NationGate Holdings Bhd, a contract manufacturer of US chip powerhouse Nvidia Corp, has suffered a series of blows that crashed its share price nearly 43% since the start of the year, wiping RM2.53 billion off its market capitalisation.
It suffered yet another setback after its a wholly owned subsidiary got embroiled in the Malaysian Anti-Corruption Commission’s (MACC) investigation into alleged scrap metal smuggling.
In a bourse filing yesterday, the electronics manufacturing services (EMS) provider revealed the MACC raided the premises of NationGate Solution (M) Sdn Bhd on Monday as part of the ongoing probe.
The revelation spooked investors, triggering a selloff that saw its shares plunge as much as 16% or 26 sen before paring its losses to close 7.5% lower at RM1.49.
The shares were trading at this level for much of the morning session today. Intraday short selling on the stock was also suspended until today.
Rakuten Trade head of equity sales Vincent Lau said NationGate’s share price should stabilise at current levels. He opined the selling yesterday was likely driven by a “sell first, ask later” reaction among investors.
He was quoted as saying the group’s core business “remains sound” and that its partnership with Nvidia is unlikely to be affected by news of the raid.
Given that NationGate was a darling tech stock last year, investors are stumped as to how the Penang-based company has gotten caught up in an MACC investigation into scrap metal smuggling.
According to Bernama, the MACC launched the large-scale “Op Metal” operation against scrap metal smuggling syndicates across five states. This has reportedly caused the government an estimated tax revenue loss of more than RM950 million.
MACC chief commissioner Azam Baki said the raids targeted factories and companies exporting scrap metal overseas.
Nvidia’s double-edged sword
NationGate is the US chip maker’s sole contract manufacturer in Southeast Asia, specialising in assembling artificial intelligence (AI) servers powered by Nvidia’s high-performance graphics processing units (GPUs) that are mainly deployed in AI data centres.
This connection with Nvidia, along with the surge in AI development and the data centre boom, propelled Nationgate’s share price which soared 72% in 2024. However, the close association with Nvidia is also a double-edged sword.
Things started souring as the new year dawned, with the global technology sector rocked by the Biden administration’s last-minute AI diffusion rule, new tariffs from the Trump administration and the emergence of Chinese AI player DeepSeek. All these sparked a selloff in global stock markets, particularly tech and AI-related stocks.
In early March, NationGate shares were pummelled following news reports about a case in Singapore related to the movement of Nvidia chips. Three men were charged with fraud over the illegal movement of Nvidia chips to China, bypassing US export controls.
US authorities have been investigating whether DeepSeek had circumvented sanctions through third parties in countries such as Malaysia, Singapore and the United Arab Emirates.
In a space of two weeks, NationGate’s stock price plunged 29% even though the case did not involve the company.
The company was listed on the ACE Market in January 2023, before migrating to the Main Market in May 2024.
The group is a turnkey one-stop solutions provider, focusing on the assembly and testing of electronic components and products.
Its co-founder and managing director Ooi Eng Leong and his wife Tan Ah Geok have a controlling 54.74% stake in the group.
Ooi, 56, holds 48.26% while Tan holds 6.48%, according to the company’s 2024 annual report. According to Forbes, Ooi has a net worth of US$335 million (RM1.42 billion).
