PETALING JAYA: The local semiconductor sector is expected to continue seeing gradual earnings recovery, led by an anticipated healthy rebound in global demand.
Many local tech companies are anticipated to benefit from foreign-exchange recovery in the upcoming quarter, given the recent retreat of the ringgit against the US dollar.
TA Research, in its report, noted that any further protectionist policies adopted by the US President-elect Donald Trump will create more trade diversion opportunities for Malaysia under the China Plus One strategy.
The research house reiterated its “overweight” stance on the semiconductor sector.
The brokerage also kept its “buy” calls on Inari Amertron Bhd
with a target price (TP) of RM4.10, Unisem (M) Bhd (TP: RM3.62), Malaysian Pacific Industries Bhd (TP: RM35.80) and Elsoft Research Bhd (TP: 50 sen).
Key downside risks include heightened geopolitical tensions weighing on economic growth and disrupting supply chains, weaker-than-expected sales, a further weakening of the US dollar against the ringgit, and a sudden spike in commodity prices.
According to the research house, the World Semiconductor Trade Statistics recently revised its 2024 global semiconductor sales forecast upward to US$629.9bil, up 19% year-on-year (y-o-y).
The global semiconductor market is closing 2024 on a high note, driven by strong demand from investments in artificial intelligence data centres, despite the consumer, automotive and industrial segments experiencing a slower pace of recovery.
Global sales are projected to reach US$697.2bil in 2025, a growth of 11.2% y-o-y.
TA Research noted the global semiconductor market continued its uptrend by posting another healthy sales growth in October.
According to the Semiconductor Industry Association, global semiconductor sales stood at US$56.9bil in October, up 2.8% month-on-month (m-o-m) and 21.1% y-o-y versus September 2024’s US$55.3bil.
This marked y-o-y sales recovery for the 12th consecutive month, while m-o-m increased for the eighth successive month.
This goes to show that the global semiconductor market is currently on an upcycle, TA Research said, adding that the strong y-o-y improvement was contributed by all regions, except Europe.
The Americas led the sales growth with a 54% rise y-o-y, followed by China (17%), Asia Pacific/all others (12.1%) and Japan (7.4%).
