Malaysia's technology sector is on track for a robust up-cycle in the first quarter of 2026, according to a recent report by Kenanga Research.
This optimistic outlook builds on the country's consistent growth in the tech industry, driven by global demand for semiconductors and advancements in artificial intelligence (AI) and high-performance computing (HPC).
Historical Growth Fuels Current Optimism
Historically, Malaysia has positioned itself as a key player in the global semiconductor market, with a strong foundation built over decades of investment and policy support.
The sector's resilience was evident even during global economic downturns, as Malaysia maintained its competitive edge through innovation and strategic partnerships.
Key Drivers Behind the Up-Cycle
Kenanga highlights that the current momentum is fueled by increased capital expenditure in AI-driven technologies and a steady recovery in the automotive sector.
Additionally, the risk of tariffs and trade disruptions appears to be contained, providing a stable environment for tech firms to thrive.
Impact on Malaysia's Economy
The technology up-cycle is expected to have a ripple effect, boosting related industries such as logistics and manufacturing while creating new job opportunities.
This growth aligns with Malaysia's broader digital economy ambitions, as seen in the e-commerce sector's impressive revenue of MYR 937.5 billion in the first three quarters of 2025, according to recent reports on TechNode Global.
Challenges and Risks Ahead
Despite the positive forecast, analysts caution that the recovery in 2026 may face risks, including potential global economic headwinds and supply chain constraints.
Environmental concerns also loom large, with experts warning about rising Scope 2 emissions due to the energy-intensive nature of chip manufacturing.
Looking to the Future
Looking ahead, sustained government support and investments in sustainable practices will be crucial for maintaining this upward trajectory.
As Malaysia aims to double its global chip market share, balancing growth with environmental responsibility will define the future of tech in the region.
Maria Lourdes
