TA Research remains optimistic about the medium to long-term outlook of the semiconductor sector in Malaysia.
PETALING JAYA: TA Research is maintaining an “overweight” call on the local semiconductor industry although near-term earnings of some semiconductor stocks are likely to be impacted by the recent strengthening of the ringgit against the US dollar.
“We remain optimistic about the medium to long-term outlook of the semiconductor sector in Malaysia, supported by the ongoing recovery in global demand for semiconductors and a PC replacement cycle,” TA Research said in a note to clients.
Additionally, the return of Donald Trump as US president will likely see the adoption of a more protectionist US policies by intensifying export controls and raising tariffs on China’s semiconductor sector.
“This could create more trade diversion-opportunities for Malaysia under the China Plus One strategy. We believe Malaysia will remain a popular destination due to its status as a politically neutral country with a well-established ecosystem and infrastructure for the semiconductor sector.”
In September, global semiconductor sales stood at US$55.3bil versus August 2024’s US$53.1bil, according to the Semiconductor Industry Association (Semi).
This marked year-on-year (y-o-y) sales recovery for the eleventh consecutive month and seventh consecutive month-on-month rise.
TA Research said this showed that the global semiconductor market is in an upcycle currently.
The robust y-o-y improvement was mainly contributed by all regions except Europe. The sales growth was led by the Americas, followed by China, Asia Pacific, and Japan.
“According to Semi, the global shipments of silicon wafers are estimated to increase 10% to reach 13,328 million square inches as wafer demand continues to recover from a downcycle.
“Meanwhile, the strong growth in silicon wafer shipments is expected to persist through 2027, driven by rising demand for artificial intelligence and advanced processing technologies. Additionally, new applications in advanced packaging and high-bandwidth memory production, which require more wafers, are further contributing to the growing need for silicon wafers,” the research firm said.
Coming back to the local sector, TA Research maintained a “buy” recommendation on Inari Amertron Bhd
with a RM4.10 target price.
It also had “buy” calls on Unisem (M) Bhd with a target price of RM3.62, Malaysian Pacific Industries Bhd at RM38.20 and Elsoft Research Bhd at 58 sen.
