KUALA LUMPUR, Dec. 16 (Xinhua) -- The outlook for Malaysia's technology sector in 2026 is a study in contrasts, with analysts pointing to both persistent headwinds and the potential for a robust recovery.
CIMB Securities said in its recent report that it expects a more robust performance in Malaysia's technology sector in 2026 as tariff impacts become clearer and supply-demand conditions continue normalizing, supporting gradual inventory replenishment across consumer, industrial, and automotive applications.
The research house expects the Malaysian technology sector to deliver average revenue growth of 10 percent over 2025-2027, underpinned by a broad-based recovery across the outsourced semiconductor assembly and test (OSAT), electronic manufacturing services (EMS), and automated test equipment (ATE) sub-sectors.
CGS International, however, noted in a recent report that Malaysia's technology sector is facing persistent pressure on earnings growth.
While heavyweights across the supply chain delivered record third-quarter turnover and improved order-book visibility, these gains were overshadowed by margin compression stemming from cost elevation and higher tax charges, according to the research house.
It opined that this earnings pressure is expected to continue into 2026, driven by higher effective tax rates as pandemic-era tax incentives expire.
While the World Semiconductor Trade Statistics (WSTS) has forecast global semiconductor sales growth to surge by 26 percent year-over-year in 2026, CGS International said this global growth will be largely driven by sustained demand robustness in leading-edge logic and memory integrated circuits (ICs), thus, the outlook is more modest for domestic downstream players.
Despite global semiconductor sales being expected to grow at a faster pace, MBSB Research viewed this growth as primarily contained to the artificial intelligence (AI) space.
According to the research house, the macro factors, including growing geopolitical tension, national security concerns as well as the previous incident of supply disruptions emanated from the COVID-19 pandemic, are also elements to keep abreast of due to the potential disruption.
However, it noted that the Malaysian government is putting efforts to support and grow the semiconductor industry, and this is expected to ease some of the difficulties the local semiconductor companies are facing. ■
