KUCHING: Semiconductor company, Unisem (M) Bhd (Unisem) anticipated another year of record sales following a strong growth in demand for tablet PCs aa well as the automotive industry.
A research report from TA Securities Holdings Bhd (TA Securities) stated that tablet PCs such as iPad, Blackberry Tablet OS, Android and Dell Streak made up approximately 20 per cent of the group’s revenue.
Unisem’s robust record of RM170 million to RM180 million earnings in financial year 2010 was due to high demand of semiconductor products and industry inventory replenishment.
TA Securities pointed out that Unisem’s current capacity utilisation rate had deteriorated since the fourth quarter for financial year 2010 (4QFY10) and was hovering around 70 per cent.
Despite that, the company viewed that such slowdown in 1QFY11 would be short-lived and end market product demand should improve in the subsequent quarter. The research firm stated that the group reserved capital expenditure of RM250 million to cater mainly for the Ipoh and Chengdu plants in FY11.
Unisem would be continuing its focus on organic growth as there were not many candidates that fit its business model and were available for acquisition. Thus, the group would be setting up a new, second plant at Jalan Gopeng, Ipoh.
On the other hand, the construction and facilitisation of Phase 2A in Chengdu was expected to be completed by 1QFY11 and would commence operation in March 2011.
This would increase production area by 130,000 square feet which would cater for wafer bumping, wafer level chip scale package (WLCSP), laminate products and microelectromechanical systems.
In strengthening Unisem’s position, the company had gone through final qualifications with a Tier 1 customer to produce quad flat no-lead (QFN) packages in Chengdu.
TA Securities highlighted that this Tier 1 customer has the potential of becoming one the group’s top ten customers if the customer was to be satisfied with Unisem’s quality and timeliness.
Hence, TA Securities pegged Unisem at a target price of RM2.46 per share.