What is Metasurface manufacturing for Applied Materials?

In our first post on Singapore’s precision engineering sector, we identified Metasurface Technologies as a potential beneficiary of the AI capex upcycle and Applied Material’s growing footprint in Singapore.

This note addresses a follow up question from our readers:

What exactly is Metasurface manufacturing for Applied Materials?

The starting point is that Singapore is AMAT’s largest manufacturing hub outside the US.

Further, AMAT is the cornerstone of Singapore’s production of semiconductor manufacturing equipment, which in turn contributes 20% of global production.

We understand that the Endura platform is/was assembled in Singapore - it was “ideated, designed and developed in Singapore”, UMS Integration manufactured up to 70% of the wafer transfer modules for the platform (one of the most sensitive components), and also assembled it in Singapore for many years.

However, we think that Metasurface’s PR alludes to the Producer platform when it refers to supplying “newly designed” components “integral to the OEM’s new ultra-high productivity platform for sub-180 nm devices”.

We believe that the Producer platform is the only platform that meets the description of “ultra-high productivity” because of its Twin Chamber architecture, enabling the processing of up to six wafers simultaneously. Ultra-high productivity is also the exact language used in AMAT’s own PR about the platform.

Assuming that is correct, we have a high degree of confidence that Micron, Samsung and SK Hynix will be placing large orders for this versatile industry workhorse, driving Metasurface’s revenues from AMAT for the next two years until it (hopefully) finds more growth by way of qualifications for aerospace customers.

We also observe that the vacuum parts supplied by Metasurface are not the most sensitive parts of the platform in terms of tolerance and that they should fall within the +/-10µm capability advertised in Metasurface’s prospectus. Anything that has more direct interaction with the wafer is likely to be a more demanding component, which Metasurface might graduate to producing in the future.

For paid subscribers, we will be getting in touch with engineers who refurbish / service the Producer platform as well as speaking with Metaoptics next week to learn more about how that business is progressing.

We are also talking through our research on Soon Lian Holdings with paid subscribers, and why we believe it deserves a smaller discount to book value than the current 0.6 valuation. In short, we think the company is supplying UMS Integration who is in turn working on a Q4 order from Applied Materials. The uptick in demand from Applied Materials has already led to reversals in provisioning in relation to inventory and two positive profit guidance announcements.