TA Research said the global chip market is expected to grow significantly this year, reaching nearly US$1 trillion in annual sales.
PETALING JAYA: The global semiconductor industry is poised for another year of strong expansion in 2026, driven largely by sustained artificial intelligence (AI) demand, even as Malaysian-listed technology stocks remain only partial beneficiaries of the global upcycle.
Citing the Semiconductor Industry Association (SIA), TA Research said the global chip market is expected to grow significantly this year, reaching nearly US$1 trillion in annual sales, with AI and high-performance computing continuing to anchor demand across memory and logic-chip segments.
The research house said it is expecting the momentum to be maintained, noting that AI-related applications remain the primary structural growth driver for the sector.
Supporting the outlook, global semiconductor sales ended last year on a strong footing. Last November, worldwide chip sales rose to US$75.3bil, up 3.5% month-on-month (m-o-m) and 29.8% year-on-year (y-o-y), marking the 25th consecutive month of annual growth, according to SIA data.
Regionally, growth was led by Asia Pacific, which recorded a 66.1% y-o-y increase, followed by the Americas, China and Europe, with Japan the only major market to register a contraction, with sales declining 8.9% y-o-y.
On a m-o-m basis, sales increased across all regions except Japan, underscoring resilient near-term demand conditions.
The uptrend in chip demand is also translating into stronger capital spending.
Industry association Semi forecasts global semiconductor manufacturing equipment sales to rise to US$145bil this year and US$156bil next year, driven mainly by AI-related investments.
TA Research said the expansion will be supported by spending on “advanced logic and memory technologies” as well as the increasing adoption of advanced packaging technologies.
Wafer fabrication equipment sales alone are projected to grow 9% y-o-y this year, while test, assembly and packaging equipment are also expected to post healthy growth.
Despite the positive global backdrop, TA Research remains cautious about the local technology sector and has maintained a “neutral” stance.
The research house said: “In general, the global AI boom has not significantly benefited Malaysian technology players, as most still rely heavily on legacy consumer, industrial, and automotive segments, with limited exposure to higher-value AI-related products.
In addition, it pointed out that the potential introduction of sector-specific tariffs by the United States on semiconductor imports remains a key overhang.
Within its coverage, TA Research upgraded Unisem (M) Bhd
to “buy”, maintained a “buy” call on Elsoft Research Bhd, and maintained “hold” calls on Inari Amertron Bhd and Malaysian Pacific Industries Bhd.
Meanwhile, Mohd Sedek Jantan, investment strategist and economist at IPP Global Wealth, concurred with TA Research on the overall outlook of the local tech sector, telling StarBiz that this year remains structurally cautious but selectively positive.
“The AI boom is not a broad-based win for Malaysia; it rewards technical depth, not scale. The industry is now competing on complexity rather than cost,” he said.
He observed that the global semiconductor investment scene is dominated by China, Taiwan and South Korea, which control the industry’s front-end logic and advanced-node manufacturing, while Malaysia remains positioned in the back-end, focused on assembly and testing.
Mohd Sedek said, this year, although global capital expenditure is concentrated in two-nanometre technologies, Malaysia’s earnings base is still anchored in lower-value manufacturing.
He said: “On one hand, we have a handful of companies who moved early into advanced packaging and liquid cooling. These will have full order books and great margins for this year.
“However, it is a grind for the rest, as most of our outsourced semiconductor assembly and test (Osat) players are still stuck with legacy chips for cars and smartphones.”
Mohd Sedek said this market has not bounced back nearly as fast as people had hoped, with companies facing high volume, but soft pricing power.
“Weak pricing power and an unfavourable product mix are the main constraints on earnings recovery,” he added.
Moreover, while the China+1 diversification strategy makes Malaysia a natural destination for global manufacturers seeking supply-chain resilience, ensuring factories remain busy, Mohd Sedek cautioned that high-volume, low-margin production does not create durable industry wealth.
