The technology sector in Malaysia is highly dependent on energy supply, especially in the semiconductor and electronics industries. According to a Kenanga Research report, even a brief power outage can have major impacts such as production losses and operational disruptions. This is because the chip manufacturing process is very sensitive and requires a stable power supply at all times.
Although the cost of energy consumption is only around 5% to 10% of the total operating costs, it actually plays a very large role in the daily operations of technology companies.
ComScore Observer
Grid Electricity Still the Main Source
The majority of technology companies in Malaysia still rely on electricity supply from the grid as their main source of energy. The use of fuels such as diesel or gas is only used as a backup.
However, this dependence actually carries risks. Although it does not use fuel directly, the price of electricity is still influenced by the global energy market such as oil and gas. This means that if there is an increase in energy prices globally, the company's operating costs will also increase.
Solar Energy is Increasingly Popular, But Still Early
In an effort to reduce this risk, many companies have begun to switch to renewable energy such as solar. Some companies such as Unisem are leveraging solar technology which contributes almost 19% of the company's energy resources and PIE (17.88%).
However, overall, the use of solar in this sector is still in its infancy. Most companies still use less than 1% of their energy from solar sources. This shows that although the trend towards green energy is positive, the impact is not yet strong enough to mitigate risks in the short term.
Impact of Rising Electricity Prices on Company Profits
One advantage in this sector is that companies can pass on cost increases to customers. Typically, increased energy costs are absorbed first before being passed on to customers within 1 to 2 quarters.
However, in the short term, companies may still experience pressure on profit margins, especially if energy prices rise sharply.
Overall, the Malaysian technology sector is still stable, but does not have a major catalyst in the near term. This means that stock price movements may be more influenced by external factors such as global energy prices and geopolitical conditions.
In the long term, companies that are faster in switching to solar energy and have good cost control are expected to perform better.
Summary of Malaysian Technology Stock Performance
Based on the comparative table in the report, most technology stocks are in the “Market Perform” category, indicating moderate upside potential and a market that is more “stock-picking”.
Among the stocks with the highest upside potential are Infomina (+71%), followed by SKP Resources (+20%), as well as several other names such as Inari, Frontken and LGMS which recorded an upside of around 9% to 11%.
However, there are also stocks that show downside risk such as Unisem (-36%), PIE Industrial (-28%), and Nationgate (-15%), indicating that pressure still exists in this sector.
Overall, this sector recorded earnings growth of around 20% with a valuation (PER) that is quite high, around 26x to 31x. This shows that although growth is still there, the room for upside may be limited without a new catalyst.
Despite efforts to switch to green energy, this sector is still exposed to the risk of rising energy prices in the short term. For investors and traders, it is important to monitor developments in global energy prices as they can have a direct impact on the performance of technology stocks.
Source: “Malaysia Tech Power Check” by Cheow Ming Liang and Tan Woon Pin, Kenanga Research (24 April 2026).
