Malaysia’s Electronics Industry Rides High on Semiconductor Boom
A Surge in Activity Boosts Malaysia’s Semiconductor Industry
The semiconductor industry in Malaysia is experiencing unprecedented growth, with increased investments and expansion projects. Ng Kok Tiong, a senior vice-president at Infineon, has been working in the industry for 34 years and claims that he has never witnessed such activity in the country before. He cites the daily traffic jams between Penang Island and Kulim, the site of Malaysia’s first high-tech industrial park, as evidence of the surge in development.
Malaysia, once known as the “Silicon Valley of the East,” lost ground to South Korea and Taiwan in the 1990s. However, the country is now aiming to make a comeback as the industry seeks to diversify production amidst US-China tensions. Intel, for example, plans to invest $7bn to establish Malaysia as its primary production base in Asia.
Record Levels of Foreign Direct Investment Boost Malaysia’s Market
In recent years, Malaysia has attracted record levels of foreign direct investment, largely driven by global tech and chip companies. The country’s approval of RM71.4bn ($15.25bn) in investment during the first quarter of 2023 exceeded the total for the entire year of 2019. Malaysia is already a major hub for the final stages of chip production, controlling 13% of the global market for packaging, assembly, and testing. However, it primarily relies on foreign chip companies for industry sustainability.
Challenges and Opportunities for Malaysia’s Electronics Industry
Despite the surge in activity, Malaysia faces challenges in terms of talent shortage and limited access to renewable energy. Intellectual property rights also pose concerns for the industry. Nevertheless, strong government support, a stable geopolitical outlook, and the absence of natural disasters make Malaysia an attractive investment destination for chip companies. The country’s convenient location in Southeast Asia, skilled workforce, and established logistics infrastructure further contribute to its appeal.
As Malaysia positions itself as a major production hub, it faces competition from other Asian countries such as Thailand and India. However, with the entire semiconductor market experiencing significant growth, multiple countries can benefit from the industry’s expansion and diversification.
The Future of Malaysia’s Semiconductor Industry
Industry experts believe that Malaysia, along with other Southeast Asian countries, has the potential to play a prominent role in the global semiconductor and electronics supply chain. The country boasts a strong presence in chip packaging and testing, while neighboring Singapore excels in front-end chip manufacturing. Combined, the region establishes itself as a significant hub for the industry’s future growth.