PETALING JAYA: Malaysia’s semiconductor sector is poised to continue benefiting from the ongoing global supercycle, driven by robust demand from artificial intelligence (AI) investments and data centre (DC) infrastructure expansion.
However, the impact is expected to be uneven across subsectors, according to TA Research, which maintained a “neutral” stance on the sector.
The research house said it expects gains to be led by integrated circuit design, optoelectronics, and semiconductor packaging and testing, especially among firms with exposure to AI-related and DC infrastructure demand.
“In contrast, players with greater exposure to traditional end markets such as personal computers and smartphones may face a more challenging operating environment, partly due to rising memory costs,” it noted.
Global semiconductor industry sales hit US$146.8bil in July 2026, representing a 135.1% year-on-year (y-o-y) surge and its 33rd consecutive month of y-o-y growth, according to the Semiconductor Industry Association.
Additionally, within the first seven months of 2026, the industry reached US$784.6bil in cumulative global sales, matching its previous record annual sales level.
On a month-on-month basis, global semiconductor sales increased by 6.4%, marking 17 consecutive months of growth.
“Looking ahead, we expect the strong momentum in the global semiconductor market to be sustained, with AI-related demand remaining the key growth driver, supported by continued investments in DC infrastructure and accelerated computing,” TA Research said.
Global semiconductor equipment billings also saw an increase of 23% y-o-y and 11% quarter-on-quarter in the second quarter of 2026 to US$40.5bil, representing the second consecutive quarter of record billings, according to industry association Semi.
“Regionally, the strong growth momentum was largely driven by Asia and North America, underscoring the global nature of semiconductor demand and the critical role these regions play in semiconductor manufacturing and enabling the next wave of AI-driven innovation,” the research house added.
Meanwhile, TA Research expects the US Federal Reserve’s recent interest rate hike to a range of 3.75% to 4%, to have a relatively minimal impact on the Malaysian semiconductor sector’s earnings.
Nonetheless, it warned that a tighter monetary policy may not bode well for semiconductor valuations, especially stocks trading at higher multiples.
“This could, however, be partially offset by a potentially stronger US dollar following the rate hike, which would provide some earnings support to export-oriented semiconductor players with US dollar- denominated revenue,” it said.
TA Research has highlighted Dagang Nexchange Bhd
as its top pick with a target price or TP of 66 sen, while upgrading Unisem (M) Bhd (TP: RM4.81) and Malaysian Pacific Industries Bhd (TP: RM47.30) from a “hold” to a “buy”.
