Malaysia eyes a bigger slice of the AI hardware supply chain

KUALA LUMPUR, Malaysia (MNTV) — Malaysia is looking beyond hosting data centers to capture more of the artificial-intelligence supply chain — the chips, power systems, sensors, and cooling equipment that AI infrastructure depends on — industry figures say, building on its established electronics base, The Business Times reported.

“The race for AI… is on, not so much [on] data centers, but on the hardware,” said Loo Lee Lian of InvestPenang. An early sign came in July, when the U.S. firm Vertiv, which makes power and cooling systems for data centers, set up manufacturing in Johor to meet rising regional demand; an executive said producing closer to customers cut lead times and drew on Johor’s established manufacturing ecosystem. 

Yong Kai Ping of the Malaysia Semiconductor IC Design Park said the country could capture far more value — ideally sourcing 30 percent of supporting equipment locally — noting, “We’re not talking about replacing Nvidia[‘s] graphics processing units… We are talking about everything around them.”

But hosting servers does not automatically pull local firms into their supply chains, cautioned Wong Siew Hai of the Malaysia Semiconductor Industry Association: without local procurement, the benefit is largely limited to land, construction, and utilities. 

Building the capability to design and qualify components globally will take time, he said. 

Some Malaysian startups are already moving up the stack — Kuala Lumpur’s nanoSkunkWorkX is developing a thin-film material to manage heat in AI chip packaging.