Introduction to Inari Amertron

Inari Amertron, Malaysia’s largest semiconductor company and a leading outsourced semiconductor assembly and test (OSAT) supplier for Broadcom’s Radio Frequency (RF) components, is positioning itself to capitalize on the exponential growth in the advanced packaging market. With a diversified portfolio that includes optoelectronics and fiber-optics components, Inari’s strategy aligns with transformative megatrends such as artificial intelligence (AI) and Edge AI technologies.

Current Market Position and Valuation

Inari’s stock is currently priced at RM2.67, with a target price of RM3.40, indicating an upside potential of 27.3%. At an ex-cash 2025 forecast price-to-earnings (PE) ratio of 23.6x, close to -1 standard deviation below its five-year forward mean, the valuation presents a compelling risk-reward dynamic. The company has weathered a cyclical bottom and is poised for recovery, maintaining its “BUY” recommendation.

Advanced Packaging: The Next Growth Frontier

Inari is advancing its packaging capabilities to meet the growing demand for high-performance semiconductor solutions. During a recent visit to its P13 plant, insights were gained into its roadmap for advanced packaging. The 2025 growth trajectory remains anchored to its flagship RF business, driven by System-in-Package technology using flip-chip. However, the company is also venturing into new platforms, including:

• Flip-chip chip-scale packages
• Flip-chip ball grid arrays
• 2.5D/3D stacked packaging

These technologies enable ultra-high performance, high memory bandwidth, and heterogeneous integration, catering to sectors like AI, servers, networking, smart devices, and industrial applications.

Barriers to Entry and Market Opportunities

Advanced packaging is a high-barrier industry requiring state-of-the-art expertise, significant capital investment, and strong customer relationships. Inari’s strategic entry positions it to tap into a total addressable market (TAM) of US\$1 trillion, with a projected compound annual growth rate (CAGR) of 11% from 2023 to 2029. The company collaborates closely with key technology partners to commercialize its new product pipelines in the coming quarters, supported by Malaysia’s progressive policies and its existing customer portfolio.

Alignment with Malaysia’s National Semiconductor Strategy (NSS)

Inari’s roadmap aligns with Malaysia’s NSS, launched in 2024, which aims to bolster high-value semiconductor manufacturing. The NSS provides RM25 billion in fiscal support, including RM3 billion allocated for capital grants, R&D, and modernization. Leveraging its position as a key OSAT player, Inari is set to benefit from cost optimization and enhanced competitiveness, reinforcing its role in Malaysia’s semiconductor ambitions.

Financial Performance and Forecast

Inari’s financial metrics underscore its resilience and growth potential:

Revenue growth in FY25 is projected at +6% year-on-year, driven by its RF segment and the anticipated launch of AI-capable smartphones and high-bandwidth optoelectronic devices.

Stock Impact and Valuation

Despite a 12.5% year-to-date decline in share price, largely due to market concerns over smartphone demand and regulatory uncertainties, Inari’s RF business maintains healthy volume loadings. The launch of a new affordable model by its primary U.S. customer is expected to sustain momentum through 1H25. The target price remains at RM3.40, based on a 35.0x 2025F PE, with positive long-term growth prospects.

Environmental, Social, and Governance (ESG) Initiatives

Inari’s commitment to ESG principles is reflected in the following initiatives:

• Environmental: Inclusion in the FTSE4Good Bursa Malaysia Index since 2020.
• Social: Hiring only foreign workers with legal permits and ensuring all employees receive minimum wages.
• Governance: Compliance with anti-corruption laws, including the MACC Act 2009 (Amendment 2018), with no reported incidents of corruption.

Conclusion

Inari Amertron is well-positioned to ride the wave of growth in the advanced packaging market, leveraging its strong customer base, technical expertise, and alignment with national initiatives. With a balanced risk-reward profile, robust financials, and strategic foresight, the company remains a compelling investment opportunity in Malaysia’s dynamic semiconductor landscape.