Singapore’s Metasurface Technologies Pursue GEM Listing in Hong Kong, Capture Rising Precision Engineering Demand from the Semiconductor Industry
Singapore’s Metasurface Technologies Pursue GEM Listing in Hong Kong,
Capture Rising Precision Engineering Demand from the Semiconductor Industry
In response to the impact of various macro factors, many high-tech companies have pursued a supply chain diversification strategy in recent years, by relocating their upstream layout from mainland China and Taiwan to the Southeast Asian market particularly led by Singapore. For example, UMC, Applied Materials, NXP Semiconductors, Global Foundries, and Vanguard have all announced plans to set up factories in Singapore, leading to the formation of a closed-loop semiconductor cluster. As a critical product supplier for the semiconductor industry, Metasurface Technologies Holdings Limited should be able to fully leverage its technological advantages and market presence, and capture further opportunities from the semiconductor industry with its expected capital.
Headquartered in Singapore, Metasurface Technologies is a precision engineering service provider, offering precision machining and precision welding services for leading international companies in the semiconductor, aerospace, and oil and gas industries. Specifically, precision machining involves using Computer Numerical Controls (‘‘CNC’’) machines and other advanced machine tools to cut and shape
Materials, and to produce parts that meet extremely strict specifications in terms of size, shape, surface finish, and other geometric attributes with micrometer-level of accuracy. Its key product includes large format vacuum chambers that are extremely important in the semiconductor production process, with it able to create a clean and dust-free vacuum environment while avoiding the leakage of toxic gases. On the other hand, precision welding involves using advanced welding methods to join materials together according to strict specifications and tolerance, often used for small parts.
Metasurface Technologies holds certain competitive advantages in craftsmanship. Supported by its Singapore and Malaysia factories, it is equipped with various advanced tools and equipment, including 5-axis CNC machines that allow machining in multiple directions simultaneously. With more machining steps being completed in the same timeframe, the Group can reduce machining cycles, operational costs, and the total lead time on production. Additionally, multi-axis systems facilitate more complex
machining operations such as simultaneous milling, drilling and cutting, thus enhancing both production efficiency and ensuring machining accuracy. As a result, Metasurface Technologies can produce large format vacuum chambers with an accuracy of +/– 10μm, versus the industry average of +/–100μm to +/–10μm. Together with its wide range of technical testing such as helium leak detection and its dedicated quality control team, the Group delivers best-in-class products with its stringent incoming, in-process, and final quality assessment. Hence, it was able to maintain an average of 11 years of business relationships with its five largest customers during the Track Record Period.
Leveraging its extensive product range and excellent technical know-how, Metasurface Technologies has accumulated a pool of reputable downstream customers. According to its prospectus, its major customer, Customer A, is an industry leader in the global semiconductor manufacturing equipment industry listed on the NASDAQ. Based on its net sales of US$26.5 billion in 2023, it has a market share of 19.5% globally, supplying large corporations including Taiwan Semiconductor Manufacturing Company Limited (TSMC) and Samsung Electronics Co. Ltd. Through such long-standing business relationship, the Group was able to gain an in-depth understanding of its client, and as the purchase volume increased, the Group was able to achieve better economies of scale, and in turn, offering higher price competitiveness to its customer. This has essentially led to a high switching cost for Customer A to seek a new supplier.
In addition to its customer portfolio, Metasurface Technologies also has strong backing from its notable shareholders. That includes Accelerate, the commercialisation arm of the Agency for Science, Technology and Research (‘‘A*STAR’’), Singapore’s lead public sector R&D agency that drives mission-oriented research that advances scientific discovery and technological innovation; and MMI, a company that is ultimately controlled by KKR & Co. Inc. $KKR(KKR.US), supplying high precision components and integrated automation solutions for multiple industries globally. Both parties are expected to bring additional business resources to the Group in the future, helping it to further increase its market share and presence.
In terms of market, the precision engineering industry has a relatively high entry barrier. Due to the high precision and customisation requirements, market players are often required to invest heavily in machinery and equipment. For instance, a five-axis CNC cutting machine costs millions of SGD. In addition, market participants also need to comply with local regulations, and are expected to obtain certain qualifications and certifications, such as ISO 9001: 2015, and certification from professional standard organisations, such as American Society of Mechanical Engineering (ASME) and American Welding Society (AWS). For certain leading downstream customers, they may also require suppliers to obtain certain industry-specific certifications, such as SSQA for the semiconductor industry. The complete certification process is extremely time-consuming and may last from six months to two or three years, deterring new entrants from entering the market easily.
The above business and technical advantages were able to translate to financial success. From the latest set of financial figures, Metasurface Technologies reported a stable revenue of S$38.8 million in 2023. From which, 87.9% or S$34.1 million came from customers in the semiconductor industry; revenue from customers in the aerospace industry enjoyed a significant increase of 15.3x to S$1.7 million, with its revenue contribution rising from 0.3% in 2022 to 4.3% in 2023. After excluding share-based payments and listing expenses, the Group’s adjusted net profit reached S$7.3 million in 2023, representing a year-on-year increase of 12.0%
Looking ahead, the global output value of the precision engineering industry is expected to enjoy strong growth, according to CICC. On the backdrop of increasing from S$403.4 billion in 2019 to S$525.7 billion in 2023 at a CAGR of 6.8%, it is expected to further increase to S$646.5 billion by 2028, indicating a CAGR of 4.2% between 2023 and 2028. Particularly for the semiconductor sector of the precision engineering industry, its global output value is expected to reach S$109.6 billion by 2028, with a CAGR of 14.2% between 2023 and 2028. The strong momentum, along with Singapore’s increasing attention on the precision engineering industry, as well as supporting policies such as Industry Transformation Maps (ITMs) and Precision Engineering Industry Digital Plan (IDP), are all expected to promote Singapore’s high-value semiconductor components development and drive the digitalisation of its precision engineering industry. As a result, more semiconductor companies or other high-end verticals may well follow suit, paving the way for a solid pipeline for Metasurfrace Technologies.
As the market continues to embrace AI advancement, with the Hong Kong stock market also welcoming the returning capital and sentiment, it is expected that the post-listing performance of Metasurfrace Technologies should remain resilient.
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About Metasurface Technologies Holdings Limited
Established in 2000 and headquartered in Singapore, the Group provides precision engineering services for leading reputable international companies in the semiconductor, data storage, aerospace, and other industries. According to the CIC Report, the Group ranked fifth in terms of revenue from the semiconductor segment of the precision component engineering industry in Singapore, with a market share of 3.3% in 2023.