PETALING JAYA: TA Securities Research remains bullish on the semiconductor sector, premised on the robust demand for chips underpinned by the ongoing acceleration in digitalisation.

       This is amid the Covid-19 pandemic and proliferation of emerging technologies such as 5G, artificial intelligence, cloud computing, Internet of Things and robotics.

       Within its semiconductor sector coverage, the research unit has “buy” calls on Inari Amertron Bhd (target price: RM4.25), Unisem (M) Bhd (target price: RM11.80) and Malaysian Pacific Industries Bhd or MPI (target price: RM51.20).

       “We continue to favour outsourced assembly and test providers including Inari, Unisem and MPI for their strong sales pipeline and earnings growth prospects.”

       Unisem factory

       TA Securities Research will also review its “sell” call on Elsoft Research Bhd (target price: 66.5 sen) pending a company update.

       It noted that key downside risks to the semiconductor sector include a prolonged Covid-19 pandemic weighing on economic growth, a heightened trade war, weaker-than-expected sales, and a weakening of the US dollar against the ringgit.

       According to global industry association SEMI, the robust investments in semiconductor equipment reflects the industry’s push to address the prevailing global chip shortage.

       The robust spending on equipment is also expected to extend into the years ahead alongside the ramp-up in fab capacity to meet strong demand for chips from emerging applications such as 5G to 6G communications, artificial intelligence, autonomous vehicles, and high-performance computing.

       Global semiconductor sales have seen 17 consecutive months of year-on-year growth, after rising 2.1% month-on-month and 29.2% year-on-year to US$44.5bil (RM187.9bil) in June 2021.

       MPI Malaysian Pacifi Industry

       Also attesting to strong underlying demand for chips, worldwide silicon wafer area shipments in the second quarter of 2021 grew 5.9% quarter-on-quarter and 12.1% year-on-year to a successive record high.

       In the first half of 2021, sales increased 23.5% year-on-year to US$256.9bil (RM1.08 trillion), marching towards the World Semiconductor Trade Statistics Organisation’s forecast for global semiconductor sales to reach a record high of US$527.2bil (RM2.23 trillion), 19.7% higher year-on-year in 2021.