Malaysia eyes over $100 billion in semiconductor industry investment

Malaysia is targeting at least 500 billion ringgit ($107 billion) in investment for its semiconductor industry, Prime Minister Anwar Ibrahim said on Tuesday, as the Southeast Asian country looks to position itself as a global manufacturing hub.

Malaysia is a major player in the semiconductor industry, accounting for 13 percent of global testing and packaging. It has attracted multibillion-dollar investments from leading firms in recent years, including Intel and Infineon.

Anwar said the investment being sought would be for integrated circuit design, advanced packaging and manufacturing equipment for semiconductor chips.

Malaysia also wants to establish at least 10 local companies in design and advanced packaging for semiconductor chips, with revenues ranging from $210 million to $1 billion, Anwar said in a speech at an industry event.

The Southeast Asian country will allocate $5.3 billion in fiscal support to meet these targets, he added, saying further details would be announced later.

"We have a strong capacity to diversify and move higher in the value chain ... to move towards even more high-end manufacturing, semiconductor design and advanced packaging," Anwar said.

He did not specify a timeline for the targets to be met.

On April 22, Anwar said Malaysia planned to build Southeast Asia's largest integrated circuit design park and would offer incentives, including tax breaks, subsidies and visa exemption fees, to attract global tech companies and investors.

He said the proposed integrated circuit design park was part of Malaysia's efforts to move beyond backend chip assembly and testing and into high-value, front-end design work.

Malaysia is seen as well placed to grab further business in the semiconductor sector, as Chinese chip firms diversify outside of China for assembling needs.

China's Xfusion, a former Huawei unit, said last September it would partner with Malaysia's NationGate to manufacture GPU servers – servers designed for data centers and used in artificial intelligence and high-performance computing.

Shanghai-based StarFive is also building a design center in Malaysia's Penang state, while chip packaging and testing firm TongFu Microelectronics said in 2022 it would expand its Malaysia facility – a venture with U.S. chipmaker AMD.

Germany's Infineon said last August it would invest 5 billion euros ($5.4 billion) to expand its power chip plant in Malaysia, while U.S. chipmaker Intel announced in 2021 it would build a $7 billion advanced chip packaging plant in the country.