November 2024 Global Semiconductor Sales +1.6% MoM & +20.7% YoY

In November 2024, the global semiconductor market continued the upcycle, posting healthy sales growth. According to the Semiconductor Industry Association, global semiconductor sales during the month reached USD57.8bn (+1.6% MoM, +20.7% YoY), compared to October 2024's USD 56.9bn. This marked the 13th consecutive month of YoY sales recovery and the 9th consecutive month of MoM growth. The main driver of this growth was the rising demand for generative artificial intelligence. The YoY improvement was primarily driven by all regions except Europe (- 5.7% YoY). The Americas led the growth (+54.9% YoY), followed by China (+12.1% YoY), Asia Pacific/All Other (+10.0% YoY), and Japan (+7.4% YoY).

Seeing MoM Sales Growth for 9th Straight Month

By geography, November 2024’s sales increase of 1.6% MoM was driven by America (+4.4% MoM) and Asia Pacific/All Other (+1.5% MoM). Meanwhile, the slowdown was observed in Japan (-0.8% MoM), Europe (-0.7% MoM), and China (-0.1% MoM).

18 New Semiconductor Fabs Scheduled for Construction in 2025

According to the latest SEMI World Fab Forecast report, the global semiconductor industry is expected to commence 18 new fab construction projects in 2025. These projects are expected to begin operations from 2026 to 2027. In 2025, the Americas and Japan lead with 4 projects each, while China and the Europe & Middle East regions have 3 planned projects each.

The global capacity expansion will be mainly driven by leading-edge logic technologies in highperformance computing applications and the increasing penetration of generative AI in edge devices.

Meanwhile, media outlets reported that President Joe Biden’s administration intends to introduce another round of restrictions on AI chip exports to certain countries. The new regulation would establish a three-tier system for chip trade limitations. The proposed system would grant key allies near-unrestricted access to American chips while significantly limiting access for adversaries. We believe the vast majority of countries, including Malaysia, will likely fall into the second tier of restrictions. This tier would face limits on AI chip imports, though higher caps could be granted if they comply to certain U.S. standards. Generally, we are neutral on this development, as we believe the proposed regulation is unlikely to significantly impact Malaysia’s semiconductor sector at the moment, given that the sector has yet to develop substantial direct exposure to American AI chips.

Maintain Overweight

Overall, we remain optimistic about the prospects of the semiconductor sector in Malaysia, underpinned by decent growth in global semiconductor sales. Additionally, the increasing trade tensions between the US and China could create more trade diversion opportunities for Malaysia under the China Plus One strategy. Furthermore, the continued implementation of the National Semiconductor Strategy will help local players move up the value chain in the global semiconductor industry. We reiterate our OVERWEIGHT stance on the semiconductor sector. Maintain Buy recommendations on INARI (TP: RM4.10), UNISEM (TP: RM3.62), MPI (TP: RM35.80), and ELSOFT (TP: RM0.50). Key downside risks include: i) heightened geopolitical tensions weighing on economic growth and disrupting supply chains, ii) weaker-than-expected sales, iii) further weakening of the USD against the Ringgit, and iv) a sudden spike in commodity prices.

Key downside risks include: i) heightened geopolitical tensions weighing on economic growth and disrupting supply chains, ii) weaker-than-expected sales, iii) further weakening of the USD against the Ringgit, and iv) a sudden spike in commodity prices.

Source: TA Research - 10 Jan 2025