KUALA LUMPUR (Sept 29): Malaysia’s semiconductor companies could see their future earnings growth constrained by a shortage of skilled talent, according to MBSB Investment Bank.

The research house said semiconductor stocks could also see a pullback if earnings growth loses momentum in the second half of 2026, following their strong gains so far this year.

The rapid expansion of the artificial intelligence (AI) and data centre sectors has created a severe structural shortage of skilled talent. For Malaysia, the challenge is compounded by its push to move beyond back-end assembly and testing into IC design, advanced packaging and innovation-led manufacturing.

“We view that future earnings growth could potentially be capped by the shortage of talent. Should there be any let-up in 2HCY2026 earnings growth, we view that there could be some pullback in share price performance,” said the research house in a note to clients. 

MBSB noted that valuations of local outsourced semiconductor assembly and test (OSAT) companies also suggest that much of the anticipated earnings recovery has already been priced in.

Share prices of the OSAT companies under its coverage have risen between 41% and 53% year-to-date, with the exception of D&O Green Technologies Bhd (KL:D&O), whose shares have fallen about 28% since the start of the year amid a challenging outlook.

Overall, MBSB maintained its “neutral” stance on the sector, with Inari Amertron Bhd (KL:INARI) as its top pick.

The research house maintained its “buy” call on Inari with an unchanged target price of RM2.95, citing an anticipated rebound in its radio frequency (RF) business, supported by a recovery in content, a promising outlook for its optoelectronics business and expectations that profit margins will rise above 20%.