KUALA LUMPUR: The National Semiconductor Strategy (NSS) provides a more balanced approach that focuses on developing local champions to compete globally unlike earlier strategies that prioritised foreign direct investments (FDIs), according to RHB Research.
The firm said Malaysia is now the sixth largest semiconductor exporter globally and the Investment, Trade and Industry Ministry aims to rise to the third or fourth.
The NSS is designed to help achieve this through a three-phase approach such as building on the nation's existing strong foundation, moving to the frontier and innovating at the frontier to ensure sustained growth.
"Supporting these ambitions are the various incentives introduced, including pioneer status, investment tax allowances, import duty exemptions, and reinvestment allowances," RHB Research said in a report after hosting an event recently featuring representatives from the ministry, Dagang NeXchange Bhd (DNeX) and Institute of Strategic and International Studies (ISIS).
RHB Research said the ministry has an ambitious RM500 billion investment target with a moving target of five to 10 years.
The focus is not limited to integrated circuit (IC) design but also includes semiconductor manufacturing equipment, advanced packaging, and front-end semiconductor processes.
Investments could also extend to specialty chemicals, equipment and material.
"In terms of fiscal support, RM25 bilion has been allocated for fiscal incentives and development expenditure to support advance packaging centres or facilities," it added.
RHB Research said ISIS had emphasised the need to reshape the semiconductor value chain amid global tech rivalries and export controls.
To enable Malaysia to move up the value chain, the institute underscores the importance of bridging research and development (R&D) gaps, pooling resources from research institutes, and focusing on talent development.
RHB Research identified three key NSS issues which are supply chain resilience, ensuring cost competitiveness, and sourcing talent.
"To address talent gaps, initiatives such as Collaborative Research in Engineering, Science, and Technology (CREST) were introduced, collaborating with tertiary education institutions to channel resources more effectively.
"There is also a need to create attractive packages to draw talent into the sector, ensuring the industry has the necessary workforce to grow," it said.
Meanwhile, environmental, social and governance considerations are being addressed through the development of a green framework, with the Kerian Industrial Park serving as a reference.