This article first appeared in The Edge Malaysia Weekly on July 14, 2025 - July 20, 2025
THE underperformance of Malaysian technology stocks against global giants was stark in the first half of 2025. The Bursa Malaysia Technology Index has shed one-fifth of its value so far this year even as global benchmarks like the Philadelphia Semiconductor Index (PHLX) rose 13.3% and the VanEck Semiconductor ETF gained 17.1%.
The divergence is stark. While the US semiconductor indices have not only rebounded but are charting new highs, Malaysian tech stocks continue to slide.
In fact, most Malaysian stocks with direct and indirect exposure to the semiconductor value chain have delivered negative returns year to date (YTD), reflecting broader concerns over the tariff war, intensified geopolitical tension as well as the US chip export restrictions.
Based on available data, all but one of the companies tracked on the local technology index have posted negative share price performance since the start of the year, with most registering double-digit declines — with the exception being YTL Power International Bhd (KL:YTLPOWR) that has a power generation business in Singapore.
At the top of the local semiconductor laggards list is contract chip designer Oppstar Bhd (KL:OPPSTAR), which has lost half its market value so far this year. The company, which was listed in March 2023 to much fanfare as the first pure-play integrated circuit (IC) design house to debut on Bursa Malaysia, has seen sentiment sour as it slipped into the red with a RM12.2 million net loss in its financial year ended March 31, 2025.
JF Technology Bhd (KL:JFTECH), a test engineering and test interface solutions provider, has seen its share price tumble 43.2% YTD. Still, the counter was trading at a trailing 12-month price-earnings ratio (PER) of over 130 times at the time of writing.
Other notable decliners include outsourced semiconductor assembly and test (OSAT) giants Inari Amertron Bhd (KL:INARI) at 36.9% YTD and Unisem (M) Bhd (KL:UNISEM) at 24.5%, as well as electronics manufacturing services (EMS) firm Nationgate Holdings Bhd (KL:NATGATE) at 35.5% — all of which are part of Malaysia’s back-end chip packaging and assembly ecosystem. These companies are sensitive to order flows from global clients, particularly those in the US and China.
In contrast, YTL Power stands out with a positive YTD gain of 14.8%. Although not a pure semiconductor play, the group is seen as a proxy for the booming data centre narrative in Malaysia owing to its partnership with US chip giant Nvidia Corp.
On July 8, YTL Power — a subsidiary of YTL Corp Bhd (KL:YTL) — said it has invested about RM10 billion in artificial intelligence and AI infrastructure to date.
Yeoh Keong Hann, executive director of YTL Power, reportedly said that the group has the world’s fastest chips, the GB200 Blackwell chips, in its data centres now, and they will be operational “very soon”.
Despite the broad selldown since the beginning of the year, valuations remain elevated for some local chip stocks, namely well-known names like Unisem, as well as automated test equipment (ATE) makers ViTrox Corp Bhd (KL:VITROX) and Pentamaster Corp Bhd (KL:PENTA).
In comparison, AI titan Nvidia last Wednesday beat Apple Inc and Microsoft Corp to be the first company in the world to hit US$4 trillion (RM17 trillion) in market capitalisation — just 13 months after crossing the US$3 trillion mark.
Nvidia’s share price has risen 18% YTD, while Advanced Micro Devices Inc (AMD) has climbed 16% and Broadcom Inc has soared 19%.
Notably, Bloomberg had on July 4, citing sources, reported that US President Donald Trump’s administration plans to restrict shipments of AI chips from the likes of Nvidia to Malaysia and Thailand, as part of an effort to crack down on suspected semiconductor smuggling into China.
Nevertheless, AmInvestment Bank Bhd head of equity research Paul Yap points out that the rules are still in draft form and are subject to change.
“Based on what has been reported, we believe the direct impact on local semiconductor-related stocks will be minimal. To avoid disrupting global supply chains, exemptions for key components are likely,” he tells The Edge.
Malaysia remains a critical player in the semiconductor ecosystem, commanding 13% of the global market for assembly and testing.
While there may be short-term disruptions, Yap believes Malaysia has an opportunity to position itself as a trusted AI hub, provided it is in compliance with US requirements.
“This could attract greater investment from the US and its allies. That said, near-term uncertainty is likely to prompt some investors to de-risk. Following the rescission of the AI Diffusion Rule [by former US president Joe Biden], we saw a rebound in positioning towards AI and data centre stocks in May,” he says.
Yap highlights that AmResearch continues to advocate a defensive positioning, reflected in the 15% cash allocation in its model portfolio.
“Our preference remains with domestic-centric and under-owned names. Within the technology and construction sectors, we take a selective approach. We favour Kelington Group Bhd (KL:KGB) for its expanding tender book as countries push for semiconductor sovereignty.
“In construction, we like Gamuda Bhd (KL:GAMUDA) and Sunway Construction Group Bhd (KL:SUNCON) given their strong track record of securing data centre projects from the US hyperscalers,” he elaborates.
TA Securities research manager and tech analyst Tony Chan Mun Chun opines that Trump’s AI chip curbs are “not entirely unexpected”, as the president had previously expressed his intention to implement his own version of the AI diffusion policy.
“For Malaysia’s technology sector, we do not expect a significant immediate impact, given the local semiconductor industry’s currently limited direct exposure to AI chips.
“Among the local tech names, we believe SNS Network Technology Bhd (KL:SNS) and Nationgate have the most direct exposure and are likely to be negatively affected,” he says.
Chan is of the view that the recent sell-off appears justifiable, as the concerns now are more on the potential long-term implications because such restrictions could hinder the country’s ambition to move up the value chain in the tech sector.
“Limited access to AI chips may delay local AI development, ultimately slowing Malaysia’s technological advancement and causing the country to lose its competitiveness,” he comments.
Boutique fund house Tradeview Capital Sdn Bhd chief investment officer Nixon Wong Gok Hey acknowledges that Malaysia serves as a crucial node in the global chip supply chain — especially for the US and China-linked supply chains.
“The question is if the draft policy includes restrictions on companies that serve Chinese chip makers or bans equipment or tools transfer even indirectly, Malaysian OSAT and equipment players may get caught in the compliance net,” he warns.
Given that many Malaysian chip firms have exposure to Chinese clients, the indirect consequences such as order flows, customer alignment and foreign direct investment (FDI) sentiment could be material, particularly for companies exposed to China or acting as key subcontractors in cross-border chip flows.
Moreover, if the new US policies pressure Malaysian companies to cut ties with China-affiliated customers, local firms could lose orders or be forced to restructure contracts, says Wong.
“Geopolitical entanglement could lead to US chip firms becoming more cautious about investing in or outsourcing to Malaysia if there is risk of secondary sanctions or future restrictions.
“That could slow the pace of new FDI, especially in high-end chip packaging or potential AI-related expansions that Malaysia is trying to attract. This could lead to a valuation discount on Malaysian tech stocks due to geopolitical overhang and sell-offs from global funds rebalancing for headline exposure,” he points out.
While the recent sell-off may be partially an overreaction, driven more by headline risk than immediate fundamentals, Wong says investors could be pricing in a worst-case scenario without clarity on how broad or enforceable Trump’s policy would be.
Indeed, he remarks, Malaysia’s tech infrastructure ambitions are increasingly drawing geopolitical attention. The combination of Chinese capital, US tech firms and local state-linked players creates a complex backdrop that could attract scrutiny from a Trump-led administration aiming to limit Chinese influence in strategic tech sectors.
“YTL Power in this context could be vulnerable due to its prominent role in data centre power supply, especially if its international partnerships or funding sources come under the microscope. While fundamentals remain strong [thanks to robust demand for hyperscale capacity], the risk premium could rise if investors grow wary of potential regulatory or trade headwinds from the West,” says Wong.
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