APPLE'S move to drop semiconductor giant
Intel Corporation's chips for future Macs is unlikely to put a dent on AEM
Holdings' business.
The firm may in fact see some upside given
that Intel "will be able to dedicate more focus on its data-centric
business" once it discontinues supplying chips to Apple, DBS analyst Ling
Lee Keng told The Business Times.
"Its data-centric business has been
growing, and is expected to grow at a faster rate than its PC-centric business,
which will positively impact AEM as it is involved in the testing of its logic
chips," she said.
Although not disclosed by AEM, most reports
suggest that the firm's key customer is Intel, which contributes over 90 per
cent of its revenue.
Intel had recorded a revenue of US$72
billion for FY2019, up 1.7 per cent from a year ago led by growth in its data
centre business.
Ms Ling also pointed out that Mac chips
sold to Apple accounts for only around 4.7 per cent of its revenue.
Likewise, Maybank Kim Eng's analyst Lai
Gene Lih noted in a report that Intel had expected strong data centre business
for the first half of 2020, and "headwinds from softer PC demands" in
the second half of the year.
Meanwhile, the long-drawn pandemic will
continue to fuel the demand for data centres and servers.
As companies see increased productivity
amid work from home measures, they will look to reassess telecommuting
arrangements, said a DBS report.
"This will drive the longer-term
demand for data centres and server processors, the segment which Intel is
focusing on," it said.
DBS had on Monday upgraded AEM to
"buy" from "hold" with a revised target price of S$3.53
from S$2.87.
Shares of AEM closed on Monday at S$2.93,
down S$0.07 or 2.3 per cent.
Claudia Tan
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