Semiconductor packaging and testing firm Unisem (M) Berhad posted a core net loss of RM13.4 million for the first quarter ended March 31, 2026 (1QFY26), missing both house and consensus full-year earnings expectations as higher production costs significantly compressed margins.
Kenanga Research said the weaker-than-expected performance came despite stronger revenue contributions from the automotive and industrial segments, with elevated material costs and weaker plant utilisation weighing heavily on profitability.
Revenue for the quarter rose 10% year-on-year to RM465 million, or 22% higher in US dollar terms at US$117 million, supported by stronger demand from the automotive segment, which grew 22% to RM116 million, and the industrial segment, which climbed 48% to RM126 million.
The industrial segment was mainly lifted by stronger demand for power management solutions, benefiting from increased artificial intelligence and data centre-related infrastructure build-outs.
However, gross profit margin fell sharply to 2.0% from 6.3% a year earlier, resulting in a net loss of RM13.3 million despite the higher revenue base.
Kenanga said the margin compression was mainly due to elevated production costs, particularly higher material expenses, alongside weaker utilisation rates during the quarter.
On a quarter-on-quarter basis, revenue declined 3.3% from RM481 million to RM465 million, although it rose 1% in US dollar terms to US$116 million, in line with management’s earlier guidance for flattish US dollar revenue.
The weaker ringgit translation effect also affected reported revenue, as the average US dollar-ringgit exchange rate eased to RM3.95 from RM4.15 in the previous quarter.
The group swung to a net loss from a net profit of RM52.1 million in 4QFY25, although the prior quarter included a one-off RM23.8 million gain from the dissolution of foreign subsidiaries.
Excluding that gain, Kenanga said the weaker 1QFY26 performance was driven by the weaker US dollar, rising material costs, salary increments following pay revisions, higher depreciation charges, and increased interest expenses linked to the Gopeng facility and the Chengdu plant expansion.
No dividend was declared for the quarter.
In line with management’s latest guidance, Kenanga cut its FY26 dividend per share forecast to zero, noting that management intends to preserve cash following heavy capital expenditure over the past few quarters.
Looking ahead, management guided for a strong 15% to 20% quarter-on-quarter increase in 2QFY26 US dollar revenue, which Kenanga described as unusually strong compared with its historical guidance range.
The optimism is based on stronger April run-rates, improved utilisation at key facilities, better profitability from Unisem’s Malaysia operations, customer forecasts, and the arrival of equipment for higher average selling price packages.
Key earnings recovery drivers include better plant utilisation, ASP improvements, the ramp-up of the Gopeng facility, recovery at the Chengdu plant, and stronger contributions from high-value packaging products such as flip chip LGA, flip chip QFN and silicon microphones.
Management also remains positive on the broader semiconductor upcycle, particularly demand linked to AI and data centre expansion, which continues to drive power management chip requirements.
