PETALING JAYA: Inari Amertron Bhd
’s earnings appear to be nearing a turning point after several years of declining profitability, with two research houses expecting artificial intelligence (AI)-related demand and a recovery in its core radio frequency (RF) business to drive a stronger growth cycle from 2027 onwards.
MBSB Research kept its “buy” recommendation with an unchanged target price (TP) of RM2.95, saying the semiconductor outsourced assembly and test (OSAT) provider is approaching such a period despite another challenging year in 2026.
“We remain confident that the financial year ending June 2027 (FY27) will serve as a strong inflection point for the group with anticipated earnings growth of approximately 50% year-on-year.”
The research house said Inari’s long-standing RF business would continue to provide a solid earnings foundation, while its optoelectronics (opto) segment is emerging as the company’s next major growth engine, supported by accelerating AI-driven optical communications demand.
“Due to AI-driven optical communications, we anticipate the group’s opto business could potentially be on par with the RF business in the coming years,” it said in a note to clients yesterday.
According to MBSB Research, investor concerns over the sustainability of Inari’s RF business have eased after the company’s direct customer signed a multi-year agreement with its end customer.
“We understand that Inari’s direct customer for the RF business has signed a multi-year contract with an end customer. “This would reinforce the medium- to long- term visibility of the RF business for Inari.”
The report added that future smartphone models are expected to carry significantly higher RF content through the migration from single-sided mould technology to double-sided mould packaging, supporting a meaningful rebound in loading volumes from FY27 onwards.
While RF remains the group’s largest earnings contributor today, analysts believe AI-related optical networking could reshape the business mix over the next several years.
MBSB Research said Inari is well positioned within the silicon photonics supply chain as an OSAT provider for optical transceiver module chips.
“The group’s opto business has been showing lacklustre performance in light of muted demand. However, there is a strong revival in demand due to AI-driven optical communications.”
It added that management has guided that optical transceiver volumes would “increase exponentially from FY27 onwards” as demand for photonics interconnect technology accelerates.
Beyond optical communications, Inari is also expanding into AI-related power management products through system-on- module solutions, including DC-DC converters and voltage regulators.
“In the immediate term, the group is focusing on power regulation to support AI applications which have been showing good momentum, with the pilot line commencing in August 2026.”
However, MBSB Research expects meaningful earnings contributions from this segment only from FY28 onwards.
Even so, FY26 is still expected to mark the company’s fourth consecutive year of earnings decline since profits peaked in FY22, reflecting continued weakness in existing demand before the anticipated recovery materialises.
Meanwhile, AmBank Research struck a similarly optimistic tone in its latest report, arguing that the company’s optical communications business is beginning to complement its traditional RF operations as a second long-term growth driver.
It highlighted improving prospects across both the RF and fibre optics businesses, suggesting the company is entering a new phase where growth is no longer solely dependent on its legacy smartphone-related RF operations.
Its report pointed to optical communications as an increasingly important earnings pillar alongside RF, reinforcing expectations that AI infrastructure investments will become a meaningful long-term driver for the group. AmBank Research has a TP of RM3.25 on the counter.
While also holding a “buy” call on Inari, an analyst with a foreign brokerage is nevertheless recommending a lower TP of RM2.80, preferring to apply a modest execution discount until the new AI-related businesses demonstrate sustained commercial volumes.
“We agree that the worst of the earnings downcycle is likely behind the company. The investment case is no longer solely about smartphones, but about diversification into AI infrastructure.
“The RF business should remain a dependable cash generator following renewed customer commitments and increasing RF content per premium smartphone, while the optical communications business has the potential to become an equally important earnings pillar as hyperscale AI data centres drive demand for silicon photonics and optical interconnects,” she told StarBiz.
The analyst added that Inari has both the financial capacity and customer relationships to invest in these opportunities without materially increasing risk.
