Catching the next big wave

(Aug 19): The Edge weekly in its latest edition said that joining the US tech stock rally, Bursa -listed semiconductor and semiconductor-related companies have risen between 22% and 250% this year.

In its cover story, the Edge’s Liew Jia Teng wrote that year to date, the Bursa Malaysia Technology Index has soared 70% to 37.59 points, its highest level since 2005.

Local technology companies and investors are bullish about the sector’s prospects, mainly due to its long-term earnings sustainability, underpinned by the diversification of products and customer base, reported the Edge.

The weekly reported that 2017 is promising to be another good year for the semiconductor supply chain with device, material and equipment suppliers expecting revenue and earnings growth for the year.

It said according to information technology research and advisory firm Gartner Inc, worldwide semiconductor revenue is forecast to total US$386 billion this year, an increase of 12.3% from last year.

Favourable market conditions that gained momentum in the second half of 2016, particularly for commodity memory, have accelerated and raised the outlook for the market in 2017 and 2018.

Unit production estimates for premium , graphic cards, video game consoles and automotive applications have improved and contributed to the stronger outlook this year.

Gartner also projected global semiconductor capital spending to increase 10.2% to US$77.7 billion this year.

“This growth rate is up from the previous quarter’s forecast of 1.4% due to continued aggressive investment in memory and leading-edge logic, which is driving spending in wafer-level equipment,” it said in an Aug 2 press release on its 2Q2017 update.

It added that the concentration this year is due to strong manufacturing demand in memory and leading-edge logic.

On a separate note, global microelectronics industry association SEMI projects that the semiconductor material market will expand 2% this year in light of growth expectations for the device market.

Market forecasts for the semiconductor market this year are also optimistic, with growth projections ranging from 3% to 11%. Given current capital expenditure announcements and the strong equipment order activity throughout 2H2016, prospects for the semiconductor equipment subsector look bright as well.

Source: The Edge Markets

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