{"id":38592,"date":"2025-03-19T09:42:54","date_gmt":"2025-03-19T01:42:54","guid":{"rendered":"https:\/\/investpenang.gov.my\/the-state-of-the-nation-shot-in-the-arm-for-producing-malaysian-made-semiconductor-chip\/"},"modified":"2025-11-28T10:56:31","modified_gmt":"2025-11-28T02:56:31","slug":"the-state-of-the-nation-shot-in-the-arm-for-producing-malaysian-made-semiconductor-chip","status":"publish","type":"post","link":"https:\/\/investpenang.gov.my\/zh-hans\/the-state-of-the-nation-shot-in-the-arm-for-producing-malaysian-made-semiconductor-chip\/","title":{"rendered":"The State of the Nation: Shot in the arm for producing Malaysian-made semiconductor chip"},"content":{"rendered":"

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The State of the Nation: Shot in the arm for producing Malaysian-made semiconductor chip<\/h1>\n

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19 March 2025<\/p>\n

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LAST week, the government disclosed that it will pay British chip architect Arm Holdings plc, which is owned by SoftBank Group Corp, a total of\u00a0\u00a0US$250 million (RM1.11 billion) over 10 years for semiconductor-related licences and know-how.<\/p>\n

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According to Minister of Economy Datuk Seri Rafizi Ramli, this development stems from discussions at the KL20 Summit last April, in which Arm Taiwan Ltd president C K Tseng was a panellist.<\/p>\n

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Rafizi, widely seen as a key minister behind the Arm deal, emphasised that this collaboration must focus on shifting Malaysia\u2019s semiconductor ecosystem from outsourced semiconductor assembly and test (OSAT) to intellectual property (IP).<\/p>\n

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Compared with his earlier projection of five to 10 years for Malaysia to produce its own chips, Rafizi has now brought the timeline forward to five to seven years, citing the Arm deal as an accelerator for this goal.<\/p>\n

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Under the billion-ringgit deal, Arm will provide Malaysia with IP licences and compute subsystems (CSS). Additionally, the UK firm will collect royalties on chips sold, although details of the royalty structure were not publicly disclosed.<\/p>\n

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With the Arm partnership, Malaysia aims to establish 10 chip companies with a combined annual turnover of up to US$20 billion. Currently, Oppstar Bhd (KL:OPPSTAR<\/a>) and Key ASIC Bhd (KL:KEYASIC<\/a>) are among the few Bursa Malaysia-listed companies involved in chip design.<\/p>\n

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During his keynote address at Malaysia\u2019s Silicon Vision launch ceremony last Wednesday, Prime Minister Datuk Seri Anwar Ibrahim stated that Malaysia\u2019s collaboration with Arm represents the start of the second semiconductor wave.<\/p>\n

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\u201cThrough this comprehensive partnership with Arm, we have conceived one of the most ambitious technological plans Malaysia has ever seen to pioneer \u2018made by Malaysia\u2019 AI (artificial intelligence) chips. These chips will be designed, manufactured, tested and assembled here, and sold to the rest of the world,\u201d he said.<\/p>\n

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He also revealed that Arm will establish its first Asean office in Kuala Lumpur.<\/p>\n

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Arm\u2019s role in the chip value chain<\/h3>\n

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But how exactly will the Arm deal help Malaysia to build home-grown chips and move up the electrical and electronics (E&E) value chain? More importantly, is Arm the right partner to drive the country\u2019s silicon vision? To answer these questions, we first need to understand Arm\u2019s role in the semiconductor value chain.<\/p>\n

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Globally, companies such Nvidia Corp, Advanced Micro Devices Inc (AMD), Broadcom Inc, Qualcomm Inc and MediaTek Inc are among the world\u2019s largest fabless chip designers. They design chips but outsource the fabrication to leading semiconductor foundries such as Taiwan Semiconductor Manufacturing Co Ltd (TSMC), United Microelectronics Corp (UMC) and GlobalFoundries Inc.<\/p>\n

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However, above these chip designers is another critical layer \u2014 pre-silicon IP suppliers such as Arm, Cadence Design Systems Inc and Synopsys Inc, which provide semiconductor IP, tools and design solutions. Essentially, they create the fundamental blueprints that chip designers use to build and customise their own chips.<\/p>\n

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Of course, chip designers can develop their own chip architecture, but the process is complex, costly and time-consuming. That is why most companies prefer to license Arm\u2019s architecture rather than reinvent the wheel.<\/p>\n

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Set up in 1990, Arm, a Japanese-owned semiconductor and software design company based in Cambridge, England, specialises in designing central processing unit (CPU) cores that implement the Arm architecture family of instruction sets. It got its big break in 1993, when Apple launched its early handheld Newton device on the Arm610 processor.<\/p>\n

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But unlike traditional microprocessor makers, Arm does not manufacture or sell its own chips. Instead, it creates and licenses its technology as IP to chip designers worldwide.<\/p>\n

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Imagine you are building a house. The architect determines how many rooms there are, how they are connected and how people move between them. Similarly, a chip architect like Arm defines how different parts of a chip, such as the processor, memory and communication units are structured and work together. Using property development as an analogy, Arm is basically the architect that designs the houses.<\/p>\n

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Chip designers such as Nvidia, AMD and Broadcom are akin to property developers, taking the blueprint, customising it and creating their own projects to sell. And then, foundries like TSMC and UMC are the construction firms that build the houses.<\/p>\n

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Arm CEO Rene Haas highlighted that Arm-designed chips are nearly all-present in the modern world, as the company has shipped over 300 billion chips, and today 99% of all individuals are connected to an Arm chip-powered device.<\/p>\n

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Timely collaboration<\/h3>\n

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Today, with Arm\u2019s involvement, Malaysia is laying the foundation for its own home-grown chip. But will this be enough to position the country as a key player in the global semiconductor industry?<\/p>\n

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Invest-in-Penang Bhd (InvestPenang) CEO Datuk Loo Lee Lian believes the Arm deal represents a transformative leap for Malaysia\u2019s semiconductor industry.<\/p>\n

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\u201cBy securing access to Arm\u2019s advanced IP licences and CSS, the agreement empowers Malaysian semiconductor players to transition from back-end assembly and testing towards high-value chip design, development and innovation,\u201d she tells The Edge.<\/p>\n

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At the state level, says Loo, this strategic partnership will further reinforce Penang\u2019s established semiconductor ecosystem and benefit the newly launched Penang Silicon Design @5km+, which aims to provide a comprehensive framework to nurture integrated circuit (IC) design start-ups.<\/p>\n

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\u201cMalaysia\u2019s timely collaboration with Arm will further complete Malaysia\u2019s chip design ecosystem by leveraging Arm\u2019s expertise to develop a comprehensive IC design training programme, grant selected Malaysian companies access to advanced technology and IP, and support the development of locally designed semiconductor products,\u201d she says.<\/p>\n

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These initiatives, combined with the existing OSAT, manufacturing and testing facilities built over the last five decades, will not only enhance Malaysia\u2019s technical capabilities, but also foster co-development opportunities, drive technological innovation and facilitate seamless integration with global semiconductor players, says Loo.<\/p>\n

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Selangor Information Technology & Digital Economy Corp (Sidec) CEO Yong Kai Ping concurs that the Arm deal grants Malaysian chip designers access to advanced semiconductor IP, fostering high-value chip design. \u201cBeyond IP, structured training programmes will be crucial for maximising adoption in next-gen electronics and smart systems.\u201d<\/p>\n

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On the other hand, the Malaysia Semiconductor IC Design Park, with its mix of local and global IC design firms, will serve as an innovation hub, helping the country develop cost-effective, locally designed products.<\/p>\n

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With the heightened US-China tech tensions and global semiconductor supply chain shifts, Yong believes this strategic partnership is timely, as it allows Malaysia to strengthen its role in the global E&E value chain.<\/p>\n

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\u201cThe Malaysia Semiconductor IC Design Park\u2019s partners are already advancing in the development of AI chip design, high bandwidth memory, controllers and advanced storage solutions, which will accelerate this transition.<\/p>\n

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\u201cBuilding a robust talent pipeline and innovation-driven ecosystem will be critical in achieving Malaysia\u2019s semiconductor exports target of RM1.2 trillion by 2030. Sidec has already launched various initiatives and is fully committed to driving Malaysia\u2019s Silicon Vision towards successful realisation,\u201d he says.<\/p>\n

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Transformative development<\/h3>\n

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With the Arm deal in place, local chip design firms are poised to be the biggest beneficiaries, gaining access to critical semiconductor IP that could supercharge their ability to develop home-grown chips.<\/p>\n

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Oppstar executive director and co-CEO Ng Meng Thai says the announcement of the Arm deal is a positive signal for the local semiconductor ecosystem, as the initiative could provide local companies access to key IP in semiconductor products. However, they will have to step up, too, in order to leverage the IPs to make commercially successful products.<\/p>\n

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\u201cHaving significantly improved our design capabilities and collaborating with advanced foundries over the years, as well as completing numerous system-on-chip (SoC) products based on Arm IPs, we are excited to see how this initiative progresses and look forward to learning more about potential opportunities.<\/p>\n

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\u201cIt is definitely timely for Malaysia to move up further in the value chain. Over the years, we have been growing capabilities, not only in IC design, but along with other synergistic subsectors such as silicon validation, advanced packaging and so on. We have the potential, we have some head start in specific areas, but we need to keep the momentum,\u201d he tells The Edge.<\/p>\n

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SkyeChip Sdn Bhd co-founder and CEO Fong Swee Kiang agrees that the Arm deal is transformative for Malaysian IC design companies. \u201cAs a silicon IP company, we are hoping to tap the Arm platform to expand the global customer base for our IPs. While details of the agreement are yet to be announced, we are hopeful that the agreement will help to accelerate the development of competitive, high-performance chips by having access to low cost or zero cost IP licensing for R&D (research and development) and production.\u201d<\/p>\n

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Fong also believes the deal would allow Malaysia to move up the E&E value chain, reducing reliance on back-end assembly and fostering front-end design capabilities. This aligns with SkyeChip\u2019s goal to strengthen Malaysia\u2019s position in the global semiconductor market.<\/p>\n

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\u201cThe partnership positions Malaysia as an emerging IC design player, but more is needed to compete with mature ecosystems like Taiwan and South Korea. While the US$250 million investment is a start, Malaysia must complement it with stronger start-up funding and talent development. SkyeChip remains optimistic as this is a strong first step, but our own execution will determine our long-term success,\u201d he stresses.<\/p>\n

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Infinecs Systems Sdn Bhd co-founder and CEO Kalai Selvan Subramaniam points out that there is still a lack of specific details on the Arm deal and its offerings to local players, which encompass local design companies, academia and research institutes. While it is promising, Malaysia must take several crucial steps to remain a competitive global semiconductor player, he says. \u201cMalaysian companies could co-develop customised chip solutions for niche markets with Arm\u2019s support, aiming to enhance their global competitiveness. We should enhance business and market access for local design companies to secure customers who require and will purchase Arm-integrated SoC solutions.\u201d<\/p>\n

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Nevertheless, he acknowledges that in contrast to South Korea, Taiwan and China, Malaysia lacks a domestic company capable of consuming Arm-based SoCs and securing business access to IC design and fabless companies. Moreover, these countries are investing significantly in semiconductor R&D and provide substantial incentives, whereas Malaysia still falls short in terms of R&D funding and lacks a well-defined long-term strategy.<\/p>\n

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\u201cUnlike Taiwan, which has TSMC, and South Korea, which has Samsung, Malaysia lacks high-end chip fabrication facilities. To achieve true competitiveness, it must develop and support its fabless sector, as well as local start-ups in custom chip development.<\/p>\n

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\u201cA stronger partnership with Arm could position Malaysian companies closer to the global semiconductor value chain, fostering partnerships with major players. This could include access to global fabs like TSMC and Samsung,\u201d Kalai says.<\/p>\n

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Ng Yi Chung, partner of AC Ventures, a regional technology venture fund, highlights that Arm is a global leader that has significant market share in worldwide mobile devices due to its energy-efficient designs.<\/p>\n

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\u201cWhile there isn\u2019t too much public detail on the deal between Arm and the government, on the surface there will be an immediate impact in terms of rights, IP and licences that will be available to players in Malaysia.<\/p>\n

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\u201cThis should allow for direct implementation, design and market of related products. A particularly impactful outcome would be if local companies are able to use these IP rights and licences for free after the government has effectively purchased them,\u201d he says.<\/p>\n

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Yi Chung adds that Malaysian companies will likely gain access to Arm\u2019s complete development toolkit, significantly reducing entry barriers for start-ups. This would take the country closer to the higher end of the value chain.<\/p>\n

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\u201cThe next steps will be extremely important as we now need to ensure that, first, the terms of the partnership focus on enabling the local industry to focus on key market segments that are relevant yet do not go head-to-head with global giants.<\/p>\n

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\u201cAn imperative towards areas where adjacent or comparative advantage lies would likely be material opportunities,\u201d he concludes.<\/p>\n

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Source: The Edge Malaysia<\/a><\/p>\n

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19<\/h2>\n
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March \u201825<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"author":5283,"featured_media":34072,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[316],"tags":[],"news_year":[325],"news_month":[221],"local_insights_alphabet":[237],"acf":[],"_links":{"self":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/38592"}],"collection":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/users\/5283"}],"replies":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/comments?post=38592"}],"version-history":[{"count":2,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/38592\/revisions"}],"predecessor-version":[{"id":38595,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/posts\/38592\/revisions\/38595"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/media\/34072"}],"wp:attachment":[{"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/media?parent=38592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/categories?post=38592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/tags?post=38592"},{"taxonomy":"news_year","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/news_year?post=38592"},{"taxonomy":"news_month","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/news_month?post=38592"},{"taxonomy":"local_insights_alphabet","embeddable":true,"href":"https:\/\/investpenang.gov.my\/zh-hans\/wp-json\/wp\/v2\/local_insights_alphabet?post=38592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}