PETALING JAYA: Asean countries continue to see good trade inflows amid the prevailing tense in trade relations between the United States and China.
This has helped lift sentiment in the technology sector in the country. For Malaysia, the sector continues to hold steady and sentiment is firm despite Apple Inc, the biggest smartphone maker, recently posting its third straight quarter of declining sales.
A good number of local tech companies rely on Apple for a substantial portion of their order books as they make up for part of the smartphone maker’s vast global supply chain.
In the near term, the biggest smartphone maker in the world was recently reported as saying that it expects a similar performance in the coming quarter, which could mark a longest streak of declines in two decades.
Consumer tech, which consists of smartphones, laptops and other similar gadgets are bearing the brunt of the rise in global interest rates and increased inflationary pressures.
Despite the slowdown reported at Apple, sentiments at key local tech companies in Malaysia appear to remain firm, with stocks such as Inari Amertron Bhd
adding some 11%, Unisem (M) Bhd climbing by about 6% and MMS Ventures Bhd gaining by some 14% in the last one month.
The Bursa Malaysia Technology Index had also chalked up gains of slightly over 7% in the last three months.
Sentiment for Bursa-listed tech companies had in part been perked up by the heightened interest in electric vehicles (EVs) and a potential spillover effect on semiconductor makers.
However, analysts said any actual spillover impact from the EV scene to the tech players in the immediate near term is still immaterial.
Fortress Capital Asset Management chief executive officer Thomas Yong said the present technology companies in Malaysia are mainly dominated by equipment manufacturers.
“We may need some time before these EV investments in Malaysia start spilling over into the semiconductor tech sector,” Yong told StarBiz.
Apart from this, interest in the EV scene in the country had also been boosted after Infineon Technologies AG recently announced its decision to build the world’s largest 200mm silicon carbide (SiC) power fabrication plant in Kulim.
Germany-based Bosch had recently also opened a new test centre for chips and sensors in Penang and plans to invest RM1.62bil within the next decade for its operations here to beef up its supply chain for semiconductors.
“Other than the recent EV investments here, the expectation of a peaking US Federal Reserve rate hike and the anticipated semiconductor recovery next year are generating firm interest in Bursa tech companies,” Yong said.
However, he said the spillover effect to local tech companies would likely come when these EV-related electronics facilities such as Infineon’s new Kulim plant and EVE Energy’s new cylindrical lithium-ion battery plant begin operations.
“Given the need for strict and rigorous testing and inspection requirements for EV-related products, there will be opportunities for Bursa tech companies when the time comes,” he said.
Yong said apart from these recent positive developments, the decoupling between the United States and China can provide more opportunities as well.
“US companies operating in this part of the world are trying to replace their China-made testing or inspection machines (China dominates the testing and inspection equipment scene for insulated-gate bipolar transistors and metal-oxide-semiconductor field-effect transistors) with non-China suppliers,” Yong said.
“The same thing is happening for Chinese companies using American-made machines.
“The challenge would be for these companies to market themselves as the go-to alternative as they are also competing with companies from neighbouring countries including Singapore,” he added.
