KUALA LUMPUR (April 14): Malaysian tech stocks extended their rebound into the third day on Monday following the weekend announcement of US tariff exemption on key consumer electronics and chips.

The Bursa Malaysia Technology Index, which tracks 49 stocks in the sector, rose by over 3.8%. Semiconductor services firm Inari Amertron Bhd (KL:INARI) was the biggest index mover, gaining 12 sen, or more than 7%, to close at RM1.78. 

The exclusion of a range of products, including smartphones and even semiconductor manufacturing equipment, offer a much-needed respite to the global electronics supply chain, according to Hong Leong Investment Bank.

Without the exemptions, pricing pressures and demand erosion would have been “severe”, the research house warned. Still, structural challenges and softer fundamentals continue to pose downside risks to earnings and target prices despite the near-term relief rally, it said.

By the market close on Monday, 37 out of 49 stocks on the Technology Index were in the green, with only three decliners and seven unchanged counters. Other gainers included MyEG Services Bhd (KL:MYEG), Frontken Corp Bhd (KL:FRONTKN), and Malaysian Pacific Industries Bhd (KL:MPI).

Electronic manufacturing services companies in the industrial sector also advanced. PIE Industrial Bhd (KL:PIE) rose over 8%, while Cape EMS Bhd (KL:CEB) and K-One Technology Bhd (KL:K1) were up about 4% each.

Over the weekend the US announced an exemption which removes steep tariffs (125% on Chinese electronics and 10% globally) on certain popular electronics — but only temporarily. It’s part of a plan to later introduce a more targeted tax on the sector.

The Technology Index remains down 30% year-to-date — underperforming the benchmark FBM KLCI, which declined nearly 10% over the same period.

China, meanwhile, has revised its rules to determine the country of origin for imported chips based on the wafer fabrication location, rather than the design or packaging origin, adding a fresh layer of complexity to the global tech supply chain.

Further, China’s new export restrictions on rare earth materials, particularly scandium and dysprosium essential for radio frequency and storage applications, pose supply chain concerns for global tech giants, Kenanga Investment Bank warned.

“The impact could be significant,” the research house cautioned, as China produces around 90% of the world’s rare earths used in everything from missiles to electric vehicles.

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