Asian tech stocks have made a strong start in the new year, with investors expecting their growth momentum to continue throughout the year and to outperform U.S. tech stocks. Additionally, the semiconductor industry is projected to see a revenue growth rate exceeding 30% by 2026, and analysts are optimistic that local tech stocks will benefit from this trend.
A recent report from DBS Research points out that market skepticism regarding artificial intelligence will intensify, and volatility will persist, but the upcycle in the semiconductor industry seems likely to last longer and be more stable.
Market research firm Gartner predicts that the semiconductor industry will continue to expand, with a strong growth of 32.6% expected in 2026.
<h3>Benefiting from the Semiconductor Industry Recovery, UMS Holdings and Frencken Group Are Worth Watching</h3>
In the local tech sector, DBS Research believes that UMS Holdings and Frencken Group are worth watching, as both companies benefit from the recovery in the semiconductor industry and the steady rebound of downstream businesses.
&#34;The outlook for UMS is supported by multiple growth drivers, including significantly increasing production for new customers and launching new products, which will significantly boost sales growth. The global semiconductor market is expected to grow further by 17.8% in 2026, and UMS can also benefit indirectly from industry expansion due to its partnerships with leading semiconductor clients.&#34;
The report mentions that UMS has built a new factory in Penang, Malaysia, to expand its capacity. As more companies diversify their operations between China and the U.S., the company is well-positioned to seize new growth opportunities.
Despite rising geopolitical risks, UMS has not yet faced any direct operational impacts, as the group adopts a &#34;local-for-local&#34; model, with products primarily shipped to clients' operational bases in Singapore and Malaysia.
Given that UMS is a direct beneficiary of the securities market development plan, along with the group's second listing on the Malaysian stock exchange and its inclusion in the iEdge Singapore Next 50 Index, market attention is expected to increase.
Therefore, DBS Research maintains a &#34;Buy&#34; rating on UMS, with a target price of SGD 1.48.
As for Frencken Group, analysts believe that the company, with its solid balance sheet and diversified business portfolio, has the capability to continue riding the upward wave of the semiconductor industry.
<h4>Further Reading</h4>
[Asia Holds 75% of Global Chip Capacity, Expected to Continue Leading the Semiconductor Manufacturing Industry in the Next Five Years 
 
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Semiconductor equipment manufacturer UMS Integration has been approved for a secondary listing in Malaysia.
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&#34;As of the third quarter of 2025, the semiconductor business accounted for 46% of total revenue, making it the company's main growth engine. The front-end semiconductor business has not yet reached its peak, while the back-end is still in a recovery phase. The group is supporting growth through strategic investments and capacity expansion.&#34;
DBS Research has also given Frencken a &#34;Buy&#34; rating, with a target price of SGD 1.92.
<h3>Asian Tech Stocks May Rise Again</h3>
On the other hand, Goldman Sachs strategists maintain an &#34;Overweight&#34; rating on Asian tech stocks, believing that with the surge in demand for artificial intelligence and reasonable valuations, there is still room for stock price increases.
According to Bloomberg, the MSCI Asia Pacific Information Technology Index has risen about 6% this year, significantly outperforming the Nasdaq 100 Index's approximately 2% increase. Since the end of 2024, this Asian tech index has outperformed the Nasdaq by 33 percentage points, but valuation gaps still exist.
The expected price-to-earnings ratio of the MSCI Asia Pacific Information Technology Index is 16.3 times, lower than the Nasdaq and the Philadelphia Semiconductor Index's level of about 25 times.
Pepperstone research strategist Wu Dillin said, &#34;U.S. tech stocks are like a mature gold mine; Asian tech stocks are like an undeveloped mine, with strong fundamentals yet undervalued, ready to deliver substantial returns at any time.&#34;
Citigroup pointed out that the Asia Pacific region plays a key role in the global semiconductor supply chain, coupled with potential earnings growth, attracting global long-term investors to continue increasing their positions in Asian tech stocks.
Franklin Templeton Global Investment Trading Head Morina said that hedge funds, long-only funds, and passive funds are all increasing their holdings in Asian tech stocks, especially in the South Korean and Hong Kong markets. Some investors have also re-entered after reducing their positions in Japanese AI-related stocks at the end of last year.
Capital inflows have driven up the stock prices of the three major Asian tech giants Taiwan Semiconductor Manufacturing Company, Samsung, and SK Hynix
Since the beginning of this year, it has risen by 8% to 16%. Meanwhile, Hua Hong Semiconductor, listed in Hong Kong, has seen its stock price increase by over 20%.
However, Ling Weisen, Managing Director of Union Bancaire Privee, reminds that Asian chip manufacturers, especially in the Taiwanese market, still face two major risks, including reduced AI spending and geopolitical factors

Asian technology stocks have had a strong start in the new year and are expected to continue outperforming U.S. technology stocks. The semiconductor industry's revenue growth rate is projected to exceed 32% in 2026, and analysts are optimistic about local technology stocks benefiting from this trend. DBS Group Research points out that despite increasing market skepticism about artificial intelligence, the upcycle in the semiconductor industry will continue. UMS Holdings and Frencken Group are worth noting as they benefit from the recovery of the semiconductor industry, with UMS expanding its new factory in Malaysia to enhance capacity, positioning itself to seize new growth opportunities

Asian tech stocks continue to lead, local tech stocks welcome opportunities as the semiconductor cycle rises | Lianhe Zaobao