AI chip boom puts aluminium supplier AMS on track for semiconductor-led growth

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According to Kenanga Research, aluminium supplier AMS Bhd is an underappreciated beneficiary of the global wafer fabrication equipment (WFE) upcycle. Growing investment in artificial intelligence (AI) infrastructure and semiconductor manufacturing is expected to create fresh growth opportunities for the company.

Kenanga identifies AMS’ potential

Initiating coverage with a fair value of 62 sen (USD 0.15), Kenanga believes AMS has the potential to evolve into a semiconductor-focused aluminium supplier.

"We believe the market has yet to fully price in this transformation, hence we see meaningful catch-up potential as AMS' semiconductor business continues to scale," noted the research house.

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Kenanga projects the AMS revenue to improve by 17 per cent in FY2026 and 20 per cent in FY2027, while net profit is forecast to rise by 49 per cent and 60 per cent, respectively. The growth outlook is backed by rising semiconductor demand, higher contributions from value-added processing services and improving margins.

The optimism reflects a strengthening global semiconductor capital expenditure cycle, particularly outside China, where WFE spending is forecast to expand 36 per cent in 2026 and 33 per cent in 2027 as new fabrication plants begin commercial production.

Adding further momentum, the world's four largest hyperscale technology companies are expected to increase capital expenditure by 75 per cent to USD 608 billion in 2026, followed by another 11 per cent rise to USD 680 billion in 2027, driven largely by AI infrastructure investments. According to Kenanga, an additional USD 100 billion invested in AI-related capex translates into USD 8 billion (approx.) in additional WFE spending.

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How is AMS positioned in the semiconductor supply chain?

AMS provides semi-finished aluminium products to precision engineering companies that manufacture components for leading semiconductor equipment producers. This allows the company to benefit regardless of which global equipment maker ultimately secures new contracts.

Kenanga stated that AMS has established strong relationships with multinational and local precision engineering companies in Penang's semiconductor manufacturing ecosystem.

It also estimates the company has over 80 per cent market share among customers supplying one major US-based WFE manufacturer, supported by its extensive aluminium product range and value-added processing capabilities.

Semiconductor-related revenue has doubled since 2024. It is projected to contribute 46 per cent of total revenue in FY2026 before surging to 55 per cent in FY2027, compared with 37 per cent in FY2025.

AMS has been expanding production capacity after its April 2026 listing. Its Penang facility has its first production shift booked through the end of 2026, while a second production shift began in July. Meanwhile, the Johor plant is expected to reach full utilisation by the fourth quarter (Q4) of 2026.

Kenanga also highlighted that AMS has secured qualification from a leading global aluminium rolling mill, with commercial production scheduled to begin in Q4 2026.

The certification enables AMS to supply as an approved supplier, recognised by global WFE manufacturers, to semiconductor precision engineering customers.

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AMS expands footprint via value-added services

Beyond semiconductor demand, AMS continues to differentiate itself from conventional aluminium distributors through value-added services such as cutting, shearing and basic machining, allowing customers to receive materials closer to production-ready specifications.

Kenanga added that WFE-related business typically delivers mid-teen profit margins while offering order visibility of around two quarters.

Although AMS shares have gained about 43 per cent since their initial public offering, Kenanga believes the stock remains attractively valued relative to peers and offers further upside as semiconductor-related earnings continue to expand.

Kenanga, however, noted that aluminium price volatility, weaker WFE spending and delays in onboarding new customers remain key risks to its earnings outlook.