Semiconductors, Malaysia, never seen before

Semiconductors, Malaysia, never seen before

U.S. Intel is building a state-of-the-art semiconductor packaging plant in Malaysia, which was once known as the "Silicon Valley of the East". Kuala Lumpur-based Nkok Thiong has worked in the semiconductor industry for 34 years, but he's never seen the kind of boom that's happening in Malaysia.


Encock, who is senior vice president of German semiconductor giant Infineon Technologies, sees a new phenomenon. It's the daily traffic jams between the northern island of Penang, where the electronics industry is clustered, and Kerim, the country's first high-tech industrial zone. "Malaysia benefits from the diversification of the supply chain (supply network). The government will expand roads next year as there will be more factories in the future," noted En, who is also president of the Malaysian Semiconductor Manufacturing Association. Infineon's office is located in a high-tech industrial zone where cranes and trucks are constantly moving. The company is investing $7 billion (about 1 trillion yen) to build the world's largest factory to make silicon carbide (SiC) products, a power semiconductor used in electric cars and home appliances, among other things.


It is reported that the number of employees at the company in Malaysia will now exceed those in its home country of Germany. Malaysia attracted many foreign semiconductor manufacturers in the 1970s, and jumped to become an early leader in semiconductor manufacturing in Asia. Once also known as the "Silicon Valley of the East", South Korea's Samsung Electronics and Taiwan Semiconductor Manufacturing (TSMC) grew in the 1990s, by South Korea and Taiwan and other countries and regions deprived of the status. However, the semiconductor industry is pushing for the decentralization of manufacturing bases amid the intensifying confrontation between the U.S. and China, and Malaysia is now boiling with anticipation of a resurgence. U.S.-based Intel is also set to invest $7 billion (about 1 trillion yen) in Malaysia as its main manufacturing base in Asia. A state-of-the-art three-dimensional (3D) semiconductor packaging plant is being built in an industrial estate in Penang. It is planned to be the company's largest factory, building more competitive semiconductors than ever before. A.K. Cheng, vice president in charge of Intel's manufacturing and supply network, said, "The new technology is attracting a lot of related businesses. In the case of our cutting-edge packaging, we need new chemicals and equipment, and a lot of investment is expected."


Foreign direct investment (FDI) into Malaysia has reached new levels in recent years, thanks to world-class high-tech and semiconductor firms.From January to March 2023, FDI amounted to 71.4 billion ringgit (about 2 trillion yen). As a comparison, accompanied by a new coronavirus unprecedented semiconductor shortage before the occurrence of 19 years of the year was 32.4 billion ringgit.


The Malaysian government says the country has become a final-process center for semiconductor manufacturing, accounting for 13 percent of the global market for packaging, assembly and testing services. As an exporter of semiconductors, it ranks sixth in the world. On the other hand, Malaysia's semiconductor industry relies heavily on foreign semiconductor manufacturers. Intel, Infineon, and Texas Instruments (USA) have had strongholds since the 1970s. However, the market share of local Malaysian semiconductor packaging and testing service companies is low. Malaysia has not produced large semiconductor manufacturers like TSMC and Samsung.


Timothy Archer, chief executive of U.S.-based semiconductor maker Pan-Lin, said Malaysia is one of the "three major production bases in Asia" along with Taiwan and South Korea. As Intel's representative in Malaysia, Zheng said: "In terms of geography and logistics, Malaysia is the center of Southeast Asia. In addition, the staff language skills (English) is also very strong."


In TSMC and other companies to pay semiconductor manufacturing equipment in the sail Xuan system technology (Marketech) general manager Scott Lynn (Scott Lynn) said: "The company will be at the request of customers to finalize the construction of a new production base in Malaysia or Vietnam, the project. " On that basis, "it is important to catch up with this trend, even if it is expensive."


"Malaysia emphasizes performance as the right place to run a business, but the competition (to attract investment) is happening across Asia in Thailand and India." So says Derek Taylor, head of Asia strategy at venture consultancy Marsh. It was noted that several countries may benefit from diversifying their supply networks, given that the overall semiconductor market is growing. Mr. Taylor cited topics specific to Malaysia, namely talent shortages and limited access to renewable energy.


Infineon's En said, "The whole industry is asking the government to expand the supply of green energy. And the government fully understands." He believes that securing green energy will be a top priority for semiconductor manufacturers when discussing new investments. En said, "If the government's supply falls short of demand, companies may stop making inroads into Malaysia." Despite the challenges that remain, Malaysia could play an important role in the semiconductor supply network. En said, "Malaysia plays a big role in semiconductor packaging and testing, and Singapore has a big ecosystem in the front end of semiconductor manufacturing. If you combine this, it can be a huge center ground."