ONE of the more recent interesting developments surrounding outsourced semiconductor assembly and test (OSAT) player Inari Amertron Bhd has been the rapid increase in the company’s shareholding by the Employees Provident Fund (EPF).
EPF has been increasing its stake in Inari from at least late September, and based on the latest filings to Bursa Malaysia, it now has a direct stake of 18.7% in the company.
Long-time shareholder Insas Bhd, meanwhile, has said that it plans to dispose of its entire remaining 5.65% stake in Inari.
EPF first emerged in Inari as far back as 2015 when it became a substantial shareholder with a 5.1% stake, so its association with Inari is not completely new.
But why has it been increasing its stake of late, stirring interest among retailers and other institutional investors?
As of Monday, the stock had gained some 1.6% in a week, while the broader stock market benchmark index lost over 2% over the same period, suggesting piqued interest from the market – to say the least.
Inari is one of the 88 companies under the MY Value Up programme, a national capital market initiative jointly led by the Securities Commission and Bursa Malaysia.
The programme is meant to “catalyse strategic value creation among public-listed companies and enhance the attractiveness of Corporate Malaysia,” according to information on Bursa Malaysia’s website.
Analysts say EPF’s accumulation should not automatically be interpreted as a guarantee of future share-price performance.
However, the increasing institutional ownership provides an interesting backdrop as Inari moves into a vital phase of its development.
“Inari is attempting to evolve beyond its traditional exposure to radio-frequency (RF) semiconductor assembly and testing, while positioning itself for structural growth in areas such as artificial intelligence (AI), data-centre connectivity, advanced packaging, silicon-carbide devices and other high-value semiconductor applications,” one industry observer says.
He reckons that with EPF upping its stake in the company, which is pursuing the MY Value Up initiative’s objectives, has its work cut out for it.
Inari reported a lower net profit of RM127.5mil in the financial year ended June 30, 2026 (FY26), compared with a net profit of RM218.7mil in the FY25.
After a briefing by Inari’s management, Public Investment Bank analyst Chong Hoe Leong opines the company is entering a transition period from a mature RF/handset-centric OSAT business towards higher-growth photonics, AI connectivity, system-on-module and advanced packaging applications.
“The most encouraging takeaway is the rapid acceleration of Inari Semiconductor Lab’s photonics/chip fabrication business at the P34 plant,” Chong tells clients in a report.
He adds that Inari’s management expects the longer-term revenue mix to gradually move towards RF (55%), optoelectronics (38%), and generic (7%) compared to a 60%-30%-10% mix, respectively, in the past.
Chong has also raised FY27 to FY29 earnings per share expectations by 10%-15% to reflect the robust growth from the company’s datacom segment.
Correspondingly, he has lifted the stock’s target price to RM3.06 after rolling valuations to FY28.
Chong’s optimism may not be unfounded, although risks still surround the company and industry,
In a report on the global semiconductor industry, TA Securities analyst Chan Mun Chun says the global semiconductor industry remains firmly in a super-cycle, supported by sustained demand from key structural growth areas, particularly AI-related investments and continued expansion of data centre infrastructure.
Citing information from the Semiconductor Industry Association, Chan points out that global semiconductor sales reached US$146.8bil in July, rising 6.4% on a month-on-month basis, and 135.1% year-on-year (y-o-y), marking the 33rd consecutive month of y-o-y growth.
Cumulatively, global semiconductor sales surged 93.6% y-o-y to US$784.6bil in the first seven months, Chan notes, adding that the industry has already matched its previous record annual sales level within the first seven months of 2026.
The outlook for Malaysia’s semiconductor sector remains constructive, Chan says, underpinned by demand from AI, data centres and advanced semiconductor applications.
“Nevertheless, we expect the recovery to remain uneven across subsectors, with growth likely to be led by integrated circuit design, optoelectronics, and semiconductor packaging and testing, particularly among companies with exposure to AI-related and data centre infrastructure demand.
“In contrast, players with greater exposure to traditional end markets such as personal computers and smartphones may face a more challenging operating environment, partly due to rising memory costs.
“All in all, we maintain our ‘neutral’ stance on the semiconductor sector.”
On Inari specifically, Chan has maintained a “hold” recommendation with a target price of RM2.70.
Clearer growth strategies
Like its peers, the MY Value Up initiative fits potentially well with what Inari is already trying to achieve.
MY Value Up places emphasis on clearer growth strategies, capital allocation, forward-looking disclosures, investor engagement and board-level accountability.
“This is what it needs to transition from OSAT player to a higher-value semiconductor platform,” says the industry observer.
“But the more important question is whether it can progressively increase the value generated from every ringgit of capital invested?,”
The challenge, therefore, is not simply finding growth, it is ensuring that future growth produces attractive returns on the substantial capital being deployed.
“Again, this is arguably where MY Value Up could give Inari a useful framework.
“Rather than merely presenting investors with a collection of individual expansion projects, Inari could use its MY Value Up plan to establish a measurable roadmap showing how its current investments can translate into higher-quality earnings and returns for shareholders over the next three to five years,” the observer says.
In its latest annual report, Inari says with the rapid integration of AI into diverse platforms, the demand for high-performance hardware solutions is accelerating.
With the group’s involvement in the relevant sectors, such as Edge AI, high bandwidth optoelectronic devices in networks and data centres serving the AI market, Inari says it is well-placed to capitalise on these opportunities.
It had anticipated a potential bottleneck in AI hardware supply in FY26, due to demand outpacing capacity.
“Our advanced packaging solutions will serve as a strategic enabler for the assembly of leading-edge chips, positioning us to capture incremental market share.
“Our priorities remain clear on expanding production capacity in line with customer demand, enhancing operational efficiencies, and achieving revenue growth consistent with or outperforming industry forecasts.”
As for the interest surrounding the increase of EPF’s stake in Inari – while this provides an interesting institutional backdrop, the more important story is what Inari does with its existing assets, capabilities and balance sheet.
The company already has some scale, manufacturing experience, global operations and exposure to several semiconductor growth themes.
The challenge is converting these into better and more consistent financial returns for its shareholders.
At last look, Inari was trading at RM2.65 apiece, valuing the company at RM10.2bil.