AEM denies allegations of patent infringement from US semiconductor firm; shares tumble 8.8%

SINGAPORE – US semiconductor test equipment supplier Advantest Test Solutions has made allegations of patent infringement against AEM and its subsidiaries – AEM Singapore and AEM Americas – which the company denies.

The infringements relate to US patents relating to a specific wafer level test system, AEM said in a Singapore Exchange filing on Oct 6. It added that Advantest has filed a complaint in the US District Court for the Southern District of California.

However, AEM said it does not practise the wafer level test system in question and that the complaints “lack merit”.

AEM shares tumbled on Oct 6 after the news. The counter closed down 8.8 per cent, or 18 cents, at $1.86 with 22.6 million shares traded, after earlier falling as much as 9.3 per cent.

“AEM has its own extensive patent portfolio and respects the intellectual property of others. It strongly denies the allegations in Advantest’s complaint. AEM has already retained US counsel to defend itself against Advantest’s claims, which lack merit,” the company said.

AEM and Advantest were previously involved in an arbitration case that was resolved via settlement on July 28, 2023. The agreement involved AEM making two payments – worth US$9 million (S$11.6 million) and US$11 million – to the complainants.

The group said the latest complaint does not affect its business operations.

It added that its revenue guidance for the second half of 2025 remains unchanged. On Aug 13, it projected that revenue for the period would be in the range of $170 million to $190 million, as a major customer is expected to ramp up production in late 2025 or early 2026.

Notwithstanding the near-term volatility of AEM’s share price, DBS Group Research on Oct 6 raised its target price for the counter from $1.50 to $2.10. It also maintained its “buy” call on the counter.

Its analyst Amanda Tan said AEM is poised for growth due to its technological edge over competitors and the semiconductor sector’s expansion trajectory.

Highlighting that AEM is a pioneer in providing system level test solutions (SLT), Ms Tan said the group is “around one generation ahead of its competitors”.

“Given its technological superiority, we believe AEM is well-positioned to ride on the growing SLT market that has benefited from increased complexity of chips and increased test coverage requirements, alongside the need for advanced heterogeneous packaging,” she said.

Ms Tan added that the semiconductor industry is “well-poised for growth” amid a digitalisation push, which could boost demand for AEM’s offerings in the long term.

Additionally, she noted that AEM has announced several customer wins in recent years. She believes its customer diversification strategy could yield “more significant returns” moving forward.

THE BUSINESS TIMES