Malaysia’s share of global semiconductor trade strives to double within five years

Juheng.com-Financial News

May 02, 2024

Juheng.com News Center

 

 

Malaysia is already a major player in the chip industry. A senior Malaysian official said that Malaysia has ambitious goals, hoping to upgrade the value chain to the field of chip design and strive to double its share of global semiconductor trade within five years.

 

According to a report by The Straits Times on Wednesday (1st), Selangor Information Technology & Digital Economy Company (Sidec) CEO Yong Kai Ping said that if Malaysia becomes a "chip design power", it may increase Malaysia's share of global semiconductor trade. , currently 7%, is expected to climb to 14% by 2029.

 

"We hope to double this number by moving up the value chain, especially through front-end IC (integrated circuit) design work. Wherever the head goes, the tail will follow, because this is a cluster industry. "He said.

 

He further pointed out that as competition intensifies, Malaysia must quickly seize opportunities in chip design to enhance its position in the semiconductor value chain.

 

This ambition is likely to stem from the Puchong IC Design Park project and the chip war between the United States and China in recent years. This competition has led multinational companies to reorganize their supply chains and shift their operations to Malaysia and Vietnam. , India and other countries.

 

Malaysian Prime Minister Anwar announced on April 22 that he plans to establish a large-scale IC design center in Selangor in an effort to shift from production to high-value front-end design work.

 

The Malaysian government has launched a series of incentives, such as tax breaks, subsidies, and visa fee exemptions, to attract large technology companies, unicorn companies, and investors, with the goal of entering the top 20 of the Global Startup Ecosystem Index by 2030 nation.

 

Julia Goh, senior economist at United Overseas Bank Group, said the proposed chip design park is "a powerful step to push Malaysia out of the low-value (semiconductor) sector".

 

Goh estimates that Malaysia's shift to higher value-added semiconductor business, including wafer manufacturing, research and development, and design work, could bring in 80% profit margins. In comparison, in the assembly and testing areas with lower added value, profit margins are usually 5% to 25%.

 

Data from the Malaysian Investment Development Authority shows that Malaysia has become a key player in the chip manufacturing industry over the past 50 years, accounting for approximately 13% of the global back-end manufacturing industry. The northern island of Penang is often referred to as Malaysia’s Silicon Valley, home to major semiconductor manufacturers such as Intel and Infineon.

 

The semiconductor industry accounts for 25% of Malaysia’s gross domestic product (GDP). Wong Siew Hai, chairman of the Malaysian Semiconductor Industry Association (MSIA), said about 40% of Malaysia's exports come from the electrical and electronics industry, with export revenue reaching MYR575 billion last year.

 

Last year, Malaysia's largest export market for electrical and electronic products was Singapore, accounting for 18.6%, followed by the United States at 16.3%, China at 15.2%, and Hong Kong at 13.1%.

 

When the new chip design park is completed, Malaysia's share of global exports is expected to further increase as the country's automotive industry and data centers increasingly adopt locally manufactured chips.

 

Related links: https://m.cnyes.com/news/id/5543562

 

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