KUALA LUMPUR: While planning and preparing to localise the semiconductor industry, Malaysia needs to ensure the country has an adequate number of advanced engineering talent, said Arthur D. Little (ADL) Southeast Asia principal Daniel Chow.
He said engineering talent is required not only in research and development but also in advanced manufacturing, which will directly attract investments from major companies such as Intel, Infineon and Nexperia to set up their factories in the country.
“Educational programmes should be in place from university level through to PhD, to attract individuals to develop capabilities in specialised electronics, as attracting overseas talent appears to be difficult in the nation’s workforce industry,” Chow said in an exclusive interview with SunBiz.
He noted that Intel’s efforts to create its first advanced 3D chip packaging factory, along with Infineon’s commitment of €5 billion (RM23.4 billion) over five years to develop the world’s largest 200mm silicon carbide chip plant in Malaysia, have highlighted the nation’s potential to upscale talent building.
“ADL believes that the government needs to offer a range of incentives, including subsidies, tax exemptions, visa waivers and other benefits. This will enable Malaysia to compete on an equal footing with other countries that are also implementing similar measures to localise the supply chain,” Chow said.
Based on ADL’s research, he said, Malaysia holds a 13% share of the worldwide market in chip packaging, assembly, and testing and ranks as the sixth largest semiconductor exporter globally. “This shows that the chip industry is a significant economic pillar and ADL estimates that it accounts for about 25% of Malaysia’s gross domestic product. ADL believes the nation is keen on evolving its chip industry from its current focus on assembly and testing to encompass higher value processes.”
Chow praised the government’s National Semiconductor Strategy (NSS), which outlines a three-phase plan to modernise existing capabilities, advance towards cutting-edge logic and memory chip design and fabrication, and ultimately attract buyers of advanced chips to source their manufacturing in Malaysia.
“Malaysia is demonstrating its dedication to realising its chip ambitions, with significant efforts from the NSS, committing RM25 billion to advance aspects of the three-phase plan,” he added.
Addressing the collaboration between the government and industry stakeholders, Chow said that having the right infrastructure capabilities and foundational knowledge is critical, as building a solid foundation creates a conducive environment.
“Both sides can take additional measures in a phased approach to gradually build up more advanced capabilities and enabling infrastructure. This will allow them to scale up sustainably, into higher-value emerging frontier technologies over time. ADL believes this is the power of the government and industry stakeholders, when working together,” he said.
Chow suggested that the government examine the benefits of fiscal measures in areas such as job creation and developing end-user application industries, while navigating geopolitical complexities as alliances shift constantly.
“ADL also suggests that governments around the world continue to support and promote low-tariff or non-tariff trade, provide tax breaks, and implement export-oriented and domestic-consumption-related measures for relevant end-user application industries,” he said.
