KUALA LUMPUR: Malaysia's technology sector is experiencing robust growth, driven by a global recovery in the semiconductor market, fuelled by investments in artificial intelligence (AI) infrastructure and a resurgence in inventory replenishment for non-AI semiconductor applications.
In December 2024, the World Semiconductor Trade Statistics (WSTS) revised its global semiconductor sales growth forecast for 2024 to 19 per cent from 16 per cent, while slightly lowering the 2025 growth forecast to 11.2 per cent from 12.5 per cent.
This reflects strong demand in the logic and memory sectors, spurred by heightened AI infrastructure investments, according to CIMB Securities Sdn Bhd.
CIMB maintains its "overweight" stance on the technology sector, citing favourable risk-reward dynamics. Factors supporting this view include improved demand recovery visibility, government initiatives promoting the electrical and electronics (E&E) industry, and growing investor confidence.
Key growth drivers for the sector include a stronger-than-anticipated semiconductor recovery, diversification of supply chains, new incentives under the National Semiconductor Strategy, and a weaker ringgit against the US dollar.
However, challenges such as delayed global semiconductor recovery, insufficient funding, geopolitical tensions, labor shortages, and potential ringgit strengthening could pose risks.
CIMB projects the sector's net profit to grow by an average of 25 per cent in 2025 and 2026, following a modest 2 per cent increase in 2024.
The firm estimates a compound annual growth rate (CAGR) of 17 per cent in net profit between 2023 and 2026, with the outsourced semiconductor assembly and test (OSAT) and electronics manufacturing services (EMS) sectors leading growth in early 2025.
Revenue is expected to grow by an average of 13 per cent in 2025 and 2026, compared to just 1.0 per cent in 2024, driven by industry demand recovery, supply chain diversification in ASEAN, and inventory restocking.
Public Investment Bank Bhd (PublicInvest) echoed optimism for 2025, citing it as a year of technological breakthroughs.
The firm highlighted AI, cybersecurity, cloud computing, and robotics as pivotal areas of opportunity and innovation.
PublicInvest noted that some local automated test equipment (ATE) manufacturers have seen increased inquiries in recent months, albeit with short-term visibility. Meanwhile, data center investments continue to gain traction, with Malaysia poised for significant growth in this area.
Data centres, essential to the expanding digital economy, offer Malaysia an opportunity to specialise in data services, particularly those linked to generative AI.
These services are expected to drive innovation across industries such as healthcare and services, enhancing quality and fostering technological advancement.
Expanding beyond semiconductors, Malaysia stands to benefit from technology transfer and investments by major tech firms, PublicInvest added.
