China’s Reopening Will Benefit Malaysia’s Semiconductor Industry Among Others, Say Experts

The semiconductor industry is expected to grow in the long term, driven by the demands arising from emerging technologies and the global digital transformation, as well as the reopening of major economies such as China.

Early this month, Malaysia secured a record RM170 billion worth of investment commitments from China from 19 memoranda of understanding (MoU) sealed between businesses in the two countries.

Malaysia Semiconductor Industry Association (MSIA) president Datuk Seri Wong Siew Hai said Malaysia needs to continue to enhance its electrical and electronics (E&E) ecosystem and seize the opportunities arising from the United States (US)-China geopolitical conflict.

In particular, the country needs to attract foreign direct investment in wafer fabrication facilities and leading-edge technologies, he told Bernama.

Meanwhile, Goon Koon Yin, chief executive officer of TT Vision Holdings Bhd (an inspection equipment provider in the semiconductor industry), forecast an investment upcycle among domestic manufacturers in China following the reopening of their country’s borders that helped boost business confidence.

“More business travels mean more interaction with customers. Thus there will be more business and project delivery will be expedited,” he said.

MIDF Research, in its report on the second quarter 2023 outlook, said the recovery in China’s manufacturing activities and an increase in the March purchasing managers’ index signal the country’s economic strength.

“China is a major consumer of semiconductors, and the resumption of economic activity in the country is expected to increase demand for electronic devices and components,” it said.

Meanwhile, MSIA’s Wong said that Malaysia should leverage the expertise of foreign talents to support the growth of the E&E industry in the country.

He said the strategy has been used by many other countries, including the US, Singapore, England and Australia.

“The semiconductor industry in Malaysia will need lots of talent while semiconductor companies are re-organising and right-sizing their companies from a headcount perspective.

“Tech talents are not only engineers and technicians. Strategy and support talents like accountants and supply-chain specialists are also needed by the industry,” he said.

According to the MIDF Research report, tech talent is still in high demand despite the recent massive tech layoffs that have spooked workers and investors.

It noted that the monthly layoff rate in tech companies through 2022 was hovering around one per cent of the workforce or around 1.4 million people, which is even lower than the pre-pandemic numbers.

“Although we might not see an uptick in overall hiring, employment figures could continue to increase, and certain industries will show outsized growth on the back of digitalisation that will continue to penetrate industrial sectors beyond tech and consumer goods.

“Thereby, we opine that the layoffs in tech should just be viewed as a small adjustment in the sector,” the research house added.

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