KUALA LUMPUR (Aug 7): Technology stocks on Bursa Malaysia swung in early trade on Thursday, after US president Donald Trump vowed to impose a 100% tariff on imported semiconductor chips.
The Bursa Malaysia Technology Index, which tracks 49 counters in the sector, opened at 51.76 and slipped 0.26 points within the first 15 minutes of trading before paring losses to close 0.1 point higher at 52.27. In comparison, the broader FBM KLCI gained 0.49% to end the day at 1,549.11.
The sector’s initial decline mirrored investors’ jitters following Trump’s remarks late on Wednesday, when he pledged to shield US chip production by heavily taxing foreign-made chips, while exempting those produced in the US.
At the market close on Thursday, some of the decliners included Malaysian Pacific Industries Bhd (KL:MPI), down 0.98% or 20 sen to RM20.30; Frontken Corp Bhd (KL:FRONTKN), which slipped 0.23% or eight sen to RM4.28; Unisem (M) Bhd (KL:UNISEM), down 2.11% to RM2.32; Greatech Technology Bhd (KL:GREATEC), which declined 1.20% to RM1.65; and JF Technology Bhd (KL:JFTECH), which dropped 4.55% to 42 sen.
However, some stocks managed to rebound by market close including Pentamaster Corp Bhd (KL:PENTA) which rose 2.96% to RM3.83; UWC Bhd (KL:UWC) gained 4.78% to RM2.63; ViTrox Corp Bhd (KL:VITROX) climbed 1.32% to RM3.84; and Mi Technovation Bhd (KL:MI) edged up 1.5% to RM2.03.
Notion VTec Bhd (KL:NOTION) slipped marginally by 0.86% to 58 sen.
In a note on Thursday, TA Securities warned that US tariffs and trade investigations are weighing on the sector’s outlook.
To recap, the US Department of Commerce previously initiated a Section 232 investigation to assess the potential risks that such imports may pose to national security.
TA Securities noted that Trump’s proposed 100% tariff on imported chips could disrupt the global semiconductor supply chain by raising production costs, which manufacturers would pass on to consumers, driving up prices and reducing demand.
“Overall, we believe that more conditional exemptions will be announced over time, given the complexity and interdependence of the global semiconductor supply chain. It would be extremely difficult for the US to fully repatriate the semiconductor value chain in the near term, as building a self-sufficient ecosystem would take decades,” it added.
TA Securities noted that in June, global semiconductor sales reached US$59.9 billion (+1.5% month-on-month/m-o-m; +19.6% year-on-year/y-o-y), marking the 20th consecutive month of y-o-y sales growth, driven by sustained demand for artificial intelligence (AI) and high-performance computing applications. All regions saw growth except Japan, Europe and America.
Citing Semiconductor Equipment and Materials International (SEMI), it said global sales of total semiconductor manufacturing equipment by original equipment manufacturers are forecast to reach a new industry record of US$125.5 billion in 2025, up 7.4% y-o-y.
“Growth is expected to continue into 2026, with sales projected to hit another record high of US$138.1 billion,” it added.
Sales of manufacturing equipment remain strong, supported by growth in advanced logic and memory chips for AI. Demand for chip innovations continues to fuel investment in capacity and manufacturing technologies.
TA Securities expects wafer fabrication equipment sales to rise 6.2% in 2025, and 10.2% in 2026, reaching RM516 billion.
Sales of assembly, packaging, and test equipment should also grow, as devices become more complex, it added.
Still, weakness in the consumer, industrial, and automotive sectors is slowing tech sector expansion.
Despite the sector’s growth, TA Securities maintains a cautious stance due to US trade policy uncertainty.
It expects Malaysia to remain committed to the National Semiconductor Strategy to strengthen its global role in the global supply chain, and maintains a 'neutral' outlook for the sector.
TA Securities upgraded Elsoft Research Bhd (KL:ELSOFT) from 'hold' to 'buy', with a target price of 36 sen, citing attractive upside after recent share price weakness. It also maintained a 'buy' on Unisem (M) Bhd (KL:UNISEM), a 'hold' on Malaysian Pacific Industries Bhd (KL:MPI), and a 'sell' on Inari Amertron Bhd (KL:INARI).