Robust outlook for semiconductor sales with global 5G rollout


According to TA Research, the global 5G rollout and the prospect of global economic recovery are among the factors that would drive the semiconductor sector growth.

PETALING JAYA: The demand for semiconductors, especially chip products in automotive and digital devices, is expected to remain strong, given the mass digitisation effort amid the Covid-19 pandemic.

For 2021, the World Semiconductor Trade Statistics forecasts that the global semiconductor sales would grow 6.6% to a record high of US$469.4bil (RM1.9 trillion).

According to TA Research, the global 5G rollout and the prospect of global economic recovery are among the factors that would drive the semiconductor sector growth.

“For 2021, semiconductor billings are on track for another record year, especially with fabs worldwide ramping capacity during the prevailing global chip shortage.

“Key drivers include the advancements to leading-edge nodes, global 5G rollout, and robust fab investments in China amid ambitions to achieve chip self-sufficiency, ” it said in a report yesterday.

In March, semiconductor billings marked another record high after climbing 4.2% month-on-month (m-o-m) and 47.9% year-on-year (y-o-y) to US$3.27bil driven by robust secular semiconductor demand across end markets fuelled by increasing digitisation globally amid the Covid-19 pandemic, TA Research said.

Meanwhile, the global semiconductor sales in March 2021 grew 3.7% m-o-m and 17.8% y-o-y to US$41.1bil, which marked a new high since November 2018, and the 14th consecutive month of growth on a y-o-y basis.

In terms of geographical segmentation, TA Research said most regions recorded accelerated y-o-y growth, with China expanding 25.6%, Asia Pacific 19.6%, Japan 13.0%, Europe 8.7% and Americas 9.2%.

Despite the rise in sales and upbeat outlook, shares of the semiconductor players have been on a decline since last week.

For instance, Inari Amertron Bhd saw its share price fell by 6% to RM3.34 per share, Globetronics Technology Bhd dropped 10% to RM2.24, Unisem (M) Bhd declined by 3.7% to RM7.74 and Frontken Corp Bhd decreased by 9% to RM3.10.

Overall, TA has maintained its “overweight” outlook on the semiconductor sector with “buy” calls on Inari, Unisem, Malaysian Pacific Industries Bhd and Elsoft Research Bhd.

“Within our semiconductor universe, we continue to favour outsourced semiconductor assembly and test providers including Inari, Unisem and MPI for their clear order visibility and earnings growth prospects.

“We expect them to continue benefiting from strong chip demand fuelled by increasing digitalisation globally amid the Covid-19 pandemic, emerging areas including global 5G rollout, as well as prospects of a global economic recovery, ” it said.

However, TA cautioned that there are downside risks for the semiconductor sector, including a prolonged Covid-19 pandemic weighing on economic growth and sentiment, a prolonged and heightened trade war, weaker-than-expected sales, and a weakening of the US dollar against the ringgit.

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