[KUALA LUMPUR] Malaysia has set a bold target to attract at least RM500 billion (S$143.5 billion) in investment for its semiconductor industry, with the aim of progressing into chip design, fabrication and more high-value developments, said Prime Minister Anwar Ibrahim on Tuesday (May 28).
To achieve the target, the government has allocated RM25 billion in fiscal support to drive the National Semiconductor Strategy (NSS) – a comprehensive plan aimed at attracting investment to improve the ecosystem in facilitating high-value developments.
The allocation will be utilised for targeted incentives, said Anwar in his speech at Semicon Southeast Asia 2024. He added that details of the fiscal support will be announced by the Ministry of Investment and Trade soon, without specifying a timeframe.
The NSS also complements the New Industrial Master Plan 2030, which was announced last September. The master plan offers a road map to transform the manufacturing sector for it to move into high-value and innovation-driven activities such as wafer fabrication and integrated circuit design, as well as electric vehicles and renewable energy industries.
“Malaysia is offering itself as the ‘bridge’ to connect countries open to tech collaboration, right here on our shores. Malaysia is already a melting pot of local and international tech talent, making it easy for companies rooted here to be regionally and globally competitive,” Anwar said.
The South-east Asian nation is one of the major players in the semiconductor industry, accounting for 13 per cent of global testing and packaging. Multinational companies such as Advanced Micro Devices, Intel and Infineon have invested billions of dollars in Malaysia.
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Early this month, US-based Microsoft announced an investment of US$2.2 billion in Malaysia for the next four years to support the country’s digital transformation, marking the single largest investment in its 32-year history in Malaysia.
Moving from back end to front end
The country is now the sixth-largest exporter for semiconductor and 10th in terms of electronic and electrical product exports, but Anwar noted that Malaysia is “over-concentrated” in the back-end process of the supply chain, in particular outsourced semiconductor assembly and testing.
With the NSS, he hopes this could attract more investment into high-value developments including integrated circuit design, advanced packaging, wafer fabrication and manufacturing equipment for semiconductor chips.
The country also aims to establish at least 10 Malaysian companies in design and advanced packaging (with revenues between RM1 billion and RM4.7 billion), and at least 100 semiconductor-related companies with revenues close to RM1 billion, to create higher-income jobs for Malaysians.
Currently, the semiconductor industry contributes an estimated 25 per cent to Malaysia’s gross domestic product.
At the same event, Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said the growing global dependency on semiconductors has drawn the attention of some of the world’s largest electronics companies, such as GlobalFoundries and Neways to Malaysia.
“As part of the world’s fifth-largest economic bloc, a growing Asean will also support Malaysia’s continued growth and resilience. This is not just propelled by the region’s growth prospects via its 670 million population, but also our collective will to innovate, adapt and thrive in an ever-evolving global landscape,” he added.
