Ng Kok Tiong, a senior vice-president at Infineon and chair of the Semiconductor Fabrication Association of Malaysia, has been working in the semiconductor industry for 34 years. He has recently witnessed an unprecedented level of activity in Malaysia’s semiconductor industry. A notable example of this is the daily traffic jams between Penang Island and Kulim, where the country’s first high-tech industrial park is located. According to Ng, this increase in traffic is a result of the diversification of the supply chain, with many new factories being established in the area. To accommodate this growth, the government is currently widening the road, a project that is expected to be completed next year.
Infineon, a top European chipmaker, is in the process of building a $7bn facility in Kulim, which will be the largest production site for silicon carbide chips in the world. These chips are used in electric cars, wind turbines, and other heavy applications, as well as consumer electronics. Malaysia has long been Infineon’s most important manufacturing hub in Asia, employing more people than its home base in Germany.
In an effort to make a comeback and diversify production amidst US-China tensions, Malaysia has become an attractive destination for foreign direct investment from tech and chip companies. Intel, for example, plans to invest $7bn to turn Malaysia into its primary production base in Asia. Bayan Lepas, an industrial park in Penang, is witnessing the construction of Intel’s largest site for advanced 3D chip packaging. This is an area that is becoming increasingly important in the development of powerful chips.
Foreign direct investment into Malaysia has reached record levels, driven by global tech and chip companies. The country now controls 13% of the global market for packaging, assembly, and testing services and is the sixth-largest semiconductor exporter. However, Malaysia still relies heavily on foreign chip companies and has yet to produce any major chip manufacturers or top developers of its own.
Despite challenges such as a shortage of talent and limited access to renewable energy, Malaysia is positioning itself as a major player in the semiconductor and electronics supply chain. Ng believes that the combination of Malaysia’s strength in chip packaging and testing, along with Singapore’s ecosystem of front-end chip manufacturing, makes Southeast Asia an attractive region for future growth in the semiconductor industry.
By leveraging its reputation as a good place to do business, Malaysia hopes to attract more investment in the electronics industry. However, it faces tough competition from other countries in the region, such as Thailand and India.
To support the semiconductor industry’s growth, the Malaysian government is being urged to increase the supply of green energy. Access to renewable energy is a top priority for chip suppliers considering new investments.
Overall, Southeast Asia, with Malaysia at the forefront, is poised to play a significant role in the semiconductor and electronics industry’s future growth.
This article was originally published by Nikkei Asia on September 29.
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