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Tech sector to recover in second half in 2024, according to analysts
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Analysts are anticipating that Malaysia's technology sector will continue to recover in the second half of 2024.
Kenanga Group, a research group monitoring market trends and projections, said that despite this, the turnaround will not be immediate. This is due to an underwhelming year-end peak demand for electronics and vehicles in 2023, and the upcoming Chinese New Year break impacting demand.
"We do not expect the industry to start the year with a bang given an expected seasonally slow first quarter cycle." wrote Kenanga group in its report.
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"We are also mindful of the scheduled plant shutdowns during the long Chinese New Year break, especially in China. As such, we believe a meaningful recovery will more likely take place in second half cycle year 2024," it explained.
According to the research group, America and the Asia-Pacific region will lead recovery this year, with Asia-Pacific's forecast set to make up 53% of global sales.
Kenanga Group also predicts that global semiconductor sales will rise 13.1% from a 9.4% contraction estimated for 2023. Additionally, increased demand for memory and logic ICs will drive the recovery.
"Semiconductor Industry Association’s (SIA) data showed month over-month improvements in sales," Kenanga Group continued. "All these point to a bottoming in the industry cycle."
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The research group also claimed that the automotive semiconductor sector continues to display mixed signals. The research group noticed a shift to electrification leading to increasing demand, but counters that prevailing high inflation and interest rate environment will lead to more cautious spending from consumers on high-priced tech items.
"We have learned that forecasts for automotive demand among Western customers are signalling an early slowdown, leading to more frequent revisions and reduced visibility. Consequently, we anticipate that the recovery in China, starting from a low base, may face dampening effects due to the early slowdown among Western automotive customers," said Kenanga Group.
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The research group added that EMS (electronics manufacturing services) players require diversity to sustain growth and favours stocks such as Inari, KGB and PIE for its ability to bring new customers into its fold.
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