Malaysia’s tech companies to benefit from US-China trade row | Digital Asia

China has become increasingly important to Malaysian tech equipment suppliers buyers for capital equipment for semiconductors as well as by the EMS players in China. — Reuters photo

KUCHING: Malaysian companies involved in the development of tech components are set to benefit from the current US-China trade tensions as China looks to cutting its trade tariffs to cushion the impact from the on-going row with the US, analysts observed.

In a report, the research arm of Maybank Investment Bank Bhd (Maybank IB Research) noted that China’s Cabinet, chaired by Premier Li Keqiang, has proposed a tariff cut on a range of big-ticket imports (covering 1,585 products) as it braces for the impact from the on-going trade war with the US.

It pointed out that this tariff reduction includes machinery, textile, and construction materials and it could save companies and consumers circa US$8.7 billion.

While the detailed list is not available yet, the research team opined: “From the onset, we view this as potential positive for the local tech equipment players, led by ViTrox Corporation Bhd (in terms of revenue exposure to China), as this tariff cut (depending on the details) could lift the appeal for Malaysia as a source for tech capital equipment.”

It further highlighted that based on the recent corporate results reporting results, China has become increasingly important to Malaysian tech equipment suppliers buyers for capital equipment for semiconductors as well as by the EMS players in China.

“Players such as ViTrox, Pentamaster Corporation Bhd (Pentamaster), MMS Ventures Bhd (MMSV) and Mi Equipment Holdings Bhd (Mi) saw significant growth in sales to China, illustrating their core competencies in the tech space for their respective technology (for inspection and test equipment).

“The tariff cut announced by China on Wednesday night signals that China is persistent about its ‘Made in China 2025′ plans, in our view, of which semiconductor components is one of the key areas targeted,” Maybank IB Research commented.