The modern economy runs on semiconductors. From the smartphones in our pockets to powering supercomputers, it’s clear that the demand for semiconductors is set to grow significantly due to technological advancements. The industry’s rapid growth, fuelled by these advancements and increasing global demand, has made it a focal point for businesses and investors alike. Malaysia’s semiconductor industry, established in 1972, has been a source of national pride ever since. Today, Malaysia holds a significant position in the global semiconductor industry, characterised by its robust manufacturing capabilities and strategic initiatives aimed at enhancing its role in the sector. Here are some key insights into Malaysia’s standing in the semiconductor industry:
1. Global Position and Market Share
Malaysia is recognised as the sixth-largest exporter of semiconductors globally, with a notable 13% share in the worldwide market for assembly, packaging, and testing (APT) services. This underscores its importance in the global semiconductor supply chain, contributing approximately 25% to the country's GDP. According to statista.com, approximately 35.23 billion semiconductors were produced in Malaysia in 2023. The market is projected to grow to a market volume of US$27.48bn by 2029.
2. Government Support and Initiatives
Prime Minister Anwar Ibrahim said that Malaysia is targeting at least 500 billion ringgit ($107 billion) in investment for its semiconductor industry. The Malaysian government has implemented various incentives to bolster the semiconductor industry, including the New Industrial Master Plan (NIMP) 2030, which aims to enhance capabilities in front-end activities like wafer fabrication and integrated circuit design. This plan is expected to double the median wage in the semiconductor sector by 2030 in hopes of addressing the talent shortage and retention challenges.
3. Future Prospects
The growth of sectors in AI, IOTs, and electric vehicles is expected to drive further demand for semiconductors. Malaysia aims to enhance its innovation potential through increased investments in research and development, particularly in these emerging technologies. The ongoing US-China trade tensions present an opportunity for Malaysia to position itself as a neutral ground for semiconductor manufacturing, attracting companies looking to diversify their supply chains.
Challenges Faced by Malaysia in the Semiconductor Industry
1. Talent Shortage
Despite its strengths, Malaysia faces a significant shortage of skilled professionals in the semiconductor sector. The country requires around 50,000 electrical and electronics engineers annually but struggles with high turnover rates and competition from neighbouring countries like Singapore, which offers higher salaries.
2. Reliance on Foreign Companies
The Malaysian semiconductor industry heavily relies on foreign firms such as Intel and Texas Instruments, with local companies having a smaller global market presence. This dependency highlights the need for Malaysia to develop its own semiconductor manufacturing capabilities further.
3. Regional Competition
Malaysia is competing with other ASEAN countries, including Thailand, Indonesia, and Vietnam, which are enhancing their semiconductor manufacturing capabilities. However, Malaysia's established infrastructure and experience in the sector position it favourably to capitalise on the reshoring of manufacturing from China.
QES’s New Plant in the Semiconductor Industry
The global semiconductor industry is complex and ever-changing. To thrive, companies must navigate cycles, innovate continuously, and invest in growth. QES Group Berhad is a technology company based in Malaysia, specialising in the manufacturing and distribution of semiconductor inspection equipment and other high-tech products. The company’s is geared to expand its manufacturing capacity with a new facility in Batu Kawan, Penang, to double production capabilities. This expansion includes a joint venture with Applied Engineering Technology Malaysia, enhancing QES’s presence in sectors such as aerospace and medical technology. The company’s strategic investments and partnerships aim to position it for growth in the evolving global semiconductor market, driven by increasing demand from sectors like IoT and AI.
QES Group is committed to innovation and maintaining competitiveness in the global market and is focused on automation and high-precision equipment. Despite challenges like long lead times for components and the cyclical nature of the semiconductor industry, QES is poised for growth with a solid foundation in both its distribution and manufacturing operations.
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