AFTER months of share price re-ratings, Malaysia’s semiconductor sector is now expected to deliver the earnings growth needed to sustain investor optimism.
Hong Leong Investment Bank (HLIB) says the industry is entering the next phase of the semiconductor upcycle, with stronger financial performances and earnings upgrades anticipated for selected technology companies.
Semiconductor upcycles tend to progress from a re-rating phase into an earnings upgrade phase, a transition believed is beginning to play through.
“Within our coverage, we see the greatest potential for positive earnings revisions and upside to consensus from ViTrox, UWC, and Inari Amertron going into the reporting season,” said HLIB.
The tech sector heads into the quarter two 2026 results season expecting a more constructive setup versus recent quarters, where positive surprises and upward revisions should feature more prominently than earnings disappointments.
Inari’s quarter four financial year 2026 (4QFY26) is a known-weak quarter, given RF softness in the current smartphone generation, compounded by the Philippines plant fire at Amertron CK1.
As such, focus will centre on management’s commentary and guidance for 1QFY27, specifically the RF ramp for the upcoming new smartphone models and the outlook for datacom photonics.
HLIB expects RF segment revenue to become more linear across quarters, as the smartphone end-customer shifts to two launch windows.
“We believe the market expects unit sales to remain healthy despite a likely USD100–200 price hike, as demand has historically been fairly inelastic to pricing, supported also by a sizable installed base,” said HLIB.
Amid the robust pick-up in analog semi, Unisem is expected to report 2Q26 revenue near the top end of its +15–20% quarter-on-quarter guidance, implying record quarterly revenue of RM540–560 mil (+13–18% year-on-year).
The research house believes this will be largely driven by the Chengdu plant, while the new Gopeng facility remains in the ramp-up phase amid the ongoing relocation from Simpang Pulai plant.
Proceeds from the recent private placement point to further capex to build out the Gopeng facilities, and HLIB understands the management continues to add headcount ahead of the ramp from the second half of 2026 onwards.
“We maintain our OVERWEIGHT stance on the Malaysian technology sector, underpinned by the broadening semiconductor upcycle and sustained earnings momentum,” said HLIB.
HLIB’s top picks for technology hardware are UWC, Inari Amertron, and Unisem, where key customer capacity expansions are translating into visible volume ramps and providing scope for further earnings upgrades.—July 24, 2026
Main image: weforum.org
