Malaysia is on the brink of a significant milestone in its semiconductor industry, with plans to begin designing its own semiconductors. This development is largely attributed to the country’s strong bilateral relationship with China, a key player in the global semiconductor market. Richard Chang, often referred to as Chinaโs “godfather of semiconductors,” highlighted this potential during a recent dialogue, noting that Malaysiaโs ties with Beijing could facilitate easier technology transfers essential for this advancement.
Leveraging Strong Bilateral Ties for Technology Transfer
Richard Chang, the founder of Semiconductor Manufacturing International Corporation (SMIC), one of Chinaโs leading semiconductor firms, emphasized that Malaysia’s long-standing relationship with China offers a strategic advantage. He suggested that Malaysia could benefit from significant technology transfers from not only China but also other semiconductor giants like Japan, Korea, Taiwan, and even the United States. Unlike some regions that face geopolitical restrictions, Malaysia’s neutral stance and good international relations make it an ideal candidate for receiving advanced technologies.
Chang drew parallels with Taiwan, the global leader in semiconductor manufacturing, which advanced significantly due to technology transfers from the US and Japan. He believes Malaysia is positioned similarly and could harness this potential to become a significant player in semiconductor design.
Malaysiaโs Role in the Global Semiconductor Supply Chain
Currently, Malaysia plays a critical role in the global semiconductor supply chain, particularly in the back-end processes such as assembly, testing, and packaging. The country contributes about 13% to the world’s semiconductor production, with major hubs located in Penang and Kedah. These regions host numerous multinational electronics companies, making Malaysia a vital node in the global electronics industry.
The push towards designing its own semiconductors could further enhance Malaysia’s standing in the global market, adding value to its already significant contribution to the industry. According to Chang, Malaysia could collaborate with over 1,000 design companies, significantly boosting its capabilities in this area.
Opportunities for Collaboration with Chinese Firms
Chang also noted that many Chinese private companies are eager to collaborate with Malaysia in semiconductor design. Unlike state-owned enterprises, these private firms face fewer regulatory constraints and are more flexible in forming international partnerships. “If you invite these private companies, 90% would say โyesโ. They would like to come here, so welcome them,” Chang said, emphasizing the openness of Chinese firms to work with Malaysia.
This potential influx of Chinese expertise and investment could be a game-changer for Malaysia’s semiconductor industry, enabling it to move up the value chain from assembly and packaging to design and innovation.
Challenges and the Need for Investment
While the prospect of designing semiconductors is exciting, it is not without challenges. Establishing a semiconductor design house requires significant investment in terms of technology, infrastructure, and human capital. Chang suggested that interested parties in Malaysia seek seed funding either from the government or private sector to kickstart these ventures. Government support, in particular, could be crucial in providing the initial capital and creating an enabling environment for this industry to thrive.
Conclusion: A Promising Future for Malaysiaโs Semiconductor Industry
Malaysiaโs readiness to enter semiconductor design marks a new chapter in its already robust electronics industry. With strong ties to China and the potential for technology transfers from global leaders, Malaysia is well-positioned to take this step. The collaboration with Chinese private companies could provide the necessary expertise and investment to overcome initial challenges, paving the way for Malaysia to become a key player in the global semiconductor design industry.
As the country gears up for this new endeavor, the support from both the government and private sector will be critical in ensuring that Malaysia can capitalize on its potential and secure a more prominent position in the global semiconductor market.
