Malaysia has now change into a middle for the semiconductor manufacturing industry, fueled by political tensions between the United States and China, prompting firms to hunt to diversify their operations.
On Wednesday, CNBC reported that Kenddrick Chan, head of the digital diplomacy project at LSE IDEAS, a foreign policy think tank affiliated with the London School of Economics and Political Science, mentioned that Malaysia has a mature infrastructure with over five many years of experience in semiconductor manufacturing processes, especially in assembly, testing and packaging.
Semiconductors, critical components of devices starting from smartphones to cars, have change into the point of interest of the technology battle between the United States and China. In December 2021, US chip giant Intel announced an investment of over US$7 billion (RM33.18 billion) to establish a chip testing and packaging facility in Malaysia, which is anticipated to be operational in 2024.
Aik Kean Chong, managing director of Intel Malaysia, revealed that Intel’s decision to speculate in Malaysia was influenced by its diverse talent pool, established infrastructure and solid supply chain, in line with CNBC. Intel began its overseas manufacturing expansion by establishing an assembly plant in Penang in 1972 with an investment of $1.6 million. Over time, Intel equipped its facility with a full test center and development and design center in Malaysia.
Meanwhile, GlobalFoundries, one other major US chipmaker, opened a middle in Penang in September to support its global manufacturing operations, complementing its plants in Singapore, the US and Europe. In July 2022, Infineon, a number one German chipmaker, also announced plans to construct a 3rd wafer manufacturing module in Kulim. Additionally, Newways, a key supplier to Dutch chip equipment manufacturer ASML, announced last month that it will open a brand new manufacturing facility in Klang.
According to Yinglan Tan, managing partner and founding father of Insignia Ventures Partners, Malaysia’s advantage lies in its expert labor in packaging, assembly and testing, in addition to lower operating costs in comparison with other countries, making its exports more competitive globally. He also noted that the present ringgit rate makes Malaysia a beautiful location for foreign investors.
The Malaysian Investment Development Authority said in its Feb. 18 report that Malaysia has a 13% share of the worldwide chip packaging, assembly and testing services market. Despite a decline in global chip demand, Malaysia’s exports of semiconductor devices and integrated circuits will increase by 0.03% to $81.4 billion in 2023.
On the opposite hand, in line with an announcement by Datuk Seri Wong Siew Hai, president of the Malaysian Semiconductor Industry Association, several Chinese firms have expanded production to Malaysia, terming the country as a “plus one” for China.
Source: CNBC
