Inari Amertron Enters New Growth Cycle Driven by Datacom

KUALA LUMPUR, July 20, 2026 – Inari Amertron is entering a new growth cycle, reversing four years of earnings decline, with datacom emerging as a powerful new engine alongside its stabilising RF base. Analysts forecast FY25–28F earnings CAGR of 15%, supported by strong liquidity and the removal of uncertainties following the termination of the Lumileds deal. Target price has been raised to RM3.25/share, pegged at 30x CY27F PE, reflecting improving visibility and structural rerating.

Datacom is expected to rival RF in size, driving earnings upgrades of 3% in FY27F and 30% in FY28F. Revenues are forecast to increase 7.5x between FY26F and FY28F, fuelled by AI and hyperscale data centres requiring high-speed lasers for data transmission. Inari Semiconductor Labs (ISL) plays a critical role by assembling and testing optical components such as tiny lasers and detectors that enable fibre-optic networks. These components are essential for optical transceivers, which convert electrical signals into light for use in data centres, telecom networks, and cloud infrastructure.

Growth is driven by surging AI and cloud traffic, with Yole forecasting the optical transceiver market to expand at a 30% CAGR from 2025–2031 to US$112 billion. Silicon photonics integration and advanced architectures such as CWL and EML lasers are also boosting demand. However, supply constraints remain a challenge.

Inari Amertron

High-performance lasers rely on indium phosphide (InP), a material with limited supply chain capacity compared to silicon. Industry leaders Coherent and Lumentum have reported shortages, with demand outstripping supply by 25–30% in late 2025 and rising above 30% by mid-2026.

This imbalance has reshaped industry economics, giving suppliers stronger pricing power and forcing selective customer allocation. Coherent is ramping 6-inch InP production in Texas and Sweden, while Lumentum is acquiring a new fab in North Carolina. Nvidia’s US$2 billion investments in both companies in March 2026 underscore the strategic importance of securing advanced optics for AI infrastructure.

Meanwhile, RF remains Inari’s stable base, supplying front-end components for smartphones. While growth has slowed, normalisation is expected in FY27F, providing steady cash flow. The cancellation of the Lumileds acquisition improves earnings quality, shifting focus back to organic growth. With datacom igniting as a second engine, Inari is positioned as one of Malaysia’s most liquid tech stocks, offering investors exposure to both lifestyle value and long-term structural growth.

#businessnews