MIDF: Semiconductor industry still set for explosive growth

KUALA LUMPUR (May 9): MIDF Research (MIDF) has maintained its positive call on the semiconductor industry, noting that the sector is still set for explosive growth ⁠— eclipsing all other sectors, including financial and industrial ⁠— due to widespread adoption and integration of technologies.

In a research note on Monday (May 9), it said that emerging technologies such as artificial intelligence, automotive electronics as well as augmented and virtual realities depend heavily on the semiconductor industry to provide the necessary computing power.

“Worldwide sales of semiconductors remained strong in the first quarter of this year despite the ongoing chip crunch, with sales at US$151.7 billion (about RM665.13 billion) or a 23% growth year-on-year (y-o-y),” it said.

Global sales in March 2022 stood at US$50.6 billion, and the US continued to surpass other regional markets, recording a 40.1% y-o-y growth.

Meanwhile, MIDF said that since 2000, total semiconductor research and development (R&D) spending as a percentage of worldwide sales outperformed the four-decade historical average of 14.5% in all but five years (2000,2010, 2017, 2018 and 2020).

“In these five years, lower R&D-to-sales ratios had more to do with the strength of total revenue growth than weakness in R&D spending by semiconductor suppliers,” it said.

MIDF also maintained its "buy" calls on semiconductor companies, namely Inari Amertron Bhd (target price: RM4.55) and Unisem (M) Bhd (target price: RM4.33).