Malaysia’s semiconductor industry projected to grow 8-10% in 2022
26 Oct 2022
The Malaysia Semiconductor Industry Association (MSIA) projected the semiconductor industry to grow by 8% to 10% in 2022, followed by a weaker 2023, due to weaknesses in the personal computer and smartphone manufacturing industries, Hong Leong Investment Bank Bhd (HLIB) said.
In a research note on Wednesday (Oct 26), HLIB said the automotive industry, however, remained resilient with a strong bill-to-book ratio.
It said fabrication plants would continue to get equipped, despite recent scaled-down capital expenditure plans by major players, but might put manpower on hold until orders are secured.
“The MSIA is working with the Government to improve non-monetary incentives to attract foreign direct investment (FDI) in this industry.
“We maintain our ‘overweight’ stance, and are tactically in favour of front-end players,” it added.
The investment bank said in the past 12 months, a total of RM52 billion in semiconductor investment was announced, targeting to create 11,000 jobs.
“In view of the impending implementation of the global minimum tax of 15%, the MSIA is working with the Government to improve non-monetary incentives, such as automation, talent and supply chains, to attract FDI in this industry,” it said.
HLIB said increasing demand for digitalisation boosted worldwide sales, which resulted in a global chip shortage that impacted supply chains across sectors.
The investment bank said the technology sector is expected to experience multi-year earnings growth supported by fundamental exponential demand and further enticed by government incentives.
“We maintain our tactical position in favour of front-end players, as many countries have rushed to develop their semiconductor capabilities, especially in leading-edge front-end fabrication (foundry), to be self-sufficient on the back of national strategic and security interests,” it said.
HLIB outlined several challenges for the semiconductor industry, including economic headwinds such as inflation and global recession risk, demand correction in consumer products, as well as supply disruptions.
Malaysia will participate in implementing the global minimum corporate tax of 15% from 2023 on large multinational enterprises and Malaysian conglomerates whose annual global turnover exceeds RM3.4 billion.