Malaysia taking the lead in Asean’s semiconductor chip race investments — Maybank IB
02 Sep 2024
Malaysia appears to be taking pole position in securing investments in Asean’s semiconductor-chip race due to its established supply chain, talent pool, abundant land and energy, as well as affordable business costs, said Maybank Investment Bank Bhd (Maybank IB).
It noted that approved investment commitments into Malaysia’s electrical and electronics (E&E) cluster nearly tripled in 2023 from the previous year.
“The momentum continued in the first quarter of 2024 (1Q2024), with investments soaring nearly 20-fold year-over-year to US$7.3 billion,” it said in a research note on Monday.
According to the investment bank, both Malaysia and Vietnam have seen notable increases in their semiconductor export shares between 2015 and 2022, demonstrating the countries’ success in attracting chip-making investments.
Maybank IB highlighted that Asean is the world’s largest semiconductor exporter, accounting for 23% of global chip exports in 2022, with Singapore (10.8%) and Malaysia (7.0%) being leaders in the region.
Malaysia’s edge lies in downstream assembly, testing and packaging (ATP), accounting for 7.0% of global ATP capacity, the largest in Asean.
Maybank IB noted that several trade-sensitive Asean economies, including Malaysia, are benefitting from an upturn in the global semiconductor and broader electronic cycle in 2024.
“Asean is benefitting from the diversification of global chipmakers’ supply chain beyond North Asia, amid intensifying United States tech sanctions on China, and rising tensions between China and Taiwan,” it said.
The investment bank said the influx of semiconductor foreign direct investments would help drive manufacturing and export growth in Asean over the longer term.
Moving forward, Maybank IB expects Asean’s electronics sector’s recovery to strengthen and broaden over the second half of 2024 (2H2024) and in 2025.
The research bank said the rise in final electronics goods sales should fuel semiconductor demand, supporting Singapore and Malaysia’s exports.
“Demand will broaden beyond advanced-node chips, given that smartphones depend on a wide range of memory chips and legacy chips for global positioning system (GPS), wi-fi, battery life and camera controls,” it said.
It noted that Malaysia unveiled a National Semiconductor Strategy (NSS) in May 2024, backed by US$5.3 billion (RM25 billion) in fiscal support and targeted incentives.
The NSS will be implemented in three phases, with the aim to court RM500 billion of domestic direct investment and foreign direct investment in phase 1; establish at least 10 homegrown companies in design and advanced packaging with at least RM1 billion of revenues in phase 2; and develop a global research and development hub for semiconductors in phase 3.
Source: Bernama
