In the second quarter of 2022, worldwide semiconductor sales increased by +13.3%yoy and +0.5%qoq to USD152.5b, however, global sales for the month of June 2022 were USD50.8b, a decrease of – 1.9%mom. Sales were up in all major regional markets and product categories in the second quarter of 2022, compared to the same period the previous year.
Nonetheless, market growth has slowed in recent months, with year-on-year growth falling below 15% in June for the first time since February 2021. On yearly basis, the growth sales were up in all regions, led by the Americas (+29.0%), Japan (+16.1%), Europe (+12.4%), Asia Pacific/All Other (+11.9%) and China (+4.7%). Meanwhile, on monthly basis, the sales were down across all regions: Japan (-0.7%), the Americas (-0.9%), Europe (-1.1%), Asia Pacific/All Other (-2.3%), and China (-2.8%).
Under the US Chips Act, the bill, which comprises about USD52b (RM231.5b) in subsidies and tax benefits for firms investing in semiconductor production in the United States, it is intended to improve semiconductor supply security and competitiveness in the sector. According to the Malaysia Semiconductor Industry Association (MSIA), the new bill will have no detrimental impact on Malaysia since the Act is to encourage front-end fabs to be built in the United States. It is worth noting that the majority of Malaysian semiconductor enterprises are involved in chip assembly, packaging, and testing (back-end process). As a result, semiconductor assembly test factories and outsourced semiconductor assembly and test (OSAT) vendors who supply integrated circuit packaging and test services would be the primary beneficiaries in Malaysia. Thus, MIDF believes that the OSAT companies such as Inari Amerton Bhd, Unisem (M) Bhd and Globetronics Technology Bhd will benefit.
MIDF maintains a positive view on the sector even though the technology sector continues to be under pressure from the rate hike and other macroeconomics issues, remains positive on the sector given demands from 5G, AI, EV related products and service remains solid and are the key enablers to ignite digital economy world widely.
The emerging technologies depend heavily on the semiconductor industry to provide the computing power necessary. Therefore, the positive stance on this sector remained due to its robust mid-long terms outlook in tandem with the increasing adoption and integration of smart technologies, enveloping lots of sectors and applications.
MIDF’s top pick semiconductor companies are Inari Amerton Berhad (BUY, TP: RM3.65) and Unisem (M) Berhad (BUY, TP: RM4.07) given the Group’s exposure to growing RF contents in 5G smartphones usages and adoption. It also likes Globetronics Technology Berhad (BUY, TP: RM1.94) due to its exposure in high-tech sensors products for various applications.
