Malaysia’s Ambitious $107 Billion Semiconductor Strategy: A Shift…

Malaysia is steering towards becoming a major player in the semiconductor supply chain through its National Semiconductor Strategy, aiming to attract MYR500 billion in investments. The strategy focuses on moving beyond assembly roles to advanced technologies and local company development. Talent training and sustainable practices are also priorities, as Malaysia seeks an edge amid global competition.

In a bold move, Malaysia is setting its sights on becoming a key player in the global semiconductor supply chain. Prime Minister Anwar Ibrahim officially launched the National Semiconductor Strategy (NSS) in May 2024, which aims to attract around MYR500 billion (approximately $107 billion) in investments. This initiative, reported by Reuters, reflects Malaysia’s ambition to enhance its role in the semiconductor industry significantly.

Historically, Malaysia has been known for back-end semiconductor processes, primarily assembly, testing, and packaging. Major companies like Intel and Infineon have operated in the country due to its reliable infrastructure and skilled workforce. The NSS, however, marks a decisive shift towards more advanced segments of the industry, focusing on areas such as chip design and research and development (R&D), as outlined by ASEAN Briefing.

This transition echoes trends among global tech giants that are striving to bolster their semiconductor capabilities in the face of heightened geopolitical and supply chain tensions. The Diplomat noted that Malaysia’s neutrality in the ongoing US-China relations positions it uniquely, attracting companies eager to diversify their manufacturing locations away from Taiwan and mainland China.

A robust fiscal strategy underpins the NSS, aimed at luring foreign investors alongside local enterprises. The Malaysian government has set aside MYR25 billion (around $5.3 billion) for incentives, including tax breaks, grants, and infrastructure support, as detailed by Free Malaysia Today. Concurrently, the Malaysian Investment Development Authority (MIDA) is actively pursuing semiconductor manufacturers from major regions, evidenced by Intel’s $7 billion expansion in Penang and Infineon’s €5 billion investment in Kulim to enhance its semiconductor production.

Recognizing the necessity of talent, Malaysia aims to train 60,000 local engineers under the NSS. This plan includes revising university curricula and forming public-private partnerships with industry leaders like ARM and Synopsys, as Malay Mail reported. The Ministry of Higher Education is also backing “dual-training systems,” combining educational experiences with direct industry exposure, with the goal of closing the skill gap and reducing brain drain.

The NSS also strives to cultivate local champions in the semiconductor space, aiming to establish at least ten homegrown companies in fields such as advanced packaging and integrated circuit design. Each of these local firms is expected to yield revenues ranging from MYR1 billion to MYR4.7 billion ($210 million to $1 billion) by the year 2030. Khazanah Nasional is leading efforts to create funding pools to support local deep-tech startups and seeking to commercialize findings from university research.

Location and diplomatic neutrality lend Malaysia an added advantage as it seeks to attract semiconductor firms. The country boasts well-developed infrastructure and competitive energy rates, particularly in key regions like Penang and Johor, ensuring considerable logistical benefits, as pointed out by The Diplomat. Additionally, Malaysia’s foundational membership in ASEAN and its involvement in various trade agreements bolster its standing as a semiconductor hub.

Rather than directly competing with heavyweights like Taiwan or South Korea, the NSS emphasizes collaboration. Malaysia’s government has initiated cross-border R&D projects and seeks foreign partnerships for shared investment in innovation parks. This approach particularly includes collaborations with nations like Japan and Vietnam in building regionally integrated supply chains, as noted by Free Malaysia Today.

Moreover, Malaysia is committed to environmentally sustainable practices within its semiconductor sector, integrating renewable energy solutions and carbon tracking systems into production facilities. TIME discusses this movement towards eco-friendly manufacturing methods as increasingly attractive to tech companies prioritizing sustainability.

Nevertheless, Malaysia’s journey is not without challenges, as it faces fierce competition from established players and rising countries like India and Vietnam. The success of the NSS will largely hinge on the government’s ability to cultivate talent, sustain investor trust, and boost domestic innovation. With this significant gamble in the semiconductor sector, Malaysia is striving for long-term technological independence. As the global competition for semiconductors heats up, Malaysia is undeniably determined to secure its place in this critical industry.

In conclusion, Malaysia is actively transforming its semiconductor industry through the National Semiconductor Strategy, which aims to draw massive investments and shift focus towards advanced technology. With ambitious plans to train engineers and foster local businesses, the country seeks to solidify its role in the global supply chain. While there are hurdles ahead, including stiff competition, the government’s commitment to infrastructural and talent advancements positions Malaysia as a future contender in this essential sector.

Original Source: www.intellinews.com