On July 30, 2026, Singapore semiconductor test equipment maker AEM Holdings released its second-quarter results, with revenue up 25% year over year, net profit beating market expectations, and raising its full-year shipment guidance. Management stated that customer order visibility has improved significantly, especially as demand for high-end chip testing for AI data centers continues to rise, which is seen as an important signal that the global semiconductor inventory correction is nearing its end.

Inventory Cycle Turning Point Emerges

Looking back at 2025, the global semiconductor industry experienced a severe inventory clearing storm. Affected by weak consumer electronics demand, geopolitical tensions, and slow recovery in the Chinese market, the chip supply chain was once piled with inventory, and price wars broke out one after another. However, entering the second quarter of 2026, multiple international research institutions pointed out that inventory levels of logic chips and memory chips have fallen to nearly three-year lows, with clearing progress exceeding expectations.

Taking AEM Holdings' earnings as an example, its equipment orders showed a V-shaped rebound after two quarters of contraction, with orders for AI accelerator test equipment from the United States and Europe contributing the most. Management also revealed that some customers have begun reserving 2027 capacity in advance, indicating strong confidence among downstream players in future demand.

AI Remains the Main Engine, but Automotive and Industrial Chips Also Show Recovery

This recovery is not broad-based but led by AI-driven structural growth. According to market estimates, the global AI chip market will exceed $120 billion in 2026, with an annual growth rate of 45%, and demand growth for advanced packaging and test equipment is even over 60%. On the other hand, after a prolonged adjustment, automotive chips and industrial control chips have also seen rush orders to replenish inventory, suggesting that end demand is bottoming out.

As a key node in the global semiconductor supply chain, Singapore is undoubtedly a beneficiary of this recovery wave. Besides AEM Holdings, local precision engineering company UMS Holdings also revealed that orders for key semiconductor equipment components have grown for three consecutive quarters, mainly driven by expansion demand from wafer fab customers in the United States and Europe.

Investment Value of Singapore Semiconductor Blue Chips

From a valuation perspective, semiconductor-related blue chips on the Singapore Exchange (SGX), after the sharp correction in 2025, now trade at an average P/E ratio of only about 15 times, below the five-year average of 18 times and also lower than the 25 times of U.S. peers. This means that even after the share price rebound, valuations remain attractive.

• Earnings upgrade cycle begins: As inventories normalize, analysts have started raising earnings forecasts for Singapore semiconductor stocks, providing a catalyst for share price gains.
• Policy tailwinds intensify: In 2026, the Singapore government launched the "Semiconductor Industry Transformation Plan 2.0," offering tax incentives and R&D subsidies to encourage companies to invest in advanced packaging and green manufacturing.
• Supply chain diversification trend: The escalating U.S.-China tech war is driving global semiconductor customers to seek more diversified supply sources. Singapore's geopolitical neutrality and infrastructure advantages benefit local blue chips.

Risks Still Require Caution

Of course, investing in chip stocks is not without risk. Global macroeconomic uncertainty remains high. If the U.S. Federal Reserve delays interest rate cuts, the high interest rate environment may suppress corporate capital expenditure and affect semiconductor equipment orders. In addition, China's chip localization wave may erode Singapore's market share in certain mature process areas, and investors must closely monitor the subsequent development of technology export control policies.

Summary: The Double Overlay of Cycle and Growth

The semiconductor industry is at the intersection of an "inventory cycle recovery" and "AI structural growth." For investors, Singapore semiconductor blue chips offer an undervalued channel to participate in this recovery. As AEM Holdings' results reveal, the industry winter is already in the past, and spring is arriving. Investors who position early are likely to reap rich rewards in the next upward cycle.

Semiconductor-related blue chips listed on the SGX, including equipment supplier AEM Holdings, precision parts maker UMS Holdings, and Singapore Oxygen Industrial, which is engaged in gases and chemical materials, are all worth in-depth research by investors. With the dual support of inventory clearing and AI demand explosion, now may be the golden opportunity for "chip investing."

(This article is for reference only and does not constitute any investment advice. Investing involves risks; enter the market with caution.)