Unisem (M) Bhd is positioned for enhanced earnings growth as utilization rates at its Gopeng Phase 1 (GP1) facility improve, its wafer-bumping unit returns to profitability, and customer demand increases. According to CIMB Research, the semiconductor assembly and testing services provider is preparing for its next growth phase with plans to begin construction of Gopeng Phase 2 (GP2) in the fourth quarter of its financial year 2026.
The GP2 expansion, with a projected capital expenditure between RM1 billion and RM1.1 billion, aims to broaden Unisem’s service offerings to include wafer bumping, probing, and advanced wafer-level packaging. This will complement the company’s existing assembly and testing capabilities, enhancing its competitive position in the semiconductor industry.
Currently, GP1 is operating at approximately 60% to 70% capacity, with volume loading seen as the primary constraint rather than physical facility readiness. CIMB Research anticipates continued sequential revenue growth, with earnings growth likely to outpace revenue due to improving operating leverage. Key contributors to this outlook include increased production from clients Monolithic Power Systems and Infineon in the second half of financial year 2026, the turnaround of Unisem Advanced Technologies (UAT), higher GP1 utilization, and a favorable shift toward higher-value flipchip packages.
The wafer-bumping segment, UAT, has returned to profitability as of June, alleviating a previous financial drag on the group. Unisem is currently implementing a US$15 million equipment upgrade to boost UAT’s capacity to approximately 20,000 wafers per month, up from the current 12,000 wafers.
To mitigate the risk of underutilized capacity once GP2 becomes operational, Unisem is pursuing long-term customer agreements, consigned equipment arrangements, and potential upfront customer funding. The expansion will be executed in two stages. The company has already raised RM467.5 million through the first tranche of a private placement, which is expected to partially finance the GP2 development.
Reflecting these positive developments, CIMB Research upgraded Unisem’s stock rating to “buy” from “hold,” raising its target price to RM5.50 based on a 37 times price-to-earnings ratio for fiscal year 2027, aligning with the five-year average for the Malaysian outsourced semiconductor assembly and testing sector.
An industry analyst highlighted the semiconductor sector’s robust growth outlook, buoyed by sustained demand related to artificial intelligence and expanding data centers. The recent decline in Unisem’s share price presents what the analyst believes is an attractive entry point given the company’s potential upside.
Unisem’s first-half financial results for fiscal year 2026 also supported this outlook, with core net profit rising 171.2% year-on-year to RM19.8 million, driven largely by increased sales volumes. The industrial segment, particularly orders linked to power management applications for AI and data centers, was identified as a key growth driver.
Shares of Unisem were trading at RM4.33 at the time of reporting.