Why Malaysia – once Silicon Valley of the East – is set to strike back

This is the value Malaysia’s new semiconductor task force wants to capture. The good news is that Malaysia already has a mature chip cluster. Major chip makers including NXP, Infineon and Texas Instruments have been operating in the country since the 1970s.

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There’s a global semiconductor shortage and this is why it matters

Two months later, Micron unveiled its cutting-edge assembly factory in the country and will invest an additional US$1 billion in the next few years. This inflow of chip investment is so strong that DHL Express is building new logistics centres around Penang.

For chip makers, investing in Malaysia can enable them to profit from this growing pool of revenue. In fact, investments in chip production and EV manufacturing are mutually reinforcing. Malaysia’s semiconductor task force can use this virtuous cycle to propel the country’s climb up the value chain.

The average salary for engineers and technicians in Malaysian manufacturing was 2,200 ringgit (US$460) in 2021 compared to S$2,000 (US$1,500) in Singapore. That disparity has caused a sustained outflow of Malaysian talent.

Several countermeasures have been put in place. At the domestic level, the Malaysian government has funded the Penang GBS Industry Academy to reinforce collaboration between universities and the industry in expanding the country’s technical talent reservoir. Its New Industrial Master Plan 2030 sets out plans to double the median manufacturing wage by 2030.

Externally, it can serve as the primary channel of communications between the US and Malaysia, tracking regulatory developments in Washington and promoting Malaysia as a reliable ally of the US chip industry. Internally, the task force can integrate key resources for chip production,