Equities

Malaysia Emerges as Semiconductor Manufacturing Hub Amid Rising Global Demand

POSITIVE

Malaysia attracts over $7 billion investment from Intel, becoming a key player in global semiconductor manufacturing amid U.S.-China tensions.

By Mackenzie Crow

4/3, 20:36 EDT
GlobalFoundries Inc.
Intel Corporation
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Key Takeaway

  • Intel's $7 billion investment in Malaysia highlights the country's rising significance in semiconductor manufacturing amid U.S.-China tensions.
  • GlobalFoundries, Infineon, and Neways' expansions into Malaysia underscore its appeal due to competitive costs, skilled labor, and strong government support.
  • With 13% global market share in chip packaging and assembly, Malaysia's strategic initiatives aim to bolster its semiconductor industry despite brain drain challenges.

Malaysia: A Rising Semiconductor Hub

In the dynamic landscape of global technology, Malaysia is carving out a significant niche for itself as a burgeoning hotspot for semiconductor manufacturing. Amidst the ongoing U.S.-China tensions, the Southeast Asian nation is attracting attention from some of the world's leading chipmakers, looking to diversify their operations and mitigate geopolitical risks.

Intel's Strategic Investment

Intel, the American chip giant, has underscored Malaysia's growing importance in the semiconductor industry with its announcement in December 2021 to invest more than $7 billion in a new chip packaging and testing factory in the country. Slated to begin production in 2024, this move not only highlights Malaysia's strategic value but also its robust infrastructure and skilled talent pool. Aik Kean Chong, Intel Malaysia’s managing director, praised Malaysia for its "diverse talent pool, well-established infrastructure, and robust supply chain," reinforcing the country's appeal to global tech firms.

GlobalFoundries and Others Follow Suit

Following Intel's lead, GlobalFoundries opened a hub in Penang to support its global manufacturing operations, citing the "forward-thinking policies and strong support from the regional government" as key factors in their decision. Similarly, Germany's Infineon and Neways, a supplier to Dutch chip equipment maker ASML, have announced significant investments in Malaysia, further cementing its status as a critical node in the global semiconductor supply chain.

Malaysia's Competitive Edge

Experts like Kenddrick Chan from LSE IDEAS and Yinglan Tan from Insignia Ventures Partners point to Malaysia's five decades of experience in semiconductor assembly, testing, and packaging, alongside its competitive operating costs and skilled labor force, as pivotal advantages. With the country holding 13% of the global market share in chip packaging and assembly services, Malaysia's semiconductor exports continue to show resilience and competitiveness on the global stage.

Navigating Challenges with Strategic Moves

Despite the challenges posed by brain drain, Malaysia is actively working towards not only retaining but also attracting skilled talent to support its growing semiconductor industry. The establishment of a national semiconductor strategic taskforce and the government's efforts to attract skilled Malaysians to return home are testament to Malaysia's commitment to strengthening its position in the global semiconductor ecosystem.