Overview UWC
Autonomous Vehicle (AV) exposure to provide impetus to growth
UWC is ramping up the production of testers for autonomous vehicle chips for the US based IDM with an interest in AV. Positive venture as customer's AV subsidiary is a leader in camera based Advanced Driving Assistance System for automotive and UWC opportunities within the emerging super trend of this.

Pivot to semiconductor.
Shifting its product mix to higher margin semiconductor segment over the years. Not only capitalize on sector's structural growth but also its carrier a higher margin. Expect further improve in FY23 on product mix improvement and the increasing use of automation such as cobots and robotic arms.

Leading American tech companies.
UWC is bound by customer confidentiality to not disclose the names of certain customers. We
abide by the same restrictions but would point out that its customers include leading semiconductor integrated device manufacturers (IDM) and equipment makers, who count the likes of Apple, TSMC, Samsung and Qualcomm among their major customers.

Exposure to multiple tech sleeves.
Involvement in semiconductor segment which includes AV, signal testers for 5G devices, logic IC in computing devices, test manipulators for logic and memory testing.

Strong back end test equipment demand.
Its memory testing client, who is one of the 2 major players in the semiconductor testing market focusing on SoC (system-on-a-chip) and memory test alongside Advantest should continue to fill UWC’s orderbook. Positive view on Advantest can serve as a read-through to the broader testing equipment sector. The team expects Advantest to register 11% topline CAGR between FY20-23E for its semiconductor tester segment. Capex forecast for 2021 is for a 35% growth in dynamic random access memory related investment (mainly for 5G and data center applications) and 21% growth in NAND-related investment. Expect this customer to contribute 15/12% of FY21/22E revenue.

Leveraging on the global deployment of 5G.
One of the leading 5G test and measurement equipment players. Clients have leverage to the entire 5G ecosystem (both mm Wave frequencies and sub-6GHz) is still in nascent stages relative to building momentum of development of 5G equipment as well as expected momentum of 5G device deployments dedicated to service providers and the broad market of consumer devices, including smartphones. The venture contribute expect 11 or 12% of FY21/22E revenue.

Positive on semiconductor cycle.
Semiconductor strength in 2021 is premised on a constructive demand environment for semiconductor led by an acceleration in data center spending, the doubling of 5G smartphone units to 525m units in 2021 alongside continued 5G infrastructure spending strength as well as gaming or PC demand to sustain from continued WFH demand. In 2021 continue strong year driven by strong growth in cloud spending and densification of 5G wireless networks.


Summary
An integrated engineering supporting services provider involved in box-building equipment for the semiconductor & medical sector, UWC stands out among other Malaysian boxbuild players playing their trade in consumer electronics, which offers a lower margin. Its business model allows it to capture emerging trends without the need for heavy capex (avg 10% of revenue), which is done at the customer level.