THMY boosts AI testing capacity with RM172.6 million factory expansion

Highlights

THMY is investing RM172.6 million to expand its second factory to 300,800 square feet, adding 20 assembly lines for AI product and cloud computing testing solutions, with completion targeted for the second quarter of 2028.
The company's net profit margin rose from 5.13% in FY2022 to 30.7% in 1QFY2027, driven by AI, data centre and high-value technology product segments.
THMY needs additional funding beyond the remaining RM28.78 million in IPO proceeds to complete its capital expenditure, and is currently in talks with several banks for loans and equity financing.

This article was translated from the original. Read the original version by our correspondent here.

Capacity expansion for the next generation of chips

As reported by The Edge Malaysia, THMY is becoming involved earlier in customers' product development processes, including working with major U.S.-based hyperscalers that design their own custom silicon chips. Chief executive officer Ooi Can Nix said the company is no longer merely supplying testing equipment after products have been developed; instead, it helps determine testing methods and validate engineering concepts before commercial production begins.

According to him, this shift is becoming increasingly important as AI chips become more powerful and generate substantially more heat. THMY is developing capabilities to simulate chip sizes, power requirements and heat generation, including working on solutions such as cold plates to manage thermal loads before actual products enter the production stage.

The company, founded in 2008, now has about 200 employees, including a large team of engineers, to support increasingly complex products. THMY is also developing modular systems that enable worn components to be replaced more quickly, thereby reducing customer downtime as high-power products place greater strain on testing equipment.

These growing infrastructure requirements have prompted THMY to expand plans for its second factory to approximately 300,800 square feet from the initial 88,000 square feet. The facility comprises 222,000 square feet of factory space, 44,000 square feet of office space and 34,000 square feet for utilities, with 20 initial assembly lines for advanced automated testing solutions focused on data centre AI and cloud computing products.

Construction began in July and is targeted for completion by the second quarter of 2028. The project is estimated to cost around RM172.6 million, nearly six times the approximately RM30 million factory expansion outlined in THMY's IPO prospectus, as the new facility's design takes into account technology requirements for at least the next five-year cycle.

Margins, funding and growth implications

THMY's existing operations are already running at full capacity despite the addition of mezzanine space and machinery, leading the company to rely on automation, outsourcing, contract workers and Penang's supply chain ecosystem to meet additional demand. Ooi said the company does not want to turn away customer orders and is simultaneously using automation to reduce reliance on manual processes such as inspections.

In terms of business mix, the technology, media and telecommunications segment, which includes data centres, AI computing and telecommunications products, contributes approximately 52% of group revenue. The electrical and electronics and electronics manufacturing services segments contribute about 19% and 17%, respectively, while THMY deliberately prioritises more complex, higher-value products to increase utilisation of its engineering capabilities.

This approach supports the company's margin expansion. Net profit margin rose from 5.13% in FY2022 to 10.57% in FY2023, before standing at around 21% from FY2024 to FY2026, while in 1QFY2027, revenue grew 42.5% year-on-year to a record RM20.2 million and net profit more than doubled to a record RM6.2 million, with net profit margin reaching 30.7%.

THMY is also assessing the next wave of growth beyond current AI, including physical AI and humanoid robot components, although current volumes remain small. At the same time, funding for the new factory requires additional funds beyond the remaining IPO proceeds, with the group holding cash, bank balances and other investments totalling RM54.7 million as at 30 June 2026, gearing of 0.35 times, and unused IPO proceeds of RM28.78 million, including RM22.9 million for the new factory.

Ooi said the remaining IPO proceeds are insufficient to cover projected capital expenditure, and the company is working with several banks to secure financing facilities while considering a combination of bank loans and equity financing. For investors, the key question now is whether THMY's earnings growth can expand fast enough to support its already significantly increased valuation, with its shares trading at an estimated trailing PER of 123 times and Affin Hwang Investment Bank assigning a buy recommendation with a target price of RM3.

The approval of 27 data centre projects in Malaysia as of July 2026 is an important benchmark for the acceleration of the country's digital infrastructure development, with Johor, Selangor and Negeri Sembilan as the main focus areas. In our previous coverage, we also outlined the investment value, projected creation of high-skilled jobs, and the minimum 30% local content requirement and periodic implementation monitoring—context that helps explain why demand for the data centre support ecosystem continues to rise.

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