PETALING JAYA: Companies with direct exposure to artificial intelligence (AI)-related semiconductor investments, optical connectivity, proprietary technology development and semiconductor infrastructure continue to be favoured by analysts within the technology sector.
BIMB Securities Research said while near-term earnings visibility is strongest among infrastructure and manufacturing beneficiaries, the longer-term value creation opportunity lies with companies successfully moving up the value chain through intellectual property, engineering know-how and differentiated technologies.
“We believe this transition will be instrumental in allowing Malaysia to capture a larger share of the global semiconductor industry’s future growth,” it told clients in a report.
An analyst told StarBiz: “For now, I like companies providing physical AI infrastructure, data centre support and advanced semiconductor packaging.
“I’d stay away from pure software developers or ‘speculative’ AI application firms.”
BIMB Research noted that while early spending was largely focused on graphics processing units or GPUs and AI accelerators, the next growth phase is increasingly driven by high-speed optical connectivity, AI accelerators, advanced packaging and semiconductor infrastructure.
Based on its channel checks in Bayan Lepas and Batu Kawan, Penang’s semiconductor ecosystem is already gaining traction across these emerging segments of the AI value chain, it said.
The research house noted that although electrical and electronics exports remained robust in the first six months of this year, rising 48.2% year-on-year to RM468bil, much of the value creation was still concentrated in manufacturing and assembly operations.
Growth was supported by AI-related semiconductor demand and recovery in global electronics inventory cycles, it said.
The research house added that local industry participants are expanding into higher-value activities such as IC design, photonics, advanced packaging, semiconductor materials and equipment development, positioning the country to capture a larger share of industry profits over the longer term.
BIMB Research said as AI workloads continue to increase power density and thermal demands, chip manufacturers are prioritising materials that improve heat dissipation, reliability and overall product lifespan.
This trend is expected to drive stronger demand for specialty alloys and other engineered materials used in semiconductor and power-related applications, it added.
BIMB Research said it visited Inari Amertron Bhd
’s P13 facility in Bayan Lepas to assess the group’s progress in radio frequency or RF packaging, photonics and advanced packaging technologies, as well as to gain insights into its medium-term growth prospects.
“We maintain our ‘hold’ recommendation on Inari with a higher target price of RM2.52 (previously RM1.92) based on a forward price earnings ratio of 34 times, compared with 26 times previously.”
It said it believed valuing Inari at its historical average multiple is no longer appropriate, given the completion of the double-sided molded transition, improving RF demand visibility and the group’s growing exposure to AI-related datacom and photonics opportunities.
In addition, technology companies entering a new earnings cycle and gaining exposure to structural growth themes typically command valuation premiums over long-term averages.
As such, it believes a standard deviation valuation benchmark better reflects Inari’s evolving business mix and medium-term growth profile.
At last look, Inari was at RM2.47 apiece.
