ELSOFT: Global Semiconductor Market Surges, AI Fuels Robust Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The global semiconductor industry is experiencing robust growth, with November 2025 sales reaching an impressive USD75.3 billion, marking a significant 3.5% month-on-month and 29.8% year-on-year increase. This sustained momentum extends the industry’s year-on-year growth streak to 25 consecutive months, signaling a strong close to 2025.
Performance Drivers
The exceptional performance is primarily driven by escalating demand across all major product categories, notably in the memory and logic segments. A key catalyst for this growth is the sustained and increasing demand for Artificial Intelligence (AI) and high-performance computing applications, which continue to underpin market expansion. Regionally, the Asia Pacific/All Other region led the growth with a remarkable 66.1% year-on-year surge, followed by the Americas (+23.0%), China (+22.9%), and Europe (+11.1%). Cumulatively, global semiconductor sales for the first eleven months of 2025 rose 22.2% year-on-year to USD687.4 billion.
Future Outlook
Looking ahead, the positive trajectory in the semiconductor market is widely expected to persist, with AI-related demand serving as the dominant growth driver. Industry leaders anticipate substantial growth in 2026, with global chip sales projected to approach nearly USD1 trillion annually. This optimism extends to the semiconductor manufacturing equipment sector, where sales are forecast to remain positive through 2026 and 2027, potentially reaching USD145 billion and USD156 billion respectively. This expansion will largely be fueled by AI-driven investments, particularly in advanced logic, memory technologies, and packaging solutions.
Challenges and Investment Stance
Despite the strong global outlook, TA Securities maintains a NEUTRAL stance on the local technology sector. The firm highlights that many Malaysian technology companies primarily serve legacy consumer, industrial, and automotive markets, with limited exposure to the higher-value AI segment. Furthermore, the potential implementation of significant sector-specific tariffs on semiconductor imports by the U.S. poses a notable overhang.
However, for specific companies showing strong fundamentals or attractive valuations, positive recommendations are warranted. For instance, TA Securities has reiterated a BUY recommendation for a particular stock, citing strong upside potential from its last traded price of RM0.20 to a target price of RM0.25, representing a 25.0% upside. This recommendation reflects attractive entry points for select players within the broader sector.
Key downside risks for the sector include U.S. policy risks impacting economic growth and supply chains, weaker-than-expected sales, a depreciating U.S. dollar against the Ringgit, and sudden spikes in commodity prices.
