KUALA LUMPUR (May 6): Analysts are bullish on Main Market-bound SkyeChip Bhd ahead of its listing,highlighting its scalable silicon intellectual property (IP) licensing model and exposure to artificial intelligence (AI)-driven semiconductor demand. However they differ on valuation assumptions, with upside estimates ranging from as low as 12.5% to as high as 91%.

PublicInvest Research assigned the highest upside, with a fair value of RM1.68 against the IPO price of 88 sen, implying a potential return of about 90.9%, while Malacca Securities pegged a target price of RM1.48, or a 68.2% upside. Mercury Securities, on the other hand, derived a more modest fair value of 99 sen. All three research notes are non-rated, meaning they do not give formal buy, sell, or hold recommendations.

The Penang-based chip design firm is looking to raise RM352 million from its initial public offering (IPO), which consists entirely of new shares, with a scheduled listing on May 20.

All three research houses converged on SkyeChip’s positioning as a front-end semiconductor player focused on integrated circuit (IC) design and silicon IP, a segment seen as higher-value within the semiconductor supply chain.

In a research note published on Wednesday, Mercury Securities said SkyeChip offers “a rare Bursa Malaysia exposure to the higher-value IC design segment”, underpinned by its proprietary IP portfolio and scalable licensing model.

PublicInvest similarly described the group as an “IC design specialist in silicon IPs”, highlighting its role in providing "pre-designed and pre-verified building blocks" that can be integrated into larger chip designs.

Malacca Securities characterised the company as “Malaysia’s premier semiconductor IP designer”, with capabilities spanning standard and custom silicon IP as well as application-specific integrated circuits (ASICs).

A key point of agreement among analysts is SkyeChip’s business model, which centres on owning and licensing proprietary IP rather than relying solely on project-based design services.

Mercury Securities said the group’s proprietary and scalable IP licensing model allows it to monetise the same IP across multiple customers and applications, supporting recurring income and operating leverage.

PublicInvest noted that ownership of IP rights enables the company “to license its products to multiple customers or reconfigure the design to meet each customer’s operating environment”, which could generate recurring licensing income over time.

Malacca Securities added that SkyeChip’s model benefits from “mandatory multi-year upgrade cycles”, as customers must re-license newer generations of IP to remain competitive.

Analysts also broadly agree that SkyeChip is leveraged to structural demand drivers in AI, high-performance computing and data centres, particularly through its focus on memory interface and interconnect IP.

PublicInvest highlighted SkyeChip's plans to expand into AI accelerators, advanced packaging and high-performance central processing unit (CPU) platforms, supported by Malaysia’s partnership with Arm Holdings.

Malacca Securities said growth would be driven by the “global AI-driven supercycle and forced memory upgrade cycles”, as well as increasing demand for advanced chips.

Despite the broadly positive outlook, the research houses diverged on valuation, reflecting different assumptions on growth, scalability and risk.

PublicInvest pegged its valuation at 45 times forward earnings, noting this represents a discount to regional semiconductor peers, while still projecting a three-year earnings compound annual growth rate of 31.3%.

Malacca Securities applied a lower 40 times price-earnings multiple, while Mercury Securities benchmarked its valuation against local peers, resulting in a more conservative fair value.

Mercury Securities also cautioned that earnings visibility, while supported by an order book of about RM130.3 million, remains “milestone-driven and uneven on a quarterly basis”, highlighting execution risks tied to project timing.

More broadly, analysts flagged risks including dependence on contract wins, talent constraints, geopolitical exposure and rapid technological changes in the semiconductor industry.

Still, the IPO comes as Malaysia seeks to move up the semiconductor value chain into higher-value front-end activities such as IC design, with SkyeChip positioned as one of a limited number of domestic players in this segment.

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