KUALA LUMPUR: Taiwan Semiconductor Manufacturing Co Ltd's (TSMC) result for the first quarter of 2-24 (Q1 2024) reaffirmed recovery in the global semiconductor market, which will lead to a pick up in demand for Malaysian technology players.
CIMB Securities Sdn Bhd said recovery in the semiconductor market is on track despite revising its growth from the mid- teens to 10 per cent, which is still better than the 8.0-9.0 per cent market decline in 2023.
"This is in line with our view for a stronger second half of 2024 (2H24), although we could see an extended inventory correction in the automotive sector.
"Given the nature of the supply chain, we expect Malaysian technology players to see a pick up in demand in the latter part of 2H24F, as our local companies sit further down at the back end (components and final product). We do not expect 2024 earnings to return to the previous 2021-22 record levels just yet," it said.
TSMC's revenue in Q1 2024 came in slightly ahead of guidance at US$18.9 billion, driven by stronger demand from the high performance computing (18 per cent) and smartphone (26 per cent) segments.
"TSMC's operations have fully recovered in the subsequent three days post the Taiwan earthquake on April 3, with no reported damage to its facilities and critical tools, including EUV lithography tools.
"However, they have to scrap some wafers and expect the loss of production to be recovered in Q2 2024."
TSMC has revised the 2024 semiconductor market sales forecast to 10 per cent YoY (vs. low-mid teens previously) due to ongoing macroeconomic and geopolitical uncertainty weighing on consumer sentiment.
TSMC is seeing automotive applications turning from flat to a decline in 2024.
CIMB Securities favours Inari Amertron Bhd (Buy, TP: RM3.50) and Malaysian Pacific Industries Bhd (Buy, TP: RM32.00) for exposure to the technology sector.