Observers are keenly anticipating the continuation of the semiconductor industry’s upcycle this year, and players like Grand Venture Technology (GVT) are expected to benefit.
Having originally carved its niche in back-end semiconductor manufacturing, such as wire bonding and chip testing, GVT has since expanded into the front-end domain, offering services like metrology and etching. Today, revenue from its semiconductor segment continues to make up the lion’s share, at 53.2% or $59.5 million of the total $111.9 million for the nine months ended Sept 30, 2024, driven by GVT winning new contracts and growing wallet share.
On Dec 19, 2024, the manufacturer further strengthened its position in the space, securing a significant contract to supply parts and components for next-generation thermal compression bonding (TCB) equipment to a “leading global semiconductor assembly and packaging equipment manufacturer”.
According to GVT, this customer’s equipment plays a critical role in advanced semiconductor packaging for next-generation chips destined for use in data centres, graphics cards, AI accelerators, mobile application processors and high-bandwidth memory (HBM).
The Singapore-listed player sees the advanced packaging market as a lucrative space, citing research from Yole Intelligence, a tech-focused strategic development firm. The market is expected to expand at a CAGR of 11% between 2023 and 2029, reaching US$69.5 billion ($94.6 billion) by the end of the period.
Following this win, analysts Amanda Tan and Ling Lee Keng of DBS Group Research note in their Jan 6 report: “Overall, with generative AI as one of the key driving forces, we see multiple growth engines powering the semiconductor segment for both new front-end customers as well as existing back-end customers, which we anticipate will lift semiconductor segmental revenues by 30% to $100.4 million in FY2025 and 30% to $130.6 million in FY2026 respectively.”
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Beyond semiconductors, GVT has also expanded into other segments through a series of M&A to diversify risk away from the cyclical nature of its key segment.
In 9MFY2024, GVT’s electronics, aerospace and medical segment was its second-largest contributor, accounting for 32.3% of revenue at $36.1 million and increasing 32.8% y-o-y from 9MFY2023’s $27.2 million. This was followed by the life sciences segment at 14.5% or $16.2 million, increasing 3.4% y-o-y from $15.7 million in 9MFY2023.
GVT has also begun to move into advanced ceramics, announcing its partnership with the Agency for Science, Technology and Research (A*Star) on Jan 13 to develop a customised manufacturing platform for high-value advanced ceramics.
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Further bolstering this diversification strategy are the cross-segment capabilities of GVT’s acquired businesses. For instance, GVT’s $17 million acquisition of surface treatment specialist ACP Metal Finishing on March 26, 2024, allows the group to apply surface treatment to prevent corrosion in specific components used in semiconductors and parts used in the aerospace industry.
With this, Tan and Ling have kept “buy” and raised their target price on the stock to $1.04 from 70 cents previously. They write: “Beyond the semiconductor segment, aerospace momentum remains healthy while resilience in life sciences and medical segments should help offset softness in the electronics segment, which is being impacted by weak end-consumer demand.”
The market has seemingly agreed with the views of the DBS analysts, with GVT’s share price closing on Jan 16 at 84.5 cents, a 32.03% surge over the past month.
As the global semiconductor market looks to return to its upward trajectory, the manufacturer looks set for brighter days, particularly given its foray into serving the front-end and specifically wafer fab equipment market, which Tan and Ling understand is “eight times larger” than the back-end semiconductor equipment market.
Another kicker for GVT going forward might be its secondary listing on Malaysia’s Bursa, first flagged last September. Bursa saw 55 new listings in 2024 but could do with GVT’s addition as well.
