AI demand has stopped being a talking point. It is now showing up in the order books.
Across Singapore’s technology sector, institutional money has moved with conviction this year.
Net institutional inflows into the roughly 49 listed tech names have concentrated heavily in semiconductor production, equipment and testing – the parts of the chain where AI demand passes through first.
Three companies sitting at different points along that chain show how it converts into revenue, margins and cash.
Micro-Mechanics: the cleanest read on AI demand
Micro-Mechanics (Holdings) Ltd (SGX: 5DD) makes the consumable tools and precision parts used in semiconductor assembly and chip-making equipment.
When chip demand rises, its tools wear out faster and need replacing. That makes it a direct read on what is happening upstream.
For the third quarter ended 31 March 2026 (3QFY2026), revenue rose 16.2% year on year (YoY) to S$18.6 million. Net profit climbed 18.8% to S$3.8 million.
The growth came from the Consumable Tools segment, where sales jumped 20.9% to S$14.4 million on demand from artificial intelligence, computing and memory applications. China stayed the largest market, with nine-month sales there up 25.2% to S$18.8 million.
Gross margin widened to 51.6%, from 50.5% a year ago.
The one soft spot was cash: free cash flow came in at S$2.8 million for the quarter, down from S$3.6 million, as higher working capital absorbed operating cash.
Even so, the balance sheet stayed pristine – S$25.7 million in cash against no bank borrowings.
Management expects strong demand into the fourth quarter, pointing to an industry forecast for global semiconductor sales to grow 25% to nearly US$1 trillion in 2026.
Nanofilm: a broad-based bounce back
Providing advanced materials, coating equipment and nanofabrication solutions across consumer electronics, automotive, semiconductor and hydrogen energy, Nanofilm Technologies International Limited (SGX: MZH) showed growth across every major division in its first-quarter update for 2026 (1Q2026).
Revenue rose 24% YoY to S$55 million.
The Advanced Materials unit, which made up 89% of group revenue, climbed 24% to S$49 million.
Within it, the consumer sub-segment surged 32% to S$34 million on strength in 3C product lines, while the industrial sub-segment grew 9% to S$15 million.
The group’s two smaller business units – industrial equipment and nanofabrication – grew 52% and 20% respectively, albeit off small bases.
The margin recovery was the bigger story.
Gross profit margin expanded from 27% to 39% YoY, and EBITDA margin more than doubled from 12% to 26%, returning the group to profitability.
A word of caution.
This was a brief business update, so figures for net profit, free cash flow, cash and debt were not disclosed.
The recovery looks real and broad, but the full picture has to wait for the half-year results.
No interim dividend was declared, in line with the group’s practice of paying only at the half and full year.
Valuetronics: when falling revenue still builds cash
An electronics manufacturing services provider running consumer and industrial segments out of China and Vietnam, Valuetronics Holdings Limited (SGX:BN2) has the most nuanced case of the three, and the most instructive.
For the year ended 31 March 2026 (FY2026), revenue fell 4.0% to HK$1.66 billion and net profit dropped 33.1% to HK$111.4 million.
The profit fall was driven largely by a HK$48.4 million loss tied to its Trio AI investment. Strip that out, and adjusted net profit was HK$159.9 million.
Yet the cash position strengthened.
Free cash flow swung to a positive HK$178.4 million, from negative HK$20.1 million a year earlier, as capital expenditure dropped to HK$47.0 million from HK$228.0 million – the prior year having carried heavy GPU and AI-hardware spending.
The group ended the year debt-free with HK$1.21 billion in cash.
That cash discipline fed shareholder returns.
The total dividend rose 41% to HK$0.38, and the payout policy was lifted to 50% to 70% of net profit.
Separately, management flagged a programme to return around HK$300 million in surplus cash across the next two financial years through special dividends and buybacks.
Management expects to stay profitable, while flagging a fluid environment shaped by US tariffs and supply-chain uncertainty.
Get Smart: AI demand reads differently along the chain
These three companies sit at different points in the same wave, and that is the point.
For Micro-Mechanics, AI demand shows up as growth and fatter margins. For Nanofilm, as a broad recovery still waiting on its full numbers. For Valuetronics, as the cash discipline that follows a heavy investment cycle.
Free cash flow is the lifeblood of dividends, and it is also what separates the durable from the cyclical when a theme is running hot.
The order books are filling up.
The job now is to watch whether the cash keeps following.
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Disclosure: Calvina L. does not own shares of any companies mentioned. Chin Hui Leong contributed to the article and owns shares of Micro-Mechanics.
