PETALING JAYA: The ongoing Middle East crisis may potentially put a dent on global sales within the semiconductor industry.
MBSB Research in a report to clients says this is in relation to Iran’s threat of targeting US tech firms with operations in the Middle East.
In recent years, these companies have been funnelling resources into the Middle East for artificial intelligence (AI) infrastructure build-out and a total of 18 tech firms have been identified as “legitimate targets” in retaliation to US and Israeli strikes on Iran, it said.
Nevertheless, it pointed out that for 2026, the World Semiconductor Trade Statistics is anticipating the global semiconductor market to reach US$975bil, an increase of 26.3% and in particular, demand for memory and logic are expected to remain strong, boosted by AI-related applications and continued demand in high performance computing and data centre infrastructure.
Sales for the month of January and February 2026 came in at US$82.5mil (plus 46.1%) and US$88.8mil (plus 61.8%) respectively and on a cumulative basis, the global semiconductor sales were on track to meet the full year target, it added.
Amid ongoing pessimism for the industry, head of equity sales at Rakuten Trade Vincent Lau pointed out that because the global chip market is expected to grow 26% to US$975bil, this was good news.
“We remain cautiously optimistic notwithstanding the on-going Middle East conflict which could slow down the projected 26% growth – especially if it is prolonged and starts to impact the entire supply chain,” he told StarBiz.
Lau said but even if the 26% were to be halved, it will still be a double digit 12%-13% growth.
“AI-driven and memory upcycle growth will remain broad based and Malaysia stands to benefit from Middle East plus one and a geopolitic reset even after the war is over.
“We believe the conflict is likely to peak and will simmer down although it will still take some months to recover,” said Lau.
MBSB Research in its report said the rising demand from generative AI and high-performance computing are redirecting the supply of memory away from smartphones and as a result, production of smartphones is adversely impacted, leading to shortage of device availability as well as higher input cost which leads to elevated selling prices.
Smartphone producers will need to accordingly adjust their selling prices and/or the specifications and this will in-turn affect consumer demand, especially in the low-to-mid market segment, while the premium market segment is likely to be more resilient in view of healthier margins and a better supply chain, it said.
MBSB Research said among companies under its coverage, Inari Amertron Bhd
has the highest exposure to the smartphone market at 62%, while Unisem (M) Bhd’s exposure to the communication and consumer market stands at 17% and 30% respectively.
Meanwhile, Malaysian Pacific Industries Bhd’s revenue from consumer and communications makes up 13% of its total revenue, it said.
MBSB Research said it was maintaining its “neutral” stance on the sector as the semiconductor industry faces mounting external risk factors.
This is on top of the structural shift caused by the proliferation of AI, it said.
