Malaysia eyes bigger slice of semiconductor value chain
Malaysia’s semiconductor industry has long punched above its weight in manufacturing, handling estimated 13% of global semiconductor assembly
KUALA LUMPUR, Malaysia (MNTV) — Malaysia’s semiconductor industry has long punched above its weight in manufacturing, handling an estimated 13% of global semiconductor assembly, testing and packaging outside China and Taiwan.
Yet despite the country’s prominent role in the global supply chain, it captures only about 6% of the industry’s value added, highlighting the challenge policymakers are now trying to address, reports The Malaysian Reserve.
Government policy is now explicitly targeting a move up the value chain, with Deputy Finance Minister Liew Chin Tong framing the state’s ambition as a push to shift Malaysia beyond its traditional outsourced semiconductor assembly and test (OSAT) role into higher-value activities such as integrated circuit (IC) design and advanced packaging.
In a sector update, Apex Securities Bhd said the transition reinforces its positive long-term outlook on Malaysia’s technology sector, maintaining an ‘Overweight’ recommendation as structural demand from artificial intelligence (AI) and advanced computing continues to reshape the global semiconductor industry.
The research house noted that Malaysia’s predicament can be explained by the semiconductor industry’s so-called ‘Smiley Curve’.
While IC design and intellectual property ownership account for roughly half of total industry value and wafer fabrication contributes another quarter, assembly, testing and packaging, Malaysia’s traditional area of strength, generate only about 6% of overall value.
This imbalance is reflected in the domestic economy.
Although electrical and electronics products account for around 40% of Malaysia’s exports, the sector contributes only about 6% to 7% of GDP because much of the activity remains concentrated in lower-value manufacturing carried out by multinational companies.
Bursa Malaysia’s listed semiconductor companies also account for only about 1.7% of the local stock market’s total capitalisation.
Rather than abandoning its established manufacturing base, the government’s strategy is to increase the value generated within the existing ecosystem.
Apex Securities said policymakers are pursuing two parallel approaches, expanding Malaysia’s presence in IC design and intellectual property ownership while simultaneously upgrading the assembly and packaging segment through advanced packaging technologies.
The latter was pursued through the Malaysia Advanced Packaging Consortium (MAPC), launched in May.
The consortium aims to develop a pilot high-bandwidth memory (HBM4) advanced packaging line over the next two years, bringing together companies across different parts of the semiconductor value chain.
SkyeChip Bhd will contribute IC design expertise, Fusion Advanced Packaging Sdn Bhd (FusionAP) will lead packaging research and development, Inari Amertron Bhd will provide OSAT manufacturing capabilities, while Pentamaster Corp Bhd and NSW Automation Sdn Bhd will focus on testing and automation.
The research house said the initiative is well timed, as advanced packaging has emerged as one of the semiconductor industry’s biggest bottlenecks amid surging demand for AI chips.
The government’s National Semiconductor Strategy (NSS) also seeks to cultivate more homegrown semiconductor companies capable of moving into higher-value segments of the industry.
Under the strategy, Malaysia aims to develop 10 listed IC design and advanced packaging companies.
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