AEM SGD (SI: AWX) might just be in that sweet spot of the global semiconductor industry right now. Or perhaps one of the sweet spots. For they're in the business of semiconductor testing equipment - the kit used to make sure that things are being made in the right way. As the world changes what is made and also the number of people making things where this could indeed be the right area of business to be in. When different things are made they need more testing. When there are more producers they will need more testing equipment.
Of course, a part of this is the idea that people are going to be silly enough to continue with this nationalisation - perhaps onshoring is better - of chip production. But that does seem to be the way that politics is going. Even if that's a bad, bad, idea for the economy in general it will also have those who benefit from it.
AEM share price from Singapore Stock Exchange
There is no specific news here driving that 6.5% rise. It looks just like a change in the general view of AEM and its prospects. Which does make a certain amount of sense. As we've pointed out about Nvidia earlier today the development process of a new technology is from general purpose chips to application specific. AI is going to move from GPUs to ASICs soon enough. As Brainchip Holdings is showing, this is already happening. Each new ASIC - and there will be many, one for each intended purpose. For that's the point, to optimise a known process - will require testing. Boom times for semiconductor testing equipment manufacturers.
That's actually fairly standard technological change. But we've another issue supercharging this too. Which is that the Americans want to stop selling chips to the Chinese. The Chinese are subsidising domestic chip manufacturing. The Europeans have the usual plans for the EU to do something or other about chip manufacturing. Everyone is being infested with the same economic nationalism at the same time. That this is a bad idea if obvious. But more chip factories littered around the world in however uneconomic a fashion does mean a larger market for semiconductor test equipment.
As this market also tends to operate there are leading - as in, only the one or two likely suppliers - suppliers of each piece of kit. No one makes “semiconductor factories” but there are specific go-to companies for each different piece of equipment.
This is not to say that AEM is definitively going to boom. But it is to say that the general macro- and micro- economic backgrounds are looking good.
