logo
Fitch Downgrades APAC Tech Sector Outlook To 'Deteriorating'

Fitch Downgrades APAC Tech Sector Outlook To 'Deteriorating'

BusinessToday10-06-2025
Fitch Ratings has revised its 2025 outlook for the Asia-Pacific (APAC) technology sector from 'neutral' to 'deteriorating', signaling increased downside risks primarily driven by the escalating global tariff environment. The ratings agency warns that tariffs are expected to directly hurt demand for hardware and trigger wider economic slowdowns due to reduced consumer confidence and spending globally.
According to Fitch, the APAC tech sector is particularly vulnerable given its central role as the world's primary assembly hub for technology hardware and the dominant manufacturer of critical component parts across the supply chain.
Consumer technology hardware, often a discretionary purchase, is highly susceptible to shifts in consumer confidence and spending habits. Fitch anticipates the United States will present a challenging market for consumer technology products this year, following its earlier revision of the US retail and consumer products sectors' outlooks to 'deteriorating' in April 2025. While some companies exposed to discretionary categories have already faced negative rating actions, most Fitch-rated US retailers and consumer product companies are believed to possess sufficient rating headroom to withstand current volatility.
Beyond the US, APAC technology hardware businesses are also facing tough conditions in other major markets. Fitch forecasts weak consumer spending growth in 2025 for the eurozone (1%), Japan (0.7%), and the UK (0.9%). Although China's consumer spending growth forecast for 2025 remains relatively robust at 3.3%, this is still a downward revision from the 4.3% projected in December 2024.
Within Fitch's rated portfolio, APAC technology hardware companies are generally expected to fare better than their non-rated peers due to their larger size, greater diversification, and enhanced financial flexibility. However, Renesas (BBB/Stable) and LG Electronics (BBB/Stable) have been identified as having the lowest rating headroom within this group.
Divergent Trends Within Semiconductors and Internet Segments:
The outlook for different segments within the APAC semiconductor sector continues to diverge. Fitch anticipates strong demand related to Artificial Intelligence (AI) will persist, but warns that non-AI demand will be weak, particularly due to the likely tariff-related fall-off in demand for consumer electronics. The semiconductor industry also faces ongoing supply chain challenges that could impact production timelines and cost structures throughout 2025.
For the Chinese internet sub-segment, Fitch maintains a 'neutral' outlook for 2025. The agency expects major internet companies' strong business profiles, robust margins, and substantial net cash positions to support their credit profiles. However, their performance may diverge further due to an uneven impact from weak consumer spending, intense competition, and the increased deployment of AI across internet services.
Lastly, the outlook for the Indian IT services sub-segment remains 'neutral'. While revenue growth is expected to be affected by the slowdown in global economic growth driven by tariff uncertainty and more cautious customer spending on external IT services, Fitch still forecasts positive revenue and EBITDA growth for the segment. Related
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Maxim, InDrive to face three-month APAD watch after e-hailing audit flags non-compliance
Maxim, InDrive to face three-month APAD watch after e-hailing audit flags non-compliance

Malay Mail

time20 minutes ago

  • Malay Mail

Maxim, InDrive to face three-month APAD watch after e-hailing audit flags non-compliance

KUALA LUMPUR, July 24 — Two e-hailing operators, Aist Malaysia Sdn Bhd (Maxim) and ID Applications Sdn Bhd (InDrive), will undergo a three-month monitoring period starting today (July 24), despite being allowed to continue operations, to ensure compliance with service conditions. In a statement yesterday, the Land Public Transport Agency (APAD) said representatives of the companies are required to attend monthly sessions at APAD headquarters throughout the monitoring period to ensure the sustained commitment of both operators. 'The frequency of monthly attendance is subject to APAD's discretion based on monitoring needs and current issues. These sessions are intended to facilitate real-time monitoring, including random checks on drivers via the InDrive and Maxim applications,' the statement said. According to APAD, stern action under Section 12A (5) of the Land Public Transport Act 2010 may be taken if the e-hailing operators are found to have breached any stipulated service conditions. On April 24, APAD issued a Notice of Business Mediation Licence (LPP) Cancellation to Maxim and InDrive, effective July 24, 2025, following an audit that found non-compliance, particularly regarding the requirement for a valid E-Hailing Vehicle Permit (EVP). Following this, both companies appealed to the Ministry of Transport and were required to undertake corrective measures before July 24 to continue their services. 'To meet this condition, Maxim and InDrive have enhanced their registration systems to ensure all drivers possess valid EVPs before taking up assignments. 'As an additional step, both companies have also granted 'view only' data access to APAD to facilitate cross-verification between company records and EVP data managed by APAD,' the statement added. APAD said it had conducted random inspections on July 11 on InDrive and Maxim drivers and found that all drivers checked held valid EVPs based on cross-verification with APAD's records. The statement added that based on the review and current assessment by APAD and the Road Transport Department (JPJ), the remedial measures and commitment shown by both operators were satisfactory. — Bernama

FMM urges Putrajaya to gazette Sept 15 holiday to give firms clarity, aid compliance
FMM urges Putrajaya to gazette Sept 15 holiday to give firms clarity, aid compliance

Malay Mail

time20 minutes ago

  • Malay Mail

FMM urges Putrajaya to gazette Sept 15 holiday to give firms clarity, aid compliance

KUALA LUMPUR, July 24 — The Federation of Malaysian Manufacturers (FMM) has called on the government to urgently gazette the September 15 public holiday to provide legal clarity to employers. The additional holiday that Prime Minister Datuk Seri Anwar Ibrahim announced yesterday in a special address has triggered concerns within the manufacturing sector over compliance and planning, the group said. FMM said many businesses remain unclear whether the holiday falls under Section 8 or Section 9 of the Holidays Act 1951, which would affect their obligations under the Employment Act 1955. 'This is critical to provide legal clarity and enable businesses to plan operations, workforce scheduling, and ensure compliance with the Employment Act 1955,' said FMM president Tan Sri Soh Thian Lai. The group warned that manufacturers operating on shift-based or continuous cycles face higher risks from such unplanned disruptions. The four-day stretch from Saturday to Tuesday may force production lines to halt and restart, which FMM said would be inefficient and costly. It added that the cascading effects on supply chains, logistics and delivery timelines would be especially difficult for small and medium-sized enterprises (SMEs) to manage. FMM advised employers to prepare buffer stock, adjust schedules, and communicate with workers, customers and suppliers to minimise operational risks. The group also reminded businesses to monitor the gazette and consider using the substitution option under Section 8, if applicable. It then reiterated its view that 'policy announcements must reflect clarity, consistency, certainty, and credibility,' adding that ad hoc decisions could undermine Malaysia's attractiveness to investors.

Bitget Partners with KOL to Drive Blockchain and AI Growth in Southeast Asia
Bitget Partners with KOL to Drive Blockchain and AI Growth in Southeast Asia

Barnama

timean hour ago

  • Barnama

Bitget Partners with KOL to Drive Blockchain and AI Growth in Southeast Asia

KUALA LUMPUR, Malaysia, July 24 (Bernama) -- Bitget, the world's leading cryptocurrency exchange and Web3 company, partnered with Indian crypto thought leader Pushpendra Singh to support a landmark Blockchain & AI Summit in Southeast Asia—further strengthening its role as a global enabler of the decentralized tech ecosystem. The summit was organized in collaboration with the Consortium of Indian Industries in Malaysia (CIIM). It brought together builders, investors, and leaders from India, South Asia, the Middle East, Singapore, China, and beyond, establishing Malaysia as an up-and-coming regional hub for blockchain and AI collaboration. The event included keynotes, panel discussions, and interactive sessions aimed at promoting innovation and the responsible adoption of Web3 technologies.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store