KUALA LUMPUR (March 14): In light of the ongoing trade war between the US and China, Malaysia has emerged as a surprising victor in the global semiconductor industry, the Financial Times (FT) and New York Times (NYT) reported.

 As rival manufacturers from the two global powerhouses face constraints, manufacturers in Malaysia are harnessing the chance to upscale their operations and extend their global market footprint.

According to FT, the Southeast Asian country is leveraging its history of working with multinationals and improving its commercial ecosystem to rise in the sector.

Escalating tensions between the US and China present multinational chipmakers with the challenge of supply chain diversification, and Malaysia is ready and able to meet this demand.

Home to operations from the likes of Intel and STMicroelectronics, Malaysia has strategically upgraded its semiconductor capabilities in recent years.

NYT highlighted Malaysia's fortuitous trade links, as well as its focus on talent development in areas such as artificial intelligence (AI) and machine learning (ML), as it positions itself to attract businesses looking for alternatives to China and the US.

Furthermore, the domestic investment agency Mida plans to offer additional incentives for companies investing in automation and AI. It recognises the importance of encouraging innovation to attract more global businesses.

Operational flexibility and practical risk management have also bolstered Malaysia's semiconductor industry.

A survey conducted by FT cited the country's manufacturing strength and logistic advantages as crucial factors helping these businesses thrive while reducing risk.

Volatile geopolitics has forced multinational companies to rethink their reliance on China for semiconductor production, and with the US placing restrictions on exports to China, businesses are looking for options.

According to NYT, it's not just about finding a cheaper manufacturing alternative; it's about finding a strategically suitable location lying outside the remit of geopolitical tensions.

While Washington and Beijing continue to battle, Malaysia is reprising its role as a global manufacturing hub and is set to take a lead role in the rapidly evolving semiconductor industry.

In addition, the country’s mature electronics ecosystem, combined with the Putrajaya’s forward-leaning approach to attract further investors, strengthens its position.

The US-China trade war has undoubtedly caused turbulence in the global markets, but it seems to have drawn a surprising victor to the forefront.

If its strategic initiatives and operational flexibility continue to attract multinational companies, Malaysia may very well secure a bright future in the global semiconductor industry, both FT and NYT concluded.

https://www.theedgemarkets.com/node/704531