Kuala lumpur: CIMB Securities Sdn Bhd anticipates that the continued depreciation of the US dollar could impede the recovery of the technology sector in the latter half of 2025.

According to BERNAMA News Agency, the brokerage firm highlighted in a research note that while the weakening dollar presents challenges, the impact on electronics manufacturing service players is expected to be minimal.

CIMB Securities predicts a low single-digit quarter-on-quarter sales growth for the sector in the second quarter of 2025, driven primarily by stronger contributions from the automated test equipment segment. The outsourced semiconductor assembly and test (OSAT) segment is also expected to see modest sales growth, thanks to robust domestic demand in China and consistent orders from the general-purpose server market. This forecast aligns with the projected average sales growth of 3.8 percent quarter-on-quarter by leading global semiconductor companies.

The brokerage has maintained a ‘Neutral’ stance on the Malaysian technology sector, citing an elusive recovery due to sluggish momentum outside the artificial intelligence space. Near-term challenges include an impending increase in electricity tariffs, new Employees’ Provident Fund (EPF) contributions for foreign workers, and potential demand volatility post-July as the US tariff grace period concludes.

CIMB Securities further noted that despite valuations being below historical averages, the lack of clear demand visibility continues to pressure earnings prospects in the technology sector.