Despite the strong demand from artificial intelligence (AI)-related themes, the overall semiconductor demand remains sluggish resulting in high inventory levels for most of the key semi-con players, Maybank Investment Bank said in its recent report.
According to the research house, demand from AI sector currently is the primary engine of growth for the semi-con sector but weakness from other key sectors like automotive, consumer electronics and industrial markets have created an oversupply and inventory correction.
It is noted that a few key players in the market have also guided for weaker demand in the first half of 2026, driven by macroeconomic and geopolitical uncertainties, as well as a projected decline in sales to China.
“Demand is only expected to pick up in the second half of 2026, driven by increasing demand for AI-related chip production,
“As a result, we also expect weakness in some of our Singapore tech names in the first half of 2026 and a pick up in the second half of 2026. Overall, 2026 should still be a better year than 2025,” said the research house.