Malaysia’s tech revolution: Rising to the top in the global semiconductor race

Published: November 5, 2024

As the global chip war between China and the US reaches a fever pitch, a quiet giant is emerging to take the spotlight.

Malaysia, once a humble player in the semiconductor industry, has pivoted from its traditional strengths in back-end manufacturing to cutting-edge design and advanced packaging, rewriting the rules of the game.

With a legacy spanning five decades, Malaysia’s ascent is no accident. The country’s growth is underpinned by a skilled workforce, strategic geographic positioning and strong government backing. These factors have created fertile ground for the industry to evolve and grow. Despite the challenges of the post-pandemic era, Malaysia attracted over RM1 trillion (USD232.2 billion) in approved investments from 2021 to the first half of 2024, emphasizing Malaysia’s resilience and growing appeal as an attractive investment hub on the global stage.

Evolution in the sector is found across the entire value chain, from the latest packaging and testing to integrated circuit design and state-of-the-art manufacturing.

NXP Semiconductors, a global leader in intelligent systems, has been a key player in Malaysia's semiconductor landscape for more than 50 years. Ambitious to lead in assembly and packaging, NXP focuses on innovation, process improvements and workforce development, driving advanced packaging to the next level and leading the modernization of semiconductor assembly and test processes.

“Malaysia’s strong support for the semiconductor sector, coupled with favourable government policies, made it an ideal hub for NXP's Assembly and Test operations,” said Kurt Sievers, president and CEO of NXP Semiconductors. “This strategic decision allows us to leverage the country’s proximity to major Asian markets and access to a growing ecosystem of suppliers and partners.”

NXP’s has developed a center of innovation in Malaysia, focusing particularly on automotive electronics, secure payment systems and IoT solutions.

“The country’s vibrant ecosystem and talented workforce have been key to our success,” Sievers added. “At NXP, we bring together brilliant minds to create breakthrough technologies that make the connected world safer, smarter and more secure. We are excited to build innovative solutions that contribute to a sustainable future.”

The company’s futuristic facilities incorporate the most advanced technologies, including AI-driven manufacturing processes and advanced packaging techniques. In line with Malaysia’s National Semiconductor Strategy (NSS), NXP collaborates closely with local universities, such as Universiti Malaya and Universiti Putra Malaysia, providing students with hands-on experience and aligning with the nation’s efforts to foster talent and drive industry research.

Penang-based Infinecs leads Malaysia’s growing semiconductor design industry, specialising in next-generation applications like AI, 5G and advanced computing.

Malaysia’s dynamic environment allows engineers at Infinecs to work with cutting-edge technologies, including 3nm and 5nm process nodes.

“The region’s expertise and strong industry clusters create synergies that enhance innovation, enabling us to grow alongside global giants,” Kalai Selvan added.

Infinecs provides comprehensive services, including IC/SoC design and embedded system development, reflecting Malaysia’s expanding role in the global semiconductor value chain. The company’s ability to attract international clients also demonstrates the country’s capacity to support high-value design services.

Selvan also emphasized the critical role of talent and research, saying, “We continually invest in R&D to remain at the forefront of semiconductor technology.

“Through partnerships with local universities, we nurture a strong talent pipeline, driving innovation in IC design,” he said. “Our graduate trainee program ensures that new engineers are equipped to work on advanced projects from day one.”

The Malaysian government's foresight and strategic support have been instrumental in transforming the country's semiconductor industry.

Key initiatives such as the New Industrial Master Plan 2030 (NIMP 2030) and the NSS are focused on enhancing Malaysia's advantage in high-value activities, including IC design, wafer fabrication and advanced packaging.

“Our goal is to craft an environment where innovation and collaboration thrive,” said Datuk Sikh Shamsul Ibrahim, CEO of the Malaysian Investment Development Authority (MIDA).

“We are fostering a dual ecosystem of multinational corporations and home-grown champions, promoting technological transfer and innovation,” he said. “Through pro-industry policies, we’re fueling R&D, automation and Industry 4.0 adoption, while our vendor development programs help Malaysian companies integrate into the global value chain.

“This holistic approach ensures Malaysia remains forefront in the semiconductor industry."

One of the NSS’s primary objectives is to increase Malaysia’s share in high-tech manufacturing exports from 5% to 6% by 2030. The strategy places emphasis on advanced packaging, chip design and front-end manufacturing while also focusing on the development of a talent pipeline of 60,000 skilled semiconductor professionals by the end of the decade.

Malaysia’s rise as a semiconductor powerhouse is supported by robust infrastructure and a well-established digital ecosystem. With more than 500 industrial parks, specialized zones and an extensive logistics network of seaports, airports and highways, the country offers a strong advantage for companies expanding semiconductor operations in Southeast Asia.

As the world becomes increasingly reliant on semiconductor technology, Malaysia is positioning itself as a crucial partner in the global supply chain. The country's semiconductor exports, currently ranked sixth in the world, are set to climb higher as investments in advanced technologies bear fruit.

"Malaysia's semiconductor industry has shown remarkable resilience and adaptability," says Datuk Sikh Shamsul Ibrahim. "As we look ahead to our ASEAN chairmanship in 2025 under the theme ‘Inclusivity and Sustainability,’ Malaysia is ready to lead with unity, inclusivity and collaboration at the heart of our efforts.

“As a key player in the electrical and electronics manufacturing sector, we are committed to transitioning towards more sustainable technologies and practices, while advancing within the semiconductor value chain,” he added. “We recognize the critical role of regional supply chains and are striving to enhance ASEAN's competitiveness in the global semiconductor industry and its supply network.”

As the industry evolves, Malaysia is well-positioned to meet the challenges and seize the opportunities presented by this rapid technological advancement.