KUALA LUMPUR (Sept 30): With semiconductor sales still rising and the direct impact of US tariffs appearing limited, Kenanga Investment Bank said it is now time to buy Malaysian technology stocks.

Latest data indicates the current upcycle in global chip sales extending at least until mid-2026 and a rise in equipment spend, the research house said in upgrading the Malaysian tech sector to 'overweight'. That’s a tailwind for Malaysian companies with exposure to front-end foundry and equipment, it said in a sector note.

“This cycle remains structurally supported by robust demand” for artificial intelligence, high-performance computing, 5G, and next-generation smartphone upgrades which drive the need for advanced logic chips, graphic processing units, and AI accelerators, Kenanga said.

Global semiconductor sales rose more than 20% year-on-year again in July, led by logic and memory on robust data-centre spend and adoption of cutting-edge artificial intelligence, according to the World Semiconductor Trade Statistics.

Industry association SEMI, meanwhile, expects front-end fab equipment spend to rise 6% in 2025 and 8% in 2026.

The constructive outlook should bolster prospects of Kelington Group Bhd (KL:KGB), which specialises in industrial gases, and UWC Bhd (KL:UWC), which supplies precision-engineered modules and provides systems integration for front-end wafer-fab equipment, Kenanga said.

“Importantly, we gathered that orders are now resuming, with minimal cancellations and costs largely passed through to clients” as US tariff uncertainties clear up, the house said.

For Malaysian technology companies, their operations are expected to normalise by now, improving earnings visibility across the sector, Kenanga added.