KUALA LUMPUR, March 16 — Growth prospects for the technology sector in the financial year 2026 remain supported by replacement cycles, automotive recovery, artificial intelligence-driven upgrades, stronger server/peripheral demand, and rising power management integrated circuit (PMIC) needs.
However, RHB Investment Bank Bhd (RHB IB) said margins are under pressure from delayed repricing and slower cost pass-through.
Most technology companies under its coverage recorded year-on-year (y-o-y) revenue growth, with sector revenue up 3.1 per cent in the fourth quarter of 2025 (4Q 2025) and 8.4 per cent year-to-date, despite foreign exchange (FX) headwinds.
“Management guidance remains constructive with improving loadings into the full FY2026 and programme wins from project transfers and supply chain reallocation,” RHB IB said in a research note.
The companies under its coverage for the 4Q 2025 results were largely within expectations, with six companies delivering in-line numbers.
Five players: Cloudpoint Technology Bhd, Cnergenz Bhd, JHM Consolidation Bhd, SKP Resources Bhd, and VS Industry Bhd missed forecasts due to weaker sales, margin compression, unfavourable product mix, FX and cost-down pressure, while Coraza Integrated Technology Bhd was the sole outperformer.
On aggregate, the sector core profit after tax and minority interests grew 1.3 per cent y-o-y and 28.1 per cent quarter-on-quarter (q-o-q). Six companies posted stronger year-over-year earnings in 4Q2025, while eight saw a better quarter-over-quarter performance.
Similarly, RHB IB added that geopolitical developments could pose near-term risks to the sector.
“On the United States-Iran conflict, Malaysia has minimal direct exposure as trade with Iran and the broader West Asia accounts for only 0.1 per cent and 4.2 per cent of total trade.
“However, higher energy costs and a prolonged conflict could indirectly slow the semiconductor capital expenditure cycle and dampen electronics demand in the medium term,” it said.
Nonetheless, it is maintaining overweight calls on the sector. It continues to view it as a preferred allocation for FY2026, particularly for shariah-compliant funds, supported by strong fundamentals, solid growth prospects, and favourable sector positioning.
