Reaffirming Malaysia's chip ambitions
AT THE ASEAN Semiconductor Summit 2025 (ASEMIS), Prime Minister Datuk Seri Anwar Ibrahim and Ministry of Investment, Trade and Industry (MITI) Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz reinforced Malaysia's ambition to become a global semiconductor powerhouse under the National Semiconductor Strategy (NSS).
Launched in May 2024, the NSS aims to shift Malaysia beyond a 'Made in Malaysia' model to a 'Made by Malaysia' one by strengthening local capabilities in integrated circuit (IC) design, research and development (R&D), advanced packaging and nurturing homegrown champions across the value chain.
NSS Progress
Since its launch, the NSS has attracted RM63 billion in investments (RM58 billion foreign direct investment [FDI], RM5.2 billion domestic direct investment), led by high-impact projects from Infineon (opened world's largest 200mm silicon carbide power fab), Carsem (M) Sdn Bhd's advanced packaging technologies for artificial intelligence (AI) and energy efficiency, NXP Semiconductors NV's semiconductor products, Syntiant Corp's micro-electro-mechanical systems (MEMS) microphone and sensors, and Plexus Corp' manufacture and re-manufacture of printed circuit boards. These investments underscore rising investor confidence in Malaysia's semiconductor ecosystem.
Building Local Champions
Malaysia aims to develop 10 local semiconductor firms with revenues exceeding US$1 billion (RM4.24 billion) and 100 firms with revenues exceeding RM1 billion. The government has identified 13 Malaysian-based companies across the semiconductor value chain as key beneficiaries, including Carsem (Malaysian Pacific Industries Bhd [MPI]), Inari Amertron Bhd, Pentamaster Corp Bhd, ViTrox Corp Bhd and Kellington Group Bhd.
In addition, promising IC design and services firms like Oppstar Bhd, SkyeChip Sdn Bhd, Infinecs Systems Sdn Bhd and Experior are also being nurtured to spearhead Malaysia's next phase of semiconductor growth.
Talent Development and Wages Uplift
Over 30,000 high-skilled workers have been trained under NSS-linked programmes. Initiatives by Collaborative Research in Engineering, Science and Technology (CREST), TalentCorp (M) Bhd and the Ministry of Human Resources (Kesuma) have led to wage gains of up to 20% for over 1,100 participants. The median manufacturing wage rose 6% year-on-year (YoY) to RM2,745 per month in the first quarter of 2025 (1Q25).
Strategic Funding and Support
More than RM2 billion has been committed by government-linked investment companies (GLICs) (eg, Khazanah Nasional Bhd, Retirement Fund Inc [KWAP]) and development banks via the GEAR-uP initiative. This complements a planned RM25 billion in total fiscal support under the NSS to accelerate R&D, ecosystem development and global partnerships.
ASEAN Supply Chain Integration
As ASEAN Chair in 2025, Malaysia is spearheading the ASEAN Integrated Semiconductor Supply Chain Framework to harmonise talent flows, fiscal incentives and infrastructure across member states. A memorandum of understanding (MOU) signed by the semiconductor associations of Malaysia, Singapore, Vietnam, Thailand and the Philippines aims to create a unified regional chip ecosystem.
Conclusion
Malaysia's transition from a back-end assebly base to a design-to-packaging semiconductor hub remains a work in progress. However, we are encouraged to see that the NSS is gaining investor traction, institutional support and regional momentum.
With RM63 billion in committed investments, an increase in local champions and stronger ASEAN alignment, Malaysia is positioning itself as a neutral, indispensable node in the global chip supply chain. We see this as one of the key advantages in ensuring Malaysia remains an attractive destination for semiconductor manufacturing globally.
Our current top picks in the Malaysian outsourced semiconductor assembly and test (OSAT) sector are Inari Amertron ('Buy'; target price [TP]:RM2.20) and MPI ('Buy'; TP: RM30). We also like ViTrox ('Hold'; TP: RM3.80) for exposure to the Malaysian Automated Test Equipment (ATE) sector.
Extracted from CIMB Securities Sdn Bhd's report dated July 25, 2025.
This article first appeared in The Malaysian Reserve weekly print edition
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