Positive stance maintained on tech sector as China’s demand rises
KUALA LUMPUR: Malaysia’s technology sector once again garnered a positive stance from analysts given that China, the main export destination of Malaysia semiconductor products, has been gradually playing a pivotal role in upholding the demand of semiconductor products.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), in recent years, the China government has been supporting the Chinese domestic semiconductor industry with tremendous capital budgets.
“This has led to China gradually playing a pivotal role in upholding the demand of semiconductor products,” MIDF Research said in its special outlook report.
“At present, sales from China have accounted for one-third of global sales. It is also the main export destination of Malaysia semiconductor products.”
Moving forward, MIDF Research expected the sales growth momentum emanating from China to remain robust in the foreseeable term.
“This is in-tandem with the anticipated heavy investment in fab equipment in the upcoming years,” the research arm said.
In the immediate term, MIDF Research expected the global semiconductor sales to continue to record positive sales growth on a year-over-year basis.
The research arm’s view was reinforced by July 2017 sales figure which remained encouraging.
MIDF Research highlighted that worldwide sales of semiconductors for the month of July 2017 surged by 24 per cent year on year (y-o-y) to US$33.6 billion from US$27.1 billion.
“Such pace of sales growth was last seen in September 2010 when sales increase by 25 per cent y-oy,” it said. “This also marks the highest-ever sales recorded for the month of July.”
Apart from the smart devices segment, MIDF Research also expected healthier demand from the automotive, storage and healthcare markets.
“The automotive market will driven by the continuous effort to increase the average semiconductor content per vehicle.
“Demand from this market is also less susceptible to seasonality factors, thus providing a steadier stream of revenue.
“Meanwhile, higher demand for the storage market would be supported by the cloud computing and data centre industries.”
All factors considered, MIDF Research maintained its ‘positive’ stance for the technology sector.