Malaysian tech firms to see limited impact from latest US AI chip curbs – analyst
10 Jan 2025
RHB Investment Bank Bhd (RHB Research) believes Malaysian technology firms will face limited impact from the US plan to tighten export restrictions on artificial intelligence (AI) chips.
“While the indirect impact is difficult to ascertain, we note that local tech supply chains are insignificant in the global AI supply chain. “We remain optimistic of a stronger 2025 on the back of a sector recovery, fuelled by firmer broad-based demand and the replacement cycle,” it said in a note today.
The US is planning to impose further restrictions on the export of AI chips, as it aims to curb the use of these chips in data centres (DC) globally, targeting both countries and companies.
According to RHB Research, if the restriction comes into effect, it will likely affect data centre (DC) expansion plans, especially outside Tier 1 countries including Malaysia.
However, it noted that most of the new AI DCs in Malaysia are US-owned. “Also, the 1.4 gigawatt (GW) capacity that is live (not all are AI DCs), under construction, or committed is well under the seven per cent threshold of the current 20.4GW DC size in the US alone (not including other Tier 1 countries), while the new 2.8GW capacity is still in the early stages. “
“Hence, we believe the impact will be more evident for Chinese DC developers/offtakers dealing with more advanced AI chips,” it said.
Furthermore, RHB Research said that the new restrictions could impact supply chains within the graphics processing unit (GPU) and central processing unit (CPU) server ecosystem.
However, only a few local companies are directly affected.
The firm added that the potential curbing of AI-related chip exports, a major growth driver for the current semiconductor upcycle, could trigger a sector-wide slowdown, impacting the entire supply chain.
Companies such as Vitrox Corp, Mi Technovation, and Pentamaster, which produce semiconductor equipment, and Frontken Corp, which supports the largest fabrication plant, may experience slower sales.
Engineering support providers and front-end equipment manufacturers, including UWC, Sam Engineering, and Coraza Integrated Technologies, could also face reduced demand.
Investors continued to selldown construction and technology stocks with the indices down 0.74 per cent and 0.76 per cent respectively.
The Bursa Malaysia construction index tracks 49 construction-related stocks, while the technology index tracks 48 technology-related stocks.
Source: NST
