Chip test equipment makers remain bullish

They are optimistic of further growth in next three quarters

GEORGE TOWN: After five quarters of growth since early 2016, semiconductor test equipment manufacturers in Malaysia are still optimistic of further growth in the next three quarters of 2017.

Both Pentamaster Corp Bhd and MMS Ventures Bhd are projecting a strong increase in their orders from the automotive sector this year.

Pentamaster executive chairman C.B. Chuah told StarBiz that “the automotive semiconductor market is expected to reach US$48.78bil by 2022, at a compounded annual growth rate (CAGR) of 5.8% between 2016 and 2022.

“This is due to the increasing use of electronic systems in vehicles to enhance the performance of safety and multimedia functions.”

For the second half of the year, Chuah expects orders from the automotive industry to rise higher between 30% and 35% of the group’s test equipment sales compared with 20% and 30% in the same period last year.

The segment with the most sales in the first half of 2017 is the smart mobile device sector, which takes up about 80% of the orders for Pentamaster’s test equipment.

“We expect growth in the third and fourth quarters of 2017, as we can see orders for the second half coming in right now.

“Although the second quarter has yet to close, we can expect improved results over last year’s same period and over the first quarter of 2017,” added Chuah.

He said Pentamaster was aiming for a double-digit percentage growth in 2017.

“We are delivering about 120 units of semiconductor test equipment with a market value estimated at US$48mil to the smart device and automotive industries in 2017 compared to about 80 units a year ago,” added Chuah.

Pentamaster posted RM26.6mil in net profit on the back of a RM151mil turnover in 2016 compared with the RM11.9mil and RM83.6mil achieved in 2015.

On the prospects of the semiconductor test equipment market in 2018, Chuah said the growth trend should continue to be driven by demand for sensors used in the smart electronic features of cars.

“However, demand from smart mobile devices is expected to grow moderately in 2018,” he added.

Meanwhile, MMS Ventures managing director T. K. Sia said orders from the automotive sector would dominate in the third and fourth quarters of this year.

“So far, about 50% to 60% of our test equipment is for the smart mobile sector, while the automotive and general lighting segments absorb the remainder.

“In the second half, the orders from the automotive sector should take the lead,” he added.

MMS Ventures expects test equipment sales to improve by a double-digit percentage in the second quarter, which closes June 30, over the preceding quarter.

“So far, we have delivered some 50 units test equipment to our customers in the United States, Japan and other parts of the Asia-Pacific region.

“We still have 20 more units to ship out before the end of June. The group will deliver another 30 to 40 test equipments in the second half of the year.

“We expect a strong double-digit percentage growth in 2017 over 2016,” added Sia.

The selling price of test equipment is around US$100,000 to US$220,000 per unit, and has remained stable for the past two years due to competition.

Moving forward, MMS Ventures expects moderate growth in 2018 for the test equipment sector, said Sia.

According to MarketsandMarkets, a leading international market research firm, the smart sensor market is expected to grow from US$18.58bil in 2015 to US$57.77bil by 2022, at a CAGR of 18.1% between 2016 and 2022.

It said that in terms of unit shipments, the global smart sensor market is estimated to grow at a double-digit growth rate between 2016 and 2022.

“In the current market scenario, there is a growing demand for smart sensors in the consumer electronics, automotive and healthcare industries, and in some industrial sectors such as textile, material manufacturing, and food and beverage, among others.

“This is attributed to the increasing demand for sensing technologies among various sectors and the growing vehicle production in economies such as Japan, China, the US and India,” said the report.

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