariff pressure, potentially reducing utilisation and pull-through of consumables.
Meanwhile, tariff impact for AEM’s new AI customer is expected to be limited, given its fabless model and chip manufacturing based in Asia. “AEM’s high volume manufacturing (HVM) tools are being installed directly at outsourced semiconductor assembly and test (OSAT) partner sites, avoiding direct US tariff exposure, though indirect risk remains if end-demand slows,” adds DBS.
Instead, DBS believes a prolonged tariff regime could indirectly benefit AEM by accelerating Intel’s foundry ambitions and reshaping global chip supply chains. If Intel gains a larger share of external customers as foreign-sourced chips grow more costly for US-based buyers, AEM could see its total addressable market expand, particularly as its handlers and consumables are adopted beyond Intel’s internal needs.
For UMS, the tariff impact is expected to be minimal. The company, which is pursuing a second listing in Malaysia, operates its main production facility there and has a strong presence in Singapore. The semiconductor sector is set to contribute 85% of total revenue for FY2024.
In Singapore, the company maintains strong relationships with existing key customers, while in Malaysia, it is expanding its footprint by engaging with a new key customer with a robust presence in the country, says DBS. “This reflects the company’s local-for-local strategy, focusing on catering to regional market demands through a strong local presence to drive operational efficiency and growth in both markets.”
Their share prices are volatile, together with other tech stocks. GVT has been down 22.97% since April 3 to close at 57 cents on April 9 but jumped 7.02% to end April 10 at 61 cents. UMS Integration was down 13.08% by April 9 and regained 5.91% to end April 10 at 99 cents. AEM, meanwhile, was down 17.19% to $1.06 and only managed to claw back one cent to end April 10 at $1.07.
A range of opportunities
Perhaps the strongest of the lot, as seen by the team at DBS, is tech player Frencken, due to its “beauty of diversification”. Frencken says DBS operates business segments across five key segments: semiconductor, medical, analytical life sciences, industrial automation and automotive, allowing it to spread risk and tap into a wide range of market opportunities.
It also operates a network of diversified production facilities in the Netherlands, Malaysia, Singapore and China, providing a broad geographic footprint that supports its global operations.
DBS sees this diversification as a way to strengthen Frencken’s market presence and mitigate regional risks, including tariff fluctuations. Its diversified customer base reflects this, with the Netherlands contributing 37% of total revenue in FY2024, followed by the US at 12%, the Czech Republic at 11%, Singapore at 9% and China at 7%.
“The revenue from the Netherlands is mainly from its key semiconductor customer there, a local-for-local model, hence not affected by tariffs. This diversified approach significantly reduces the company’s vulnerability to tariff fluctuations, as its revenue streams are spread across different industries, regions and customers,” says DBS.
Nanofilm Technologies (Nanofilm), with its supply chain dynamics largely spread across China and other parts of Asia, should also provide shelter from direct tariff impact, says DBS, which has a “hold” call and 72 cents target price. Nanofilm’s main production facilities comprise two plants in Shanghai, along with facilities in Vietnam, Singapore, India and Germany. The Shanghai plants, along with those in Vietnam and Singapore, serve as key supply chain hubs for consumer electronics. “Barring a complete reshoring of manufacturing to the US- a scenario deemed unlikely due to competitive disadvantages, the group is well-positioned to navigate the current market landscape,” adds DBS.
OCBC Investment Research (OIR) analyst Ada Lim holds a more pessimistic view on Nanofilm, as she lowered her fair value on the stock for the second time in a week. Lim, having already reduced her fair value on the stock to 66.5 cents from 73.5 cents previously on April 2, has further lowered this to 59.5 cents on April 8.
She notes that Nanofilm operates in Vietnam and China, as well as in Germany, India and Japan. “As we have cautioned previously, Nanofilm is not immune to a potential slowdown in US growth and spillover effects on the broader economy given its dependence on end-demand for consumer electronics,” writes Lim. As her fair value is now higher than Nanofilm’s closing price of 45.5 cents on April 9, down 40% since April 3, when the tariffs were announced, Lim has a “buy” call for the stock. This counter regained 7.69% on April 10 to close at 49 cents.
