The semiconductor sector received a MAINTAIN OVERWEIGHT call from RHB Investment Bank Bhd (RHB Research). The research house cited strong potential for growth in advanced packaging and manufacturing as geopolitical shifts reshape global supply chains.
Following its sectoral series event attended by industry experts, analysts, fund managers, and government officials, RHB Research noted that Malaysia is well-positioned to capture a greater share of the semiconductor market. With companies such as DNeX (SilTerra) and X-FAB already established, the country has the infrastructure and skilled workforce to expand its role in the global semiconductor race. However, the research house highlighted that investments in these technologies require patience, often taking five to ten years to yield meaningful returns.
The report pointed to the dominance of Taiwan and South Korea in global wafer fabrication, with both nations accounting for 70% of foundry revenue. Taiwan remains the leader in advanced chip production, while South Korea excels in both logic and memory chips, benefiting from robust supply chains, engineering expertise, and stable political landscapes. Singapore, meanwhile, has positioned itself as a hub for semiconductor processing equipment and advanced fabrication plants such as those owned by GlobalFoundries and Micron.
Elsewhere, the US, Japan, and Europe are aggressively working to attract semiconductor firms. The US has introduced the CHIPS and Science Act to boost domestic semiconductor manufacturing, while Japan is leveraging government incentives and partnerships with companies like TSMC to revitalise its semiconductor industry. China, too, is making significant strides in building its own supply chain through government subsidies, although RHB Research noted that the country remains several years to a decade away from full technological self-sufficiency.
For Malaysia to successfully grow its semiconductor sector, RHB Research highlighted several key factors. A strong base of engineering talent is critical to sustaining advanced manufacturing and R&D efforts. Government policies such as subsidies and tax incentives further enhance investment appeal by lowering operational costs, while reliable and competitively priced utilities like electricity and water are necessary to support energy-intensive fabrication processes.
The ongoing US-China trade war has further accelerated the diversification of semiconductor supply chains, with companies looking to South-East Asia for alternative manufacturing bases. RHB Research said that Malaysia could benefit from this trend, provided it navigates the conflict carefully to maintain strategic trade relationships. However, the research house cautioned that challenges remain, including supply chain resilience, cost competitiveness, and the ongoing struggle to secure high-skilled talent.
