GEORGE TOWN (Sept 10): Malaysia’s electrical and electronics (E&E) exports are on track to surpass the record RM601.21 billion achieved in 2024, buoyed largely by the semiconductor sector, which has so far avoided US tariffs despite looming threats of duties of up to 100% from US President Donald Trump.

In 2024, semiconductor exports accounted for RM437.5 billion of Malaysia’s total E&E exports, with RM56.2 billion destined for the US.

From January to July 2025, E&E exports rose 17.3% year-on-year to RM391 billion, with July alone recording RM63 billion — up 17.3% from June and 23% compared to July 2024.

Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri SH Wong told The Edge, “The sector could do better than 2024 barring unforeseen circumstances. However, the threat of 100% tariffs on semiconductors from countries without US chip production plans has introduced uncertainty to the long-term outlook.”

Malaysia’s semiconductor exports to the US are currently exempt from retaliatory tariffs, but this could change based on future US policy decisions.

“Global semiconductor sales could grow 11.2% this year, driven primarily by the AI segment, and as a key player in the global semiconductor supply chain, Malaysia may benefit from some aspects of this growth," he said.

Local semiconductor players see growth potential but have mixed outlooks due to varying trends across market segments.

ViTrox Corporation Bhd (KL:VITROX) CEO Datuk Chu Jenn Weng expects strong momentum in the second half of 2025, driven by AI infrastructure, 5G-enabled devices, electric vehicles and advanced medical technology. ViTrox provides automated machine vision inspection systems.

He said the global semiconductor market is expected to grow over 11% in 2025. Equipment investments are also up 21%, showing the industry is preparing for higher demand.

“With secular trends in AI and digitalisation continuing to unfold, the outlook for the industry remains promising and customers are already lining up new production lines to stay ahead,” Chu said.

Semiconductor design company Oppstar Bhd (KL:OPPSTAR), however, in its latest results commentary expects a mixed-to-cautious outlook due to global uncertainties, weak consumer electronics demand, delayed spending and renewed trade tensions.

Automated technology and manufacturing solutions provider Pentamaster Corporation Bhd (KL:PENTA) executive chairman Datuk CB Chuah told The Edge he anticipates flat performance this year. 

He said while its semiconductor test equipment business is stable, weak automotive sales — especially in electric vehicles — have hurt demand for its power module silicon carbide (SiC) testers, which make up about 30% of its revenue. Price competition in the SiC market is also squeezing margins. Each tester is priced around US$500,000 (RM2.11 million) to US$2 million.

According to CIMB Securities, in a note published on Tuesday, Malaysia’s technology sector posted a modest 1.4% quarter-on-quarter (q-o-q) sales increase in the second quarter ended June 30, 2025 (2Q2025), driven by the automated test equipment (ATE) and outsourced semiconductor assembly and test (OSAT) segments. However, sales in the electronics manufacturing services (EMS) segment fell 4.3%. Strong equipment deliveries from ViTrox and robust utilisation at Malaysian Pacific Industries Bhd (KL:MPI) and Unisem (M) Bhd’s (KL:UNISEM) China plants underpinned growth.

Despite these gains, net profits in the sector declined 9.5% q-o-q, weighed down by losses at Genetec Technology Bhd (KL:GENETEC), underutilisation at Unisem Malaysia and weak EMS earnings. Only MPI, ViTrox and VS Industry Bhd (KL:VS) posted profit growth during the quarter.

The AI-driven semiconductor segment remains the primary growth engine, with industry giants Nvidia, AMD and Broadcom expecting strong sales in 3Q2025. Outside AI, the automotive and industrial sectors show signs of recovery. Leading chipmakers such as NXP, Infineon and STMicroelectronics report that the automotive inventory glut is easing and inventories are being replenished. Onsemi recorded a 23% sequential sales rebound in China in 2Q2025, fuelled by SiC demand for new EV production ramps.

Overall, these semiconductor companies anticipate sales growth of between 4% and 15% in 3Q2025. The top 15 global semiconductor firms forecast a 7.6% q-o-q increase, outpacing CIMB Securities’ 2.2% forecast for Malaysia’s technology sector (ATE, EMS, OSAT). The gap is largely attributed to softer utilisation in the EMS segment. Excluding EMS, the ATE and OSAT segments in Malaysia are expected to grow by 5.8% q-o-q in 3Q2025.