At recently hosted webinar on E&E investment in Malaysia organised by Malaysian Investment Development Authority (MIDA) and the Malaysia Semiconductor Industry Association, the agenda of the day was to tell the attendees that Malaysia is open-for-business and efforts are being made to improve the ease of doing business in the country.
The semiconductor industry is all the rave at the moment and possibly for the next decade or so, with digital transformation the theme being globally, the demand for electrical components currently outstrips supply to the extent car makers have stalled production.
Malaysia is a key player in the market, we presently stand as a crucial global hub in the semiconductor global supply chain, with approximately 7 per cent of the total global semiconductor trade flowing through the nation. In 2020, the E&E exports recorded RM386 billion, accounting for 39.4 per cent of Malaysia’s total exports. For context, the global E&E size is estimated to be USD5.28 trillion.
According to Statista, the global market size for semiconductor can reach USD527 billion by end 2021 and could possibly reach USD600 billion in 2022. The growth is attributed to everything-digital phenomena, the pandemic 5G and the rush by nations for digital transformation.
Evidently, the market is big and Malaysia needs to act fast to capitalise on this growth, Arham Abdul Rahman, CEO of MIDA, highlighted the need for Malaysia to be in the forefront in seizing opportunities in the E&E, particularly the semiconductor segment. This is in particular as more global companies are seeking to capitalise on Malaysia to develop new technologies, venture into additional products and ramp up production capacities to meet the growing needs and demands of the industry.
Malaysia is already a seasoned player in the industry with established manufacturers, its time these companies broaden their eco system and work up the value chain. These companies should participate in the greater E&E value chain, especially in closing the ecosystem gaps, such as in IC design, advanced IC packaging, engineering and testing services, as well as Electronic Manufacturing Services (EMS). This in turn will attract larger investment and orders from global giants.
To support the industry, there are various initiatives provided by the government that the manufacturers can take advantage of, for instance the massive allocation under PENJANA can support new and existing industry players and promote the development of the industries. They have to take full advantage of all the packages available, particularly those offered through MIDA to facilitate investments and businesses added Arham.
Texas Instrument which opened its factory in Malaysia 50 years ago, believes that since manufacturing is the main engine of Malaysia’s economic growth, the Government and industry players must seize this opportunity by improving Malaysia’s attractiveness as a global E&E investment destination.
Adding to that statement, another global semiconductor player Infineon is also confident in Malaysia as it has cost advantages and supportive economic environment, which continue to be very attractive for Infineon to expand its existing operations and R&D capabilities in new technologies.
These are clear indication on Malaysia playing a key role in the supply chain for the industry, the window is perfect for the country to bet big in this sector and pump as many resources to attract larger companies and the same time grow local players.
The next growth engine for Malaysian economy could very likely come from this sector!