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AEM Q1 profit tumbles 62% amid semiconductor slump

SINGAPORE - Semiconductor equipment maker AEM Holdings posted a 61.8 per cent drop in net profit to $15.6 million for the first quarter ended March 31, from $40.8 million the year before.

This comes as the group’s revenue for the quarter fell 41.7 per cent to $152.7 million, from $261.9 million in the preceding year-ago period, the mainboard-listed company said in a regulatory filing on Thursday.

The company noted that the “exceptionally high” revenue recorded in the year-ago period was due to “volume ramp-up to support our key customer’s new platforms”, with this starting to taper off in the third quarter of last year.

“The completion of this volume ramp-up, coupled with the slowdown in the semiconductor industry in general, resulted in the decrease in both Q1 2023 revenue and profit before tax,” the company added.

As at March 31, the group maintained a “healthy balance sheet” with total assets standing at $809.8 million, compared to $805.6 million as at Dec 31, 2022.

Cash and cash equivalents fell to $110.1 million at the end of the first quarter, compared to $127.8 million at the end of the fourth quarter. This was mainly due to changes in working capital, said AEM.

In the near term, the group sees a “flickering of positive signs” across the semiconductor industry.

“Technology nodes are continuing to advance as two of the world’s most advanced foundries are forecasting new process nodes to be up and generating revenue in the second half of 2023,” said the company, and this is expected to drive demand for new test capability.

Beyond 2023, AEM is positive that the future of the industry “has never been more promising”.

“The recent excitement over generative artificial intelligence (AI), such as ChatGPT, is fuelling the demand for AI-focused semiconductor devices to enable these solutions to be delivered to the masses at economically feasible rates,” it said.

Said chief executive Chandran Nair: “Given the expected decline in testing equipment spending this year, we are taking proactive steps to lower operating costs and drive operational efficiency, while doubling down investments in engineering and R&D in critical areas.

“As we navigate short-term headwinds, we are accelerating our development of Test 2.0 solutions that will be our key driver of growth in the coming years,” he added.

Shares of AEM were trading down one cent, or 0.3 per cent, at $3.44 as at 10.54am on Friday, after the earnings announcement. THE BUSINESS TIMES