KUALA LUMPUR (July 29): Phillip Capital has doubled down on its bullish stance on SkyeChip Bhd (KL:SKYECHIP), lifting its target price to RM3.50, implying a 20% upside from current levels and twice its old target.

The house doubled its previous target of RM1.75 after raising SkyeChip's financial year ending March 31, 2028 (FY2028) to FY2029 earnings forecasts by 11%-12% after incorporating higher project value assumptions and stronger AI semiconductor design demand.

The new target price of RM3.50 is based on a higher 65 times price-to-earnings (PE) multiple (from 45 times previously) and rolling forward its valuation base year to FY2028.

"Our higher PE multiple is based on 30% premium to global silicon IP (intellectual property) and custom Asic (application-specific integrated circuit) peers, justified by SkyeChip’s differentiated position as Malaysia’s only listed semiconductor IP player with proprietary silicon IP capabilities at the front-end of the semiconductor value chain," Phillip Capital said in a note on Wednesday.

The house noted that SkyeChip continues to expand globally, with markets in the US and South Korea contributing 24% of FY2026 revenue, reducing reliance on traditional markets.

Notably, two key US customers, Cerebras Systems and Persimmons Inc, have enabled SkyeChip to strengthen its position among the artificial intelligence (AI) hyperscalar supply chain, it said, adding that Cerebras is a standout, with a multi-year partnership with OpenAI valued at over US$20 billion (RM81.76 billion).

Phillip Capital believes this engagement will enhance its ability to capture higher-value silicon IP and custom Asic opportunities. 

Driven by strong demand for AI infrastructure and next-generation computing, SkyeChip’s project pipeline remains well supported. At the same time, engineering utilisation reached 100% in 1QFY2027.

The research firm said the group has increased its technical headcount to 400 personnel as of May 2026 (from 365 as of March) and is expected to reach 426 personnel by FY2027.

"The increased engineering team will enhance SkyeChip’s execution capacity and enable the group to capture more design opportunities in AI, high-performance computing and data centre applications," it said.

“Key risks to our 'buy' call include strengthening of RM, lower-than-expected margins, unfavourable updates on pioneer tax status, and slower-than-expected commercialisation of new IP," Phillip Capital added.