Semiconductor industry expected to boom with development trajectory

KUALA LUMPUR – Analysts from MIDF Research kept its positive call on the semiconductor sector due to the sector’s development trajectory.

A research note from MIDF had recently stated that the sector is poised for rapid development where they believe would surpass other sectors such as finance and industrial.

The note attributes the semiconductor industry boom to the widespread adoption as well as integration of technology as the the world continues to embrace digitalisation.

MIDF explained that emerging technologies like artificial intelligence, electronics for automobiles, and the augmented and virtual reality rely largely on the semiconductor sector to deliver the required computational power needed for the tech to work.

The research firm highlighted that even though the supply of semiconductors were short, the sales remain high for the Q1 2022, with the sales amounting to US$151.7 billion overall. This figure marks a 23.0% increase for its year-on-year performance.

In March of this year, global semiconductor sales were recorded at US$50.6 billion with United States outpacing other regional markets with a 40.1% year-on-year performance increase.

Aside from that, MIDF reported that since 2000, spending on semiconductor research and development as a percentage of global sales has exceeded the four-decade historical average of 14.5% in all but five years which are 2000, 2010, 2017, 2018, and 2020.

The report further stated that during the five years, the lower research and development to sales ratio was attributed to the strength of total revenue growth and not the inadequacies of spending by the semiconductor suppliers.

Additionally, the research firm continues to maintain its call to ‘buy’ for semiconductor companies which are lnari Amerton (target price RM4.55) and Unisem (M) Bhd (target price RM4.33).

In other related news, South Korean semiconductor and printed circuit board manufacturer SIMMTECH has completed its Malaysian-based factory operated under its subsidiary, SUSTIO Sdn Bhd.

The factory is located in Penang and expected to further ramp up productions for chips to be supplied globally.

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