Malaysia is making efforts to attract more investments in its semiconductor industry to propel it further up the value chain. The country currently holds 13 percent of the global market for packaging, assembly, and testing services for semiconductors and is the world’s sixth-largest exporter of semiconductors. The semiconductor industry contributes to approximately 25 percent of Malaysia’s GDP.
With the aim of diversifying its production and reducing reliance on foreign chipmakers, Malaysia is seeking to expand its semiconductor industry beyond assembly and testing. The country’s New Industrial Master Plan (NIMP) 2030 provides a roadmap for the development of the manufacturing sector by broadening the range of exported products. The government hopes that NIMP 2030 will encourage activities such as semiconductor equipment manufacturing, wafer fabrication, and integrated circuit design.
To support this initiative, Malaysia has recently attracted major investments from Intel and Texas Instruments. Intel is investing US$7 billion in the construction of an advanced 3D chip packaging facility, marking its first overseas facility for 3D chip packaging. Similarly, Texas Instruments is investing US$3.1 billion to engage in more complex manufacturing activities.
However, the semiconductor industry in Malaysia faces several challenges. The industry suffers from a shortage of skilled talent, with an estimated annual requirement of 50,000 electrical and electronics engineers. Additionally, many engineers and technicians are lured to Singapore due to higher wages. Another challenge is the heavy reliance on foreign companies for sustained growth, as Malaysia lacks major chip manufacturers and chip developers.
Country-level competition poses another hurdle for Malaysia. Thailand, Indonesia, the Philippines, Singapore, and Vietnam are emerging as strong contenders in the semiconductor industry, capitalizing on the reshoring of manufacturing from China. These countries offer skilled workforces, supportive government policies, and increased manufacturing capabilities.
Amidst these challenges, Malaysia still offers opportunities for foreign investors. The country’s strategic geographic location in Southeast Asia, coupled with its logistical advantages, attracts foreign chipmakers. Companies like Jabil, Bosch, Western Digital, and Lam Research are expanding their manufacturing presence in Malaysia. Additionally, DHL Express is constructing logistics centers in Malaysia’s Penang island, facilitating direct cargo flights to Hong Kong, a hub for chip trading.
As supply chains diversify, Malaysia stands to benefit by expanding its footprint in the global electronics industry. This diversification provides opportunities for the development of front-end production and innovation in the semiconductor industry. However, to fully capitalize on these opportunities, Malaysia needs to invest in research and development, particularly in areas like artificial intelligence (AI). The country also needs to focus on improving its engineer-to-population ratio to meet the growing demand for skilled talent.
Overall, Malaysia is well-positioned to navigate the challenges and opportunities in the global semiconductor landscape. By attracting investments, fostering innovation, and strengthening its presence in the electronics industry, Malaysia can solidify its role as a crucial player in this dynamic sector.
The source of the article is from the blog myshopsguide.com