The other side of Malaysia: Is the chip industry actually very strong? 3 advantages to attract money

2024/07/19

Business Times
July 13, 2024
Author Zhongshi News Network

[Zhongshi News Network, Guo Yixin] Semiconductors have become an important industry actively developed by various countries. Malaysia has also used three major advantages to defeat Vietnam, India and other places to become the new semiconductor star in Southeast Asia. It is also expected to attract foreign investment and become a powerful data center in Southeast Asia.

■Malaysia breaks through with 3 advantages

Malaysia has long occupied a place in the semiconductor supply chain, with a market share of more than 10% in back-end packaging, testing and assembly. Not only major manufacturers such as Infineon and Intel are expanding their factories locally, but Taiwanese packaging and testing giant ASE has also increased its investment in Malaysia.

Malaysia has a mature packaging and testing supply chain, a large labor force and low operating costs. In addition, the government has also begun to spend money to provide subsidies in recent years, attracting the attention of many multinational companies.

According to comprehensive foreign media reports, Kenddrick Chan, head of the digital international relations project at LSE IDEAS, a diplomatic think tank at the London School of Economics and Political Science, said that Malaysia has a complete infrastructure, especially in the back-end supply chain of semiconductor production, with nearly 50 years of experience, which will arouse the interest of enterprises.

Brokerage firm JPMorgan Chase also gave a positive review. Rajiv Batra, head of stock market strategy, said that he is optimistic that Malaysia will become a powerful data center in Southeast Asia and has proven its status as a technology center. In addition, Rajiv Batra mentioned that Malaysia has entered the fields of electric vehicles, green energy, and now even solar energy.

■The chip industry has ambitious ambitions

Malaysia has already established a foothold in the latter part of the semiconductor supply chain, and now it also wants to explore higher-value fields such as wafer foundry and IC design. Malaysian Prime Minister Anwar announced at the beginning of the year that he would spend NT$100 billion to cultivate local engineers and semiconductor companies. Towards the goal of becoming a global chip center.

Malaysia's semiconductor development is booming. After the US-China trade war and the outbreak of the epidemic, companies were forced to accelerate the diversification of their supply chains, and Malaysia's semiconductor industry experienced explosive growth.

However, Malaysia's transformation is not without its hidden worries. The lack of high-level talents and leading companies is the most worrying aspect for the market. Currently, the local semiconductor industry relies on investment from major international manufacturers. If local semiconductor giants can be cultivated, it will be a big plus for Malaysia.

Malaysian Trade Minister Zafrul Aziz mentioned that cutting-edge investment must be actively increased, otherwise it will lose to regional competitors. Vietnam and India are also building semiconductor industries, but they have more incentives and skilled engineers.

Perhaps Taiwan will play a key role in the process? Zhang Kaiting, Secretary of the Economic Section of the Taipei Economic and Cultural Office in Malaysia, said that Taiwan can help Malaysian semiconductor companies transform, and the supply chains of both countries can complement each other. Through technical cooperation, agents and original equipment manufacturers, a cooperation model for the semiconductor supply chains of the two countries can be established.

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