Opportunities > Industries

Electrical and electronics (E&E) in Malaysia


The electrical and electronics (E&E) in Malaysia is aiming to strengthen the available ecosystem especially the semiconductor, solar and Light Emitting Diodes (LED) technologies. The E&E have contributed a total of RM9.8 billion towards the Malaysian economy. In 2013, Malaysia supports 12% of the global back-end support for semiconductor industry out of which Penang accounts for 8% (Source: SEMI). The E&E industries in Malaysia can be categorized into 4 sections which are:


i.            Electronic components

Products/activities which fall under this sub-sector include semiconductor devices, passive components, printed circuits board and other electronic components such as media, substrates and connectors. Electronic components section has contributed 18.3% of total E&E sector (43 projects, RM1.8 billion) in 2013 to Malaysia (Source: MIDA Report 2013).


ii.            Consumer electronics

This sub-sector includes the manufacture of colour television receivers, audio visual products such as digital versatile disc (DVD) players/recorders, home theater systems, blu-ray, mini disc, electronics games consoles and digital cameras. The sector is represented by many renown Japanese and Korean companies, which have contributed significantly towards the rapid growth of the sector. Consumer electronics section has contributed 0.9% of total E&E sector (7 projects, RM91.9 billion) to Malaysia in 2013 (Source: MIDA Report 2013).


iii.            Industrial electronics

Industrial electronics refers to multimedia information technology products such as computers and computer peripherals, telecommunications equipment, office equipment and boxes built products for industrial applications. Industrial electronics section has contributed 26.4% of total E&E sector (17 projects, RM2.6 billion) in 2013 to Malaysia (Source: MIDA Report 2013).


iv.            Electrical products

Electrical products are categorized into three sub-sectors, namely industrial equipment sub-sector, electrical component sub-sector and household appliances. There are presently more than 381 companies producing a wide range of products such as household electrical appliances, wire and cables and electrical industrial equipment.

The major electrical products produced in our country are household appliances such as air-conditioners, refrigerators, washing machines, vacuum cleaners and other electrical appliances. Manufacturing activities in the electrical industry have evolved from mere assembly to design and marketing of ‘local' brands for the regional and global markets. Electrical products section has contributed 54.8% of total E&E sector (51 projects, RM5.3 billion) in 2013 which is also the largest contributor toward the electrical and electronics sector to Malaysia (Source: MIDA Report 2013).


Electrical and electronics Industry in Penang


Penang was recognised by UNIDO Industrial Development Report 2009 as top 10 dynamic industrial cluster locations in the world to have demonstrated a successful manufacturing experience among developing economies.


Underpinning Penang’s success is the presence of 40 years strong & efficient supply chain with world class capabilities and proven track record to support our potential investor. Their exceptional experience will provide operational advantages to our potential investor that include shorter development cycles, steeper learning curves and reduced cost and time to market. These robust supply chains comprise both local as well as foreign companies providing critical support services.


Penang’s vibrant E&E ecosystem has been a strong determining factor for many investments and is supported by a network of over 3,000 well diversified and competent local suppliers in, but not limited to:

  • Automation - Vision inspection system, test handlers and material handling systems
  • Electronics - Various products, components and services including lead frames, flex circuits, built-in, plating and assembly & test
  • Packaging - Paper and boards, polystyrene, sponge and hard rubber, antistatic packaging, clean room engineering and accessories and sterile medical packaging
  • Plastics - Precision plastics, engineering plastics, injection molding and blow molding
  • Precision Engineering and metal work - Precision machining, prevision tooling, stamping and fabrication
  • Software development - Manufacturing, telecommunication, enterprise resource planning (ERP), and Human Resource Management (HRM)


Local electronic manufacturing service (EMS) companies such as Inari Technology is providing back-end wafer processing, package assembly and RF final testing for its European and US customers.  Another local company, Vitrox designs and manufactures innovative, leading-edge and cost-effective automated vision inspection equipment and system-on-chip embedded electronics devices for the semiconductor and electronics packaging industries. There are many other such successful local companies. Multi-national EMS includes Flextronics, Jabil, Plexus and Venture has their presence in Penang.


Even though Penang is the second smallest state in Malaysia, Penang, as the E&E hub of Malaysia, contributes 7% to Malaysia's GDP and 39% of the country’s gross output in electronic and electrical products in 2012. In addition, Penang supports 8% of the global back-end support for semiconductor industry.



Aerospace industry in Malaysia

The overall industry performance for 2012 recorded turnover growth of 9.4% compared to 2011, contributing 3.23% to the country’s GDP. The RM30.3 billion turnover is contributed by the vibrant airlines activities particularly the low cost carriers, the expansion of aerospace manufacturing businesses and the positive development in the airport sub-sector. Selangor is the main aerospace area where 50% of aerospace activities are focused at Selangor (majority MRO activities) followed by Kuala Lumpur (28%), Penang (17%) and others (5%).


Malaysia aerospace focus on four priority areas:

  1. Transforming Subang International Airport to Malaysia International Aerospace Center (MIAC) to become a regional MRO hub
  2. Endorsement for a locally development Unmanned Aerial Vehicle (UAV) System to support military surveillance operations
  3. Intensification of aerospace Research and Technology activities through the establishment of Aerospace Malaysia Innovation Centre (AMIC)
  4. Development of earth observation satellites – TiungSAT and RazakSAT
  5. Implementation of two aerospace projects under the economic Transformation Program (ETP) as part of the business Services National Key Economic Area (NKEA)


Aerospace industry in Penang


Penang is strong and competitive in the aerospace industry which is complete in terms of infrastructure and partners to develop and expand their business. This is mainly due to the leveraging impact from the matured E&E industry in Penang. Among others, the following mirrors the advantages that Penang poses for the aerospace industry:

  • Penang is a major electronics manufacturing hub in Malaysia.
  • Well developed supply chain strong in manufacturing of parts and components,  jigs and tooling,  and engineering design
  • Availability of excellent infrastructure.
  • Strategic location as a regional hub within IMT-GT and ASEAN, which offers easy access to the regional market.
  • Highly skilled and educated  workforce equipped with relevant technical know-how  for manufacturing and research
  • Availability of new graduates in aerospace studies (course offered by USM)
  • Opportunity to locate regional headquarters within Penang.
  • Strong government support


Diversification of the existing industrial base, particularly the E&E industry into aerospace:

  • Provide opportunities and new carrier pathways for the  highly qualified and skilled workers;
  • Shares many of the same technologies used in other high-tech fields such as electronics, PV, nanotechnology,  ICT &  Advanced materials;


The aerospace industry which already has a strong foothold in Penang will provide the industrial diversification and growth necessary to enhance Penang’s position as the global high technology manufacturing hub with emerging knowledge-based value-added activities, increasing innovation & skilled workforce.


Currently, companies in Penang are  involved in the manufacture and supply chain of aircraft components and parts including aerospace structures, avionics, engines, cable assemblies, connectors, PCBA, sub-assembly, machining solutions, molding, precision machining and grinding and special surface treatment process . About 20% of all aerospace activities in Malaysia are located in Penang (largest outside Klang Valley) (Source: Malaysian Industry Group for High Technology).


After 40 years of major industrialization, Penang is now focusing on moving up the value chain, which is also an opportunity for suppliers to innovate, adopt high level technologies, implement best practices and invest in change. A collaborative effort to synchronize the strategy to move up the value chain for the aerospace industry with industry, academia, and federal levels will be the key towards moving up the value chain.


This is also in line with the National Policy (NP) to consolidate the existing industry and move to higher end design and knowledge based activities that will drive the industry growth:

 i.            Parts and components manufacturing;

 ii.            Avionics and systems integration;

 iii.            Center for training and education;

 iv.            Maintenance, repair and overhaul (MRO);


Thus, Penang aims to move up in line with the NP as the aerospace industry is becoming increasingly global due to heightened competition, growing travel demands, and security requirements in emerging markets.