Malaysia Economic Outlook 2026: Why the Technology & Semiconductor Sector Is Set to Surge
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The time for mere "planning" is over. 2026 is now seen as a critical year for the execution phase in Malaysia.
With the launch of the 13th Malaysia Plan (RMK-13) and the highly anticipated Visit Malaysia Year 2026 campaign, we shall delve into the key catalysts and challenges facing 11 selected sectors in the country.
From technology to property, every sector must skilfully balance global economic uncertainty while driving domestic growth.
Today, our focus is on the hottest sector of them all: Technology.
The world''s insatiable demand for high-performance computing and Artificial Intelligence (AI) is expected to reignite the fortunes of Malaysia''s semiconductor players in 2026.
However, market analysts caution investors not to get ahead of themselves. This recovery is described as "selective" — meaning not every company will benefit equally.
According to research firms, AI-related investments are projected to propel the global semiconductor market to grow by more than 25% in 2026, approaching a value of US$1 trillion (RM4.1 trillion).
This surge is driven by the urgent need for high-powered chips for AI servers and data centres that process massive volumes of data at high speed.
Kenanga Investment Bank Research, in its latest note, offers a realistic perspective:
"This upcycle is becoming increasingly concentrated. Demand strength favours AI data centres, premium smartphones, and infrastructure."
Conversely, demand for chips used in automobiles and legacy products (mature-node segments) is recovering at a rather sluggish pace.
Meanwhile, TA Securities has opted to maintain a "neutral" stance on the sector. According to them, although order visibility from customers appears clearer, it does not necessarily guarantee substantial profits.
"Most technology stocks under our coverage have yet to experience the significant recovery that was anticipated," the firm explained, citing cost pressures, thinning profit margins, and execution risks as the primary concerns.
Overall, the spillover demand from AI data centres remains the industry''s primary lifeline.
This should improve factory utilisation rates and support high-value product output for selected assembly, testing, and electronic manufacturing services (EMS) players in Malaysia.
Kenanga is optimistic that the current upcycle, which began in late 2023, "may extend through mid-2026 or beyond," given that AI demand is structural in nature, not merely a passing trend.
However, beware of geopolitical risks. TA Securities warns that "Trump policy risk remains a dark cloud," where any shift in US trade policy and tariffs could undermine market sentiment in the blink of an eye.
We frequently receive questions from readers asking — this is a stock market page, so why bother discussing global politics and geopolitics?
To better understand the connection between the financial world and these issues, we recommend reading our earlier article: Geopolitics as a Catalyst in Stock Trading: An In-Depth Analysis
For investors seeking opportunities in this sector, two major names have been highlighted as top picks:
Newcomers just getting acquainted with the stock market can refer to our earlier article: What Are Stocks? Why Should You Buy Them?
Source: The Edge
This article is not investment advice. Readers and investors are advised to consult their respective remisiers and dealers for confirmation.
2026 is not just an ordinary recovery year; it is a year of reckoning for Malaysia''s technology sector. While the "AI Boom" narrative sounds overwhelmingly positive, the reality is more nuanced, and investors need to choose their "horses" wisely.
The technology sector will not rise in unison. We are witnessing a "K-shaped" recovery:
Although this article highlights Inari and Unisem as top picks, external analyst reports provide a more in-depth picture:
Unisem (M): Appears more aggressive with its factory expansion in Gopeng, Perak. If global semiconductor demand fully recovers in the second half of 2026, this additional capacity will become their primary "money machine."
Inari Amertron: While it remains a favourite due to its exposure to radio frequency (RF) chips for smartphones, the real challenge is increasingly intense market competition. Inari''s key to success in 2026 hinges on how quickly it can pivot to the photonics segment (for high-speed data transfer in data centres).
This is the most unpredictable yet most dangerous risk. US trade protectionism policies (such as import tariffs on chips or technology hardware) could be a double-edged sword:
If you are planning to invest in Malaysia''s technology sector in 2026:
In conclusion, 2026 promises handsome returns, but only for those who invest based on factual data, not merely following trends.
Malaysia''s semiconductor sector is expected to recover selectively in 2026, driven by AI and data centre demand that is propelling the global semiconductor market by more than 25%.
No. The recovery is selective — companies involved in AI chips and data centres stand to benefit more compared to automotive chip and legacy product segments.
Key risks include global trade policy uncertainty (the Trump factor), cost pressures, thinning profit margins, and project execution risks.
Demand for AI computing requires high-powered chips for servers and data centres, making Malaysia a crucial destination for semiconductor assembly and testing.
Understand the technology and semiconductor sector before making informed investment decisions.
Open your CDS account via Register for an Mplus CDS Account to start investing in technology stocks on Bursa Malaysia.
Just starting to learn about stocks? Download the Free Stock Basics Ebook to understand the fundamentals of stock investing before you begin.
Further reading: