Kuala Lumpur, Malaysia – 2018/01/24: A foreigner poses with the Malaysian flag in the background. Kuala Lumpur or commonly known as KL is the national capital of Malaysia and the fastest growing metropolitan area in Southeast Asia. The city is also world-famous for tourism and shopping. Kuala Lumpur has excellent public transportation, making it easy for people to get around the city. (Photo by Faris Hadziq/SOPA Images/LightRocket via Getty Images)
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Malaysia is becoming a hotspot for semiconductor factories as U.S.-China tensions prompt companies to diversify their operations.
“Malaysia has a well-established infrastructure and approximately 50 years of experience in the ‘back-end’ of the semiconductor manufacturing process, particularly in assembly, test and packaging,” said Kenddrick Chan, head of digital international relations at LSE IDEAS. London Government Seminary Foreign Policy Think Tank.
Semiconductors – key components in everything from smartphones to cars – have been at the center of the technology war between China and the United States.
American chip manufacturer Intel In December 2021, it stated that it would invest more than US$7 billion to build a chip packaging and testing factory in Malaysia, with production expected to begin in 2024.
“Our decision to invest in Malaysia is rooted in its diverse talent pool, well-established infrastructure and strong supply chain,” Intel Malaysia managing director Aik Kean Chong told CNBC.
Intel’s first overseas production factory It is an assembly plant built in Penang in 1972 with an investment of US$1.6 million. The company subsequently added a full testing facility and a development and design center in Malaysia.
Another American chip giant, GlobalFoundriesin September Open hub in Penang “Supporting global manufacturing operations” with factories in Singapore, the United States and Europe.
Tan Yew Kong, Senior Vice President and General Manager of GlobalFoundries Singapore, said: “Forward-looking policies and strong support from local governments and partners such as InvestPenang have created a strong ecosystem for the industry to thrive.”
Germany’s top chip maker Infineon said in July 2022 that it would build a third wafer manufacturing module in Kulim, while Neways, a major supplier to Dutch chip equipment manufacturers ASMLsaid last month New production facility to be built in Klang.
Yinglan Tan, founding managing partner of Insignia Ventures Partners, said: “Malaysia’s strength has always been its skilled workforce in packaging, assembly and testing, as well as its low relative operating costs, making exports more competitive globally,” he added Ringgit The current status makes the country “an attractive place for foreign players”.
The Malaysian Investment Development Authority stated in the report that Malaysia accounts for 13% of the global chip packaging, assembly and testing services market. Report on February 18. Due to weak global chip demand, exports of semiconductor components and integrated circuits increased by 0.03% in 2023, reaching 387.45 billion Malaysian ringgit (US$81.4 billion).
Datuk Seri Huang Xiuhai, chairman of the Malaysian Semiconductor Industry Association, said that many Chinese companies have transferred part of their production to Malaysia, calling the country China’s “plus one”.
Malaysian Investment, Trade and Industry Minister Zafrul Aziz told CNBC in January that Malaysia aimed to focus on the “front-end” of the wafer manufacturing process, not just the “back-end.” The front-end process involves wafer fabrication and photolithography, while the back-end process focuses on packaging and assembly.
To develop the country’s semiconductor ecosystem and attract investment, Malaysia established the National Semiconductor Strategy Task Force in January, Local media reports.
Tensions between China and the United States
India approves construction in February three semiconductor factories The investment amount exceeds US$15 billion.India approves U.S. memory chip giant in June Micron’s Plans to establish semiconductor division.
In the same month, TSMC, the world’s largest contract chip maker, opened its first factory in Japan as it diversifies away from Taiwan amid tensions between China and the United States.
Amid concerns that China may use advanced chip technology for military purposes, Washington introduced sweeping rules in October 2022 aimed at restricting China’s access to advanced chip technology. Last year, the United States announced new regulations banning U.S. chip designer Nvidia from selling advanced artificial intelligence chips to China.
“Malaysia and Asia as a whole are poised to benefit from the China-US tech war, where access to advanced semiconductor chips is being weaponized as a tool to establish global technological hegemony,” said public policy consultancy Access Partnership.
talent loss
While Malaysia stands to benefit from the U.S.-China chip war, its brain drain poses challenges as workers leave the country in search of better job prospects and higher wages.
“This is likely to be the case if companies invest in upskilling the Malaysian workforce but lose them to other competitors in the region once they acquire the skills,” Lim said.
An official study conducted in 2022 showed Three-quarters of Malaysian workers are in Singapore are skilled or semi-skilled, highlighting the country’s brain drain problem.
“Whether the demand arising from supply chain diversification can be met by an adequate supply of skilled talent in the country remains an ongoing operational challenge,” said Insignia Ventures Partners’ Tan.
Malaysian Prime Minister Anwar Ibrahim in September It said the government is seeking to attract skilled Malaysians to return and contribute to the country.
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