PETALING JAYA: Analysts expect sentiment in the local semiconductor sector to improve further, underpinned by an anticipated healthy recovery in global demand and increasing trade diversion opportunities as a result of the China Plus One strategy.
TA Research said the global semiconductor market continued its upward trajectory in April when sales grew by 15.8% year-on-year (y-o-y) to US$46.4bil.
On a month-on-month (m-o-m) basis, semiconductor sales rose by 1.1% from US$45.9bil in March.
“This marked a y-o-y sales recovery for the sixth consecutive month, while the sales in April increased on a m-o-m basis for the first time this year.
“This further confirms that the global semiconductor market is in a recovery mode,” the research house said in a report yesterday.
TA Research maintained an “overweight” call for the sector, with a “buy” call on Inari Amertron Bhd
with a target price (TP) of RM4.30, and “hold” calls on Unisem Group (TP: RM4.37), Malaysian Pacific Industries Bhd (TP: RM41.10), and Elsoft Research Bhd (TP: 58 sen).
Additionally, the research house said the Americas and Asia-Pacific regions are expected to see substantial growth in their semiconductor industry, which will be backed by memory and logic categories.
TA Research stated the decent y-o-y improvement was mainly driven by the Americas (up 32.4% y-o-y), China (up 23.4% y-o-y), and Asia-Pacific all others (up 11.1% y-o-y).
“By geography, April 2024’s sales increase of 1.1% m-o-m was mainly driven by the Americas (up 4.2% m-o-m), Japan (up 2.4% m-o-m) and China (up 0.2% m-o-m). Meanwhile, the slowdown was observed in Europe (down 0.8% m-o-m) and Asia–Pacific all others (down 0.5% m-o-m),” the research house said.
Recently, the World Semiconductor Trade Statistics organisation has revised its forecast upwards for global semiconductor sales with 2024’s now at US$611bil (up 16% y-o-y) as compared with previous forecast of US$588.4bil (up 13.1% y-o-y).
TA Research said the strong growth will be fuelled by robust double-digit growth from memory and logic categories.
“The Americas and Asia Pacific regions are anticipated to experience substantial growth, with projected increases of 25.1% and 17.5%, respectively.
“Conversely, Europe is expected to see minimal growth of 0.5%, and Japan is forecasted to experience a slight decrease of 1.1%,” the research house noted.
Meanwhile, the key downside risks include heightened geopolitical tensions weighing on economic growth and disrupting supply chains, weaker-than-expected sales, and weakening of the dollar against the ringgit.
