Investors are advised to be patient with SkyeChip Bhd as the Malaysian integrated circuit (IC) design company expands its technical capabilities to capture opportunities arising from growing demand for artificial intelligence (AI) and high-performance computing chips.
In its latest research report, HLIB said SkyeChip’s growth initiatives are progressing, but meaningful contributions from newer business opportunities may take another one to two years to materialise.
The research house expects 2026 to be a year of capability expansion, with more tangible progress towards management’s targets of 30% compound annual revenue growth and a 30% net profit margin likely to emerge in 2027 and 2028.
Since its listing in May 2026, SkyeChip has strengthened its balance sheet and corporate profile, providing management with greater capacity to pursue new customers, develop intellectual property (IP) and recruit specialised engineering talent.
However, HLIB noted that the stock is already trading at approximately 64 times projected mid-calendar-year 2028 earnings, reflecting substantial expectations for future growth.
HBM4 Technology Opens New Chip Design Opportunities
HLIB identified the transition to fourth-generation high-bandwidth memory (HBM4) as a potential growth avenue for SkyeChip.
The adoption of advanced logic processes in HBM4 base dies creates greater opportunities for customisation, particularly as chip manufacturers incorporate additional memory management and processing functions.
The research house said these developments align with SkyeChip’s plans to develop compute-in-memory silicon dies, which could improve data processing efficiency for AI applications.
SkyeChip is also exploring opportunities to expand its IP portfolio into serializer/deserializer (SerDes) technology, which enables high-speed communication between chips.
SerDes would complement the company’s existing memory interface, network-on-chip and die-to-die IP capabilities, potentially allowing it to offer a broader range of design solutions for AI and high-performance computing chips.
However, HLIB cautioned that developing SerDes capabilities requires specialised mixed-signal engineering expertise and substantial investment in talent.
The proposed establishment of a research and development centre in Taiwan could help SkyeChip access a larger pool of experienced semiconductor engineers.
Arm Chip Development Could Require Up To US$200 Million
On the Arm Compute Subsystem (CSS) programme, HLIB expects SkyeChip to take a measured approach before committing to the government-supported initiative.
Although the licence is subsidised at approximately US$35 million to US$40 million, SkyeChip and its potential partners would still need to invest an estimated US$100 million to US$200 million before reaching the chip tape-out stage.
The licence subsidy would also be repayable if the programme is unsuccessful, according to the research house.
HLIB expects a potential CSS agreement to be signed in 2027, as management prioritises securing prospective customers before committing substantial capital.
Given the lengthy development cycle, which could take at least three years before tape-out, HLIB has not included potential contributions from the programme in its current earnings forecasts.
Engineering Workforce Expands To 416
SkyeChip has also accelerated recruitment to support its growth plans.
The company ended FY2026 with 365 technical employees before adding a net 51 in the first quarter of FY2027, bringing its engineering workforce across Malaysia and Vietnam to 416.
This compares with 62 net additions throughout the whole of FY2026.
HLIB said the current recruitment pace is ahead of its FY2027 assumption of 445 technical employees, suggesting that management could accelerate its planned hiring.
The research house believes SkyeChip’s listed-company status has strengthened its ability to attract and retain engineers, including through share-based compensation.
HLIB maintained its earnings forecasts and RM2.85 target price, based on 61 times projected mid-calendar-year 2028 earnings.
While remaining positive on SkyeChip’s long-term exposure to AI and semiconductor design opportunities, HLIB said further share price gains would depend on tangible progress in customer acquisition, technology development and earnings growth.
Hong Leong Investment Bank (HLIB) has maintained its HOLD recommendation on SkyeChip Bhd with an unchanged target price of RM2.85. The share price is trading at 3.06 as of today.
