KUALA LUMPUR (May 11): AmBank Research said that looking ahead into 2022, the electrical and electronics (E&E) segment will remain as a key growth driver.
In an economics note on Wednesday (May 11), AmBank chief economist/head of research Dr Anthony Dass said E&E is expected to expand in the region of 15% (18.2% in 2021), benefiting from the still-strong global semiconductor sales which are projected to grow by 13.6% (26.3% in 2021).
His comments came after Malaysia’s Industrial Production (IP) improved in March 2022 by 5.1% supported by all three sub-indices, particularly manufacturing which grew strongly by 6.9% year-on-year.
Dass said one of the key drivers for the strong growth in this segment is the hike in the average selling price (ASP) due to the continued chip shortage which remains a concern in some sectors.
He said that for instance, automotive applications are expected to experience component supply constraints — particularly in microcontrollers (MCUs), power management integrated circuits (PMICs) and voltage regulators — extending into 2023.
“Thus, they will continue to experience high ASPs.
“Automotive high-performance computer (HPC), EV/HEV and advanced driver assistance systems will lead the growth in the automotive electronics sector,” he said.
Dass said he foresees a slower growth in PCs, smartphones and server end markets, it will gradually soften the growth of semiconductor revenue as semiconductor supply and demand strike a balance during 2022.
He said the chip shortage will continue to be a concern for the supply chain of electronics equipment in 2022.
“It will have different effects in major electronic equipment markets depending on the semiconductor device types.
“Still, the semiconductor overall component supply constraints should ease gradually through 2022.
“This would mean that prices would stabilise with the improving inventory situation. And this would be reflected more in 2023,” he said.
Meanwhile, Dass said the migration to 5G is expected to spur growth as 5G smartphone unit production would surge by a whopping 45% in 2022, reaching 808 million units and representing 55% of all smartphones produced.
He said the aggressive migration from 4G to 5G from major smartphone chipset vendors has temporarily led to a shortage in 4G system-on-chip integrated baseband integrated circuits (ICs) which began in the second half of 2021.
“Rising 5G-integrated baseband IC inventory will result in declining prices for 5G smartphones and accelerate the penetration of 5G further through the forecast period,” he said.