Inari to ride the AI wave, China’s smartphone market expansion
KuCHING: Inari Amertron Bhd (Inari) is set to benefit from the rise in artificial intelligence (AI) products and services as well as China’s ongoing economic recovery, analysts observed.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) highlighted that global chip demand will be buoyed by the AI supremacy race among mega-tech names while a prominent US smartphone maker is poised to unveil a major AI technology breakthrough.
The smartphone market in China is also expanding with Inari set to benefit from the expansion of YSIC joint venture in Yiwu.
“Global chip demand will be buoyed by the AI supremacy race among mega-tech names. We expect the prominent US smart phone maker to unveil a major AI technology breakthrough during its upcoming smartphone launches in 2024/2025, as its current virtual assistant, ‘Siri,’ is starting to feel outdated as compared with the generative AI features of products from peers such as Microsoft, OpenAI and Google.
“The trend towards AIpowered smart phones has also manifested itself in positive reviews for recently launched Samsung Galaxy S24 featuring a slew of innovative AI features,” Kenanga Research said.
Inari is also approaching a period where by the smartphone market is entering another replacement cycle.
“This is especially significant as the shipment of the USbranded smartphone has been consolidating over the past eight quarters, and a rebound is anticipated in 2024.
“The potential upswing could be rapid, considering the consolidation in the overall smartphone market has depleted inventories, suggesting limited downside risk.
“Consequently, the supply chain may need to respond swiftly and scale up production if the smartphone market performs even slightly better than expected,” it said.
Inari’s RF segment is expected to show q-o-q improvement in the December quarter (2QFY24) after addressing inefficiencies in the previous quarter.
Meanwhile, it pointed out that Inari’s strategy of ‘China for China; Penang for the West’ positions the group to benefit from the smartphone upcycle in both regions.
“The 54.5 per cent owned YSIC-JV expansion, featuring a 500,000 sq ft plant in Yiwu, set to be operational by mid-2024, positions the group to tap into the China smartphone market with an ambitious goal of achieving one billion renminbi in revenue and listing status within three years,” it highlighted.