Malaysian Pacific Industries set to ride Infineon's AI power semiconductor growth

KUALA LUMPUR: Malaysian Pacific Industries Bhd (MPI) is well-positioned to benefit from growing demand for advanced power semiconductor packaging, supported by the strong growth outlook of German chipmaker Infineon Technologies AG.

CIMB Securities Sdn Bhd said MPI had invested about US$65 million in its financial year ended 2026 (FY26) to expand its artificial intelligence (AI) server-related packaging capabilities and increase production capacity for new power modules at its Carsem facility in Ipoh.

Infineon's AI data centre power revenue more than doubled to over €1.7 billion in FY26 from €700 million a year earlier, exceeding its earlier guidance of €1.5 billion.

The growth was driven by accelerating AI infrastructure investments, production capacity expansion and higher power semiconductor content per AI server.

Infineon expects its combined AI and conventional data centre power revenue to reach nearly €4 billion in FY27.

CIMB Securities said the outlook was supported by multi-year customer supply and capacity reservation arrangements, both signed and under negotiation, which could underpin more than €10 billion in potential cumulative revenue.

"We believe Infineon's strong growth trajectory is a positive read-through for MPI, which is well-positioned to benefit from rising demand for advanced power semiconductor packaging," it said in a research note.

The firm expects the new power modules to increase MPI's AI-related revenue contribution from 13 per cent in FY26 to 18 per cent in FY27 and 23 per cent in FY28.

It said MPI is also expected to ramp up production of new vertical power delivery-enabled modules in FY27, providing another growth avenue through higher packaging content value.

"Over the medium term, we expect the growing adoption of 800 volt data centre server-rack architectures to accelerate demand for wide-bandgap power solutions, particularly silicon carbide and gallium nitride, creating further opportunities for MPI to capture higher semiconductor packaging content per AI server," it said.

HLIB maintained its "Buy" call on MPI but lowered its target price to RM48.50 from its previous valuation.

The revised target price is based on a lower price-to-earnings multiple of 29 times, compared with 37 times previously, while rolling forward its valuation to end in 2027.

CIMB Securities said the lower valuation reflected weaker global technology sentiment amid inflationary pressures and concerns over a potential slowdown in AI infrastructure investment.