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Malaysia aims to attract over $100 billion in investments for its semiconductor industry.

ByYasmeeta Oon

May 28, 2024
Malaysia aims to attract over $100 billion in investments for its semiconductor industry.

Malaysia aims to attract over $100 billion in investments for its semiconductor industry.

Malaysia aims to attract at least 500 billion ringgit ($107 billion) in investment for its semiconductor industry, Prime Minister Anwar Ibrahim announced on Tuesday. This move is part of a broader strategy to establish Malaysia as a global manufacturing hub.

Malaysia is a significant player in the semiconductor industry, contributing to 13% of global testing and packaging. The country has successfully attracted multibillion-dollar investments from leading firms like Intel and Infineon in recent years. Anwar highlighted that the targeted investment would be channeled towards integrated circuit design, advanced packaging, and manufacturing equipment for semiconductor chips.

To bolster this initiative, Malaysia aims to foster the establishment of at least 10 local companies specializing in design and advanced packaging for semiconductor chips, with projected revenues ranging from $210 million to $1 billion each. Anwar shared these ambitious goals during his speech at an industry event, underscoring the government’s commitment to advancing the semiconductor sector.

The government will allocate $5.3 billion in fiscal support to achieve these targets. Anwar assured that further details on this support would be disclosed soon. He emphasized Malaysia’s strong capacity to diversify and advance in the value chain, aiming for high-end manufacturing, semiconductor design, and advanced packaging.

Key Investment AreasDetails
Integrated Circuit DesignFocus on developing new, cutting-edge circuit designs
Advanced PackagingEnhancing the packaging technology for semiconductor chips
Manufacturing EquipmentInvesting in state-of-the-art equipment for chip manufacturing
Local Company DevelopmentEstablishing local firms with significant revenue potential

Anwar did not specify a timeline for meeting these targets, but the ambitious plan is set to position Malaysia as a frontrunner in the semiconductor industry.

In a related announcement on April 22, Anwar disclosed plans to build Southeast Asia’s largest integrated circuit design park. This initiative is part of Malaysia’s strategy to move beyond backend chip assembly and testing into high-value, front-end design work. To attract global tech companies and investors, the government will offer various incentives, including:

  • Tax Breaks: Reducing tax liabilities for companies investing in the semiconductor sector.
  • Subsidies: Providing financial support to offset the costs of establishing operations in Malaysia.
  • Visa Exemption Fees: Easing the process for foreign experts and talent to work in Malaysia.

These incentives aim to make Malaysia a more attractive destination for global semiconductor companies.

Malaysia is well-positioned to capitalize on the growing demand for semiconductor manufacturing outside of China. Chinese chip firms, in particular, are diversifying their assembly needs due to geopolitical tensions and supply chain disruptions.

Several key projects and partnerships illustrate Malaysia’s strategic positioning:

  • China’s Xfusion Partnership: Last September, Xfusion, a former Huawei unit, announced a partnership with Malaysia’s NationGate to manufacture GPU servers. These servers are essential for data centers and are widely used in artificial intelligence (AI) and high-performance computing.
  • StarFive Design Center: Shanghai-based StarFive is building a design center in Malaysia’s Penang state, further enhancing the country’s capabilities in semiconductor design.
  • TongFu Microelectronics Expansion: In 2022, TongFu Microelectronics, a chip packaging and testing firm, announced plans to expand its facility in Malaysia. This venture is in collaboration with U.S. chipmaker AMD, highlighting international confidence in Malaysia’s semiconductor sector.

Several leading companies have made significant investments in Malaysia, reinforcing its status as a key player in the semiconductor industry:

  • Infineon’s Expansion: In August, Germany’s Infineon announced a 5 billion euro ($5.4 billion) investment to expand its power chip plant in Malaysia. This investment underscores Infineon’s commitment to growing its presence in the country.
  • Intel’s Advanced Chip Packaging Plant: U.S. chipmaker Intel announced in 2021 that it would build a $7 billion advanced chip packaging plant in Malaysia. This facility is expected to create numerous high-skilled jobs and drive technological advancements in the region.

These investments are pivotal for Malaysia’s goal to become a global hub for semiconductor manufacturing and innovation.

Malaysia’s ambitious plans for its semiconductor industry reflect a broader strategy to enhance its economic growth and technological capabilities. By attracting substantial investments and fostering local expertise, the country aims to climb higher in the semiconductor value chain.

The government’s proactive approach, coupled with strategic incentives and partnerships, positions Malaysia to seize emerging opportunities in the global semiconductor market. With ongoing support and investment, Malaysia is poised to play a crucial role in shaping the future of semiconductor manufacturing and design.

In conclusion, Malaysia’s commitment to advancing its semiconductor industry through significant investments and strategic initiatives highlights its ambition to become a global leader in this critical sector. As the country continues to attract international partnerships and foster local expertise, it stands ready to drive innovation and growth in the semiconductor industry.

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Featured Image courtesy of BusinessWorld Online

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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