UOB Kay Hian
04 August 2025

Inari Amertron and San’an’s Strategic Lumileds Acquisition: A New Era for Malaysia’s Semiconductor Giant

Executive Summary

Inari Amertron, Malaysia’s largest semiconductor company and a leading OSAT (Outsourced Semiconductor Assembly and Test) supplier, has announced a bold strategic move by partnering with San’an Optoelectronics to acquire a controlling stake in Lumileds International. This acquisition is set to redefine Inari’s growth trajectory, offering multi-pronged benefits including portfolio diversification, new revenue streams, and deeper access to global technology markets. UOB Kay Hian maintains a BUY rating on Inari Amertron with a target price of RM2.36, reflecting a 10.8% upside potential.

Company Profile: Inari Amertron Berhad

• Sector: Information Technology
• Market Cap: RM8,070.5 million (US\$1,907.9 million)
• Shares Issued: 3,788.9 million
• Bloomberg Ticker: INRI MK
• Major Shareholders:
  • Employees Provident Fund – 13.4%
  • Insas Bhd – 12.9%
  • Kumpulan Wang Persaraan – 8.5%
• 52-week Price Range: RM3.60 / RM1.45
• FY25 NAV/Share: RM0.75
• FY25 Net Cash/Share: RM0.56

Strategic Acquisition: Inari and San’an to Acquire Lumileds

Inari Amertron, together with San’an Optoelectronics, is set to jointly acquire 100% of Lumileds Holdings B.V. and its 11 global subsidiaries. The total enterprise value of the deal is US\$239 million (subject to net debt and working capital adjustments) and will be satisfied entirely in cash. The transaction will be executed via a special purpose vehicle (SPV) based in Hong Kong, with San’an holding 74.5% and Inari holding 25.5%.

• Total Investment Outlay: US\$280 million (including working capital injection)
• Inari’s Commitment: US\$71.4 million (RM307 million), funded by existing private placement proceeds
• Timeline: Final purchase price to be determined within 105 business days post-completion (expected 3QFY26)

About Lumileds International

• Global leader in the LED industry with a diversified portfolio:
  • Automotive lighting
  • Mobile camera flash modules
  • High-performance specialty illumination
• Key clients include top-tier smartphone OEMs and premium automotive brands
• 2024 Revenue: USD589 million
• 2024 Net Loss: USD67 million
• Total Liabilities (1Q25): USD322 million

San’an Optoelectronics: The Strategic Partner

San’an is a high-end LED chip manufacturer in China, reporting annual revenue of RMB16.1 billion in 2024 and a market cap of RMB60 billion. The partnership boosts the technological and operational synergies for Inari, particularly for LED manufacturing and global market access.

Why This Acquisition Matters: Key Strategic Impacts

• Portfolio Diversification: Reduces earnings cyclicality and customer concentration risk by expanding into automotive, industrial, and specialty illumination markets.
• New Revenue Streams: Unlocks OSAT insourcing opportunities and advanced backend assembly, especially with Lumileds’ established Penang operations (over 2,500 staff).
• Access to Top-Tier Global Clients: Positions Inari to supply components to leading global smartphone and automotive OEMs, as well as specialized industrial markets.
• Immediate Synergies: Geographic proximity and operational familiarity with Lumileds’ Penang facilities for streamlined integration and cost efficiencies.

Financial Performance: Key Metrics and Outlook

Stock Impact and Market Outlook

• Stock Recovery Expected: Inari’s share price has dropped 30% YTD, mainly due to concerns over smartphone demand moderation and US-China trade tensions. However, a rebound is anticipated in 2H25, driven by market share gains in RF, new flagship launches, and increased volume support from key US customers.
• Expansion in Core and New Segments: Inari is expanding its product suite, particularly in advanced packaging (e.g., flip-chip chip-scale packages, ball grid arrays), and sees momentum in its optoelectronics division due to higher bandwidth fiber chip demand.
• Tariff Relief and Supply Chain Realignment: The 19% tariff imposed on Malaysia, less than the expected 25%, restores competitiveness for Malaysian tech exporters. Ongoing US+1, China+1, and Vietnam+1 supply chain shifts, supported by Malaysia’s robust tech ecosystem and policy clarity, are expected to benefit Inari’s long-term growth.

Valuation and Recommendation

• Rating: BUY (Maintained)
• Target Price: RM2.36 (based on 30.0x FY26F PE, seven-year mean forward PE)
• At 19.7x ex-cash FY26F PE (at -1SD below seven-year mean), current valuations reflect cyclical lows, offering a favorable entry point for investors.

Environmental, Social, and Governance (ESG) Updates

• Environmental: Inari meets global standards and is included in the FTSE4Good Bursa Malaysia Index since June 2020.
• Social: Only legally permitted foreign workers are hired, with all staff receiving at least minimum wage.
• Governance: An Anti-Corruption and Bribery Policy is in place, fully compliant with the MACC Act 2009 (Amendment 2018), with no reported breaches in 2020.

Comprehensive Financial Overview

Conclusion: Inari Amertron’s Path Forward

The strategic acquisition of Lumileds positions Inari Amertron at the forefront of the next technology growth wave. With expanded market reach, product diversification, and a solid financial foundation, Inari stands to benefit from industry tailwinds, supply chain realignment, and increasing global semiconductor demand. The company’s strong ESG credentials and prudent financial management further enhance its long-term investment appeal.

Recommendation: BUY for a balanced risk-reward profile and exposure to Malaysia’s leading semiconductor innovator.