After attending the $AEM(AWX.SI) AGM yesterday, I see 4 potential positive catalyst and one negative news for the stock price. First the positives:
The increase in sales is due to Intel’s decision to rollout their 10nm chips earlier. Those who follow Intel’s progress on 10nm will know that Intel is facing huge problems with 10nm. The yields are low which means more testing is required to ensure reliability. Furthermore Intel has no confidence on their 10nm chips so they continue to produce their 14nm processors, hence the need for new handlers from AEM. Therefore the high sales orders are expected to continue for this year at least in my opinion.
AEM shipped the first prototype to the new memory customer in Feb’19. The prototype is now under Qualifications approval by the customer. Once approved which is expected in the next couple of months, commercial deliveries will start. I believe this is a huge potential as volume of memory chips are huge as compared with processors and this success may trigger other memory chips manufacturers to come on board.
Huawei has accepted AEM’s solution and the first delivery will be in Jun’19. This tester is for testing the short reach cable links for the 5G network which operates at speeds of 100Gbps. It was Huawei that approached AEM to come out with a solution as there are currently no portable testers. This tester will enable Huawei to use the cheaper Multimode Fibre Optic cable for the 5G network. As Huawei will be aggressively rolling out it’s 5G network in China, this is another big potential customer. On top of this, AEM’s handheld cable tester, TestPro which was launched last year has won several awards. This recognition and the approval of network cable manufacturers on the use of AEM’s tester to make claims will enable AEM to penetrate the market for network cable testers currently dominated by Fluke Networks.
AEM’s MEMS tester division, Afore is a pioneer in WLP (Wafer Level Packaging) MEMS testing. MEMS with WLP are much smaller 1x1mm compared with 4x4mm normal MEMS. Currently the world’s largest MEMS sensor manufacturer in the world is conducting qualifications on Afore’s testers. Hopefully there will be good results from this.
Finally Novoflex which is 21% owned by AEM, has received authorization from MasterCard and Visa for their customized Smart Cards. Novoflex’s printed chip technology is not only cheaper but more secure as the chip cannot be removed unlike current Smart Carts. They are securing pilot testing with several banks globally with expected roll out by end of this year. As this is not AEM’s core business, most likely the business will be sold for a good profit.
As for the negative news, the management confirmed that there will an impact from Intel’s withdrawal from the 5G Modem business. As currently Intel is still producing 4G Modems, the impact will not be felt yet. The impact will also be mitigated as although the volumes are large the testing time of modems are much shorter than processors. Furthermore as modems are not part of Intel’s core business, some of the testing are outsourced to assembly and test companies. These companies do not use AEM’s handlers. My concern is that as Intel’s 4G modem performance is inferior to Qualcomm’s modems, Apple may switch from Intel to Qualcomm earlier, before the 5G phones are released.
There are also other technologies which AEM are working on but I will not mention here as those will take a longer time to bear fruits. Please see the attached pdf for the AGM presentation. I foresee a bright future for AEM. Please DYODD, vested 190k shares.

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thank you for the details.. 👍


Thanks for the summary! Appreciate it. :)


Good summary and analysis. Thanks.


Reply to @sby125 : super investor is back.


Wow! This said a lot about the relationship AEM has with Huawei and AEM's reputation. AEM management said this in the AGM or recorded in the mnutes agenda?
"It was Huawei that approached AEM to come out with a solution as there are currently no portable testers."


Reply to @Pizzaprata : Thank you for sharing this.

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Thanks very much for all this useful information from managements presentations and the Q and A session. Just wanted to add that the CEO of Inspirain had said that although that cable testing unit would be seeing strong growth, this is coming from a small base, so revenue contribution in the next year won’t be very impactful.


Reply to @Pizzaprata : Couldn't stay after the AGM as time had dragged on, and I had to leave. I believe that the hybrid tester launch by end-2019, was something that they had mentioned previously.

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Thanks for your input Sir! I value your insights a lot!


Getting a client like Huawei is a coup for $AEM(AWX.SI) ....nice one by this management. A leader in tech and a very fast mover at that, Huawei, is a big bonus to all its downstream business compatriots.

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AEM 3Q2019 Results Briefing

Attended the above today. The Chairman Mr Loke was very upbeat about $AEM(AWX.SI)’s future. One of the slides he showed during the briefing was from Intel which is moving beyond PC and Server market to the Data-Centric market. The slide below shows the total addressable market or TAM growing from around $60 billion currently to $288 billion in 2023! AEM will expand their offerings in SLT and grow their capabilities in tester development including incorporating AI.

However the news that I am excited about is that they have shipped the prototype Hybrid test handler and have received PO for production shipping next year. Please read my previous post here: to know more about the Hybrid Project. The Hybrid handlers is not a replacement of their HDMT but it will replace a competitor's product at Intel. So this is a new market for AEM.

More good news is that the Gross Margins of the Hybrid Equipment is even better than the current HDMT. AEM is all geared up for this additional capacity, they have recruited additional staff and secured an additional 20,000 sqft of space next to their current location in Singapore. They have also fully fitted out their space in Penang.

Unfortunately there are no new updates for their other potential major customers, the memory customer and Huawei. However even with Intel alone, AEM should continue to grow in the years ahead due to the rollout of 5G, cloud computing and AI.

Vested 140k shares. Please DYODD.

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Intel Strikes Back

A couple of good news from $AEM(AWX.SI)'s main customer $INTC from the past week. According to the attached Maybank KE report, Intel has started ordering EUV equipment which are lithography tools used for manufacturing 7nm process nodes semiconductors. This means Intel is on tract to launch their 7nm chips in 2021 which means more orders for AEM next year. As I mentioned in my previous post, Intel has no choice but to push forward regardless of the poor yields in the new process nodes as they have to snatch back their technological lead from $AMD

The second news this week is that Intel has slashed their new 10th generation chips for high end desk tops (HEDT) by up to 50%, see link: This is unprecedented, faster chips at much lower prices. Intel has no choice as these are still the ancient 14nm process chips and Intel just squeezed out more performance from these chips by boosting the clock speed. However the cut in prices has put Intel chips back in the lead in the performance per dollar, see chart below. This will help Intel maintain demand for the older process chips.

However this lead will be short-lived as AMD is expected to launch their 3rd gen HEDT Threadripper 7nm chips in November. All these are bad for Intel but good for for equipment suppliers like AEM as Intel have to ramp up their 10nm process and start on their 7nm process next year.

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$AEM(AWX.SI) has finally broke 1.20, it's amazing that there are so many sellers at every pip despite the positive news recently. There are too many investors with only a short term view of AEM. The Maybank KE analyst has increased the target price of AEM to 1.50 which is the same as my estimate last month:
I guess most are concerned that next year's orders have been front loaded to this year which means next year will be bad. However like the MKE analyst I am confident that next years orders of HDMTs will continue to be big as Intel will be ramping up their 10nm production as well preparing for the 7nm process (see image).
On top of that we have the Hybrid Project for Intel which should be ready for production by years' end. Currently Intel is using the HDMTs mainly for functional testing which Intel calls Class Test. AEM is developing the Hybrid solution which is an extension of the HDMT for System Level Testing (SLT) and Burn-in. Intel is still buying AEM's legacy STHI equipment currently for SLT. However the STHI is able to handle only one chip at a time as compared with up to 30 chips at a time for HDMTs. Therefore Intel will definitely be moving all SLT and burn-in to the new Hybrid solution to reduce the Cost of Testing (CoT).
Why does Intel need so much testing? They are facing huge yield problems with the new 10nm process. By having multiple performance characteristics, Intel may be able to salvage defective chips as lower performing processors for the low end market. This is called the Binning process, just Google it if you want to know more.
However I do not expect much contribution from the 5G cable test equipment from Huawei given the problems Huawei is facing and that these testers cost only a couple of thousand each. However I do hope that AEM can break Fluke Networks domination of Network cable testers in the long term. Please DYODD.

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Target Price

Nice Q2 results from $AEM(AWX.SI). The record revenue and profits is due to their key customer Intel rolling out their 10nm processors. I believe Intel will continue ramping up their 10nm processors due to yesterday's product release by AMD, see link:
For the first time in history AMD's server processors are faster than Intel's. This is critical as the server chips are the most profitable for Intel and they totally dominate the market with a 95% market share. Intel will want to snatch back the crown.
Currently Intel is rolling out their 10nm chips for Laptops for delivery for the holiday season end of this year. As they having serious yield problems, they are still producing the 14nm chips hence the need for more handlers from AEM. From Intel's April 2019 Investor Day Slide below, they plan to produce 10nm server chips from 1H2020. However AMD's product release yesterday will place much pressure on Intel to move this schedule forward regardless of the yields to snatch back the lead from AMD.
Another good news is that AEM's MEMs testing division, Afore has received an initial order from the world's larget MEMs sensor supplier. I mentioned this possibility in my previous post here
Please DYODD. Vested 210k shares in AEM and 300 shares in AMD.

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Although the STI did no go up much (<2%) for the month of February, my portfolio performed much better (+11%) this month thanks to the following counters:
$Accordia Golf Tr(ADQU.SI)
$Silverlake Axis(5CP.SI)
$Sasseur Reit(CRPU.SI)

My conviction and patience have paid off. Even Oxley which have been on the downtrend for so long has finally started to move up, however it’s still underwater for me. Last week I took 23% profit for AGT. Today, I sold all my Silverlake shares at 31% profit. I also sold 20% of my AEM share at 33% profit. And for Sunpower, my average price is 0.44 and I will sell my 2nd batch after the results release tomorrow.
As for Sasseur Reit, I will be keeping them for now. It is still CD with a 3.541c dividend coming up. I believe their outlet sales can continue to grow and it should be able to payout a dividend yield of at least 8.5% after XD.
I first bought Sasseur reit 5 months ago. I did not buy much as there is no track record and the malls are in China, it will be difficult to monitor how there are doing. However I believe in their business model and even added more during the recent price drop before the results release. The results were better than expected and it proves that the Outlets model is resilient to online shopping and even the trade war! The 4Q DPU is 28% above forecast. This is despite the fall in the RMB/SGD exchange rate. The reason for the good performance is that the 4Q is historically the period with the highest sales and also that they no longer have to keep reserves in case of poor performance. This REIT is difficult to understand and is not for everyone, please see my previous post if you want to know more:

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