Tata Electronics' Malaysia foray poised to boost tech sector

New Straits Times

3 days ago

KUALA LUMPUR Tata Electronics' strategic push into Malaysia through potential mergers and acquisitions could significantly revitalise the local technology sector and enhance the country's standing in the global semiconductor supply chain, according to PublicInvest Research.
The India-based semiconductor giant is reportedly eyeing a strategic entry by acquiring a semiconductor fabrication or outsourced semiconductor assembly and test (OSAT) facility—marking what could be its first major footprint in Southeast Asi
If successful, this would mark Tata's first major footprint in the region, positioning Malaysia as a strategic node in the group's global semiconductor ambitions.
Among the local players under consideration are X-Fab (a speciality foundry with operations in Kuching, Sarawak), SilTerra Malaysia (owned 60 per cent by Dagang NeXchange Bhd or DNex), and Globetronics Technology (a Penang-based OSAT and sensor specialist).
These firms offer Tata compelling strategic value due to their established infrastructure, strong capabilities in advanced packaging and testing, and relatively lower acquisition costs compared to regional or global peers.
According to reports, these potential acquisitions are being explored in Malaysia because it is one of the most economical options and talks have been going on with different players since April this year.
PublicInvest highlighted Globetronics and SilTerra as particularly attractive acquisition targets, citing cost-effective entry points and access to a mature, talent-rich ecosystem.
It said that should a deal materialise, it believes it could serve as a catalyst for Malaysia's tech sector, strengthening the country's global position in the OSAT segment and revitalising investor confidence in the broader technology sector.
Malaysia has long been a pivotal hub in the global semiconductor value chain, contributing around 13 per cent of global back-end semiconductor output, particularly in assembly, testing, and packaging services. The country's established electronics ecosystem, especially in Penang and Sarawak, is underpinned by decades of foreign direct investment (FDI), skilled engineering talent, and robust manufacturing capabilities.
For Tata, Malaysia offers proximity to major semiconductor hubs in Asean, access to skilled labour, a well-developed industrial base, and a hedge against geopolitical volatility in the wake of intensifying US-China trade tensions.
The potential move into Malaysia would allow Tata to expand its geographic footprint, diversify operations amid rising global tech protectionism, and deepen its vertical integration in chip design, packaging, and testing.
Tata has rapidly ascended the ranks of the global semiconductor landscape. Its capabilities span Electronics Manufacturing Services (EMS), OSAT, foundry operations, and semiconductor design services.
PublicInvest noted that Tata has also gained increasing importance in Apple's iPhone supply chain, serving both as an assembler and component manufacturer, a role that positions it as a credible challenger to Taiwan's Foxconn.
This shift is emblematic of Apple's broader strategy to diversify away from China, with India now accounting for 18 per cent of global iPhone production, according to Counterpoint Research, up sharply from single-digit levels in prior years.
Counterpoint Research senior analyst Parv Sharma reportedly said that if Tata were to have a partnership or presence in Malaysia, it would enable the group to develop expertise in ATMP, and it would complement the wafer fabrication and OSAT (operations) in India.
It would also de-risk Tata from current semiconductor tariffs and provide a risk-free supply chain to serve a wider customer base globally, he added.
At the helm of Tata's M&A strategy is KC Ang, appointed in April as President of Tata Semiconductor Manufacturing. Ang is no stranger to Malaysia's semiconductor scene. He previously held the role of vice president of operations at SilTerra, giving him deep operational insight and local connections that could accelerate deal execution.
"Based on our understanding, discussions with various Malaysian players have been ongoing since April. The potential acquisitions would allow Tata to tap into Malaysia's mature ecosystem and deep expertise in assembly, testing, and advanced packaging.
"This move would also help Tata Electronics mitigate risks associated with current semiconductor tariffs and provide a diversified platform to serve a broader global customer base," it added.