Hana Microelectronics Plc and national oil and gas conglomerate PTT Plc stand to gain from the Thai government's attempt to attract more foreign investment to produce advanced semiconductors, which could prove to be a milestone for Thailand, says a local brokerage.
CGS International Securities (Thailand) (CGSI) said Hana is likely to benefit from the government's efforts to attract advanced semiconductor players to Thailand, with the aim of elevating Thailand's position in the semiconductor value chain and creating high-skill jobs.
The government said it is negotiating with several global semiconductor firms.
CGSI said the government is also trying to foster innovation in electric vehicle (EV) technology by investing in integrated circuit (IC) design and power electronics R&D. This initiative aligns with Thailand's ambition to establish itself as a hub for EV production, reducing dependence on imports and enhancing the competitiveness of domestically produced EVs.
Analysts speculate the government, through PTT, plans to establish an IC manufacturing facility in Thailand, focusing on producing power electronics modules for the EV supply chain. This move would capitalise on Hana's expertise gained from its investments in the South Korean EV industry's front-end semiconductors.
Although still in its nascent stage, the government's recent statements indicate promising prospects for Hana, potentially leading to the establishment of an IC factory in Thailand, given Hana's partnership with PTT.
However, stock benefits in the semiconductor industry are gradually waning from their previous highs, with more sales than orders in the fourth quarter of 2023 and the first quarter of 2024.
It may take another one or two quarters for inventory levels to normalise, said the brokerage.
Hana expects demand for IC packaging products to remain subdued in the first half of the year, with improvements projected in the second half.
Sukit Udomsirikul, managing director of the research department at InnovestX Securities, emphasised the pivotal role of semiconductors as the foundation for technology present in virtually every product, ranging from mobile phones to cars and various electrical appliances.
Regardless of the product type, chips or electronic components are indispensable, he said.
"This year, we're witnessing robust demand for semiconductors. With the ongoing trade war prompting shifts in production bases, the demand for semiconductors is already evident. Despite the scale of growth, Thailand stands on par with India and Indonesia in terms of opportunities," said Mr Sukit.
Thai government spokesman Chai Wacharonke revealed the President's Export Council, led by US Secretary of Commerce Gina Raimondo, who recently visited Thailand, expressed interest in investing in the country's semiconductor industry.
The meeting highlighted the potential for collaboration between Thailand and the US in this sector, with both sides agreeing to establish a working group to delve into the details.
According to Mr Chai, the surge in demand for semiconductor components, driven by the digital age, particularly within the US private sector, has positioned Thailand as a prime candidate for diversifying the semiconductor supply chain. With its advantageous location and lack of conflicts, Thailand is being considered as a primary alternative for semiconductor production, he said.
Wirat Tatsaringkansakul, deputy secretary-general of the Board of Investment (BoI), said last week many companies in China and Taiwan plan to expand investment in semiconductors in Thailand, particularly for printed circuit boards, as they look to avoid geopolitical risks.
Thailand is attractive as an advanced manufacturing base because of its strong infrastructure, skilled workforce and tax privileges, Mr Wirat said.
According to BoI data, total investment in semiconductor production in Thailand last year tallied 800 billion baht.