UMS Integration Limited

Letter to Shareholders

Extracted from Annual Report 2025

Dear Shareholders,

On behalf of the Board of Directors, we are pleased to present the Annual Report of UMS Integration Limited ("UMS" or "the Group") for the financial year ended 31 December 2025 ("FY2025"). FY2025 was a year of steady execution, operational discipline and strategic positioning.

In view of the Group's robust performance, the Board of Directors (the "Directors") is pleased to recommend and propose a final dividend of TWO (2.0) Singapore cents, notwithstanding the 1 for 4 bonus share issue completed at the beginning of this year. Subject to the approval of the shareholders, the total dividends declared and proposed for FY2025 will be FIVE (5.0) Singapore cents.

Delivering Growth in a Transformative Industry

Despite tariff threats, intensifying geopolitical tensions and market uncertainties, the Group delivered a better performance in FY2025 - growing its topline and bottom line and generating both positive operating cashflow and free cashflow.

Revenue in FY2025 rose 4% to S$251.1 million from S$242.1 million in FY2024. Our Semiconductor segment remained the primary growth driver. Component sales grew 10% year-on-year to S$121.2 million, reflecting increased demand from both our existing and new key customers. While Integrated System sales moderated slightly for the year, quarterly momentum improved in 4QFY2025, signalling a strengthening customer demand.

Geographically, Malaysia recorded a significant 91% surge in revenue, driven by orders from our new key customer. Taiwan and other regional markets also delivered strong growth, highlighting our expanding global footprint.

Margin Expansion and Operational Efficiency

Gross material margin improved to 54% in FY2025 from 51% in FY2024, supported by a favourable product mix and improved cost management. While depreciation expenses increased due to new machinery additions and facility expansion, these investments were necessary to prepare for the anticipated production ramp-ups.

We also made deliberate efforts to optimise manpower costs and streamline operational expenses, reinforcing our long-term competitiveness.

Positioned for the AI-Driven Super-Cycle

The semiconductor industry is undergoing structural transformation. AI acceleration is driving unprecedented demand for high-bandwidth memory, advanced logic and sophisticated packaging solutions. Capital expenditure in semiconductor manufacturing equipment is forecasted to reach record levels over the next few years.

In anticipation of this growth, we invested more than S$155 million over the past four years to expand and upgrade our facilities.

Our new manufacturing capabilities position us to support next generation semiconductor equipment and advanced packaging requirements.

We are also actively working on multiple new product introductions (NPIs) from our new key customer, which will further broaden our revenue base.

Aerospace Recovery

The Aerospace segment experienced some softness in FY2025 due to delivery timing adjustments. However, global air travel demand continues to strengthen, and industry forecasts project record passenger volumes in 2026. According to IATA, the number of air travellers is expected to rise 4.4% to 5.2 billion in 2026 with passenger loads reaching an all-time high. In the Asia-Pacific - the largest market globally - passenger load factors are projected to reach another record of 84.4% despite a slower recovery in international traffic.

We remain confident in the medium-term recovery trajectory of this segment.

Investor Relations

During the year, the Group successfully completed its secondary listing in Bursa Malaysia. UMS is also listed as one of companies on the SGX iEdge Singapore Next 50 Index which aims to track the performance of the next 50 largest companies listed on the SGX Mainboard, beyond the 30 largest companies by market capitalization.

All these are part of our investors relations efforts to better engage investors so as to unlock value for shareholders. Our share price has risen during the year and market capitalisation hit consistently above S$1 billion.

Looking Ahead

With a renewed three-year integrated system contract secured and new product pipelines progressing, we enter FY2026 with confidence.

Both our key global customers have forecast robust demand growth for 2026 and 2027. With the acceleration of AI applications, they are ramping execution velocity to drive multi-year outperformance targets going forward.

The improvements in chipmaking hardware are outpacing Moore's Law as leading chipmakers claim they can make AI chips today 1,000 times more advanced than what was produced a decade ago, far outstripping the pace set by Moore's Law which predicted that the number of transistors on computer chips would roughly double every year.

This move beyond Moore's Law will help to drive down computing costs and at the same time drive up performance, fuelling the rapid progress of the industry.

The escalating demand for high-bandwidth memory (HBM) and advanced logic is driving the need for packaging complexity and the Group's key customers see advanced packaging as a major growth driver in the coming years as it plays a critical role in enabling AI performance and semiconductor innovation.

Both of the Group's key customers are important players in the advanced packaging space as HBM adoption expands.

The semiconductor industry is now entering a period of record growth and is predicted to reach US$1 trillion in revenue this year for the first time ever, fuelled by artificial intelligence and the spread of computer chips to virtually every part of the economy.

According to the Semiconductor Industry Association (SIA), colossal demand for new data centre computers has provided a bonanza for chipmakers, allowing the industry to keep eclipsing growth estimates.

The global semiconductor industry is embarking on a new "supercycle" of capital expansion of unprecedented scale, driven by a structural re-architecture of the computing stack to support AI.

According to a new forecast released by industry association SEMI, global sales of semiconductor manufacturing equipment will climb for three consecutive years, culminating in a record high of $156 billion in 2027.

This forecast signals a clear shift away from traditional consumer driven cycles toward a new "Giga Cycle," in which major tech companies are investing heavily to compete in the AI era.

Our strategy remains clear:

Appreciation

We would like to thank our employees for their dedication, our customers for their continued trust, and our shareholders for their steadfast support.

Together, we will continue building UMS into a stronger and more resilient enterprise so as to deliver sustained positive shareholder value in the long term.

Andy Luong

Chief Executive Officer
UMS Integration Limited