AI export bet: Here to stay?

MALAYSIA has never exported so much, or depended so heavily on one sector to do it.

In September, shipments hit RM215.1bil, up 54.5% from a year earlier. Electrical and electronics (E&E) products accounted for RM110.23bil of that, a monthly record and 51.2% of total exports, according to trade data from the Investment, Trade and Industry Ministry and the Statistics Department.

MBSB Research calculates that E&E delivered about 59% of the month’s growth, led by integrated circuits and storage devices. Orders from Taiwan jumped 175.2% and those from the United States rose 89.9%.

Behind those numbers is one theme: the global rush to build artificial intelligence (AI) infrastructure. Now the money funding it is looking nervous.

China’s tech-heavy STAR50 index has fallen about 40% in under four months, erasing roughly US$480bil.

Last Sunday, Elon Musk warned on X that more than 200 “neoclouds” – firms that buy chips and rent out computing capacity – could face “guppy-level death and consolidation”.

“Debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centres,” Musk wrote.

Neoclouds buy the chips and servers that Malaysian plants package and test, so they sit at the demand end of the chain.

This raises the question: Is the bubble bursting?

Peter Lim Tze Cheng, chief research officer at Trident Analytics, says no.

“If you look at the share price aside, the fundamentals for the semiconductor and E&E are still very strong,” he tells StarBiz 7. “I think the AI boom has barely started.”

His evidence is revenue. Anthropic’s second-quarter revenue rose 1,368% to US$11.6bil, according to its S-1 initial public offering (IPO) prospectus filed with the US Securities and Exchange Commission.

Lim says this separates the current cycle from the dot.com bubble, when “there’s no revenue, there’s no business model”.

Demand is physical too, he says. “Are we seeing a volatility in demand for the chips? The answer is no,” Lim adds.

Memory is in short supply as producers shift capacity to high-bandwidth memory, and “the current shortage is mind-boggling”.

He cites a US Semiconductor Industry Association forecast of global chip sales rising from about US$800bil to US$1.5 trillion.

China’s slide, he says, reflects very high starting valuations and little comparable AI revenue, rather than a collapse in demand.

On Musk’s warning, “neocloud” is too broad a label. What separates these companies is their financing, and the weak spot is operators whose loans depend on the future resale value of their graphics processing units.

Where Malaysia sits

Malaysia does not design or fabricate the chips. That is the work of firms such as Nvidia Corp and Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

Its role lies in packaging and testing, through listed outsourced semiconductor assembly and test (OSAT) firms Inari Amerton Bhd, Malaysian Pacific Industries Bhd and Unisem (M) Bhd, as well as makers of test equipment.

“Our exposure is indirect,” Lim explains.

The 175.2% jump in exports to Taiwan, home to TSMC, shows how deeply Malaysian plants are embedded in that supply chain, but it also ties the country’s fortunes to a small cluster of customers.

The counterpoint is that scarcity doesn’t last. Tradewind chief executive officer (CEO) Ng Zhu Hann does not dispute current demand. He questions how long the shortage will last.

Chip users may widen their sourcing beyond Samsung, SK Hynix and Micron to include ChangXin Memory Technologies (CXMT), the Chinese memory maker.

“If so, the capacity constraint will then be easily overcome,” he says.

Following a domestic IPO on the Shanghai Stock Exchange in July 2026, CXMT briefly became China’s most valuable listed company, capturing roughly 10% of the global dynamic random-access memory market by mid-2026.

That matters because scarcity is the heart of the bull case.

“It doesn’t mean, especially in a technology space, that the cost will remain high,” Ng says. “Breakthroughs will happen and within a very short span of time, things can also change.”

He also calls the sector’s share-price run-up “a bit dangerous”, since valuations may already have priced in strong earnings.

Ng is speaking about equities, not export orders. But the two views are less opposed than they seem.

Lim says demand is strong and prices are noisy. Ng says demand is strong and prices may assume it stays that way.

The what-if situation

Danny Wong, CEO of Areca Capital, frames it as a question of how long, not whether.

“Malaysia’s exports are doing very well, especially electronics and computer chips, attributed to the AI boom,” he says. “But the big question is how long this growth can last.”

While the shortage and demand persist, exports would be supported, “albeit normalise on its growth”.

If the boom stalls, the damage would probably come in stages. Wong reads the STAR50’s fall as “a warning sign that the boom may be losing steam”, but not a sign that production is slowing.

If big companies spend less on AI, though, “Malaysia could face fewer export orders, slower factory production and even job losses, but not as severe as other high-end production countries”.

The second stage is a supply response. If Ng’s scenario plays out, prices could ease and revenue growth slow even without a fall in volumes. The question is whether that would hurt OSATs or help them through higher volumes.

The third is arithmetic. September’s growth beat forecasts of about 40% by a wide margin, according to Hong Leong Investment Bank Research, so comparisons will only get steeper.

“We should expect the growth to normalise,” Wong says.

None of the three expects a collapse.

“We must not focus just on AI-related demand. There are other growth drivers for our E&E sector, such automotive/electric vehicle, industrial automation, power/energy transition, consumer electronics/telecommunications/aerospace, to name a few,” Wong adds.

For a country whose exports have never leaned so heavily on one sector, the answer will determine how prepared it needs to be.

“The AI boom could slow down at some point, and Malaysia must be ready for it,” he says.