RHB Investment Bank Bhd (RHB IB) is confident that Joe Biden’s recent move to restrict exports of artificial intelligence chips will have a minimal impact on Malaysia’s key data centre contractors, particularly Gamuda Bhd (GAM) and Sunway Construction Group Bhd (SCGB).

In a research note today, RHB IB said this is due to the high likelihood of their DC clients from Tier 1 countries being eligible to apply for the Universal Validated End User (UVEU) programme, allowing larger quantities of AI chips to be brought into Tier 2 countries like Malaysia if certain conditions are met.

Tier 1 countries include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom.

Meanwhile, other than Malaysia, other Tier 2 countries include Brazil, India, Singapore, Switzerland, Angola, Austria, the Czech Republic, Greece, Indonesia, Kenya, Luxembourg, Mexico, Monaco, Nigeria, Poland, Portugal, Romania, South Africa, Thailand, and Turkey.

RHB IB said GAM and IJM Corp are trading at forward P/Es of 17x, while SCGB is at 18.9x, near their respective levels seen during the last 2017 construction upcycle.

“These counters should trade at higher levels given the DC element.

“The establishment of Malaysia’s national AI office last year also signals the government’s push to strengthen the country’s AI framework,” RHB IB said.

Hence, RHB IB said investments by global tech giants from Tier 1 countries, such as Google, Microsoft, and Amazon Web Services, are expected to remain intact.

Nevertheless, RHB IB acknowledged that risks stem from lingering uncertainties, particularly with President-elect Donald Trump assuming office, and having a 120-day window to comment on AI chip restrictions before they become effective.

Trump will be inaugurated today, taking the oath of office as the 47th US president.

- Bernama

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