Northern region should emerge as global E&E hub as semiconductor is the next oil

KULIM: The northern states should take advantage of the global relocation of supply chains to position the region as the hub of high-end international semiconductor supply chain that is to become the next oil in the upcoming years.

Deputy Investment, Trade and Industry Ministry Minister Liew Chin Tong said the northern region should capitalise on the 50 years of semiconductor and electrical and electronic (E&E) supply which had started in Penang.

"It is very crucial for us to move into advance manufacturing. The northern corridor should develop in tandem, take advantage of the 50 years of semiconductor or E&E supply chain, which had started in Penang and expanded to Kulim nearly 30 years ago.

"We are now in a very fortunate time because of global relocation of supply chain," Liew told reporters after the opening of AT&S Austria Technologie & Systemtechnik (Malaysia) Sdn Bhd campus in Kulim Hi-Tech Park (KHTP) here.

The opening of Phase 1 of the AT&S plant is part of a RM8.5 billion (about €1.7 billion) investment in KHTP and also its biggest investment ever outside Austria.

Kedah Industry and Investment Committee chairman Dr Haim Hilman Abdullah had attended the AT&S administrative building opening, representing Menteri Besar Datuk Seri Muhammad Sanusi Md Nor.

Present were AT&S chief executive officer Andreas Gerstenmayer, AT&S board member and executive vice president for business unit microelectronics, Ingolf Schroeder and Austrian ambassador to Malaysia and Brunei, Andreas Launer.

Liew said the federal government wished to see the northern region to emerge as the global cluster semiconductor hub, comprising of Penang, Kulim, and potentially Perlis and northern Perak as well.

"We hope that the northern region will grow not just in term of the number of companies but also higher-end and also at some time move towards a higher wage society," he said.

Liew also applauded AT&S's massive investment, describing it as an important move to add value to the supply chain and help to edge Malaysia position as a high-end manufacturing destination.

"The more companies come, the more companies compete for talents, it will push wages up, and by pushing wages up Malaysia will achieve a middle-class society through more investments coming for the region.

"For Malaysia to be a genuine middle-class society, Malaysians working in industry, in manufacturing earning a decent wage, it will help the region and the country as well," he said.

Earlier in his speech, Liew said the semiconductors sector was set to be become the next important contributor to Malaysian economic growth after fossil fuel.

He said it was set to become the "new oil" and grow further for three reasons, namely the growing demand from the automotive sector, the advancement of the AI (Artificial Intelligence) and the increasing demand for semiconductor and chips in healthcare and consumer technology.

"Cars today are using a lot more chips compared to 10 years ago, not to mention the revolution in electric vehicles (EV) and we are seeing it is coming in a big wave.

"The International Energy Agency says that last year 18 per cent of world vehicles were EV, the year before 14 per cent, the year before nine per cent, the year before five per cent," he said.

He added that Malaysia contributes about seven per cent of global semiconductor trade and is the sixth largest export country for semiconductor.

"I would like to see a lot more collaboration among the states and federal government. We should grow this cluster in Kedah, Penang, potentially Perlis and northern Perak into one global semiconductor hub — it is already there but it should grow even further.

"With the presence of AT&S with their RM8.6 billion investment into Kulim I believe that this will bring us closer into making northern region as the global semiconductor hub," he said.

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