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As Malaysia stakes claim in semiconductor industry, Putrajaya says not worried over competition with US, China

Publish date: Fri, 19 Apr 2024, 10:55 AM

KUALA LUMPUR, April 19 — As Malaysia attempts to move away from the back end of the semiconductor supply chain production and towards the higher end of the spectrum, Second Finance Minister Amir Hamzah Azizan reportedly said that Malaysia is not worried about the competition from the United States and China.

He was quoted by the American network CNBC saying Malaysia does not foresee a rivalry forming with the duo since it would be offering a different value proposition by not going for the topmost end of semiconductor chips.

“The semiconductor space is now in the upcycle — and Malaysia will be a beneficiary of that. I think the reality of it all is, there is enough growth that will go around. So, everybody will get some pickups on that one.

“I think where Malaysia competes in, we’re not going to go head-on to the tail end of the high-end competition, where maybe the US is bringing all the parts. Therefore, I don’t think it’s a big challenge for us,” he told a CNBC reporter at the International Monetary Fund spring meetings in Washington.

As geopolitical tensions arise, he said Malaysia must make the most of the global need to have robust supply chain connectivity.

“We’re seeing a lot of end users now diversifying their supply chain.

“Our focus is to provide a very vibrant, strong supply chain connectivity, and make sure that we ride on that,” he said.

According to the Malaysian Investment Development Authority’s report on February 18, Malaysia holds 13 per cent of the global market for chip packaging, assembly and testing services.

Malaysia is also increasing its efforts to attract new businesses and to make itself a strong player in the field.

“At the end of the day,” the minister added, it's “about economies of scale.”

News agency Bernama reported last week that Malaysia’s vibrant semiconductor industry has been the talk of the town of late as the country emerges as a new semiconductor powerhouse with the global spotlight on Penang.

The World Economic Forum stated on its LinkedIn page that Penang has major industry players from Europe and the United States setting up units or expanding existing operations as they seek to build new global supply chains for these vital components.

Besides the WEF, major media also reported that Penang has in recent years won new chip sector investments from multinationals, including Lam Research, Infineon Technologies, Texas Instruments, Micron Technology, Bosch, Advanced Semiconductor Engineering and Intel.

According to the international media, the investments have reinforced Malaysia’s entrenched position in the late stages of the semiconductor supply chain, particularly chip assembly, testing and packaging, areas in which it holds a 13 per cent share of the global market.

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