November 21, 2020 ASEAN Technology POSITIVE (Upgrade) Riding a new wave; U/G to POSITIVE Analysts POSITIVE on MY and SG tech sectors U/G both Malaysia Technology Hardware and Singapore Technology Kevin Wong sectors to POSITIVE (from NEUTRAL). We adopt a positive growth outlook (603) 2082 6824 for the tech sector due to: (i) rollout of 5G networks; (ii) ramp-up of
[email protected] semiconductor components and equipment; (iii) development of sub- Gene Lih Lai, CFA sectors such as Internet of Things (IoT), artificial intelligence (AI) and (65) 6231 5832 electric vehicles (EVs); and (iv) Industry 4.0. These should bode well for
[email protected] OSATs, ATE/automation manufacturers and EMS/precision engineering companies. Technology Catching the 5G wave We believe the sector will ride an imminent upcycle, as indicated by the positive growth outlook for the global semiconductor industry. The World Semiconductor Trade Statistics (WSTS) projects global semiconductor market to grow by 6.2% YoY to USD452b in 2021 (2020: +3.3% YoY) while SEMI (the global industry association) estimates global semiconductor manufacturing equipment sales to grow 11% YoY to USD70b in 2021 (2020: +6% YoY). This upcycle would also be driven by the rollout of 5G MKE: Tech coverage in MY and SG networks across key cities - accelerated by the growing number of 5G- Regional Stock BB Ticker Rec. Price TP U/D enabled devices (i.e. smartphones and IoT) and high adoption rates of 5G (%) by key countries (i.e. China, US and South Korea). Specifically, we expect OSAT Inari INRI MK Buy 2.62 3.40 29.8 semiconductor equipment component and module suppliers, OSAT Globetronics GTB MK Buy 2.87 3.30 15.0 companies and ATE/SLT manufacturers to be key beneficiaries of such a Semiconductor equipment/automation favourable outlook, attributed to rising supply and demand for advance ViTrox VITRO MK Sell 15.06 11.60 -23.0 chipsets and components (i.e.