More opportunities to emerge for tech sector

PETALING JAYA: A firmer year is expected for the local technology sector, driven by the demand for artificial intelligence (AI) particularly as strength in logic and memory chips broaden into other sub sectors.

RHB Research said in a recent report the sector’s improving growth momentum is being supported by more optimistic guidance from most companies despite seasonal softness into the fourth quarter of last year, and the first quarter of this year.

“We see greater upside asymmetry in the second-line players, where improving fundamentals are yet to be fully reflected in share prices. The sector’s 22 times forward price-earnings ratio is positive versus more than 50% for earnings growth forecast this year,” RHB Research said.

The Semiconductor Industry Association (SIA) revised its projection on global semiconductor sales growth to 26% year-on-year, while industry body SEMI also raised its forecast on semiconductor equipment sales to US$145bil this year, with growth across both front-end and back-end segments.

According to the research house, engineering support and automated test equipment manufacturers are expected to see growth this year, on the back of higher orders.

RHB Research said it is maintaining an “overweight” call on the sector, with its top picks being Malaysian Pacific Industries Bhd, CTOS Digital Bhd, Coraza Integrated Technology Bhd and JHM Consolidation Bhd.

Meanwhile, MBSB Research said there would be some spillover for the local supply chain, backed by the highest global semiconductor sales last November, on top of an upward trend for the past 25 months.

At the recent Consumer Electronic Show 2026 in Las Vegas, many big companies launched new chips.

Nvidia Corp launched its next-generation Vera Rubin superchip while Intel Corp, Qualcomm Inc and AMD Inc launched chips to target the laptop market.

The research house said there has also been an emphasis on physical AI, especially in humanoid robots doing human-centric tasks and in industrial applications.

“We view that while there could be near-term limitations where the use cases are constrained to certain environments, it also shows that the technology is closer to mass commercial deployment. Thus, having a presence in the supply chain for physical AI and robotics would prove to be beneficial, especially for our local semiconductor companies.”

MBSB Research said it was maintaining a “neutral” call on the sector.

Vincent Lau, head of equity sales at Rakuten Trade said he is “overweight” on the sector as orders are resuming and outlooks are better, particularly because things are picking up on the back-end.

“If we look at Taiwan Semiconductor Manufacturing Co Ltd, its earnings show there is no AI bubble and the demand is real. They are planning to invest in the United States since tariffs have been lowered. We can expect to see a recovery and stronger results for our local players and the electrical and electronics segment,” he told StarBiz.

Lau added UWC Bhd and Mi Technovation Bhd are estimating they will report stronger sales for the fourth quarter of last year.