KUCHING: With the global semiconductor industry expected to record another healthy year, driven by the rapid expansions of the internet of things (IoT) industry, analysts viewed Malaysia’s electrical and electronics (E&E) sector as “well positioned” in this highly demanding global tech supply chain.
The research team at AmInvestment Bank Bhd (AmInvestment) highlighted that the global semiconductor market revenue should grow in 2018 and thereafter stay at a healthy pace supported by the megatrend of the IoT that has multiple applications and increasing use of wearable gadgets, smart home applications, automotive industry, and the use of artificial intelligence (AI) technologies.
“Hence, our E&E sector is expected to continue playing a pivotal role. With a growing focus on integrated circuit (IC) design innovation and the adoption of Industry 4.0, this paves way to move up the value chain,” it opined.
As such, it stressed: “We should focus on IC design innovation and the adoption of Industry 4.0 with the aim to move up the value chain. The introduction of mid-range smart phones, IoT devices and the adoption of electronic functions in the automotive industry should drive demand for semiconductors, integrated circuits and printed circuit board assembly (PCBA) products, popularly also known as electronic motherboards.”
Aside from that, it pointed out that Asia Pacific and in particular China and India, would dominate the smart display market for the automotive industry while the current US-China trade war should have a positive impact on Malaysia.
“Our E&E sector has successfully positioned itself in the global supply chain of electronic manufacturing services, outsourced semiconductor assembly and testing as well as in research, design and development.
“We foresee the industry flourishing as we move ahead supported by several megatrends. We project the average annual growth for E&E segment to be around 9.6 per cent between 2018 and 2022. Growth will be supported by the electronics segment which we forecast at 13 per cent between 2018 and 2022,” it opined.
The arrival of Industry 4.0 has also allowed the use of AI, machine learning (ML) and the IoT in our daily lives.
“Digital lifestyle and digital economy, which fall under the ‘New Millennium’ will continue to support the explosive growth in the areas of e-commerce, e-mobility and e-healthcare.
“And to some degree, our local E&E industry is able to leverage these megatrends which offer strong demand for state-of-the-art hardware, along with the diversification into the areas of design and development (D&D), shared services covering human resource, finance and information technology as well as supply chain management for regional and global logistics hubs,” AmInvestment added.
To unlock greater productivity in this sector, the research team suggested that local players need to move up the value chain and be globally competitive.
“Our local players currently face strong competition from the regional players coming from Vietnam, China and Thailand who are also leveraging this sector to stimulate their economic growth,” it added.
Hence, it said: “So we need to attract more MNCs and large local companies with the aim for them to set up D&D and at the same time assist local SMEs to grow in this sector is vital.
“Besides developing their capabilities in areas such as R&D and business development, they also need to move across all industrial segments that use E&E components such as automation, industrial electronics, semiconductors, electronics manufacturing services, storage, light emitting diode, solar and IoT.”