Brief Summary
RHB Investment Bank Bhd. maintains an OVERWEIGHT call on the semiconductor sector, citing strong growth potential in advanced packaging and manufacturing due to global supply chain shifts. Malaysia is well-positioned to capture a larger share of the market, but requires significant investment and time to yield returns. The report highlights the dominance of Taiwan and South Korea in wafer fabrication, while other countries like Singapore, the US, Japan, and China are actively pursuing semiconductor development. Malaysia's success hinges on factors like a strong engineering talent pool, government support, and strategic trade relationships. However, challenges remain in areas like supply chain resilience, cost competitiveness, and talent acquisition.
- Malaysia is well-positioned to capture a larger share of the semiconductor market.
- The report highlights the dominance of Taiwan and South Korea in wafer fabrication.
- Malaysia's success hinges on factors like a strong engineering talent pool, government support, and strategic trade relationships.
Semiconductor Sector Outlook: A Global Race for Dominance
RHB Investment Bank Bhd. maintains an OVERWEIGHT call on the semiconductor sector, citing strong growth potential in advanced packaging and manufacturing. The research house believes that geopolitical shifts are reshaping global supply chains, creating opportunities for countries like Malaysia to expand their role in the semiconductor industry. Following its sectoral series event, RHB Research noted that Malaysia is well-positioned to capture a greater share of the market, with companies like DNeX and X-FAB already established. The country has the infrastructure and skilled workforce to expand its role in the global semiconductor race. However, the research house highlighted that investments in these technologies require patience, often taking five to ten years to yield meaningful returns.
Global Landscape: Taiwan, South Korea, and Beyond
The report pointed to the dominance of Taiwan and South Korea in global wafer fabrication, with both nations accounting for 70% of foundry revenue. Taiwan remains the leader in advanced chip production, while South Korea excels in both logic and memory chips, benefiting from robust supply chains, engineering expertise, and stable political landscapes. Singapore, meanwhile, has positioned itself as a hub for semiconductor processing equipment and advanced fabrication plants such as those owned by GlobalFoundries and Micron. Elsewhere, the US, Japan, and Europe are aggressively working to attract semiconductor firms. The US has introduced the CHIPS and Science Act to boost domestic semiconductor manufacturing, while Japan is leveraging government incentives and partnerships with companies like TSMC to revitalise its semiconductor industry. China, too, is making significant strides in building its own supply chain through government subsidies, although RHB Research noted that the country remains several years to a decade away from full technological self-sufficiency.
Malaysia's Path Forward: Challenges and Opportunities
For Malaysia to successfully grow its semiconductor sector, RHB Research highlighted several key factors. A strong base of engineering talent is critical to sustaining advanced manufacturing and R&D efforts. Government policies such as subsidies and tax incentives further enhance investment appeal by lowering operational costs, while reliable and competitively priced utilities like electricity and water are necessary to support energy-intensive fabrication processes. The ongoing US-China trade war has further accelerated the diversification of semiconductor supply chains, with companies looking to South-East Asia for alternative manufacturing bases. RHB Research said that Malaysia could benefit from this trend, provided it navigates the conflict carefully to maintain strategic trade relationships. However, the research house cautioned that challenges remain, including supply chain resilience, cost competitiveness, and the ongoing struggle to secure high-skilled talent.
