--- title: "Malaysia’s Position in the Global Semiconductor Industry" description: "Discover how Malaysia has become a key player in the global semiconductor industry. Explore insights, challenges, and the country's strategic initiatives." url: "https://www.mrmoneytv.com/articles/malaysia-s-position-in-the-global-semiconductor-industry/" category: "Investing & Market" author: "Finlit" published: 2024-08-27 source: "Mr Money TV" --- # Malaysia’s Position in the Global Semiconductor Industry Discover how Malaysia has become a key player in the global semiconductor industry. Explore insights, challenges, and the country's strategic initiatives. ## Key takeaways - Malaysia is the world's sixth-largest semiconductor exporter, holding a 13% share of the global assembly, packaging, and testing (APT) market, with the sector contributing roughly 25% of the country's GDP. - Malaysia produced about 35.23 billion semiconductors in 2023, and the market is projected to reach US$27.48 billion by 2029. - Prime Minister Anwar Ibrahim set a target of at least 500 billion ringgit ($107 billion) in semiconductor investment, backed by the New Industrial Master Plan (NIMP) 2030, which aims to double the sector's median wage by 2030. - Talent is a major constraint: Malaysia needs around 50,000 electrical and electronics engineers a year but struggles with high turnover and competition from Singapore, which pays more. - The industry leans heavily on foreign firms like Intel and Texas Instruments and faces competition from Thailand, Indonesia, and Vietnam, though its established infrastructure positions it to gain from reshoring out of China. - Malaysia-based QES Group Berhad is building a new plant in Batu Kawan, Penang, to double manufacturing capacity, via a joint venture with Applied Engineering Technology Malaysia. The modern economy runs on semiconductors. From the smartphones in our pockets to powering supercomputers, it’s clear that the demand for semiconductors is set to grow significantly due to technological advancements. The industry’s rapid growth, fuelled by these advancements and increasing global demand, has made it a focal point for businesses and investors alike. Malaysia’s semiconductor industry, established in 1972, has been a source of national pride ever since. Today, Malaysia holds a significant position in the global semiconductor industry, characterised by its robust manufacturing capabilities and strategic initiatives aimed at enhancing its role in the sector. Here are some key insights into Malaysia’s standing in the semiconductor industry: ## 1\. Global Position and Market Share [Malaysia is recognised as the sixth-largest exporter of semiconductors globally](https://www.isis.org.my/2024/06/20/malaysias-semiconductor-ecosystem-amid-geopolitical-flux/#:~:text=The%20E%26E%20sector%20remains%20a,testing%20and%20packaging%20\(ATP\).), with a notable 13% share in the worldwide market for assembly, packaging, and testing (APT) services. This underscores its importance in the global semiconductor supply chain, contributing approximately 25% to the country's GDP. According to [statista.com](http://statista.com), approximately [35.23 billion semiconductors were produced in Malaysia in 2023](https://www.statista.com/statistics/719265/semiconductor-production-malaysia/). The market is projected to grow to a market volume of US$27.48bn by 2029.  ## 2\. Government Support and Initiatives Prime Minister Anwar Ibrahim said that Malaysia is targeting at least 500 billion ringgit ($107 billion) in investment for its semiconductor industry. The Malaysian government has implemented various incentives to bolster the semiconductor industry, including the New Industrial Master Plan (NIMP) 2030, which aims to enhance capabilities in front-end activities like wafer fabrication and integrated circuit design. This plan is expected to double the median wage in the semiconductor sector by 2030 in hopes of [addressing the talent shortage and retention challenges](https://www.mida.gov.my/nurturing-malaysias-semiconductor-industryaddressing-talent-challenges-for-sustainable-growth/). ## 3\. Future Prospects The growth of sectors in AI, IOTs, and electric vehicles is expected to drive further demand for semiconductors. Malaysia aims to enhance its innovation potential through increased investments in research and development, particularly in these emerging technologies. The ongoing US-China trade tensions present an opportunity for [Malaysia to position itself as a neutral ground for semiconductor manufacturing](https://www.apacoutlookmag.com/industry-spotlight/malaysia-semiconductor-industry-association-spotlight), attracting companies looking to diversify their supply chains.  ## Challenges Faced by Malaysia in the Semiconductor Industry  ## 1\. Talent Shortage Despite its strengths, Malaysia faces a significant shortage of skilled professionals in the semiconductor sector. The country requires around 50,000 electrical and electronics engineers annually but struggles with high turnover rates and competition from neighbouring countries like Singapore, which offers higher salaries. ## 2\. Reliance on Foreign Companies The Malaysian semiconductor industry heavily relies on foreign firms such as Intel and Texas Instruments, with local companies having a smaller global market presence. This dependency highlights the need for Malaysia to develop its own semiconductor manufacturing capabilities further. ## 3\. Regional Competition Malaysia is competing with other ASEAN countries, including Thailand, Indonesia, and Vietnam, which are enhancing their semiconductor manufacturing capabilities. However, Malaysia's established infrastructure and experience in the sector position it favourably to capitalise on the reshoring of manufacturing from China. ## QES’s New Plant in the Semiconductor Industry The global semiconductor industry is complex and ever-changing. To thrive, companies must navigate cycles, innovate continuously, and invest in growth. [QES Group Berhad](https://www.qesnet.com/) is a technology company based in Malaysia, specialising in the manufacturing and distribution of semiconductor inspection equipment and other high-tech products. The company’s is geared to expand its manufacturing capacity with a new facility in Batu Kawan, Penang, to double production capabilities. This expansion includes a joint venture with Applied Engineering Technology Malaysia, enhancing QES’s presence in sectors such as aerospace and medical technology. The company’s strategic investments and partnerships aim to position it for growth in the evolving global semiconductor market, driven by increasing demand from sectors like IoT and AI. QES Group is committed to innovation and maintaining competitiveness in the global market and is focused on automation and high-precision equipment. Despite challenges like long lead times for components and the cyclical nature of the semiconductor industry, QES is poised for growth with a solid foundation in both its distribution and manufacturing operations. To gain deeper insights into QES Group and other small-cap stocks, check out the [RHB Small Cap Jewel e-book](https://www.mrmoneytv.com/mmtv-faq-rhb-small-cap-jewel). [Watch my full interview](https://www.youtube.com/watch?v=_27ht7Zq4rs&t=4s) with QES New Plant’s CEO on [The FAQ Show](https://www.youtube.com/@FAQShow). *Subscribe to our* ***financial newsletter*** *for the latest news, insights, and advice on personal finance, investing, and more. With every email, you’ll gather the confidence and knowledge to make informed decisions to achieve your financial goals.* ## Frequently asked questions ### How big is Malaysia in the global semiconductor industry? Malaysia is the sixth-largest semiconductor exporter in the world and holds about a 13% share of the global assembly, packaging, and testing (APT) market. The sector contributes roughly 25% of the country's GDP, and the industry has run here since 1972. Around 35.23 billion semiconductors were produced in Malaysia in 2023. ### How much is Malaysia investing in its semiconductor industry? Prime Minister Anwar Ibrahim said Malaysia is targeting at least 500 billion ringgit ($107 billion) in semiconductor investment. This sits under the New Industrial Master Plan (NIMP) 2030, which aims to build up front-end activities like wafer fabrication and integrated circuit design, and to double the sector's median wage by 2030 to help with talent retention. ### What are the biggest challenges facing Malaysia's semiconductor industry? There are three main challenges. The first is a talent shortage: Malaysia needs around 50,000 electrical and electronics engineers a year but struggles with high turnover and competition from Singapore, which pays more. The industry also relies heavily on foreign firms like Intel and Texas Instruments, and faces regional competition from Thailand, Indonesia, and Vietnam. ### Why is Malaysia well placed for the semiconductor supply chain shift? Ongoing US-China trade tensions give Malaysia a chance to position itself as neutral ground for semiconductor manufacturing, attracting companies that want to diversify their supply chains. Its established infrastructure and experience also put it in a strong spot to capitalise on manufacturing reshoring out of China. Demand from AI, IoT, and electric vehicles is expected to drive further growth. ### What is QES Group's new plant in Penang? QES Group Berhad, a Malaysian company making semiconductor inspection equipment, is building a new facility in Batu Kawan, Penang, to double its production capacity. The expansion includes a joint venture with Applied Engineering Technology Malaysia, extending QES into sectors like aerospace and medical technology. The company is focused on automation and high-precision equipment.