Malaysia’s Technology Sector Continues to Shine
KUALA LUMPUR: Amid escalating global economic uncertainty driven by the United States-Israel and Iran conflict, Malaysia’s technology sector continues to shine.
The latest indicators show strengthening momentum, with exports of electrical and electronic (E&E) products surging by 70.5 per cent in May to RM91.6 billion, representing 49.8 per cent of the country’s total exports.
At the same time, Bursa Malaysia’s Technology Index has risen by approximately 35 per cent since the start of the year, making it the best-performing index on Bursa Malaysia. This performance clearly reflects investor confidence in the sector’s prospects and Malaysia’s increasingly important position in the global technology supply chain.
Several key factors explain this positive development. First, global demand for semiconductors continues to rise in tandem with the rapid advancement of artificial intelligence (AI), cloud computing and data centres.
Malaysia, as one of the world’s major hubs for semiconductor chip assembly, testing and packaging, directly benefits from this wave of technology investment.
For the data centre sector, Malaysia is the ninth-largest recipient of investment globally, based on official data from the United Nations Conference on Trade and Development (UNCTAD) in 2025.
Second, increased foreign direct investment (FDI) in the technology sector is also supporting industry growth. International technology companies continue to expand their operations in Malaysia, particularly in Penang, Kedah and Johor.
Recently, Austrian circuit board manufacturer AT&S announced an investment of up to €2 billion to expand its operations in Kulim to meet AI-related demand.
Third, geopolitical tensions and efforts to diversify global supply chains have positioned Malaysia as an attractive investment destination.
Many multinational companies are now adopting a China Plus One strategy to reduce dependence on a single production location. Malaysia benefits from this trend due to its mature infrastructure, skilled workforce and long-established semiconductor ecosystem.
In addition, investor sentiment is also driven by expectations that the global semiconductor industry’s growth cycle remains in an expansion phase.
Demand for high-performance chips used in AI, industrial automation and smart vehicle technology is expected to continue growing over the coming years.
For the next six months, the outlook for Malaysia’s technology sector is expected to remain positive. Demand for semiconductor products and electronic components is expected to remain strong, supported by continued investment in AI and data centres worldwide.
E&E export performance is likely to remain high, although its growth rate may moderate after the extraordinary surge in the first half of this year. Based on the latest projections from the World Semiconductor Trade Statistics (WSTS), semiconductor sector sales are expected to increase significantly by 89.9 per cent in 2026. This figure is much higher than the December projection of 26.3 per cent.
However, several risks warrant attention. These include geopolitical tensions in West Asia, more protectionist US trade policies, and the possibility of new tariffs being imposed on technology products. If these risks become more pronounced, they could affect investment sentiment and trade flows.
In conclusion, the country’s technology sector is growing and robust. With global demand remaining encouraging, the influx of new investments, and the country’s strategic position in the global semiconductor supply chain, this sector is expected to continue being a major driver of Malaysia’s economic growth in 2026.
Sinar Harian