KUALA LUMPUR (Dec 19): Shares in Inari Amertron Bhd, which is principally engaged in back-end semiconductor packaging including radio frequency testing, fell 15 sen or 7.98% this morning.
As at 11.50am, the counter fell to a more than two-week low of RM1.73 with 46.47 million shares traded. Generally, the stock has a good run this year, climbing 10% from a year ago.
Analysts contacted by theedgemarkets.com believe the drop could be due to news of a US chipmaker selling off a business unit, which may impact Inari's contract book.
An article by the Wall Street Journal this morning said Broadcom Inc, an Apple supplier, is looking to sell one of its wireless-chip units, a move that would accelerate the company's shift away from its roots as a semiconductor maker. It is understood that Apple itself could be a potential buyer.
"Broadcom is working with Credit Suisse Group AG to find a buyer for its radio-frequency, or RF, unit, a segment of its wireless-chip business that makes filters used in cellphones to clarify signals, according to people familiar with the matter," said the Wall Street Journal.
It is understood that the selling pressure on Inari this morning is possibly due to the fact that Broadcom is a major customer of the Malaysian semiconductor group. News of the US microchip company selling off its RF unit could likely cause a disruption to the supply chain, analysts say.
Analysts are mixed in their outlook for the local semiconductor industry, with some warning of a slowdown amidst trade tensions which is expected to be reflected in Malaysian-based semiconductor companies' performances.
Of the 19 calls listed on Bloomberg, a majority of analysts (eight) have issued a Sell call on Inari, with six Holds and five Buys.
According to UOB Kay Hian analyst Desmond Chong, assuming Apple is the buyer of the RF unit and decides to load more volume, this would no doubt benefit Inari.
However, if Apple only keeps Broadcom for its own use, then customer concentration risk might increase, Chong said.
"While it's everyone best guess on the outcome of this news as there are too many variables at the moment, sentiment wise it certainly doesn't favour Inari at this juncture because of the uncertainty.
"Near term wise, business is still intact at the moment, at least until end of FY21, as Broadcom did sign a two-year RF supply contract with Apple in June 2019," Chong told theedgemarkets.com.
https://www.theedgemarkets.com/article/inari-falls-almost-8-news-us-chipmaker-selling-unit
