Global demand pick-up to boost semiconductor players
Taiwan Semiconductor Manufacturing Co Ltd’s (TSMC) first quarter results reaffirmed the recovery of the global semiconductor market and will lead to a pick-up in demand, which will boost Malaysian technology players.
CIMB Securities Sdn Bhd said recovery in the semiconductor market was on track despite revising its growth from the mid- teens to 10 per cent, as this was better than last year’s eight to nine per cent decline.
“This is in line with our view for a stronger second half of 2024, although we could see an extended inventory correction in the automotive sector.
“Given the nature of the supply chain, we expect Malaysian technology players to see a pick-up in demand in the latter part of the second half as they sit further down at the back end (components and final products).
“We do not expect 2024 earnings to return to the previous 2021-2022 record levels yet,” it added.
TSMC posted a revenue of US$18.9 billion in the first quarter, driven by stronger demand from the high performance computing (18 per cent) and smartphone (26 per cent) segments.
“TSMC’s operations recovered fully three days after the Taiwan earthquake on April 3, with no reported damage to its facilities and critical tools.”
TSMC has revised the semiconductor market sales growth forecast for this year to 10 per cent year-on-year (versus low-mid teens previously) due to ongoing macroeconomic and geopolitical uncertainty weighing on consumer sentiment.
In Malaysia, CIMB Securities favours Inari Amertron Bhd (“buy” call, RM3.50 target price) and Malaysian Pacific Industries Bhd (“buy” call, RM32 target price) for their exposure to the technology sector.