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Global semiconductor investments offer opportunities to local players

Global semiconductor investments offer opportunities to local players

08 Mar 2022

Malaysia’s local tech companies could stand to benefit from the massive technology investment planned by manufacturers in the European Union (EU), America and South Korea to scale up and secure their semiconductor supplies in the digital age. 

Malaysia Semiconductor Industry Association president Datuk Seri Wong Siew Hai said the investments, such as the EU’s €43 billion (RM197.8 billion) investment plan under its Chip Act, will likely focus on the front-end processes and build on the region’s strength in leading research and technology organisation.

Such large-scale investment is also expected to pioneer equipment manufacturers which could benefit Malaysian players that have a foothold in the global tech supply chains. 

“Every major country now has a ‘thing’ for their semiconductor industry. The US announced its chip act while Korea is investing more in its semiconductor sector much like the EU to ensure the semiconductor supply to the countries is not affected,” Wong told The Malaysian Reserve

South Korea recently announced an investment of 56.7 trillion won (RM226.8 billion) to create jobs and strengthen the supply chain of its semiconductor industry. 

The US has authorised a US$52 billion (RM217.36 billion) plan to support the expansion of the semiconductor sector in the country.

Malaysia is mainly focused on the back-end of the semiconductor process and he does not foresee manufacturers in the EU and the US investing in the back-end semiconductor assembly test.

“Although their plans did not say whether they will invest in the back-end, I doubt it because it is difficult to compete with Asian’s back-end markets like Malaysia, Taiwan, South Korea, China, the Philippines and Vietnam,” he continued. 

Nevertheless, Wong said the local industry here needs to try to go up in the value chain into innovation, design development and so on with assistance from the government as the electrical and electronics sector falls under the high-impact industries in the 12th Malaysia Plan. 

“We have to strengthen our supply chain and our back-end capability. This will give us the opportunity to collaborate with other countries that need front-end support. 

“If we can have the talent and capability, there are always chances for collaboration,” he said. 

Wong, meanwhile, projects Malaysia’s semiconductor exports will continue to grow at high single-digit or closer to the 10% level in 2022, despite the supply chain facing disruptions. 

“Orders are still there. Companies that increased capacity either for productivity or expansion to meet the demand will come online in two years. 

“So, for now, we still have some lead time and backlogs until the new capacity comes online,” he said. 

Source: The Malaysian Reserve

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