KUALA LUMPUR (April 7): The technology sector, particularly the semiconductor industry, is facing mounting external factors such as supply chain vulnerability despite strong demand from artificial intelligence (AI) and high-performance computing, according to MBSB Research.
The research house highlighted that beyond helium, sulphur supplies could potentially be affected amid the Middle East conflict, which is a key input for sulphuric acid used in cleaning and etching silicon wafers for the semiconductor industry specifically.
The Gulf states account for approximately 44% of the global sulphur production, according to the US Energy Information Administration.
"When converted to sulphuric acid, there are five main uses, which include chemical manufacturing, metal processing, batteries, cleaning products, agriculture and fertilisers,” it further said in a note on Tuesday.
MBSB Research maintained a ‘neutral’ stance on the sector and highlighted that the smartphone downturn is deepening and may turn out to be worse than originally expected, with the International Data Corporation and Counterpoint Technology Market Research now forecasting global shipments to contract by more than 10% year-on-year in 2026.
“The contraction will potentially mark the lowest annual shipment of smartphones in more than a decade. While there is ongoing effort to build memory capacity, especially from memory suppliers in China, we view that it would be insufficient to offset the shortage which could prolong beyond 2026,” it said.
Among Malaysian players, Inari Amertron Bhd (KL:INARI) has the highest smartphone exposure at 62%, while Unisem (M) Bhd (KL:UNISEM) derives 30% and Malaysian Pacific Industries Bhd (KL:MPI) 17%.
Meanwhile, the World Semiconductor Trade Statistics said the global semiconductor market is on track to hit US$975 billion (RM3.94 trillion) in 2026, an increase of 26.3% year-on-year as demand for memory and logic is expected to remain strong.
However, the research house viewed that the geopolitical conflict could dent global semiconductor sales as Iran has identified up to 18 US tech firms as ‘legitimate targets’, including Intel, Microsoft, Nvidia, Apple and Google.