Letters | Malaysia is primed to revamp its once dominant semiconductor sector

Readers discuss Malaysia’s revival of its semiconductor industry, the exclusion of an elevated cycle track from Hong Kong’s Trunk Road T4 project, and the need to prevent work-to-rule-style bureaucracy

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A worker inspects semiconductor chips at a packaging plant in Ipoh, Malaysia, on October 15, 2021. Photo: Reuters

Published: 11:30am, 13 May 2024

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Once seen as the Silicon Valley of the East, Malaysia was a leader in chipmaking during the 1970s but lost ground to South Korea and Taiwan in the 1990s with the rise of Samsung and Taiwan Semiconductors Manufacturing Co (TSMC). Its recent moves to revive this industry have been eye-catching. I believe it is well-positioned to succeed.

Malaysia controls 13 per cent of the global market for packaging, assembly and testing services for semiconductors and, according to the country’s government, is the world’s sixth-largest exporter of semiconductors. The semiconductor industry contributes to an estimated 25 per cent of Malaysia’s gross domestic product.

US chip giant Intel and Germany’s Infineon are each investing US$7 billion in Malaysia. Intel’s expansion will include the construction of an advanced 3D chip packaging facility – Intel’s first overseas facility for 3D chip packaging. Nvidia is developing a US$4.3 billion artificial intelligence cloud and supercomputer centre. Texas Instruments, Ericsson, Bosch and Lam Research are all expanding in Malaysia.

Microsoft has also recently pledged a US$2.2 billion investment in artificial intelligence and cloud computing in Malaysia to help develop the country’s AI infrastructure.

Its strategic geographic location and placement of ports are critical factors but Malaysia enjoys the benefits of having well-established infrastructure with around five decades of experience in the “back end” of the semiconductor manufacturing process. But the focus must be on the “front end” of the chip manufacturing process. This will require a new strategic approach, such as forging mutual partnerships with key established firms from Taiwan and the US.