Tap malaysia's potential to boost chip production

LETTERS: Malaysia stands to gain from the scramble for semiconductor supremacy, especially when we are the sixth-largest exporter of such products.

In Southeast Asia, semiconductor exports reached a total of US$165 billion in 2022, a vast increase compared with US$52 billion in 2017.

Once seen as the Silicon Valley of the East, Malaysia used to be a leader in chip-making in the 1970s, but lost ground to South Korea and Taiwan in the 1990s with the rise of Samsung and Taiwan Semiconductor Manufacturing Co (TSMC) Limited.

However, Malaysia still has all the potential and support it needs to capitalise on a new drive by the West to diversify its investments in this sector, besides serving as a crucial link in the supply chain.

We are reaping dividends of past and current well-established infrastructure, with around five decades of experience in the "back-end" of semiconductor manufacturing.

This creates a supportive pathway for the next stage of advancement in the chip industry.

Some factors also portray the increasing long-term appeal of the country's critical sectors in the field.

They include the strategic position and location of ports that provide critical connecting points between the East and West, creating a secure and sustainable supply chain.

Other factors include a well-developed education system and human capital, as well as adequate labour.

In addition, new efforts to make Malaysia the hub for digital technology and electric vehicle (EV) investments could be an added appeal for chip firms to bolster their presence here.

Enhancing Malaysia's potential for semiconductor innovation will create a ripple impact on investments in research and development, especially in artificial intelligence (AI).

Microsoft has recently pledged a US$2.2 billion investment in artificial intelligence and cloud computing in Malaysia to help develop the country's AI infrastructure.

The ripple effect will lead to improvements in critical areas, including the education sector and training of more top talent in high-impact science fields.

By having more scientists and engineers, this will support the country's new drive towards scientific transformation.

However, this would require an increased focus on the importance of science, technology, engineering and mathematics (STEM) education.

The focus should also be on the "front-end" of the chip manufacturing process.

This requires a new strategic approach in getting mutual partnerships with key established firms, including those from Taiwan and the United States.

We need to move beyond assembly and testing, and into the value-added line of production, such as wafer fabrication and integrated-circuit design.

Although the journey is long and the process is still at an early stage, bold new moves in taking this approach must begin.

The setting up of the Semiconductor Strategic Task Force reflects the ambition to maximise the return of the chip industry to the country, while realising that the country has advantages compared with regional competitors.

Malaysia's New Industrial Master Plan (NIMP) 2030 also offers complementing support to the Strategic Task Force. Thus, let's strengthen our semiconductor sector.


Foreign affairs, strategy and

security analyst,

Universiti Malaya

The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times

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