Malaysia's Silicon Valley ambitions face tough challenges

Malaysia's signing of a large woody with British spot elephantine Arm this period was the latest measurement towards achieving the country's extremity of producing its ain top-end chips. Photo: Mohd RASFAN / AFP/File
Source: AFP

Malaysia is making large strides successful its effort to go a large subordinate successful the planetary semiconductor industry arsenic it looks to capitalise connected a surge successful request driven by the AI detonation but analysts pass it faces headwinds.

Malaysia's signing of a large woody with British spot elephantine Arm this period was the latest measurement towards achieving the country's extremity of producing its ain top-end chips successful the adjacent 5 to 7 years.

But experts accidental interior constraints specified arsenic a endowment crunch, backing problems and different proviso concatenation gaps are cardinal hurdles the state indispensable flooded if it is to vie with apical determination manufacture giants specified arsenic Taiwan, South Korea and Japan.

Shafiq Kadir, an equity expert astatine CGS International, said section integrated circuit (IC) plan houses had constrictive entree to ample capital, and lacked a beardown way grounds and an established excavation of experienced engineers.

"We inactive deficiency capable talent, arsenic our tertiary education is little prepared successful producing graduates with the close accomplishment set," Shafiq told AFP.

Malaysia Semiconductor Industry Association president Wong Siew Hai besides said determination was a "shortage of those suitable for the circumstantial acquisition and accomplishment sets that we are looking for".

Although determination are experienced Malaysians who person worked with multinational firms, galore of them chose to enactment overseas for amended wage and opportunities, among different factors, Wong said.

"We suffer an mean 15 percent of our endowment successful the semiconductor manufacture each twelvemonth to encephalon drain," helium told AFP.

In the woody signed connected March 5, Malaysia volition wage Softbank-owned Arm $250 cardinal implicit a decennary to entree its intelligence property, including 7 high-end spot plan blueprints and different technology.

The purpose is to assistance Malaysia determination into much value-added accumulation specified arsenic wafer fabrication and IC design.

The woody besides includes the grooming of 10,000 section semiconductor engineers, portion Arm volition found its archetypal bureau successful Southeast Asia successful Kuala Lumpur.

'White elephants'

Farlina Said, a cyber and exertion argumentation chap astatine the Institute of Strategic and International Studies Malaysia, said gathering semiconductor ecosystems would necessitate clip and cautious planning.

"These would person to beryllium mapped against assets availability and marketplace conditions. Building the infrastructure without capable players can make achromatic elephants for the industry," she told AFP.

"Moving up the worth concatenation means first, Malaysia has to find means of transferring cognition to make section capacities.

"Second, funds are needed to make the ecosystem surrounding the cognition transfer. This includes exertion transfers, endowment pipelines and R&D sustainability," she added.

Wong, the manufacture radical chief, said the government's $5.3-billion allocation implicit the adjacent decennary to upscale Malaysia's semiconductor assemblage is tiny compared with authorities investments by China and the United States.

Shafiq, the analyst, said the tools and instrumentality required for spot accumulation could tally into the billions of dollars -- isolated from the request for highly skilled engineers and operators.

"Achieving a definite level of accumulation output connected those high-end chips... has proven to beryllium precise challenging adjacent for established fabs similar Samsung and Intel," helium said.

2030 income people

Expert Farlina said competing with semiconductor powerhouses successful the portion volition not beryllium a locomotion successful the parkland arsenic they person "developed the ecosystems to enactment technological enactment successful the past fewer decades".

Malaysia, however, is not starting from scratch, the analysts said.

The state has agelong been a cardinal subordinate successful the chips sector, with its bluish authorities of Penang -- often called the nation's Silicon Valley -- astatine the bosom of its success, though focused connected the backmost extremity of the manufacture specified arsenic assembly and testing.

"Key (multinational corporations) specified arsenic Intel and AMD some person integrated circuit plan operations successful Penang... and this has somewhat generated the improvement of IC plan among section engineers for decades," Shafiq said.

"We basal to payment from this arsenic much superior and absorption are being enactment into the IC plan area."

Malaysia accounts for an estimated 13 percent of planetary back-end manufacturing, according to German tech steadfast Bosch.

And Malaysia's semiconductor exports were valued astatine 387.98 cardinal ringgit ($87.48 billion) successful 2024, the Malaysia External Trade Development Corporation said, making the state 1 of the world's apical 10 spot exporters.

The manufacture relation is aiming for the country's spot exports to scope $270 cardinal by 2030, which Wong said would let the state to "maintain its comparative presumption successful the world" arsenic a apical semiconductor exporter.

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Source: AFP