MITI Sees Semiconductors as ‘New Oil’, Eyes Further E&E Development in Northern Peninsular Malaysia

MITI Sees Semiconductors as ‘New Oil’, Eyes Further E&E Development in Northern Peninsular Malaysia

25 January 2024

January 25, 2024 – Given that semiconductors are now as central to world economies as oil has long been, it is time for Malaysia to build a world-class electrical and electronics (E&E) cluster in northern Malaysia, said Deputy Minister of Investment, Trade and Industry Liew Chin Tong.

“Going forward, we are seeing Kedah, Penang, Perak and Perlis becoming an important cluster for the semiconductor industry, not just in Malaysia, but also the world. Today, Malaysia is already the sixth largest semiconductor exporter in the world. To me, that is an important milestone.

“But moving forward, I would like to see more collaborations among the state governments and the federal government. We should grow the E&E clusters in Kedah and Penang, and potentially North Perak and Perlis, into one global semiconductor hub. It is already there, but it should be grown even further,” he told a press conference on Wednesday following the official opening of AT&S Austria Technologie & Systemtechnik AG’s (AT&S) new production site in Kulim.

The Leoben-headquartered AT&S is the world’s second largest high-end printed circuit board (PCB) producer, as well as the world’s fifth largest sophisticated integrated circuit (IC) substrates manufacturer.

The Vienna-listed company, which operates seven plants in Europe and Asia, has been building its new plant in Kulim with a planned investment of €1.7 billion (about RM8.5 billion) under phase one of the project. To date, it has invested over €1 billion.

With the presence of AT&S in Kulim, Liew believes Malaysia is closer to making the northern region a global semiconductor hub that is recognised globally.

The idea of creating a northern corridor has always been there, he noted. “Today, Malaysia is in a sweet spot due to geopolitical tension and trade diversion. We have to do more in the northern region. To us, as the federal government, the development of the northern region is not just about Penang and Kedah, we are also including north Perak and Perlis in the cluster,” said Liew.

He also noted that Prime Minister Datuk Seri Anwar Ibrahim had, in his Budget 2024 speech, said that the government planned to open a high-tech industrial area in Kerian, north Perak.

Liew also pointed out that Malaysia used to be a very important high-end manufacturing hub before China became the world’s factory.

“But we are coming back to a full circle now, whereby we are given a new opportunity to become a high-end manufacturer again. I hope that very soon, Malaysia will be seen as a destination for high-end manufacturing, and hopefully, we could build a stronger supply chain in our country and the region.

“In the years to come, I believe Southeast Asia will play a very important role in the world due to the relocation of the global supply chain. We should expect some sort of vertical integration in the region, where Malaysia sits at the high-to-middle part of the value chain,” he said.

Meanwhile, Liew welcomed AT&S’ positive impact on the Malaysian economy, saying its investment, especially in the area of IC substrates, is expected to take Malaysia further into the new era of semiconductor value chain.

Liew, who described semiconductors as “the new oil”, said the industry is anticipated to grow further for various reasons, including the revolution in the automotive industry, the advent of artificial intelligence and the continued development of the healthcare industry.

“The International Energy Agency had said last year that EV (electric vehicles) could account for 18% of total car sales in the world. In 2022, it was 14%. In 2021, it was 9%. And in 2020, it was 5%. We are seeing an exponential growth of the EV industry. I believe this mega trend is likely to benefit states like Kedah and Perak,” he said.

Andreas Launer, the Austrian ambassador to Malaysia and Brunei, believes that the economic cooperation between Austria and Malaysia “is reaching a historic high point” with the opening of AT&S’ first plant and its Malaysian headquarters.

“I am confident that AT&S’s strong presence in Malaysia will give important impetus to our bilateral relations and create many new opportunities to work closer together also in other fields such as higher education, vocational training or the development of new technologies.

“I hope that this investment will also put Austria in the spotlight of Malaysian companies as a great business location and tech partner in the heart of Europe,” he said.

Source: The Edge Malaysia